Teachers' Pensions (Hansard, 1 November 1995)

§ Mr. Robin Squire

I announced on 7 June 1995 that we were inviting expressions of interest for a contract to administer the teachers' superannuation scheme. In the light of the expressions of interest that we received, my right hon. Friend the Secretary of State is satisfied that we should proceed to the next stage and invite some of the companies concerned to tender for a contract. Inviting tenders will give the companies the opportunity to show whether they could administer the scheme at lower cost and to the required standard. The taxpayer is entitled to the best possible value for money in the administration of the scheme.

We are inviting six companies to tender: Abbey National Benefit Consultants Ltd., Capita Group Plc, Colonial Mutual Group (UK Holdings) Ltd., CSL Group Ltd., Hartshead Solway Ltd. and ITnet Ltd.

All six have declared that they would: intend to seek a fee for administering the scheme that was lower than the expected cost of keeping the administration of the scheme in the public sector; and agree in any contract to provide a standard of service and performance that was at least as high as that which the Teachers' Pensions Agency would provide.

We shall let a contract only if it would be better value for money than keeping the administration of the scheme in the public sector. We remain absolutely committed to ensuring that the scheme continues to operate smoothly and without interruption. We continue to expect that any contract would start in the latter part of 1996.

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We are advised that staff of the Department for Eduction and Employment who transferred to a contractor would be covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981. All six companies say that they would intend to keep the core administration of the scheme at its current location in Darlington. All six see possibilities for introducing new business.

We shall lay a draft order under section 69 of the Deregulation and Contracting Out Act 1994 at the start of the coming Parliamentary Session. It will be subject to affirmative resolution in both Houses. Once approved, it will allow my right hon. Friend to authorise a contractor to administer the scheme.

I reaffirm that a contractor would not be allowed to use data on teachers for purposes other than administering the scheme. All the companies have declared that they would keep data concerning members of the scheme confidential.

I also reaffirm that any contract would concern only the administration of the scheme. Whether or not we let a contract, the scheme itself will stay in the public sector, on its current statutory basis.

Letting a contract would not affect the size of safety of teachers' pensions. The scheme has no real pension fund. Instead payments are made to and from the Exchequer; and the Exchequer guarantees, in effect, the payments to which retired teachers are entitled under the regulations that govern the scheme.

We shall shortly invite representatives of teachers and their employers to comment on a draft statement of the service that any contactor would have to provide in administering the scheme. Similar invitations will go to the staff of the TPA itself and to the six companies that we are inviting to tender. We shall take careful account of all the comments that we receive before finalising the statement.