Pension Funds (Hansard, 2 March 1992)

§ 7. Mr. Corbyn
To ask the Secretary of State for Social Security when he last held a meeting with the Occupational Pensions Board to discuss protection of pension funds.

§ Mr. Newton
I have had a number of informal discussions with the chairman of the Occupational Pensions Board in recent months.

§ Mr. Corbyn
In those discussions, did the Secretary of State draw to the attention of the Occupational Pensions Board the loss of hundreds of millions of pounds of money owned by Maxwell and Mirror Group pensioners? Did he also draw attention to the total inadequacy of control over pension fund investments and procedures? Is he prepared to state clearly now that he will introduce legislation to ensure that the sort of scandal that occurred, which robbed the workers of the Maxwell and Mirror corporations, will not occur again and those workers and others like them will be protected in future?

§ Mr. Newton
The hon. Gentleman is a member of the Select Committee on Social Security, which is examining 5 those matters, and I see that the Committee's Chairman, the hon. Member for Birkenhead (Mr. Field), is sitting in front of the hon. Gentleman. We have seen in the press suggestions about what members of the Committee might say, and we shall consider their proposals with interest. I spent two hours responding to questions put to me by the Select Committee only a fortnight or so ago. I made it absolutely clear that, when we know precisely what happened in that case and can draw the lessons from it, we shall be willing to learn them and take note of the need for future action, if that is shown to be necessary.

§ Mr. Hind
In the light of the serious situation which has arisen in relation to the Maxwell case, will my right hon. Friend take a good look at the pension funds of ABG Research, which is about to be wound up? Hundreds of pensioners in the north and south of England who work for that company are about to lose their pensions, including a 79-year-old widow. Will my right hon. Friend consider the problem to see whether the Government can help?

§ Mr. Newton
I am concerned about the position in which some people find themselves as a result of problems with the funds. That is why, among other matters, I made it clear that, in the appropriate circumstances, we would expect to operate the provisions—through state scheme premiums—to ensure that people at least receive their state earnings-related pension scheme entitlement.

§ Mr. Kirkwood
Although I fully understand why the Secretary of State needs to be cautious about the Maxwell case, will he be more firm on the need for change? His earlier answer suggested that there was some doubt in his mind about whether that was necessary. Is he having any discussions with the Treasury to find ways of getting some compensation for pensioners, who stand to lose millions of pounds?

§ Mr. Newton
I have made the point about the SERPS buy-back provisions and the guarantee involved, but I cannot go beyond that. On the wider issue, it has been made clear, not simply from what I have said but through what I have done over many years—in an earlier ministerial capacity and in my present one—that we are more than willing to take action where it is shown to be necessary, once we are sure that such action would be well-judged. We are some way short of being able to judge precisely what is required, especially as questions have been raised about the regulatory machinery under the Financial Services Act 1986, as well as the arrangements of the Occupational Pensions Board.

§ Mr. Irvine
My right hon. Friend will know that the Serious Fraud Office is conducting investigations into fraud and dishonesty in this sphere. However, there is also the related issue of possible negligence and breach of duty on the part of the supervisory authorities. Will my right hon. Friend give the several hundred Maxwell pensioners in my constituency an assurance that he will scrutinise carefully the role of those supervisory authorities—such as the Occupational Pensions Board—in relation to that subject? If those authorities were negligent or in any way in breach of duty, it is important that that fact should be uncovered at an early stage.

§ Mr. Newton
I can certainly give my hon. Friend an assurance that, were the investigations by the Serious 6 Fraud Office to produce evidence of fraud that would have to be considered by those involved in criminal prosecutions of if there were claims that the Occupational Pensions Board had been negligent or in any other way culpable of failure to carry out its duties as imposed by the law, those matters would be considered with great care.

§ Mr. Frank Field
Does the Secretary of State accept that the answer that he has given on paying the guaranteed minimum pension to the Maxwell pensioners is wholly inadequate? Does he accept that many of the constituents of his hon. Friend the Member for Ipswich (Mr. Irvine) face losing their houses if they do not receive the full pension? Once the facts are established, will the Government be prepared to move beyond carrying out what they are, after all, required to do by law?

§ Mr. Newton
I certainly cannot go beyond what I have said this afternoon and on earlier occasions, including what I have told the hon. Gentleman in the Select Committee, about the guarantee of SERPS rights—to put it in shorthand terms—in respect of the guaranteed minimum pension. As I told the Select Committee—I make no apologies for reminding the hon. Gentleman of it—anything going beyond that would raise huge implications for all kinds of investments.

§ Mr. Dickens
Does my right hon. Friend agree that the Robert Maxwell episode has vividly illustrated to the nation the fact that an unscrupulous director can put his hand in the till and get hold of pension fund money? That being so, many people throughout the nation who are in pension schemes are frightened. Will my right hon. Friend go as far as to say that we definitely intend in the fulness of time to bring in legislation and, I hope, include in the legislation the provision that there should be at least one employee representative among pension fund trustees?

§ Mr. Newton
To take the latter point first, if my hon. Friend looks at many, perhaps all, of the Maxwell pension fund trustee bodies, he will find that they were split 50:50—there was employee representation. I do not think that that would necessarily solve the problem. I cannot go beyond what I have said, except to make it clear once again that if and when it is clear that a further legislative change will materially assist in ensuring that this sort of thing does not happen again, we will be ready to make it. But there is still a great lack of clarity and we are not prepared to pretend that we know the answer, thereby running the risk of causing at least as much damage as we do good.

§ Mr. Meacher
Does the right hon. Gentleman recognise that the banks and the Government have treated Mirror Group Newspapers pensioners extremely shabbily? Will he seek to ensure that the banks hand back the pension fund assets which belong to scheme members and which the banks have no right to keep, given their reckless lending practices? Is not the right hon. Gentleman culpably negligent in that, 20 months after the Social Security Act 1990 became law, he has still not introduced the regulations that would protect pension funds in the event of bankruptcy? Although the right hon. Gentleman has said again—several times today—that he will pay MGN pensioners their guaranteed minimum pension, will he accept that it is a mere pittance, and that if Barlow Clowes group shareholders who knowingly took the risk of 7 speculating offshore can be compensated by the Government, the pensioners in MGN and other pension funds are no less deserving?

§ Mr. Newton
On the latter point, the hon. Gentleman is well aware of what was said at the time of the Barlow Clowes affair, following an investigation by the ombudsman into what was seen to be a unique set of circumstances.
To answer the hon. Gentleman's other points—I hope, not taking too much time over it—the debt-on-wind-up provisions were originally linked, as I think the hon. Gentleman knows, with the wider provisions for limited price indexation. As they involved a great deal of the same work to bring them into effect—work that would have taken a considerable time—and would have imposed further contingent or actual liabilities on funds at a time when there was already considerable anxiety because of the uncertainty over the Barber judgment—

§ Mr. Meacher
The Government dropped limited price indexation.

§ Mr. Newton
We did not. We made it clear that we would give further consideration to it once the Barber judgment was clear, and that is precisely what we are beginning to do.
On the hon. Gentleman's first question, he will understand that I have no power to order banks to take particular actions. However, he will have noted what some banks have said in recent days about their attitude to this matter.