Oversea Superannuation Bill (Hansard, 19 April 1991)

§ Lord Reay
My Lords. I beg to move that this Bill be now read a second time.
Noble Lords may be unaware that the Overseas Development Administration, which is responsible for the implementation of Her Majesty's Government's aid programme, also has an important responsibility for pensions. The ODA is custodian of the pension rights of many thousands of officers and their dependants who served in the former colonies and in the Asian sub-continent. Those men and women were the predecessors of the technical assistance officers whom the ODA now appoints to the service of overseas governments.
Certain research and scientific officers who worked in the colonies under the auspices of the Colonial Secretary were not employed on the permanent establishments of the territories and did not, therefore, benefit from colonial government pension schemes. The Oversea Superannuation Scheme (OSS) was set up in 1951, under its original name the Colonial Superannuation Scheme, to cater for those officers. The OSS has always been a small scheme. It was closed to new members as long ago as 1961. There are no active contributors and it now has 151 pensioners. Administrative costs at about £25,000 continue to constitute a substantial burden on the fund's finances at roughly 25 per cent. of the pension bill. In finalisation of its wider policy on colonial pension funds, ODA is proposing to convert the fund to a pay-as-you-go system.
Under this arrangement the assets of the fund are made over to the Exchequer, in exchange for an undertaking to pay the pensions out of current revenue. The proposal has been approved by the OSS Advisory Board and all the scheme's members have been consulted. All members of the scheme will benefit from having their pension guaranteed by the Exchequer. It will remove the element of risk inherent in all pension funds. In order to proceed with eventual conversion to the pay-as-you-go system, ODA needs to bring the OSS within the scope of the Overseas Pensions Act 1973. The OSS is now the only fund under ODA jurisdiction which does not fall within the remit of that Act. The Bill, when it becomes law, will remove that anomaly. Conversion will be cost-neutral for the Exchequer and there are no manpower implications for the public service. This is an enabling, 1703 tidying-up Bill designed to rationalise the status of this colonial pension fund. I hope your Lordships will give it your support.
Moved, That the Bill be now read a second time.—[Lord Reay.]

§ Baroness Ewart-Biggs
My Lords, we are grateful to the Minister, who has made a clear exposition of this small but nevertheless very sensible adjustment which is contained in the Bill. It seems perfectly acceptable to us on these Benches to bring the Oversea Superannuation Scheme within the scope of the Overseas Pensions Act 1973, thereby giving the Overseas Development Administration authority, I suppose one can say, to de-fund the scheme. As the Minister has said, that would convert the scheme into a pay-as-you-go system. This is a wise change, as the Minister said, to remedy an anomaly which still exists.
Perhaps the Minister will answer one question. What arrangements will be made for the Hong Kong Civil Service officers when the transfer of sovereignty takes place, or has a decision not yet been taken in that regard? We very much commend this Bill from these Benches.

§ Lord Reay
My Lords, I am grateful to the noble Baroness for the support which she has given to the Bill. She asked me about Hong Kong. No decision has yet been taken on the arrangements to be made for Her Majesty's Overseas Civil Service officers following the transfer of sovereignty. We hope to encourage as many HMOCS officers as possible to stay in Hong Kong after 1997. Various options are being discussed with the Hong Kong Government.
This is a short Bill. It will bring the Oversea Superannuation Scheme, as I have said, within the scope of the Overseas Pensions Act 1973. Some of the scheme's 151 beneficiaries stand to make small gains and none stands to lose anything from the change. Administrative savings in excess of £20,000 a year in management costs will result once it is converted to a pay-as-you-go arrangement. These are not vast benefits, but they are nonetheless benefits. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.