§ Sir Peter TapsellTo ask the Secretary of State for Work and Pensions if the Government will require solvent employers to make up any shortfall to the full buy-out value of an employer funded pension scheme that has been promised to members as their pension entitlement when the scheme is wound up, regardless of the date when the wind-up commenced. [169869]
§ Malcolm WicksThe Government have already announced its intentions on "full buy-out" and has introduced Regulations that bring about a significant change to the protection afforded to scheme members.
The Occupational Pension Schemes (Winding Up and Deficiency on Winding Up etc.) (Amendment) Regulations 2004 were introduced to strengthen members' protection when a salary-related occupational pension scheme, subject to section 75 of the Pensions Act 1995, starts to wind up while its sponsoring employer is solvent.
The Regulations mean that the debt on the employer is calculated on the basis that the scheme should be able to meet the full costs of winding up and the full benefits that scheme members have accrued and expect to receive. The Regulations will ensure that members are more likely to receive the pensions they expect.
The Government expect sponsoring employers of pension schemes to take their obligations seriously and act in the spirit of the Government's stated intentions. However, the Government will not be requiring employers whose schemes started to wind up before 11 June 2003 to make up any shortfall in these schemes to the "full buy-out" level. To do so would mean that the Regulations affected schemes that started to wind up before the employer, trustees or other relevant parties were aware of the new requirements. It is possible that for some employers such a change could place a significant financial imposition on them that they had not budgeted for.