Discussing the planned state pension reforms – ones that will see the end of the state second pension (S2P) and therefore the end of contracting out of the state tier – the pensions minister said he did not believe those companies still operating DB funds would see it as an opportunity to end the provision.
Giving evidence to the parliamentary select committee on work & pensions, Webb also insisted that the override, criticised as "unnecessary" by the TUC in a previous session, could not be used as a "backdoor" way of amending benefits any further than the increased NI costs. The Liberal Democrat insisted those companies still offering DB pensions viewed it as important for employee retention and dismissed criticism that ending contracting out would act as a "nail in the coffin" of DB provision. "So, whilst they could use the opportunity of the end of contracting out to get rid of that type of pension scheme altogether, and some may choose to do so, frankly, the 'nail in the coffin' analogy – this coffin has got enough nails in it already", he said. "So if they are still going now, this will have some effect, but I don't see it being seismic."
He said he viewed proposed changes to the IORP Directive as a much larger threat. "Solvency II would be a pretty big, fat nail, which hopefully we can see off", he said.
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