Pension Schemes (Hansard, 17 November 2003)

§ 18. Mr. Best
To ask the Secretary of State for Work and Pensions what measures are in place to protect the(a) values and (b) benefits of pension fund schemes created by the former publicly owned industries. [138651]

§ Malcolm Wicks
Responsibility for the pension fund schemes created by the former publicly owned industries is a matter for the relevant sponsor Departments, or their successors, and the successor companies themselves. More generally, however, we have proposed a range of protection measures which will apply to the pension funds created by the former publicly owned industries in the same way as they will to those of any other privately owned company.
Through the introduction of the new Pension Protection Fund, we are taking action to make sure that members of defined benefit schemes will still have the secure retirement they were expecting. The Government has also published and consulted on draft regulations 481W that increase the debt due from solvent employers when their salary-related pension scheme is wound up. In addition we are at present consulting on draft Regulations on the proposed new priority order.

§ Mr. Best
To ask the Secretary of State for Work and Pensions if he will introduce legislation to prevent employers from taking contribution holidays from their employees' pension fund schemes. [137921]

§ Malcolm Wicks
No.
Since pension provision by employers is voluntary, the levels of contributions are a matter for agreement between pension scheme trustees and sponsoring employers.
Under the new scheme-specific funding regime which will replace the Minimum Funding Requirement, trustees and sponsoring employers will be required to develop and agree, with the scheme actuary's advice, the funding principles for their scheme—including a determination of whether the level of contributions is sufficient to meet a scheme's long-term pension commitments.
The new simplified tax regime for approved pension schemes (set out in the document "Simplifying the taxation of pensions: increasing choice and flexibility for all" (December 2002)) would abolish the rules requiring approved occupational pension schemes to run off their surplus funds (for example by agreeing contributions holidays) or lose their full tax exempt status. In addition, the document "Action on Occupational Pensions" announced that pension funds will no longer be able to make payments of surplus to employers from an actuarial surplus only where the scheme was funded above a level sufficient to secure full buy-out of scheme liabilities.