§ Mr. McWalterTo ask the Secretary of State for Work and Pensions what help he can offer pensioners who have lost money because the occupational schemes of their insolvent employers have been administered under the Pensions Act 1995 since 6 April 1997. [142110]
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions (1) what the Government's policy is on establishing a compensation fund for payments backdated to 1997 to pension scheme members who would be entitled to final salary pensions where the scheme(a) has been wound up and (b) is being wound up where there are insufficient assets fully to meet the scheme pension liabilities; [142378]
(2) what proposals the Government have to make the proposed Pension Protection Fund retrospective from the introduction of the Pensions Act 1995. [142382]
§ Malcolm WicksThe Government have great sympathy for the pension scheme members who have suffered pension losses due to their insolvent company's scheme winding up underfunded. These cases have highlighted the need for urgent action so that their situation can be avoided in the future. This is why we are amending the priority order, introducing the Pension Protection Fund and strengthening the employer debt by introducing the full buy out provision.
When the introduction of the Pension Protection Fund (PPF) was announced on 11 June 2003, Official Report, column 683, my right hon. Friend the Secretary of State stated that it would be introduced as soon as parliamentary time allows, and that it would apply to the future, not retrospectively.
Ministers have been meeting those affected by pension losses in order to understand their plight and to listen to suggestions regarding assistance ahead of the PPF's introduction. However, to provide help for those 470W who have already lost out would raise a number of complex and difficult issues, and, as a result, Ministers have emphasised that they do not want to raise false hope in this area.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions (1) what the Government's policy is in relation to the protection of pension rights on employer insolvency under Article 8 of the EU Insolvency Directive of 1980; [142373]
(2) if he will make a statement on how the Government has complied with Article 8 of the EU Insolvency Directive of 1980. [142374]
§ Malcolm WicksOur policy in relation to Article 8 of the EU Insolvency Directive of 1980, is to safeguard certain contributions that members pay into occupational pension schemes.
We meet our obligations under Article 8 of the Insolvency Directive, as successive Governments have done since it was adopted in 1980. Under the Employment Rights Act 1996 and the Pensions Scheme Act 1993, the Redundancy Payments Directorate, on behalf of the Secretary of State for Trade and Industry, makes insolvency payments from the National Insurance Fund (NIF) to qualifying former employees. The amounts payable from the NIF are subject to statutory upper limits. In addition, the Pensions Act 1995 requires salary-related schemes to meet the Minimum Funding Requirement (MFR), and provides for a statutory priority order for the distribution of a scheme's assets if a scheme, that is required to meet the MFR, winds up.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions (1) what the Government's estimate is of the number of final salary pension funds that(a) have been wound up and (b) are being wound up since the introduction of the Pensions Act 1995; and how many of those employers were (i) solvent and (ii) insolvent at the time of winding-up; [142375]
(2)what estimate the Government has made of the total value of pensions lost since 1997 as a consequence of final salary pension schemes that (a) have been wound up and (b) are being wound up by (i) solvent and (ii) insolvent employers; [142376]
(3)if he will list by (a) region and (b) constituency final salary pension schemes which (i) have been wound up and (ii) are being wound up by (A) a solvent and (B) an insolvent employer in each year since 1997. [142377]
§ Malcolm WicksThe Pensions Schemes Registry (PSR), administered by the Occupational Pension Schemes Regulatory Authority (OPRA), holds information on the number of final salary schemes which are currently in the winding-up process and the number of schemes which have entered and completed winding-up. The registry database is, however, limited in a number of ways as described in the footnote. Consequently, it does not provide all the information requested, though it nevertheless remains the most comprehensive source of information available on the aggregate number of pension schemes in the UK.
According to the PSR's most recent data, around 1,400 private sector final salary schemes were in the winding-up process at the beginning of September, and 471W around 4,800 private sector final salary schemes have completed winding-up. The data does not permit any further analysis on whether these schemes have commenced/completed winding-up prior to 1997 or 1995.
It is not possible to split the above by whether they are connected to a solvent or insolvent employer. No alternative data source exists to provide this information. Also, the information collected does not facilitate analysis by region or constituency. As regards estimating the value of pensions lost (due to winding-up), this is also fraught with numerous difficulties. The extent of loss depends on many different factors—such as the maturity of the scheme (that is, the age profile and retirement status of members), and the funding position before starting winding-up. The latter in turn is highly sensitive to investment decisions and conditions in the financial markets. With no information to draw on at an aggregate level, we are unable to comment on the extent of scheme under-funding and losses arising from wind up. The PSR, as mentioned, was not designed originally for the purposes of such analysis, and therefore does not provide information on scheme funding positions and costs.
Note:The Pension Schemes Registry (PSR) is not designed or intended to provide a comprehensive or continuous statistical record of the status of schemes. The PSR registers schemes for tracing purposes and collects the levy from pension schemes, including those in the process of winding-up. New scheme data are being reported to the PSR on a continuous basis. Therefore, the figures are subject to continuous revision. When a scheme has changed status, the previous status of the scheme is not recorded on the Registry. Schemes have up to 12 months to notify OPRA of any status change.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what estimate the Government has made of the cost of paying compensation backdated to 1997 for pension scheme members who would be entitled to final salary pensions where the scheme is(a) wound up and (b) being wound up and where there were insufficient assets to fully meet the scheme pension liabilities. [142379]
§ Malcolm WicksIt is not possible to provide an estimate of the cost of a compensation arrangement without a range of assumptions, including assumptions about the nature and level of compensation to be provided, the number of people covered and the degree of underfunding in their pension schemes.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what the Government's policy is on the guarantee of members' future pension benefits of existing final salary pension schemes in the period before the introduction of the proposed Pension Protection Fund. [142383]
§ Malcolm WicksThe Pensions Act 1995 makes provision for the payment of compensation to trust-based occupational pension schemes in cases of dishonesty. The compensation scheme should provide some help where the sponsoring employer is insolvent and the value of the scheme assets has been reduced as a result of dishonesty.
There is legislation currently in place that provides that, when a salary-related occupational pension scheme winds up, any deficiency in the pension fund 472W becomes a debt on the employer. The Government have issued draft regulations designed to strengthen this protection. They state that where a scheme is wound up and the sponsoring employer is solvent, the employer should ensure that there are sufficient funds in the scheme to meet the full costs of the rights accrued by scheme members, unless doing so would put the company itself at risk.
The current legislation provides a statutory priority order for distribution of assets on wind-up. We have issued draft regulations on a revised statutory priority order that will ensure that the degree of protection offered will reflect the length of time a member has been contributing to the scheme.
We are planning for both sets of regulations to come into force in early 2004.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what the Government's policy is on protecting the accrued pension rights inherent in the value of money transferred into employer defined benefit occupational pension schemes from other schemes, to prevent loss of these sums as a consequence of employer insolvency. [142385]
§ Malcolm WicksThe current legislation which applies when a defined benefit occupational pension scheme winds up does not differentiate between accrued pension rights that have been transferred into a scheme, and other accrued rights that are already in the scheme. We have no plans to alter this position.
We have announced a package of measures to protect all members of defined benefit occupational pension schemes when their employer becomes insolvent. These include the introduction of the Pension Protection Fund and refinements to the priority order.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what plans the Government have to reduce the time taken to wind up final salary pension schemes. [142386]
§ Malcolm WicksIn April 2002, we introduced legislation to speed up the time taken to wind up pension schemes. Trustees are required to make regular progress reports to the Occupational Pensions Regulatory Authority (Opra). Opra can direct that action is taken by those responsible if it considers that the winding up is being unreasonably delayed. Other people involved in running the scheme are required to tell Opra if there are no trustees so that consideration can be given to appointing a trustee. And trustees can apply to Opra for an order to modify the scheme so that it can be wound up.
In addition, there will be proposals in the recently announced Pensions Bill for the introduction of a more hands-on role for the new Pensions Regulator which will be based on risk analysis. This approach will further facilitate the winding up of schemes and will provide welcome support for trustees.
§ Mr. WoodwardTo ask the Secretary of State for Work and Pensions what comparative studies the Government 473W has carried out to establish how the cost of providing annuities to employer final salary schemes in wind-up can be of best value to scheme members. [142387]
§ Malcolm WicksThe Government have not carried out studies into the use of annuities when a final-salary scheme is in wind-up. When a pension scheme is in wind-up, its trustees seek to discharge the scheme's liabilities, using annuities to secure pensioners' incomes.
Benefit/Scheme Administration Department Passported by Pension Credit
Guarantee Credit
Passported by Pension Credit
Savings Credit alone
Assisted Prison Visits England, Scotland and Wales Home Office Yes No Court Fees Exemption England and Wales Department for Constitutional Affairs Yes No Dental Treatment England, Scotland and Wales Department of Health Yes No Discretionary Grant for the Disabled England Office of the Deputy Prime Minister Yes No Discretionary Grant for the Disabled Wales Welsh Assembly Yes NO Home Energy Efficiency Scheme England Department for Environment Food and Rural Affairs Yes Yes Home Energy Efficiency Scheme Scotland Scottish Executive Yes Yes Home Energy Efficiency Scheme Wales Welsh Assembly Yes Yes Improvement and Repair Grants Scotland Scottish Executive Yes. No Milk Tokens for Pregnant partners England, Scotland and Wales Department of Health Yes No Optical Vouchers and Sight Tests England, Scotland and Wales Department of Health Yes No Seat Belts—no need to pay for medical evidence for exemption England, Scotland and Wales Department for Transport Yes No Legal Aid—Pension Credit Guarantee Credit and Pension Credit Savings Credit will be disregarded in the assessment for financial eligibility for Legal Aid.
People who qualify for a guarantee credit only or who qualify for a guarantee credit and a savings credit will generally get help through Housing Benefit towards all of their eligible rent payments, provided these are reasonable, minus deductions for any non-dependants living with them.
People who receive only the savings credit will not be entitled to full Housing Benefit. Instead, the amount of Housing Benefit they receive will depend upon their income (including their savings credit), their personal circumstances and the amount of their eligible rent. However, the personal allowances used in the Housing Benefit calculation have been enhanced to reflect the maximum savings credit figure. This will ensure that people do not lose the gains from the savings credit in the calculation of their Housing Benefit. This enhancement will apply to all Housing Benefit claimants, aged 65 or over, irrespective of whether they are receiving the maximum savings credit or no savings credit.
Welsh further education tuition fee remission policy is at the discretion of the Further Education College. People in receipt of Pension Credit may (subject to the other criteria) be eligible for a payment from the Social Fund.
People in receipt of Pension Credit have access to the Social Fund subject to the criteria which apply to the different types of Social Fund payment available.