Lister Group (Hansard, 31 March 2003)

§ Mr. McCartney

No consultations have been held with the liquidators of the Lister Group regarding the level of pensions to be paid to scheme members. But we are aware of the difficult situation faced by members of the Lister pension scheme, and I sympathise with their position.

We are concerned about instances when the employer sponsoring a pension scheme becomes insolvent and the pension scheme winds up under-funded. We are aware of the impact this has, and we are determined to protect the long term security of pensioners and other scheme members in occupational pension schemes.

That is why we have consulted on proposals in our Green Paper, 'Simplicity, Security and Choice: Working and Saving for Retirement' (Cm5677), published on 17 December, aimed at improving protection for scheme members on wind up. This includes proposals to share out scheme assets more fairly, introduce a centralised "clearing house" or some form of insurance, remove the restrictions on the amount of compensation payable under the compensation scheme and strengthen protection for members whose solvent employer chooses to wind up its scheme.

The Government want to ensure that when a scheme winds up, the assets are divided among scheme members as fairly as possible. Through the Green Paper we have consulted on:

1. whether people who are approaching retirement age should be given a higher priority when scheme assets are distributed on wind-up, than at present;
2. whether people who have been members of their pension scheme for a number of years should be given a higher priority; or
3. whether there should be a fairer sharing of assets between those with larger and smaller pensions when a scheme winds up, possibly setting a cap on the level of pension that those with the highest pensions might receive, if there are limited assets available in the scheme.

We are considering moving pension schemes up the order of priority for payment, possibly creating a new category of creditor, which would give pension schemes higher priority than at present.

We have sought views on other approaches to dealing with under-funded defined benefit schemes that are wound up because their sponsoring employer becomes insolvent. Possibly: 1. a form of insurance (perhaps a central discontinuance fund) that enables members to be more confident that, if their employer becomes insolvent with an under-funded pension scheme, they will receive the benefits promised; or 601W 2. a centralised arrangement or "clearing house" into which people whose employer became insolvent could pay the funds that they receive on wind-up. The "clearing house" would seek to buy the best available deferred annuity from an insurance company and should be able to negotiate better annuity rates.

Insurance or a centralised "clearing house" might have advantages, providing better protection for scheme members where a company becomes insolvent and is forced to close its under-funded scheme. However, the costs would need to be balanced against the greater overall level of security offered.

A compensation scheme already exists to provide compensation for losses caused by dishonesty where the employer is insolvent. Nonetheless, we are seeking views on removing the restrictions on the amount of compensation payable under the compensation scheme.

Income Support, Jobseeker's Allowance (income-based), Housing Benefit and Council Tax Benefit recipients by family type, May 2001
Thousands
	Income Support/Income-based JSA	Housing Benefit	Council Tax Benefit
Single (no children)	2,932	2,247	2,704
Couple (no children)	394	443	733
Single parent (one child)	475	413	403
Single parent (two children)	324	294	298
Single parent (three or more children)	212	183	187
Couple (one child)	102	98	120
Couple (two children)	92	101	120
Couple (three or more children)	99	96	109
Total benefit units with at least one person receiving benefit	4,629	3,874	4,673
Total number of adults in benefit units where at least one person is receiving benefit	5,316	4,611	5,756
Total number of children in benefit units where at least one person is receiving benefit	2,507	2,278	2,393

Notes:

1. IS/JSA numbers are based on per cent. sample. HB/CTB numbers are based on a 1 per cent. sample and are subject to a degree of sampling variation.

2. Numbers have been rounded to the nearest thousand.

3. Figures relate to benefit units and not households.

4. A benefit unit may be a single person or a couple.

5. Children are defined as children aged under 16 and young persons aged 16 to 18 in full-time education.

6. HB figures exclude extended payment cases.

7. CTB figures exclude Second Adult Rebates.

8. The HB/CTB totals for Great Britain includes estimates for local authorities that have not responded. This estimate is based on historical and regional data. These types of estimates are standard practice in reporting totals where there have been non-respondents.

9. There will be a significant overlap between the figures as most people receive both HB and CTB, and a significant proportion also receive IS or JSA.

10. Single parents are defined as all claimants with dependants and without a partner.

Sources:

1. Housing Benefit (HB) and Council Tax Benefit (CTB) Management Information Annual 1 per cent. sample inquiry, May 2001.

2. Income Support (IS) Quarterly Statistical Enquiry, May 2001.

3. Jobseeker's Allowance (JSA) Quarterly Statistical Enquiry, May 2001.