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Examination of witnesses (Questions 133 - 139)
WEDNESDAY 8 JULY 1998
MR PETER
MURRAY, MR
PETER THOMPSON and MRS
JANE MARSHALL
Chairman
133. Good morning, ladies and gentlemen,
can I start the public session of our evidence session by welcoming
our guests from the National Association of Pension Funds. We
have Mr Murray, the Chairman, Mr Peter Thompson, who is the Chairman
of the NAPF Benefits Committee and Jane Marshall, who is a lawyer
and a Member of NAPF's Regulatory Standing Group. So a very high
quality delegation and we are very grateful for you taking the
time to come and see us. Peter, it would help us, I think, if
you could just introduce Peter and Jane in a wee bit more detail,
and then tell us a bit about the work you have been doing, very
briefly, to set the scene.
(Mr Murray) Thank you, Chairman. As well as being
Chairman of the Association, I am Chief Executive of the Railway
Pensions Trustee Company, which runs the industry-wide scheme
for the railways. Jane is head of pensions for Hammond Suddards,
who have, I think, 23 pension lawyers up and down the country.
Peter Thompson is a consulting actuary. He heads the Leeds office
of William Mercer, one of the major firms of consulting actuaries.
NAPF has 1500 members. One thousand of these are pension schemes.
We have almost all the largest pension schemes in the country
among our members, we have a large number of medium size pension
schemes and, indeed, we have two or three hundred smaller schemes.
In addition to that, we have 500 members who provide professional
and other services to pension schemes and leading firms of actuaries,
lawyers, the leading firms of investment managers, and so on,
who are members of NAPF. Our aim in life is to ensure that there
is an environment in this country which encourages employers to
provide occupational pensions for their employees. Of course,
it is in that context that we are approaching this piece of prospective
legislation.
134. I am tempted to ask is there anybody
left. Is there anybody that you do not represent?
(Mr Murray) We only have 1,000 pension schemes
among our membership and there are, I think, 128,000 pension schemes.
So it is a very large number of very, very small pension schemes
who are mostly looked after by insurers and they tend, of course,
not to be members. NAPF members look after 7 million employees,
they pay pensions to 4 million pensioners and our members have
over £400 billion of assets, so it is quite a large slug
of the occupational pensions movement, as distinct from personal
pensions.
135. It was not an entirely facetious question
because we have to look at the problems that may confront the
whole range of sectors.
(Mr Murray) Indeed.
136. You have, very concisely and helpfully,
described the people that are within your umbrella, but we do
have to look after the problems of the other schemes. They are
mainly, if I understood what you said, funds that are provided
through organisations like ABI?
(Mr Murray) No. The ABI, which I believe are due
to talk to you shortly, represent insurers. We represent schemes
which are promoted by employers. Typically, the employer will
organise this. If they are large enough they will administer it
themselves or, in the case of the smaller companies, it will be
done through an insurance company but sponsored by the employer
and they will typically pay in, usually, one-and-a-half to twice
as much as the employee will.
137. Would it be true to say that your organisation
has actually been actively campaigning for the rights of ex-spouses
of pension scheme members to be recognised?
(Mr Murray) Indeed. A number of organisations
in the pensions movement, including ourselves, recognise that
pension assets represent an important part of a couple's assets—an
ever increasingly important part of a couple's assets—and
it is essential, if we are to move forward, that there is a sensible
way of including this in the sub-division of property which normally
follows a divorce. Our concern is that methods are introduced
which are easy for the couple and for the courts to understand
and are workable in practice, so that more divorce settlements
take into account the pension scheme assets of both parties.
138. The implication would be that you do
not think that earmarking or attachment provisions that are available
are adequate?
(Mr Murray) We have never supported earmarking.
We have always opposed earmarking. We have always supported pension
sharing. There are a number of reasons for this. The main reason
is that we support the "clean break" principle, and
earmarking flies in the face of that. We anticipated (correctly,
I fear) that there would be considerable problems with earmarking
in practice, and the problems would be such that earmarking would
not be used very much in practice. In my own scheme, which is
a very large scheme, with 330,000 members, we have handled 11
earmarking orders and we have about another 17 in the pipeline,
and we have had difficulties with many of these. It is not a problem,
having difficulties with 11 earmarking orders, so I am not complaining
about that, but I am saying that our experience with them has
not been encouraging, and if we had to deal with thousands of
orders like that then there would be problems. In some cases it
has not been clear to us what the court was asking us to do. In
other cases it was not clear to us whether we had received orders
which were addressed to the petitioner or the respondent, but
the court had sent them to us. Clearly, we would have no powers
to vary the pension of our member unless the court had instructed
us to do so. There have been other cases where we have been asked
to do things which are actually impossible—to pay a lump
sum which is in excess of the lump sum which the member would
receive. All sorts of little difficulties like that.
139. To what extent, if at all, are public
sector pension funds represented by the NAPF?
(Mr Murray) Funded public sector schemes—we
have a number of local authority schemes—are among our members,
but the main unfunded schemes are not members. We really deal
with funded pension schemes.
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