Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if he will make an assessment of the potential merits of bringing forward legislative proposals to protect pension rights accrued prior to the 1995 Pensions Act from the effects of inflation.

The Pensions Act 1995 required all defined benefit pension rights accrued from April 1997 to be indexed once the pension is in payment. This provides members with a measure of protection against inflation on the pensions rights they accrue after this date.

Before 1997, only contracted out pension rights, which replace the additional State Pension, were required to be indexed. However, many pension schemes voluntarily provided indexation on pensions accrued before 1997. If scheme rules provide for increases on pensions in payment earned before April 1997, those increases must continue to be paid.

Pensions legislation does not usually apply new provisions retrospectively to rights that have already been accrued. It is generally seen to be unreasonable to add liabilities to pension schemes that could not have been taken into account in the funding assumptions that determined the contributions to be paid at the time.

There are no current plans to change these arrangements.