Millions of savers could see their retirement pots put at risk under sweeping new pension reforms unveiled by the government, leading experts and campaigners have warned.
A series of proposed changes, confirmed on Thursday as part of the new Pension Schemes Bill, would loosen rules on how surplus funds can be extracted from defined benefit (DB) pension schemes — allowing employers to reclaim billions of pounds that are currently locked within retirement funds.
The Department for Work and Pensions (DWP) said it intended to “remove barriers to extraction” and revise the threshold at which pension trustees can share scheme surpluses with sponsoring employers. Ministers claim the proposals could help boost economic growth by enabling companies to reinvest the funds into business expansion, wage increases or further pension contributions.
But pensions industry leaders have voiced serious concerns about the potential fallout for more than ten million people who are members of DB schemes, warning that loosening the rules could undermine long-term security and destabilise well-funded schemes.
The newly formed Pension Security Alliance — comprising pension insurers Just Group and Pension Insurance Corporation, consultant John Ralfe, and organisations representing pensioners — said the reforms threatened to turn pension schemes into “piggybanks for others to dip into.”
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