Unite has warned the Labour Government to exercise extreme caution over its recent proposals allowing companies to invest surpluses from defined benefit pension schemes.
The UK’s largest union is demanding that workers must have an equal voice in decisions about surplus pension investments, insisting that these funds rightfully belong to scheme contributors.
The union emphasised that Chancellor Rachel Reeves must ensure any surplus funds must be invested in ways that benefit scheme members, not just employers.
Unite is also pushing for reforms to defined benefit scheme rules, arguing that current regulations force trustees into overly conservative short-term investments.
Ahead of the changes, the union wants new rules that would enable trustees to make longer-term investment decisions, which they believe would help keep defined benefit schemes operational.
As such, Unite has called for strict laws to be implemented to ensure surplus investments are made only for prudent purposes.
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The Chancellor is preparing for a pension system overhaul
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The union specifically highlighted the need to prevent any repeat of the Maxwell pensioners scandal.
“These proposals may have some benefits, but it is essential that nothing is done which allows employers to play fast and loose with workers pensions,” said Unite general secretary Sharon Graham.
“The Maxwell scandal must never be repeated,” she added. Graham emphasised that workers’ representatives must be involved in any decisions about investing surplus pension funds.
“Any decision on investing surplus pension funds needs to be made with representatives of the workers who pay into the funds,” she said.
Britons are looking for more security when it comes to their pension savings
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“And it is essential that workers benefit from those investment decisions. We can’t have any loopholes which allow employers to squirrel away profits for themselves,” Graham added.
Graham also stressed that the Government’s focus should be on preserving defined benefit pensions rather than changing surplus investment rules.
“The most important challenge for the government in this area is not changing the rules on the investment of surpluses,” she said.
“Defined benefit pensions are by far the best way to ensure that workers enjoy a financially secure retirement,” Graham continued.
“So, the big question is how to get employers to stop closing these schemes and start opening new ones.”
Unite is calling on the Government to actively encourage employers to open or reopen defined benefit pension schemes.
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The union believes new policies and regulations are needed to ensure more companies provide these pension arrangements.”
Reeves said: “I know this government and businesses are united on growth being the top priority for our economy, which is why I am fighting every day to tear down the biggest barriers to growth, taking on regulators, planning processes and opposition to this urgent mission.”
Prime Minister Keir Starmer added: “The number one mission of my government is to secure growth, drive higher living standards for everyone, and get more money into people’s pockets.
“To achieve the change our country needs requires nothing short of rewiring the economy. It needs creative reform, the removal of hurdles, and unrelenting focus. Whether it’s how public services are run, regulation or pension rules, my Government will not accept the status quo.
“Today’s changes will unlock billions of investment, pushing forward in delivering my Plan for Change.”