"This will be a major inquiry considering radical solutions to one of the great problems of this age."
The inquiry comes following ongoing work at BHS and British Steel to resolve difficulties at their pension schemes, both of which are currently in deficit.
In a statement, Frank Field, Chair of the Work and Pensions Committee, said that "we should be under no illusions that British Steel is a special case".
Eleven million people currently have private DB pensions. The government estimates that more than 5,000 of the associated schemes are in deficit to the tune of £805 billion, while the combined surpluses of other schemes is £4bn.
Field said that the government "will be going much, much further to consider defined benefit pension schemes in their entirety".
He added: "The impact on millions of people’s living standards from inter-generational trade-offs of income and wealth are brutal. It's not now simply that children in today's nurseries will be paying for our pensions and healthcare – it may be that – but the pension promises for today's pensioners are being stacked up against the jobs of those people who followed them into the firm.
"This will be a major inquiry considering radical solutions to one of the great problems of this age. The inquiry will consider, amongst other things, radical solutions that could be more easily implemented if real returns on capital rise again.
"The Select Committees' in-depth case study on BHS is illustrating how such schemes are already creaking from rising life expectancy and record low returns on capital. Pension law and regulation must urgently adapt to the issues of the future, rather than the problems of the past."
Tom McPhail, Head of Retirement Policy at Hargreaves Lansdown, commented: “This wider inquiry was almost inevitable, once the committee had started delving into the governance and funding of the BHS scheme. The concurrent issues at British Steel have forced policymakers’ hands. It is no longer possible to turn a blind eye to the yawning reality gap that has opened up between the past promises made by employers through their pension schemes, and the funds available today to make good on those promises.
"This issue affects just about everybody, either directly or indirectly; not just as scheme members, employers, trustees and shareholders, it is also relevant to younger employees in defined contribution pensions. A huge proportion of employers’ pension spending is currently being diverted into these final salary schemes, at the expense of younger workers who typically receive lower pension funding as a consequence. We welcome this inquiry and see it as an opportunity to explore whether aspects of the scheme governance and the Pensions Act 2004 should be revisited.”
