Members' Staff (Pensions) (Hansard, 23 March 2004)

§ Mr. Hain

The information requested is as follows, and is based on 16 March 2004.

ProAct are the Independent Financial Advisers who have been assisting the Speaker and the advisory Committee on Members Estimate (formerly known as the Speaker's Advisory Panel) with the setting-up of the Portcullis Pension Plan (the plan).

They provide an impartial professional assessment, in accordance with regulatory guidelines, of whether an individual would be better off remaining in their current pension arrangement, or having future contributions paid to the plan.

The Department of Finance & Administration are responsible for implementing the advice given by ProAct to the House.

I am delighted to confirm that the introduction of the plan (a group stakeholder arrangement) has seen take-up for the 10 per cent. pension supplement move from 49 per cent. as at February 2003 to a nigh-on 100 per cent. take-up rate as of 16 March.

I would like to thank ProAct Financial Planning, CMS Cameron McKenna and members of the Department of Finance & Administration for all their efforts and assistance in helping this major project reach such a highly successful conclusion.

The right hon. Member will be aware that all Members were advised a full year ago of the proposals, by e-mail and in hard copy, and were sent questionnaires to give to their staff for forwarding to current pension providers and/or professional advisers. Staff who are on e-mail were similarly advised at the same time. It was not possible to write to home addresses at that time because the Payroll System then in place could not generate individual address labels. This has since been rectified.

A deadline of October 2003 was given originally, but this was subsequently extended to 31 March 2004. Relevant information was circulated to all Members and to home addresses of employees during September and October 2003. It was made clear that 31 March 2004 was the final deadline, although changes will not be effective until April's payroll run two weeks later. There are no plans to extend this again. Members' staff have already had 12 months in which to submit their questionnaires, and ProAct have dealt with these in a commendably prompt and efficient manner.

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However, an exception will be made where employees submitted questionnaires in good time but ProAct will be unable to complete the assessment by the deadline because the further information they require was not supplied in a timely fashion by the current pension provider.

Members' staff have been advised by ProAct of the outcome of every questionnaire where the assessment has been finalised. In 49 cases, further information has been sought from the current pension provider. Final answers cannot be given until the relevant further information has been supplied to and assessed by ProAct.

ProAct have now confirmed that all Members and their employees, who have requested a "memory prompt" will be sent an annual e-mail by ProAct. This reminder will be sent out at a time when the House is sitting (on or around 31 January each year), thus ensuring that employees should be around to act on it and consider whether to top up their pension before the end of the tax year, if they wish to do so.

For 2004–05 only, the reminder will be sent at the beginning of December 2004 to give any employee wishing to use "carry back" time to pay a contribution before this facility is abolished on 31 January 2005.

Contributions for at least 131 staff of Members will (if the employee so wishes) continue to be paid to current arrangements. At least 131 staff wish to have contributions made to their pre-Portcullis pension arrangement. This includes employees who: are currently contributing to a pension arrangement that has terms that, when assessed in accordance with regulatory guidelines, are at least as good as those offered by the plan—only 30 employees fall into this category; are currently contributing to a pension arrangement that cannot accept transfers from the plan—certain cases, detailed in a letter to all Members and their employees on 16 March 2004, are being revisited now that current pension providers/advisers have admitted they gave incorrect or incomplete information in respect of the ability to make annual transfers from the plan to the current pension arrangement, so the number in this group may increase; were born on or before 1 October 1946 (this is based on reaching the age of 60 by the latest possible date for the next general election, plus four months for any "handover") and who have confirmed that they expect to retire at the next general election. Employees in the latter category had a free choice as to whether they wished future contributions to be paid to the plan or their current pension arrangement, and as such their position was not necessarily assessed by ProAct

Furthermore, many people who already had pension arrangements before the plan was introduced are now having future contributions paid to the plan. They now have the benefit of much more flexible contract terms—in particular, lower charges, thus increasing the amount of cash available for investment towards their retirement. Proper regard has been taken of those who may wish to keep their existing pension arrangements going, especially those who are very close to retirement.

In addition, the majority of employees of hon. Members now have death in service cover of twice basic pay. For some time there has been considerable interest 764W in such a benefit, particularly from employees with young families, and we are very pleased that this arrangement is now in place.

Of the 275 questionnaires received, ProAct have recommended that 175 employees should have future contributions paid to the plan. It is entirely up to the employee as to whether the default option comes into play. They are fully entitled to choose whether their funds are invested wholly with AXA or Norwich Union, or split (as the employee directs) between the two. The employee is also able to stipulate that funds other than the default funds should be used. If the employee later changes their mind, they can switch between AXA and Norwich Union, and also invest in different funds with these two insurers.

ProAct currently have 49 questionnaires to assess. This does not represent any tardiness on their part. The apparent delay is because ProAct have felt unable to complete their impartial assessment without seeking further information from the current pension provider.

As advised to Members and their employees, subject to ProAct receiving all outstanding information, the deadline is 31 March 2004. However, an exception will be made where employees submitted questionnaires in good time but ProAct will be unable to complete the assessment by the deadline because the further information they require was not supplied in a timely fashion by the current pension provider.

ProAct is currently contacting or recontacting all the personal providers to whom contributions were being paid until the advent of the plan. If any of the providers are found to have given incomplete or misleading information about annual transfers, and such transfers are not in fact possible, the individuals concerned will be offered the chance to have future contributions paid to their current arrangement. Accordingly, this number may increase.

Some staff initially indicated that they would like to stay with their previous pension arrangements, but when they understood the true costs and charges associated with these older style contracts, the majority were grateful for ProAct's helpful responses and were content to join the plan.

A small number of staff would still prefer to remain in their previous arrangement, but it would be misleading to suggest that this number can be precisely quantified.