HC Deb 05 July 2004 vol 423 cc537-9
7. John Robertson (Glasgow, Anniesland) (Lab)

What plans he has to protect the pension rights of workers transferred from one employer to another. [1818931

The Minister for Pensions (Malcolm Wicks)

Measures in the Pensions Bill will protect the pension rights of employees where there is a TUPE transfer. No longer will employees who have access to an occupational pension scheme with employer contributions risk losing their benefit when a transfer occurs. Our Bill will ensure a decent level of pension provision by their new employer.

John Robertson

I thank my hon. Friend for his answer. During consideration of the Pensions Bill, he expressed concern that obliging transferee employers to provide pension schemes broadly comparable to existing ones could encourage such employers to pull out of pension provision altogether. On the basis of what advice and evidence does he make that assessment, and does he believe that it constitutes the right balance between giving flexibility to business and providing genuine and worthwhile protection to employees on the transfer of an undertaking?

Malcolm Wicks

We wanted to get the balance right because often it is in the interests of a company and its work force that the work force be transferred to another company. We require the new employer to provide transferred employees with a defined benefit occupational pension, or a defined contribution pension with a matched employee-employer contribution of up to 6 per cent., or a stakeholder pension with a matched contribution of up to 6 per cent. That provides a decent minimum standard for such employees.

Mr. Bill Tynan (Hamilton, South) (Lab)

My hon. Friend will recognise that sometimes employees transfer to inferior schemes. Will he support re-examining compulsion—whereby the employer has to put in 10 per cent. and the employee 5 per cent., for example—to ensure that we create an occupational pension scheme that is fair to all in the event of a transfer?

Malcolm Wicks

We will look at the more general question of a voluntary-versus-compulsory approach when we receive the advice of Adair Turner's Pensions Commission. The Government are committed to a voluntary approach, which has many advantages. However, it is right and proper that the Government—a Labour Government—have for the first time legislated to give private-to-private transferred employees a decent minimum pension standard. As my hon. Friends the Members for Glasgow, Anniesland (John Robertson) and for Hamilton, South (Mr. Tynan) know, in the light of the good service that they have provided on the Pensions Bill Standing Committee, that is what we intend to do.

Kevin Brennan (Cardiff, West) (Lab)

Last week, my hon. Friend publishcd some details on those who have lost their pensions rights through insolvency and who may be entitled to make use of the financial assistance scheme. He said that the scheme's generosity will be affected by a number of factors, including whether there is funding from industry. What progress has been made in persuading industry to contribute to the scheme?

Malcolm Wicks

As the House knows, we have decided that £400 million of public money should be provided for the assistance scheme. That was the right thing for the Government to do because, apart from the justice of the case, we have an interest in restoring confidence in pensions, as does the pensions industry. We have written to a number of organisations and we will soon have meetings. I very much hope that the industry will make its contribution to the assistance scheme.