§ Mr. David ShawTo ask the Secretary of State for the Environment what arrangements the Government are making to ensure that water authority employees can continue to be members of an index-linked pension scheme.
§ Mr. HowardEach authority is offering a "mirror image scheme", so called because it will offer the same benefits, including full index linking, for the same level of contribution by employees as the local government superannuation scheme. The water authorities are preparing trust deeds for the mirror image schemes, and the Secretary of State will not approve these until he is satisfied that the commitment to match the local government superannuation scheme has been met. The mirror image scheme will be open to employees who stay in the local government superannuation scheme until the transfer date, when the assets, rights and liabilities of water authorities, except for those being vested in the NRA, are vested in their successor companies. As an additional alternative, most water authorities are offering employees new water pension schemes with a different mix of benefits which includes limited index linking; these new water pension schemes will continue to be available after the transfer date.
Employees will be able to choose whether to leave their accrued pension rights in the water authorities superannuation fund, which will in future be administered by the National Rivers Authority, or to transfer accrued rights to the mirror image schemes or the new water pension schemes being set up by the water authorities. The pension rights of existing pensioners, and those who have left or choose to leave their accrued rights in the fund will also be 66W preserved. Clause 160 of the Water Bill would give the Secretary of State a power to pay into the fund and a duty to ensure that the fund can meet its liabilities.
The Government will introduce further regulations under the Superannuation Act 1972 to make index-linked increases a liability of the fund and to make an appropriate distribution of the resources already in the water authorities superannuation fund between that part of the fund which will continue under the management of the NRA, and the pension schemes run by the industry so that these schemes will be funded to meet both basic pension liabilities and those index-linked increase liabilities that have accrued up till the date of transfer of members into those schemes.
The Water research centre, the Water Authorities Association, the Water Industry Training Association, British Water International Ltd., the International Association on Water Pollution Research and Control, and the International Water Supply Association will also be able to participate in these arrangements.