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Probe into UK occupational pension schemes

Tata steel workers Image copyright Getty Images

An inquiry is to be launched into the UK's 6,000 occupational pension schemes after question marks about the future of the BHS and British Steel schemes.

The government wants to reduce pensions payable to 130,000 current and ex-steel workers, to make Tata's Port Talbot operations more attractive to a buyer.

Meanwhile the Commons Work and Pensions select committee is investigating the £571m deficit at the BHS scheme.

Now it will also investigate how many pension schemes are at risk of failing.

'Worrying evidence'

Proposed changes to the British Steel scheme, from one based on the Consumer Prices Index (CPI), inflation measure, rather than the Retail Prices Index (RPI). could see some future pensioners 17% worse off.

And current and former BHS employees who had not yet reached retirement age when it went into administration in March could see a 10% cut to their pensions.

"The state of the British Steel pension scheme is further worrying evidence of a wider danger to one of the biggest savings successes in Britain during the last century - occupational pension schemes," said pensions committee chair Frank Field.

"The select committees' in-depth case study on BHS is illustrating how such schemes are already creaking from rising life expectancy and record low returns on capital.

"Pension law and regulation must urgently adapt to the issues of the future, rather than the problems of the past. The whole savings edifice is in danger."

'Problem of the age'

Mr Field said that while he welcomed discussions with the government on finding a way forward on the British Steel issue, it was far from an isolated case.

Mr Field said 11 million people had private "defined benefit" pensions, but that more than 5,000 of the associated schemes were in deficit by a total of £805bn.

Meanwhile, the combined surpluses of other schemes was just £4bn.

"This will be a major inquiry considering radical solutions to one of the great problems of this age," said Mr Field, the Labour MP for Birkenhead.

"The inquiry will consider, amongst other things, radical solutions that could be more easily implemented if real returns on capital rise again."

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