HC Deb 31 January 1996 vol 270 cc836-7W
Ms Corston

To ask the Secretary of State for Social Security if he will make a statement on the role of the Pensions Act 1995 in preventing employers appropriating or transferring the surpluses from company pension funds. [12606]

Mr. Heald

At present, trustees can approve payments from surplus to employers if they are permitted by scheme rules. The Pensions Act 1995 will no longer allow the trustees of occupational pension schemes to make a payment to the employer from a surplus unless new statutory requirements are met. In future, the following conditions will have to be met, irrespective of the terms of the scheme rules:

  1. (a) the proposals to eliminate the surplus have been approved by the Inland Revenue;
  2. (b) the trustees are satisfied that it is in the interests of the members for the payment to be made;
  3. (c) the scheme must not be winding up;
  4. (d) all pensions must be increased annually in line with inflation up to 5 per cent. for both past and future service;
  5. (e) the employer has agreed that a payment should be made to him;
  6. (f) members must be notified in accordance with prescribed requirements of the intention to make a payment from surplus to the employer.

The Act also provides that if a payment is made to an employer in breach of the statutory requirements, the Occupational Pensions Regulatory Authority may apply to the High Court—the Court of Session in Scotland—for an order to restore the funds to the scheme.

We have announced our intention to bring these requirements into force from April 1997.