The current pandemic-led economic crisis, coupled with the fact that some of the biggest defined benefit schemes are sponsored by quasi-governmental institutions, has led to suggestions that the UK government should nationalise these pension funds.

Despite being considered a “radical idea” that would need legislation to be put forward, several pension specialists can see the benefits of the government taking ownership of pension funds such as the Railways Pension Scheme or the Universities Superannuation Scheme.

Rosalind Connor, partner at Arc Pensions Law, noted that this is an interesting idea but it would lead to some scheme sponsors feeling they have been missed out.

She further commented:

“Obviously, there are political arguments about why the government should take some responsibility for certain schemes, but that will lead other schemes to ask why they aren’t being covered,” she said.

“These very big schemes are relying on a large number of employers, but there are other schemes that may not be so big but where one employer is covering a lot of liability — or even a lot compared with the size of the business — who might feel they should be looked at as well.”

Read Rosalind’s comments in Pensions Expert.