Introducing tougher measures to deal with companies who put workers’ pension payouts under threat will give employees piece of mind their financial future is secure, Esther McVey said.

The Tatton MP said the vast majority of companies fulfilled their duty to their staff but new rules will come into place for those who neglect their pension responsibility. 

In her role as Work and Pensions Secretary she set out measures to give the Pensions Regulator more powers to get the information they need quickly and introduced tougher penalties including hefty fines and criminal convictions for those who “wilfully or recklessly” put the financial future of employees at risk. 

Ms McVey said: “Our goal is to make sure people have confidence in these schemes by increasing the protections in place and by stopping the irresponsible few. We will not stand for employers evading their responsibilities and relying on the protection that the system offers whilst others who do play by the rules, have to foot the bill.”

The White Paper “Protecting Defined Benefit Pension Schemes” comes in the wake of the BHS and Carillion collapses and follows a wide-ranging consultation with workers, employers and the pensions industry. Other initiatives will support consolidation of DB schemes, making them more efficient and improving Governance.

A Defined Benefit Pension is where the employer promises a specified pension payment, or lump sum, or combination on retirement. It is predetermined by a formula based on earnings, length of service and age, rather than being based on individual investment returns. 

There are more than 10.5 million Defined Benefit Pension scheme members in the UK and most employers are doing the right thing and people will get their pension in full. Employers behaving correctly will not see major changes but everyone will be given clear instructions of what is expected from them.