Speaking ahead of the final Pension Schemes Bill session in the House of Commons next week, Altmann said changes “could make or break” private pensions.

The government and regulators have “chosen to remove important amendments passed by cross-party peers” Altmann said, which were “considered crucial to helping defined benefit (DB) schemes to remain open”.

“The Lords debates highlighted concerns from many open schemes that the new funding code, recently consulted on by The Pensions Regulator, poses an existential threat to open schemes; 8% of private sector schemes are still open to ongoing pension accruals but trustees of these remaining schemes fear they will be unable to continue if MPs do not vote for amendments to ensure open schemes are still able to invest in higher expected return assets that can help the economy too,” she said.

Private pension schemes could boost growth directly but are buying “unproductive low-return gilts” in an effort to ‘reduce risk’, Altmann added. “In recent years, employers have ploughed billions of pounds into their pension schemes, continually trying to repair deficits and reduce their balance sheet pension risk,” she noted.

“However, in their efforts to ‘reduce risk’ the regulators have decided all private sector schemes, but not those in the public sector, should buy more bonds and gilts, rather than investing directly in assets that directly increase economic growth.”

While this may reduce risk, Altmann argued the method also reduces expected returns, leaving the schemes less chance of paying pensions. Almost three quarters (70%) of private funds are now in long-term bonds, of which three quarters are UK gilts. “As quantitative easing (QE) increases, this undermines pensions further,” Altmann said.

“Forcing pension schemes away from assets with higher expected returns seems like reckless conservatism and is a waste of resources. Sponsors should be investing in their businesses not in gilts.”

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