HC Deb 23 April 1991 vol 189 cc962-7

' .— (1) Subject to subsection (2) below, this section applies to—

  1. (a) any person transferred by virtue of the transfer under section 19(6) above from the employment of the Port Authority to that of the company who—
    1. (i) immediately before the date of the transfer was a member of the Port of London Authority Pension Fund ("the Fund"); and
    2. (ii)ceased to be such a member by virtue of the transfer; and
  2. (b) any person who, after that date, acquires pension rights under any pension scheme provided or amended in pursuance of any provision made in accordance with the following provisions of this section by the scheme under section 19 above (a "relevant pension scheme") by reason of the death of a person within paragraph (a) above;
but only, in the case of any person within paragraph (b) above, as respects the pension rights by virtue of which he falls within that paragraph.

(2) Any person to whom this section applies may elect in such manner as may be prescribed that this section shall cease to apply to him; and if any person within subsection (1)(a) above—

  1. (a) ceases to be in continuous employment; or
  2. (b) voluntarily withdraws from a relevant pension scheme;
otherwise than in such circumstances as may be prescribed, this section shall cease to apply to him except as respects pension rights which have accrued to him before that time.

(3) The required provision for the protection of pension rights mentioned in section 20(1A) above is provision for the purpose of securing that—

  1. (a) no person within subsection (1)(a) above is placed in any worse position by reason of—
    1. (i) ceasing to be a member of the Fund by virtue of the transfer of employment mentioned in subsection (1)(a); or
    2. (ii) being prevented from continuing to participate in or acquire pension rights under a relevant pension scheme by any subsequent change of employer which does not affect his continuity of employment;
  2. (b) no person to whom this section applies is placed in any worse position by reason of—
    1. (i) any winding up, in whole or in part, of a relevant pension scheme; or
    2. (ii) any amendment of a relevant pension scheme which results in benefits under that scheme being reduced or contributions by employees being increased.

(4) The references in subsection (3) above to any worse position shall be construed, in relation to a person within subsection (1)(a) above, as references to a position which is any worse than his position immediately before he ceases to be a member of the Fund.

(5) Provision made by virtue of subsection (3) above may impose duties (whether as to the provision or amendment of pension schemes, the purchase of annuities, the making of payments or otherwise) on persons, other than the Port Authority, who are or have been employers of persons within subsection (1)(a) above.

(6) Duties imposed on any person by any such provision may include duties owed to persons of whom he is not and has not been an employer.

(7) The scheme under section 19 above may also provide for any dispute arising under any such provision to be referred to arbitration.

(8) So much of Schedule 13 to the Employment Protection (Consolidation) Act 1978 as has effect for the purpose of ascertaining whether any employment is continuous shall apply for the purposes of subsections (2) and (3) above as if those subsections were contained in that Act.

(9) In this section— employer", in relation to a person employed by a company which is a wholly-owned subsidiary of another company, includes that other company; pension", in relation to any person, means a pension of any kind payable to or in respect of him, and includes a lump sum, allowance or gratuity so payable and a return of contributions, with or without interest or any other addition; pension rights", in relation to any person, includes—

  1. (a) all forms of right to or eligibility for the present or future payment of a pension to or in respect of him; and
  2. (b) any expectation of the accruer of a pension to or in respect of him;
and includes a right of allocation in respect of the present or future payment of a pension; pension scheme" means any scheme for providing pensions to or in respect of any persons; the Port of London Authority Pension Fund" refers to the Port of London Authority Pension Fund established under section 5 of the Port of London Act 1928; and prescribed" means prescribed by the scheme under section 19 above.'.—[Mr. McLoughlin.]

Brought up, and read the First time.

Mr. McLoughlin

I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Miss Betty Boothroyd): With this it will be convenient to take the following

Amendment No. 49, in clause 19, page 16, line 12, at end insert— '(5A) The scheme shall contain provisions for the setting up of a mirror-image pension scheme identical in all ways to any scheme operated by or funded in whole or in part by that authority. The Secretary of State shall provide for the funding of this scheme equivalent to the amount held in respect of each member's accrued pension benefits, allowing for expected future pay increases. Bulk transfers without consent should be conditional upon the Actuary to the transferring scheme supplying a certificate of broad equivalence. Pensionable service shall be regarded as not having terminated in any change of scheme.'. Government amendment No. 4.

7.15 pm
Mr. McLoughlin

The purpose of new clause 1 is to require the transfer scheme under clause 19 to include provision for the protection of pension rights of members of the Port of London Authority pension fund who are transferred from the employment of the PLA to that of the new company and who cease to be members of the fund by virtue of the transfer. That point caused anxiety among all members of the Committee. I hope to explain to the House how the Government intend to tackle it.

The protection of such pension rights was an important point and it was raised often in Committee. It was mentioned by my hon. Friend the Member for Thurrock (Mr. Janman). In Committee I said that it was the intention of the PLA that benefits available to employees joining the new company would be no less favourable than those under the PLA pension fund, and that the Government intended to give statutory effect to that. New clause 1 and amendment No. 4 have been tabled to implement the undertaking that I made to the Committee.

I said to the Committee that the detailed provision was likely to be more suitable for inclusion in the scheme of transfer under clause 19 than in the Bill itself, and this has turned out to be so. The details will therefore go into the scheme, and the purpose of these is to require the scheme to include such provision.

The House will appreciate that the provisions of the new clause are complex. In essence, they establish a category of protected persons and they require that such protected persons are not placed in a worse position through ceasing to be members of the PLA pension fund or for other specified reasons, such as the winding up or amendment of a pension scheme provided by the successor company.

The persons to be covered by these provisions are transferred employees who are contributing members of the PLA pension fund immediately before transfer day and certain dependants of such employees. Transferred employees will retain their protection so long as they are "continuously employed", as defined in the clause.

The scheme under clause 19 will require the employer of the protected persons to ensure that such persons will continue to enjoy pension rights that are no worse than they would have been if they had continued to be members of the PLA pension fund as it was before the transfer date. The clause also enables any dispute in respect of the protective provision to be referred to arbitration.

I have given only a summary of new clause 1, but I hope that the House will recognise from the details of the new clause that we have been concerned to make full provision for the protection of the people concerned.

Amendment No. 4 is a paving amendment for the new clause. It amends clause 20, which provides for the supplementary provision that may be included in a scheme under clause 10. Amendment No. 4 inserts into clause 20 a requirement for the scheme to include the provision for protection of pension rights described in subsection (3) of new clause 1.

Amendment No. 49, tabled by Opposition Members, has basically very similar objectives to those in the amendments which my right hon. and learned Friend the Secretary of State has tabled. I am told that some of the phraseology used would be difficult to interpret. It also seems to require the Secretary of State to fund a pension scheme to be available to the transferred employees and this would be quite unacceptable. I hope, therefore, that Opposition Members will withdraw their amendment and that the House will accept the amendments that I have described. They should go a long way to allaying the fears of the employees to be transferred from the PLA.

Ms. Walley

We are pleased that the Minister has introduced proposals to deal with pensions. He was right to say that the interview caused great anxiety in Committee, certainly among Opposition Members. We pressed the Government on the matter at great length. The Minister referred to the hon. Member for Thurrock (Mr. Janman). I do not see the hon. Gentleman in the Chamber. I wonder where he is.

Mr. McLoughlin

I hope that the hon. Lady will not press the non-attendance of my hon. Friend. He is serving on a Select Committee, so he cannot be here this afternoon.

Ms. Walley

I am grateful for that explanation. I was referring to the debates and disagreements in Committee. I should have expected the hon. Gentleman to be here, but we have had an explanation from the Minister of his whereabouts.

We had a commitment from the Minister that the Government would return with the mechanics of introducing detailed proposals to enshrine the pension rights of the workers in the legislation. We are pleased that the pressure that we applied has borne fruit and that the Government have addressed the issue. Previously the Bill ignored it.

The Minister referred to our amendment, which sets out the principles of a pension scheme that will in no way undermine the rights of the Tilbury workers and those remaining with the Port of London Authority. The Minister promised to state in the Bill that the same benefits would be available from the new company. I want to press him further. I want from him an absolute assurance that the Government's amendments, technical and complicated as they are, will satisfy the concerns of the port of London work force.

We debated the matter at length in Committee, when we echoed the concerns of the Transport and General Workers Union and of the prospective candidate for Thurrock, Andrew MacKinley, whom I am pleased to see in the Strangers Gallery.

Madam Deputy Speaker

Order. As the hon. Lady knows, under our procedures we do not refer to people outside the Chamber.

Ms. Walley

I am grateful for that advice, Madam Deputy Speaker.

I was interested to hear the Minister say that the amendments which he has tabled would mean that the employees would not have worse conditions at the date of the sale. One point which we should address is that employees who are covered by the Port of London authority pension scheme can look forward to index-linked benefits, because that is a healthy fund, with large investments.

I appreciate that we are dealing with a complicated and technical issue and that what the port of London pension fund can and cannot do is enshrined in legislation. However, I want to press upon the Minister concerns that have been brought to my attention by people employed by the Port of London authority. I quote directly from a letter: It is therefore most imperative that, if it is not possible to remain within their own fund, then Government statutes should provide that whatever future pension changes that are imposed on us, they will not diminish in real terms the members' final settlements. The pension benefits of some 400 workers may not seem an important issue in direct comparison with the other matters with which we are concerned in the Bill, but pensions will clearly be crucial when those workers reach retirement age. It is up to the House to protect their interests fully. I do not know whether the Minister will address the matter in more detail, but we do not want people to be worse off as a result of the Government's proposals. We need further clarification from the Minister.

Mr. Loyden

I support fully what my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) has said. Many of us have been concerned in the past about pensions when employees have been transferred from one company to another. In many cases the workers find themselves worse off. I hope that the Minister will take into account the principle that those covered by the pension scheme at present will be no worse off and will gain any advantages that accrue from index linking in future. My hon. Friend has made the case, and I hope that the Minister will respond positively.

Mr. McLoughlin

I do not think that it was fair of the hon. Member for Stoke-on-Trent, North (Ms. Walley) to maintain that the point was ignored earlier. As I said in Committee, the Government always intended to address the point that Tilbury was different from all the other trust ports in that it was being split from the Port of London authority. The problem did not arise from the other trust ports, where there was a straight transfer.

For the hon. Lady to say that the matter was ignored was to over-egg the importance of the Opposition's case. We always accepted that it would be an important part of the Bill. Certainly I would not say that it was not important for the House to spend time on the pensions of 400 people. It is exceptionally important and vital for those people that we get the clause right.

That is why the Bill will provide that the scheme proposed for the privatisation will ensure that those people are treated in the same way as those who are in the PLA scheme. It is impossible for them to remain in that scheme, because they will cease to be employees of the port of London. I do not think that anybody should be under any misapprehension that we intend to make sure that they get equal treatment to those who remain in the scheme.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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