§ Mr. McCrindleasked the Secretary of State for Social Services whether he has yet received the recommendations 165W of the Occupational Pensions Board on further steps to protect the occupational pension rights and expectations of those who change employment; and, if so, what are those recommendations.
§ Mr. Patrick JenkinI received the board's report on 5 May and arrangements are in hand for its publication next month. Very briefly, the board consider that the protection of the pension rights of early leavers should be improved and for pension purposes they should, all other things being equal, be treated no less favourably than those who stay in their pension schemes until they reach pension age. The board favours the removal of any unnecessary barriers to the transfer of pension rights but it concluded that its recommendations should concentrate on preserved benefits. With regard to final salary schemes, which cover most scheme members, the board consider that there is a need for legislation. A majority of the board consider that schemes should be required to increase preserved benefits in line with earnings movements up to a ceiling of 5 per cent. a year, calculated over the whole period of preservation. They also urge that schemes should make such further improvements above this level as their resources permit. A minority of the board consider that the statutory requirement should be for preserved benefits to be increased in line with orders which I make under section 21 of the Social Security Pensions Act 1975 that is in line with national average earnings; but if there had to be a limit on statutory requirements, it should not be less than 8½ per cent. a year. The board also recommends that the proposed revaluation of preserved benefits should be applied to benefits other than those already subject to a statutory revaluation requirement in such a way that early leavers would receive the full benefit of the board's recommendations in addition to the contracting-out requirements.
The report raises complex issues not least about the cost to employers and makes many other recommendations, all of which will have to be studied in detail and weighed carefully. At a time when company profits are under intense pressure, it is not easy to see how the extra costs could be absorbed. I shall be making a further statement in due course, but in the meantime I wish to place on record my appreciation of the board's thorough and expert examination of this difficult subject and of the fact that it has succeeded in producing a comprehensive report within the time scale originally evisaged.