Post Office Pension Fund (Hansard, 30 July 1981)

§ Mr. Kenneth Baker

I have sent the following letter to Sir Henry Chilver, the chairman of the Post Office.You wrote to Keith Joseph on 26 January with the Post Office Board recommendation that the present pension fund should be split into two following the creation of British Telecommunications. Your letter also contained other possible solutions for the future of the Fund. Since then, Bryan Stanley of the POEU, has written to Keith reflecting the views of five of the unions involved and Sir Daniel Pettit wrote on behalf of the Trustees. We have also had letters from Kenneth Glynn of SPOE and the pensioners organisations, and either Michael Marshall or I have held meetings with all interested parties so that everyone has been able to explain their views. The whole subject of pensions has also been debated in both Houses of Parliament on a number of occasions during the passage of the BT Act. This is a complex problem, and one that is rightly viewed as one of the most important decisions consequent on the reorganisation of the Post Office. I have been greatly helped in understanding the issues involved by the meetings that I have had with you, the Trustees and the unions. Pensions affect the lives 469W of all who work in the Post Office and British Telecommunications, and the need to safeguard the position of all pensioners and members of the fund is reflected in the BT Act. As you know, section 33(3) requires the Secretary of State to amend any order which would otherwise place any individual in a worse position than he would have been in if the order had not been made. I would very much have preferred to use the powers in the Act to implement a solution which had the consent of all parties but my discussions have shown that is not possible. It is clear to me, as I think to everyone else, that there will be a need to maintain discrete accounts of the pension liabilities and assets relating to the staff and pensioners of each corporation. That will be necessary to meet the requirements of the Inland Revenue. Having given very careful thought to all the arguments that have been advanced I also believe that the unions and management of each corporation should be free to consider pensions and related benefits without being obliged by the pension arrangements themselves to have reference or regard to the other corporation. For these reasons, I think there should be separate pension schemes for BT and the Post Office, each with its own trust deed and separate body of trustees. To my mind, and without prejudice to the nature of the investment arrangements, this implies that there should be scope for the two sets of trustees to adopt different investment policies, should they wish to do so. The Trust Deed for the Post Office will remain substantially unchanged but a new deed will have to be prepared for BT. I need hardly say that I would not, indeed could not, approve any new scheme for BT which did not embody the same level of pensions and other benefits and the same level of funding arrangements as the present Post Office scheme. I would be grateful if you could begin the preparation of such a scheme and the associated trust deed in consultation of course with the unions. This does, of course, leave open the question of the investment arrangements for the two schemes, and in particular whether there should be a common investment organisation and fund. The arguments here seem finely balanced and I have an open mind. In any case I should much prefer the question to be resolved by those most directly involved, that is the trustees, members of the scheme, and the corporations who carry the onus of making good any deficiencies. I hope, therefore, that you can begin consultations with the unions and the present trustees on the investment arrangements for the two schemes. I think it important that the uncertainty about the future investment arrangements should be removed as quickly as possible. I would like to see the period within which the interim measures operate kept to a minimum and the new arrangements in force, if at all possible, within a year from the appointed day. This points to an early decision on the investment arrangements and I would be grateful if you would report the results of your consultations before the end of September. I would be prepared to give effect to any reasonable agreed solution and the Lords amendments to the previous pensions clause were designed to make sure that all likely options are indeed possible. I am copying this letter to the General Secretaries of the unions and to Sir Daniel Pettit, and also to Sir George Jefferson and Ron Dearing.