§ Mr. Colin ShepherdTo ask the Secretary of State for Social Security what representations he has received about the effect of his proposals concerning the investment of small self-administered pension scheme funds in the company to which they relate; and what response he has made.
§ Mr. NewtonIn the case of pension schemes covering employees, the proposal to restrict to 5 per cent. investment by the scheme in the company to which it relates has been generally well received. It is widely agreed that it must be right to avoid the risk of "double jeopardy" to both jobs and pensions if a company should get into difficulties.
We have however received numerous strong representations that different considerations apply to small self-administered pension schemes (SSAPs), which cater mainly and often exclusively for shareholding directors, who are themselves normally the trustees, and whose investment decisions therefore can only create that double risk for their own jobs and pension prospects rather than those of other people.
We accept the force of this argument, and have therefore decided that the proposed restrictions will not apply to SSAPs in cases where all members are trustees, each member is a "20 per cent director" as defined for Inland Revenue purposes, and trustee decisions require a "nem con" vote.
Restrictions on SSAP's investments for tax purposes will, of course, continue.