| Previous Section | Index | Home Page |
Government amendments (a) to (k) in lieu of Lords amendment No. 298 agreed to.
Malcolm Wicks: I beg to move, That this House agrees with the Lords in the said amendment.
Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to take Lords amendments Nos. 96 to 120, 122, 123, 125 to 130, 132, 133, 135, 137 to 144, 146 to 150, 152, 153, 156, 160, 162 to 165, 167, 169, 171 to 179, 181, 184 to 196, 198 to 208, 211 to 218, 221 to 223, 227 to 230, 232 to 246, 248 to 256, 258 to 260, 262 to 270, 272 to 277, 279 to 281, 284 to 292, 294 to 297, 299 to 303, 306 to 323, 330 to 345, 384, 388 to 397, 399 to 401, 499 to 523, 525 to 538, 540 to 542, 544 to 551, 554, 555, 558, 563, 565 to 567 and 569 to 576.
Malcolm Wicks:
I want to offer a brief explanation of the Government amendments on the pension protection fund, which were tabled in the other place. On compensation, we have introduced a set of
16 Nov 2004 : Column 1217
amendments to cover court orders made against a pension scheme following divorce or nullity proceedings. The amendments enable the PPF to honour attachment, earmarking and pension-sharing orders made before the end of the assessment period, and in particular to implement pension-sharing orders made before the end of the assessment period but not implemented before the board assumes responsibility for the scheme.
Following representations made in Standing Committee, provisions have been extended to provide compensation to surviving unmarried and civil partners. We have also included regulation-making powers to enable us to ensure that survivors' payments will be made only where there was provision to pay survivors' benefits under the scheme.
4 pm
Other provisions allow for compensation to be paid to members whose scheme characteristics differ from traditional defined benefit models, for example, cash balance schemes. That is a response to changes in scheme design as employers seek to share risk with their employees but still offer attractive pension benefits. Further changes have been made to ensure that members who have been in their pension schemes a short time are treated fairly. Amendments will replace the current statutory priority order on wind-up with a new one when the PPF commences business. The priority order will be aligned with PPF benefits to ensure that if a scheme has been through a PPF assessment period but has not transferred into the PPF, scheme members receive broadly what they would have done had the scheme gone into the PPF. The Government's view is that it would be unfair for people to be entitled to significantly less on winding up than they would have received had the scheme gone into the PPF. The same priority order will apply whether a scheme starts to wind up owing to the insolvency of the employer, or does so while the employer is solvent. The objective remains to ensure that the limited assets available are distributed fairly between all scheme members during a scheme wind-up.
Moving on to the PPF's entry rules, changes have ensured that insolvency practitioner notices have no effect until they have been verified by the board. Because of the importance of those notices, we have made that verification a reviewable matter. The board will also be able to modify certain insurance contracts to ensure that no one receives more than the PPF level of compensation. Further amendments have ensured that schemes that become ineligible during an assessment period are still able to enter the PPF if necessary— for example, to cover the situation when there is a two-member scheme in an assessment period and one of the members dies. We have also protected the PPF against certain compromise agreements and, in the light of industry concerns, have ensured that the board's powers in insolvency proceedings do not exceed those of trustees. We have also taken a regulation-making power to ensure that, in the valuation of a scheme, the PPF will take account of any contribution notices and financial support provisions put in place by the regulator using its moral hazard powers. Without those amendments, the
16 Nov 2004 : Column 1218
PPF could be called upon to assume responsibility for schemes which, had they been taken into account, could have been wound up outside the PPF to the benefit of members.
On levies, the Opposition have introduced amendments limiting the initial period to 12 months and requiring the board to set both the scheme-based and risk-based pension protection levies. We have revised the non-executive functions for the PPF board in response to Opposition's concerns, so that they include only remuneration and the review of financial affairs. Other functions that were previously listed as non-executive functions become subjects for inclusion in the board's annual report. Rules governing the investment strategy of the PPF board have been amended to ensure that the interests of levy payers and scheme members are taken into consideration.
Mr. Webb: I am aware that the Minister has only a few minutes—nine, I think—to deal with this huge group of amendments. He is working through them systematically, but the group deals with an important matter that I fear he will not reach. Does the group contain amendments relevant to his written statement of last Monday and his press release of last Thursday about schemes in the gap year and the scope of the financial assistance scheme and the PPF in relation to schemes that become insolvent now? Will he clarify the position of schemes in the 12-month period—the gap year? Do they go into the FAS or the PPF, or can they go into either?
Malcolm Wicks: The relevant amendments are in this admittedly rather large group. Our concern was to ensure that we took a comprehensive view across the piece so that people could be protected as Parliament intended. We hope and assume that the PPF will come into force in April, subject to the will of Parliament. Let us suppose that an insolvency event affecting a scheme occurs before April—the company goes into administration, for example. We are now stating clearly in the legislation that scheme members should not be prevented from benefiting from the PPF as long as there is a second insolvency event—for example, the company goes into liquidation—after April. If there is a second insolvency event, a scheme can be covered by the PPF, subject to other criteria. A scheme that is totally wound up before April, however, will not be subject to the PPF.
The other announcement that we were able to make last week is that the financial assistance scheme will cover what some call the gap year—the period to April next year—as we intended. We were concerned about moral hazard issues, but we are now satisfied that they cannot arise. I hope that that answers the hon. Gentleman.
Mr. Webb:
Will the Minister make it clear that if a first insolvency event occurs in the gap year, the company will have some incentive to delay the second insolvency event until the PPF comes into force, because it is more generous than the FAS—that, in principle, a scheme that enters administration now might hold on for the PPF because it gives scheme members more? Is that how it will work?
16 Nov 2004 : Column 1219
Malcolm Wicks: I am happy to write to the Opposition spokesmen about this important matter. Despite our initial doubts, having consulted a number of people we are now reassured that such manipulation—delaying until after April—cannot take place. That is why we felt able to make the announcement we did.
Mr. Waterson: I agree that this is an important issue. Yesterday in the Lords, Baroness Hollis was at pains to say that the Minister's statement a few days ago made no real difference; it was merely a clarification. However, when the information was leaked or announced to the press, it was presented—or spun, if one prefers—as good news for, for example, the Turner and Newell pension scheme. Either it makes a difference or it does not, but the noble Lady's suggestion that it makes no difference to the potential liability of the PPF must surely be wrong.
Malcolm Wicks: I do not wish to refer to any particular scheme, although I have to say that some of the news on one scheme might be looking better than it was. However, surely even the cynics accept that, together, the two announcements are good news, because it means that, subject to the criteria being satisfied, scheme members in defined benefit schemes will now be covered, one way or another, either because we have extended the FAS to the start of the PPF or because we have now covered cases in which a second insolvency event occurs after April. Fair-minded people should welcome that news.
Mr. Andrew Miller (Ellesmere Port and Neston) (Lab): Following on from the same point but looking back in time, when does my hon. Friend expect to be able to announce the date on which the Government propose to commence the financial assistance scheme?
| Next Section | Index | Home Page |