| Previous Section | Index | Home Page |
Mr. Smith: There are essentially two aspects to the priority order proposals that we are introducing. This is a sort of interim measure that we can bring into effect quite quickly—because it can be done through regulations—pending the establishment of the pension protection fund. There are two kinds of changes to be made. The first is to give more priority to those who have been contributing to a scheme longer, and are therefore more likely to be those closer to retirement. My right hon. Friend the Member for Birkenhead has advocated this proposal in the past. By definition, therefore, there would be a relatively lower priority for those who have not been contributing for so long.
We are also bringing forward the introduction of measures that were expected to take effect in 2007, to alter the balance and place the protection of active members who are contributing to a scheme over the indexation requirements for pensions in payment.
Mr. Derek Wyatt (Sittingbourne and Sheppey): As my right hon. Friend knows, ASW workers in Sheerness were made redundant last July and their pension funds were put into administration. Although they will be pleased to learn of the protection measures, there will be heavy hearts in Sheerness and Cardiff, for 1,350 have lost their pensions. If my right hon. Friend cannot accept the recommendations of my right hon. Friend the Member for Birkenhead (Mr. Field) in relation to the capping of banks and building societies, will he find another solution? I know of 41 companies in the UK in which the same thing has happened during the last 18 months. Two billion pounds would be needed. That is not much money, and this is a very serious matter. It was a condition of employment for ASW workers that they would have both the jobs and the pensions. They thought that they would receive pensions, but they will not.
Mr. Smith: I understand how my hon. Friend feels, and, more important, I understand how his constituents feel. A number of my own constituents were affected by the Maxwell pensions saga. As I have said, it is because of the seriousness of those people's position that we are introducing the measures that I have described. As I told my right hon. Friend the Member for Birkenhead, I stand ready to engage in meetings and to consider any constructive proposals, but I do not want to raise false hopes.
Mr. Paul Goodman (Wycombe): Presumably the Secretary of State agrees that occupational pensions cannot flourish unless the state system is stable. What will the measures that he has announced do to clear up the confusion between what the state second pension seeks to do and what the minimum income guarantee does? A person receiving both the full second state pension and the basic pension will still not be lifted clear of the minimum income guarantee. Does the Secretary of State accept that unless he can solve these serious problems, occupational pensions will not be able to flourish as he wants them to?
Mr. Smith: No, I do not. My statement concerned the specific issue of insecurity affecting occupational pension schemes; but I think that the extension of cover through the state second pension, and what we have done not just in relation to the minimum income guarantee but in introducing the pension credit, will protect those on low incomes and help the important cause of tackling pensioner poverty. I will not take lectures from the Conservatives, who oversaw not only pension mis-selling but the entry of many more pensioners into poverty, and imposed VAT on fuel. They are not in a strong position to lecture us now.
Richard Burden (Birmingham, Northfield): I welcome much of what my right hon. Friend has announced. It will strike a chord with the employees and deferred pensioners of Kalamazoo in my constituency, whose company has been taken over, split up and finally put into voluntary liquidation. The pension scheme was wound up and today, like many others, the employees stand to lose at least 50 per cent. of their entitlement. I understand what my right hon. Friend said about not raising false hopes, and I applaud his honesty, but I agree with others who have said that we need to consider the issue of retrospection in one way or another. I commend the Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), but if the Secretary of State does not feel able to back it, I nevertheless welcome what he said about talking to people. Let us hope that we achieve some results, because those employees deserve it.
Mr. Smith: I thank my hon. Friend for his welcome for the proposals. As I have said, I stand ready to discuss the issues, although I do not want to raise hopes on any false basis, and I am happy to extend that invitation to my hon. Friend.
Sir Archy Kirkwood (Roxburgh and Berwickshire): I echo the welcome given by other Members, and I think that the statement will repay careful study. I am also grateful for the Department's positive response to the recent report of the Select Committee on Work and Pensions on this important subject. But the devil is in the detail, and I want to press the Secretary of State on the issue raised by my hon. Friend the Member for Northavon (Mr. Webb) about the insurer of last resort. The Pension Benefit Guaranty Corporation in America has turned a $7 billion surplus to a loss of $3 billion or $4 billion in the space of 12 months. If this scheme is to have any credibility, that issue must be dealt with explicitly at the outset.
I also want to make a bid for some pre-legislative scrutiny, which the Government appear to have set their face against. Action is important, of course, but does the Secretary of State accept that if the devil is in the detail, the House and its Select Committees must have a chance to look at the small print before announcements are made that are vital to all our constituents?
Mr. Smith: I thank the hon. Gentleman for what he said about our proposals, and commend the work of the Select Committee. Today we are publishing our responses to its recommendations, which are very helpful.
The hon. Gentleman mentioned the insurer of last resort. There could be an additional element of moral hazard if people felt that the Government stood behind such an institution. As for the financial position of the Pension Benefit Guaranty Corporation in the United States, of course its balance sheet will have shifted given the swings in the stock market, but it is still 90 per cent. fully funded to meet its obligations. At this stage of the economic cycle, that is not a weak position for such an institution to be in.
The hon. Gentleman asked about pre-legislative scrutiny. We engaged in a lot of consultation, and I detect among the public, as well as in the House, a feeling that we need to get on with introducing legislation—having considered it fully and having scrutinised it in the usual way.
Mrs. Betty Williams (Conwy): In view of the severe injustice suffered today by workers at Wardles, Bangor in my constituency, I welcome my right hon. Friend's proposals to extend the TUPE regulations. Does that mean that in future all workers who have made pension contributions will be given a guarantee that their pensions cannot be stopped if their firms are taken over?
Mr. Smith: I thank my hon. Friend for welcoming my statement, and extend my sympathy to her constituents. Following a takeover and a transfer, no pension to which a worker is entitled can be scrapped. At the very least, the employer would have to match up to 6 per cent. of the employee's contributions. In some cases, that could improve the pensions available.
Miss Julie Kirkbride (Bromsgrove): Like many other Members, I have constituents whose financial security has collapsed in their retirement years—employees of Kalamazoo and UEF, for instance. I agree with the right hon. Member for Birkenhead (Mr. Field) and the hon. Members for Birmingham, Northfield (Richard Burden) and for Sittingbourne and Sheppey (Mr. Wyatt) about the need to find a solution for deferred pensioners who have lost security for their old age.
What plans has the Secretary of State for the insuring of company pensions, which I think is a good idea? Will the premiums be paid by the employer, or will the Secretary of State allow the employer to pass the contribution on to the employee, who will also be making pension contributions? Given the fact that his Government increased taxes on pensions by £5 billion in their first year of office back in 1997, why should they
not share some of the liability that he rather optimistically estimates to amount to about £150 million a year?
Mr. Smith: I am stacking up a lot of meetings today, but I am happy to extend to the hon. Lady the invitation I have already extended to Labour Members to discuss the position of workers in their constituencies. As for the payment of flat-rate risk-related premiums, economists may say that employers always pass on contributions in some way, but we intend the employers to meet the cost. It will, as I have said, be offset by savings made through the reduction of the mandatory cap on price indexation.
Mr. Jon Owen Jones (Cardiff, Central): Like my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt), I have many constituents who were employees of Allied Steel and Wire. While they may gain some comfort from having inspired the statement today, it is cold comfort to know that their experience means that others may not suffer as badly as they have. I plead with the Secretary of State to consider what my right hon. Friend the Member for Birkenhead (Mr. Field) has said and to find some mechanism to help those poor people out.
| Next Section
| Index | Home Page |