National Bus Company Pension Trustees Ltd. (Hansard, 27 November 1996)

§ Sir George Young

Following the determination by the pensions ombudsman on a complaint against the trustees of the Bus Employees Superannuation Trust—BEST—one of the pension funds of the former National Bus Company, the NBC pension trustees wrote to me on272W 20 September asking for my proposals for repayment by my Department of the surplus of the fund paid to it in 1990 or, if the Department were not prepared to repay the surplus, for financial resources to enable the trustees to seek its recovery through the courts. The pensions ombudsman had ruled that the trustees should take all practicable steps to obtain the return of the moneys from the pension fund received by the Department of Transport on behalf of the National Bus Company. His determination was, however, directed to the trustees, and makes it clear that he has not carried out an investigation, or made a determination, with respect to the National Bus Company, or to my Department.

I have obtained legal advice on the points raised in the trustees' letter. I have considered carefully the background to the events with which the determination is concerned and the legal advice which I have now obtained. It is clear that those involved in the decisions at the time—the trustees, the National Bus Company and the Government—were satisfied, after taking legal and expert advice and after lengthy consideration of the options available, that the agreement reached in 1986 represented a reasonable and balanced solution to the difficult and contentious problem of how to secure, in advance of the company's privatisation, the accrued pension benefits of NBC employees. The arrangements provided the necessary protection for members' accrued benefits, and involved a Government undertaking that funds would be made available to cover any deficiency in the pension fund at wind-up, in return for a change in the fund's rules which provided for any surplus in the fund to be paid to the NBC. There was no certainty at that time whether the fund would be in deficit or surplus at the date of wind-up.

The amount at issue in this matter is substantial, and payment of such a sum would raise serious accounting issues. My Department has been advised that it has good grounds to put these matters before the courts. The Department's accounting officer would need to show conclusive reasons for making the payment and a determination as to its amount. I have therefore concluded that, if the trustees wish to pursue their claim, they must do so through the courts. If a legal action were commenced by the trustees, both parties could present all relevant evidence and legal arguments and the court could make a definitive ruling which would be binding both on the Department and on the trustees.

I have therefore today written to the NBC Pension Trustees Ltd. to say that, if it is minded to commence a legal action against my Department in the High Court, my Department would be prepared to meet its legal costs, given that it has no resources of its own to pursue litigation. I hope that any litigation could be carried out in as co-operative and speedy a manner as possible. A copy of my letter has been placed in the Library.

Finally, I should make it clear that the pensions ombudsman's determination and my announcement today address only the BEST pension fund which covered the majority of the NBC's employees. Management staff were covered by a separate pension fund, the National Bus pension fund. I understand that the NBPF is the subject of a separate complaint to the pensions ombudman which he is still considering.