Asked by Lord McKenzie of Luton To ask Her Majesty’s
Government when they intend to review the Pension Protection Fund
and the powers of the pension regulator, as set out in their 2017
manifesto. The Parliamentary Under-Secretary of State,
Department for Work and Pensions (Baroness Buscombe) (Con) My
Lords, the Government are determined...Request free trial
Asked by
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The Parliamentary Under-Secretary of State, Department for
Work and Pensions (Baroness Buscombe) (Con)
My Lords, the Government are determined to ensure that the
entitlements of occupational pension scheme members are
protected from the actions of unscrupulous employers. We
published the Green Paper, Security and Sustainability in
Defined Benefit Pension Schemes, in February this year, and
consulted on changes to pension protection legislation,
including those set out in the manifesto. I am pleased to
tell noble Lords that the Department for Work and Pensions
is today announcing plans to launch a White Paper on the
future of defined benefit final salary pension schemes in
the near future.
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(Lab)
My Lords, I thank the Minister for that reply. We agree
with the importance of sustaining confidence in the pension
system, particularly DB schemes, and ensuring that the
pension promises of employers are honoured. We look forward
to seeing the White Paper in due course, whenever that
might be. But, given the experience of U-turns on the
triple lock and the lack of reference to the issue in the
Queen’s Speech, we are entitled to check the status of what
was promised to the electorate, especially as it is branded
as a component of the strong and stable leadership and said
to be protection from “irresponsible bosses”—not usual Tory
language, but we know who they mean. Can the Minister
confirm that it is government policy—which would have our
support—to introduce for the Pensions Regulator a
notification scheme for certain mergers and acquisitions;
powers to block certain takeovers; punitive fines for those
wilfully under-resourcing schemes; and powers to restrict
dividends of irresponsible employers? Can she also say what
changes the Government consider necessary to the powers of
a pension protection fund?
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My Lords, as the noble Lord will know, the Green Paper
covered four key areas: funding and investment, employer
contributions and affordability, member protection, and
consolidation of schemes. It looked to examine and build on
the discussion already taking place on what, if anything,
should be done to ensure that the system remains
sustainable while ensuring that members’ benefits are
protected. It is really important to say that issues such
as powers to block certain mergers and acquisitions should
be thought through extremely carefully, not least because
we want to ensure that any changes to the powers of the
regulator do not trigger unintended consequences and act as
an impediment to business and growth.
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(Con)
My Lords, my noble friend talked of the “near future”—is
that soon, or shortly?
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That will be shortly.
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(Lab)
My Lords, will the Minister join me in welcoming the
decision of the Supreme Court yesterday, which will enable
lesbian and gay couples to have the same pension rights as
heterosexual couples?
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I of course respect the decision of the Supreme Court—
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Noble Lords
Oh!
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I want to be absolutely straightforward about this with noble
Lords. We are reviewing the implications of the judgment in
detail and will respond appropriately in due course. The
Government affirm their commitment to same-sex marriage and
are proud of the achievement of the coalition Government,
which delivered the 2013 legislation. The Government are
committed to equality, and that is why legislation was
introduced whereby pensions are built up equally for all
legal partnerships.
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(Con)
My Lords, the main problem for defined benefit schemes is the
rate of interest at which accounting standards require them
to discount their future liabilities. This gives rise to
arithmetic which shows a substantial deficit that is not
likely to happen. I believe that a White Paper is coming, but
can the Government get a move on and address this issue? It
is causing problems where they do not really exist.
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I entirely accept what my noble friend has proposed; I am
very much hoping that this will be part of the many issues
covered in the White Paper.
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(LD)
Surprisingly, the section of the Conservative manifesto on
protecting private pensions did not mention ’s policy of enabling
people to cash in their pensions, which was introduced
without very much consultation. Today’s FT says that this
change is not,
“a palpable fiasco, but the early signs do not look
promising”.
So what are the Government doing to protect people from being
duped—or was this simply a short-term measure to raise tax
revenue?
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My Lords, I too read the article in the Financial Times this
morning. The truth is that these pension freedoms are proving
very popular. However, they raise important issues around the
operation of the market and how we support consumers, so we
will be working with the Financial Conduct Authority on the
next steps to address this issue.
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(Lab)
My Lords, the mention by my noble friend Lord McKenzie of
irresponsible employers reminded me of Sir Philip Green. Can
the Minister bring us up to date on the position of the BHS
pensioners and what the Government are doing to help them?
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My Lords, the financial settlement regarding BHS is valued in
total at £363 million, and £343 million has already been
placed in a fully independent escrow account to fund a new
scheme. The settlement with Sir Philip Green for the British
Home Stores scheme is the largest of its kind the Pensions
Regulator has reached to date. Indeed, in total, the Pensions
Regulator has secured more than £1 billion for pension
schemes through the use of settlement in avoidance cases.
Existing members of the scheme now have three options:
transfer to the proposed new pension scheme, opt for a lump
sum payment, if eligible, or remain in their current scheme,
which is expected eventually to transfer to the Pension
Protection Fund. However, the new scheme will be a fully
independent trust with independent governance and trustees.
Neither Sir Philip Green nor the Arcadia Group will be
involved in the management of the scheme. In the highly
unlikely event that the new scheme fails, members can rely on
the Pension Protection Fund.
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(Con)
My Lords, would my noble friend care to agree with me that
the Pension Protection Fund is performing a vital function
very well? Its investment policies and levy management have
achieved a significant funding surplus and tens of thousands
of workers are receiving most of their promised pensions,
whereas in the pre-PPF days, they would have lost the entire
amount.
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I thank my noble friend very much for her question. She is
completely right. With regard to the British Home Stores
financial settlement, the lump sum payment option will be
available to members with small pots of up to £18,000 in
value. Those who choose not to take a lump sum and opt to
transfer to the new scheme will be entitled to the same
benefit structure as all other members. The new scheme will
also be eligible for the Pension Protection Fund.
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