Defined Benefit Pension Schemes (Hansard, 9 February 2004)

§ 2. Dr. Vincent Cable (Twickenham) (LD)
What estimate he has made of the number of wind-ups of defined benefit pension schemes in solvent companies in 2003. [153171]

§ The Minister for Pensions (Malcolm Wicks)
The pension schemes registry holds information on the number of final salary schemes that are currently winding up, or which have entered into and completed the winding-up process. It is not, however, designed or intended to provide a comprehensive or continuous statistical record of the status of schemes, and it does not provide information on the solvency position of companies whose schemes are winding up.
According to the registry, in the first half of 2003 approximately 100 of a total of some 15,000 defined benefit pension schemes had started the winding-up process, and approximately 260 such schemes had finished winding up. Owing to schemes having a 12-month notification period, these figures may be subject to change.

§ Dr. Cable
I thank the Minister for that informative reply. Is he aware of the recent warning from the Office of the Pensions Advisory Service that a massive loophole is opening up in the Government's pension protection plans, inasmuch as solvent companies with large deficits in their pension schemes on a minimum funding requirement basis can capitalise on those deficits, and then renege on their debts at the expense of their pensioners? Does he recognise OPAS's warning that there could be what it calls
a flood of solvent wind-ups before April 2005 at members' expense", and how would he plug that loophole?

§ Malcolm Wicks
All our endeavours—including the pensions Bill, which will be published soon—are intended to get security back into social security in old age. We will listen very carefully to any concerns about loopholes, including those expressed by OPAS, in order to ensure that there are not ways in which people can avoid their responsibilities

§ Mr. Frank Field (Birkenhead) (Lab)
In the past four months, when asked when the House will see the pensions Bill, the Minister for Pensions has said—as he said this afternoon—that it will appear "soon". How soon is "soon", and when "soon" arrives will the Bill contain a clause that puts a levy on unclaimed assets, so that people who have already lost most of, if not all, their pension will be compensated at least to some extent?

§ Malcolm Wicks
I like to be consistent, but may I now revise "soon" to "very soon"? My right hon. Friend, who is occasionally a patient man, will not have to wait very much longer. The pensions Bill will be concerned with establishing a new pension protection fund and a new regulator with real teeth, to ensure that when pension promises are made, they are kept.

§ Mr. Michael Weir (Angus) (SNP)
Is the Minister aware of the research of Dr. Ros Altmann, who 1102 calculates that some 40,000 members of pension schemes are affected by these wind-ups, and that some £93 million will be needed to compensate them over many years? If he is not, will he look at that research and think again about compensation for those who have already lost out, because as I understand it the forthcoming Bill will not deal with retrospective claims?

§ Malcolm Wicks
Various matters are on the agenda. We are concerned that solvent companies that seek to wind up their schemes must now guarantee the full buyout of pension rights for members. Secondly, the "pensions (very soon) Bill" will legislate for a pension protection fund to bring future security. Meanwhile, we are looking at the very serious circumstances that existing pensioners and members face in respect of schemes that have gone bankrupt, but it is important to repeat that we cannot provide any false hope in what is a very complex situation.

§ Mr. John McFall (Dumbarton) (Lab/Co-op)
The Minister will know that some companies are using the flight from such schemes to reduce their contributions to employees, and that there is a long-term saving problem in this country. What are the Government doing to ensure that these employers face up to their responsibilities to employees in future?

§ Malcolm Wicks
It is very important that employers are able to offer proper company pension schemes. We have created an employers taskforce to look at this issue. and its purpose is to establish good practice. We are very conscious of the need for many people to save more than they are saving at the moment. Our recent strategy paper on informed choice is designed to introduce measures that will enable people to make better choices. In other ways, too, we are concerned to enable people to save more and to have decent pension schemes.

§ Mr. Nigel Waterson (Eastbourne) (Con)
Has the Minister seen last week's calculation by Mercer that the total deficit in UK occupational pensions is now £330 billion? Does he agree that EU rules requiring companies to make up that deficit may render irrelevant much of the pensions Bill, even before it is published?

§ Malcolm Wicks
I certainly do not recognise the hon. Gentleman's last point. We have consulted on the EU directive, which is very much in line with our own ideas. The pensions Bill will promote the concept of scheme-specific funding, which the industry has widely welcomed. Estimates of pension liabilities vary a great deal. Other estimates suggest that recent increases in world share prices have made the deficit less than it was, but none of us is complacent about the issue.