Occupational Pension Rights (Transferability) (Hansard, 21 March 1978)

§ Mr. Orme

Under the contracting-out provisions of the Government's new pension scheme commencing next month, if a Member of a contracted-out occupational scheme changes his employment before State pension age, accrued pension rights corresponding to the additional pension under the State scheme will be not only preserved but also effectively increased in value to reflect the increase in national average earnings up to State pension age.

This is a major advance in statutory provision for preservation or transfer of pension rights. But it applies compulsorily only to that part of the occupational pension accruing from April 1978 onwards which replaces the earnings-related element of the State pension. The Government are anxious to see further progress towards the maintenance of occupational pension rights, whether by transfer of rights between schemes or by enhancement of the value of preserved rights.

492W

My right hon. Friend has today written to the Chairman of the Occupational Pensions Board in the following terms: In the White Paper 'Better Pensions (Cmnd. 5713) which contained the proposals for the new State pension scheme due to start on 6th April, the Government acknowledged the universal transferability of occupational pension rights as a desirable ideal but concluded that the issues were so complex as to require careful study over a period of time. I now make the following reference to the Board under Section 66(1)(b) of the Social Security Act 1973; 'To consider what further steps should be taken to protect the occupational pension rights and expectations of employees who change employment, including the transfer of rights between pension schemes; to review the financial and other implications; and to make recommendations.' This will be a most important study of a subject which has considerable significance for those members of occupational pension schemes who, for various reasons, do not stay in the same job throughout their working lives. I am conscious of the loss of pension rights and expectations which can occur on changing employment before normal pension age and of the beneficial effect which the full preservation or transferability of pension rights may have on the willingness and ability of employees to move from one employer to another. I am aware of the complexity of the question which I am referring to you for advice, and while I am naturally anxious to have your report as soon as possible, I accept that a study lasting two or three years might be necessary in order to give the subject full justice.