§ Mrs. Gorman
To ask the Secretary of State for Social Security when he expects to bring forward proposals to use the powers contained in the Social Security Act 1990 to restrict self-investment by pension funds.
Level at which housing benefit ceases Level at which community charge benefit ceases Gross earnings £ per week Total net income £ per week Gross earnings £ per week Total net income £ per week Single householder 87 77.02 76 74.64 Married couple 118 107.49 146 123.05 Married couple with two children aged 4 and 6 105 147.89 169 158.05 Lone parent with one child aged 3 91 131.76 62 128.37
§ Mr. Newton
Because of the possible double jeopardy to job and pension that can be caused by a pension scheme investing in a related employer, broad powers were taken in the Social Security Act 1990 to restrict the practice. Messrs. Ernst and Young were asked to report on the overall extent of self-investment and any implications there might be in imposing restrictions. A copy of their report, "Study of Self Investment by Pension Fund", is being published and I have arranged for a copy to be placed in the Library.
Draft regulations have been referred for consideration by the Occupational Pensions Board. We propose that the overall proportion of a scheme's resources that may be self-invested should be limited to 5 per cent. Schemes that are currently above the limit will be required to take steps to reduce their level of self-investment, but only in respect of certain types of investments. A period of two years will be allowed for loans and equities listed on the stock exchange, and five years for equities traded on the unlisted securities market.
Most small self-administered schemes and individual insured schemes will be exempted from the regulations where written agreement by all the members is provided to each act of self-investment. Where schemes currently have holdings of property or equity in private companies, they will not be required to take action to disinvest. In such circumstances no further self-investment may be made.