UK: Parliamentary Select Committee Enquiry Into Defined Benefit Pension Schemes: Show-Stopper Or Damp-Squib?

Last Updated: 25 October 2016
Article by Clive Weber


Not content with its Report on the BHS Scheme (issued on the 20 July 2016) the Parliamentary Select Committee (the Committee) announced on 8 August 2016 a wide ranging enquiry into defined benefit (DB) schemes and asked for written submissions on 5 topics by 23 September 2016.

Below is an overview of the Committee's remit and our comments on whether the Committee's recommendations are likely to result in new legislation. In our view the forthcoming Select Committee proceedings will produce a lot of 'hot' air, no new legislation but perhaps a sea change in TPR's working methods.

Enquiry's scope

The Chair of the BHS enquiry, Frank Field MP, said on 8 August:

"The lessons of BHS must be learnt. This may mean strengthening the powers and resolve of the Pensions Regulator to act early, quickly and firmly with those who seek to avoid their pension responsibilities. It is important, however, that businesses that are run reputably and responsibly are not put under undue restriction. Ultimately, defined benefit schemes must be placed on a sustainable footing."

The whole framework for DB schemes is therefore being excavated to see whether its foundations are fit for purpose. The main areas to be microscopically examined are:

  • The Pensions Regulator (TPR);
  • the Pension Protection Fund (the PPF);
  • role and powers of pension scheme trustees;
  • relationship between TPR, PPF, scheme trustees and sponsoring employers; and
  • balance between meeting pension obligations and ensuring the on-going viability of sponsoring employers.

From the Committee's further comments it is clear it will focus on whether TPR's powers need strengthening and should be more pro-actively exercised. For instance, the Committee says it will enquire into the following:

  • "whether specific additional measures for private companies or companies with complex and multi-national group structures are required;
  • the pre-clearance system, including whether it is adequate for particular transactions including the disposal of companies with DB schemes;
  • powers relating to scheme recovery plans; and
  • the impact of the TPR's regulatory approach on commercial decision-making and the operation of employers"

Our observations

TPR's powers and particularly its anti-avoidance powers (contribution notices and financial support directions) were very carefully constructed on TPR's creation under Pensions Act 2004. This was strengthened in 2008 by adding the additional test of material detriment to members' accrued benefits. TPR has issued many guidance notes on how it will exercise its powers and reports of their use in particular cases. Further adjustment was made in 2014 when in relation to the scheme funding legislation TPR was given an additional statutory objective namely "to minimise any adverse impact on the sustainable growth of an employer". Whilst further adjustments may be needed at the fringes, the legislation itself as interpreted by the Courts is in our view mostly fit for purpose. The problem lies more in the way TPR approaches its powers, at least in part, because TPR is under-resourced.

Following the Committee's enquiry into BHS, corporate transactions are clearly under the microscope. Takeovers of listed companies will usually involve the application of the Takeover Code's pension provisions, but applying similar provisions to private transactions seems inappropriate. Please contact us for details of the Takeover Code's pension provisions.

Progress of the Select Committee's enquiry

Following the close of the window for submissions on 23 September 2016, it seems likely there will be further televised Committee hearings this Autumn. TPR and the PPF are already due to give evidence on 10 October. At the time of writing, details of further Committee hearings have yet to be announced. 

Likely upshot of the new enquiry

The Committee is likely to report and make recommendations by 31 December 2016. We doubt whether any new legislation will appear in 2017 or perhaps at all because:

  • the Government is very pre-occupied with BREXIT and will become increasingly so as legislation in many areas (not just pensions) is re-examined in the light of BREXIT and in some areas re-shaped;
  • the Government itself is reviewing the valuation bases for schemes and may suggest its own solutions;
  • the eventual outcome of the BHS debacle may influence the Government's approach; it remains to be seen whether Sir (?) Philip Green and TPR/PPF will reach agreement and, if so, on what terms (please see our separate article [insert hyperlink] in this issue of Pensions Compass); and
  • the Government's approach to the British Steel Pension Scheme may define the Government's approach to defined benefit schemes in some areas (e.g. mandatory indexation of pensions).

The Labour party has said it wants TPR's powers over corporate transactions to be strengthened and for corporates' powers to pay dividends to be restricted in certain circumstances. In the normal course, a General Election is not due until 2020, however political life is full of surprises!

Our conclusion

We doubt the Committee's recommendations following its new enquiry will lead to any major new pension legislation. However, we do expect a more pro-active approach from TPR and the PPF to corporate transactions particularly where the corporate is in a near insolvency situation. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.