Pensions Bill

My Lords, I have had some doubts about the conditional indexation model in relation to final salary schemes. As noble Lords will remember from previous debates, I have always been very much in favour of final salary schemes, and it is a matter for regret that a number of them have been disappearing. In my opinion, the problem with the conditional indexation model is that it could simply precipitate the flight from existing schemes to conditionally indexed schemes, even when employers have no difficulty in funding their current schemes. There is a fine balance to be struck between encouraging employers to retain DB provision where they would otherwise switch to defined contribution schemes and not incentivising employers to switch to risk sharing where they would otherwise retain their final salary scheme. I understand that the Government are committed to considering regulatory change, as necessary, and I should be happy for that to proceed. However, I am not at all convinced that the effect of adopting the scheme recommended in the amendment would be the retention of final salary schemes where employers were not under any pressure, either financially or in any other way, to switch to DC schemes.