§ Mr. PickthallTo ask the Secretary of State for Work and Pensions (1) what mechanisms he proposes to prevent companies from winding up, closing down and fundamentally changing pension schemes without the approval of members; [43315]
156W(2) if he will amend the accounting rules and minimum funding requirement for company pension schemes with a view to preventing unilateral changes; [43316]
(3) if he will examine incentives and initiatives which might be introduced to support the continuation of final salary schemes; [43317]
(4) if he will introduce legislation to create an obligation on companies to consult fund members and their unions about proposed changes in pension arrangements and to provide full financial information. [43318]
§ Malcolm WicksOccupational pension schemes are provided voluntarily by employers, and they are therefore free to decide whether to continue to provide such pensions in the future. The legislation that is in place is to ensure that the pension rights that individuals have already built up in schemes are protected.
Accounting rules are the responsibility of the Accounting Standards Board which is independent of Government. The Government have already announced proposals to replace the minimum funding requirement (MFR) with a long-term scheme specific funding standard in the context of a regime of transparency and disclosure, with additional measures to strengthen security. This will be taken forward as soon as parliamentary time is available. Meanwhile the Government announced a package of changes on 26 February to improve the way the MFR operates in the period leading up to its replacement, and increase protection for pension scheme members where an employer decides to wind a scheme up voluntarily.
We have asked Alan Pickering and Ron Sandler, in two separate studies to review the regulation and operation of the pensions, and the wider market of savings products, including final salary schemes. Alan Pickering will report, with recommendations for reform, in June and Ron Sandler will also report around that time.
The Government will then set out its proposals, which will build on the reforms put in place since 1998, and on which it will consult, to simplify the regulatory system, to look at how the Government and employers encourage and support pension savings, and to make sure that the most appropriate incentives for savings in retirement are in place.
We have already announced last month an interim package of measures to improve the way the minimum funding requirement works, which will reduce compliance costs for employers with defined benefit pension schemes.