Warning of 'unforeseen consequences' if steelworker pension change plans rushed
Pensions experts have warned of "unforeseen consequences" if suggested changes to steelworkers' pensions are rushed.
Under moves to save the UK business of Indian giant Tata, an option is to base annual increases in pensions on the Consumer Prices Index (CPI) inflation measure, rather than the Retail Prices Index (RPI).
In its response to a Government consultation, the Association of Consulting Actuaries expressed concern that the idea was being driven by politics rather than pensions.
The need to respond to the crisis in the steel industry could lead to rushed changes to well-established legislation with the potential for adverse and as yet unforeseen consequences, said the association.
Chairman Bob Scott said the association would support a "very narrow" adjustment to the 1995 Pensions Act to facilitate a reduction to benefits, but only for the steelworkers' scheme, and with no precedent that could be extended.
A Department for Work and Pensions spokesman said: "We are consulting on a wide range of options for the British Steel Pension Scheme and are keen for as many people as possible to provide their views, including those who will be affected by any changes."
In their submission to the Government, the Unite, Community and GMB unions said: "The law prohibits changes in pension scheme rules which reduce members' accrued rights unless the individual consent of affected members is obtained. These provisions are intended to hold employers to honouring the pension promises they have made.
"These are fundamental protections for members which are critical to the integrity of the DB (defined benefit) promise and we reject any change in these fundamentals of pension law which would undermine them, as long as the employer responsible for the accrued benefits remains associated with the scheme.
"It is not appropriate to make such modifications (to reduce pension increases and revaluation) while the employer bearing responsibility for the deficit is still liable for it."