Pensions committee warns around 11m private sector defined benefit schemes face cuts

 
Jessica Morris
Follow Jessica
As Americans Save More, Piggy Banks Gain Popularity
Field also wants to strengthen legislation to block the payment of dividends (Source: Getty)

Around 11m promised final--salary-style pensions in the private sector could face cuts, Frank Field, chairman of the work and pensions select committee, has warned.

It comes as the committee prepares to launch a wide-ranging investigation into occupational pensions. It's currently looking into the collapse of BHS, with 20,000 people facing at risk of reductions to their pension.

Read more: Pensions lifeboat may have to take on bankrupt Nortel's 33,000 pensioners

Speaking to The Times, Field said that the committee would look at legislation to ease "unrealistic" burden on employers, with rising life expectancy and record low investment returns leading to ballooning bills.

Around 600 pension funds are certain to collapse in the next decade, with another 400 at risk, according to the Pensions Institute at the Cass Business School.

These funds have deficits of around $45bn.

Field also wants to strengthen legislation to block the payment of dividends.

Read more: Pensions dashboard takes a step closer to becoming a reality

“You can’t take all the rewards and shift the real risks to other people. There could be restrictions on dividends when there isn’t an agreed recovery plan for the pension fund," he said.

The committee is currently investigating how Sir Philip Green and other BHS shareholders took more than £400m in special dividends from 2002 to 2004, despite a deficit opening up in the pension fund.