The real questions about company pension freezes
1. Is my company pension (Defined Benefit scheme) going to be frozen?
No, not officially. But many schemes are now refusing discretionary increases (like BP and Shell), even when inflation is high. So while your pension may rise by 3% or 5% as guaranteed, if inflation is 8%, you’re losing out in real terms.
That’s what we mean by a “freeze”.
2. Why aren’t I getting a pension increase if my scheme has a surplus?
Because the new law allows companies to claim that surplus back for themselves (starting 2027). Every pound not given to pensioners can be taken later. So schemes are keeping the surplus high, not sharing the gains.
3. Can they really change the pension rules like that?
Yes. The company Pension Schemes Bill allows trustees to override trust deed protections and insert new rules that let employers take the surplus. It’s legal, and already being planned for in some schemes.
4. Who decides whether a surplus gets shared?
Your scheme’s trustees. But many are employer-appointed, and there’s no legal requirement to consult members.
If you’re abroad and not in touch, you could be left out entirely.
5. Will this affect inflation protection?
That’s very likely. Discretionary increases are being withheld more often. If you have service before 1997 or if your increases are capped, inflation can eat away at your income year after year.
6. What happens if my scheme is bought out by an insurer?
You’ll lose all discretionary increases. Insurers pay what the contract says – no more. And any surplus left after the buy-out? Under the new law, the company gets it.
Next Steps
7. Should I transfer out or retire early?
Possibly – but only after professional advice as these choices carry long-term consequences. Some schemes will tempt members with enhanced transfer offers or early retirement packages to lower liabilities before a buy-out.
8. What can I do now?
- Get a professional’s help
- Make sure your pension contact info is up to date
- Join scheme member groups or forums
- Ask your trustees the right questions
- And don’t assume silence means safety
9. What if I’m not sure what’s happening with my company pension?
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