§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what plans the Government have to review the policy of unlimited pension contribution holidays in final salary pension schemes. [142381]
§ Malcolm WicksSince pension provision by employers is voluntary, the levels of contributions are a matter for agreement between pension scheme trustees and sponsoring employers.
Under the new scheme-specific funding regime, which is intended to replace the Minimum Funding Requirement, trustees and sponsoring employers will be required to develop and agree, with the scheme actuary's advice, the funding principles for their scheme—including a determination of whether the level of contributions is sufficient to meet a scheme's long-term pension commitments.
The new proposed, simpler tax regime for approved pension schemes (set out in the document "Simplifying the taxation of pensions: increasing choice and flexibility for all" (December 2002)) would abolish the rules requiring approved occupational pension schemes to run off their surplus funds (for example by agreeing contributions holidays) or lose their full tax-exempt status. In addition, the document "Action on Occupational Pensions" announced that pension funds will be able to make payments to employers from an actuarial surplus only where the scheme is funded above a level sufficient to secure full buy-out of scheme liabilities".