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Standing Committee B
Thursday 11 March 2004
[Mr. Win Griffiths in the Chair]
Regulator's right to apply under section 423
of Insolvency Act 1986
Amendment proposed [this day]: No. 188, in
clause 33, page 20, line 31, leave out subsection (7).—[Mr. Osborne.]
Question again proposed, That the amendment be made.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): Hon. Members will have been waiting anxiously to hear how the sentence that I began before lunch ends. I thank them for their patience. We are discussing amendment No. 188, which would remove the provisions that the regulator can apply under section 423 of the Insolvency Act 1986 only if the valuation of assets needed for such an application is done on a date before the section comes into force.
It may assist hon. Members if I explain that the clause is designed to give the regulator the same standing as an insolvency practitioner to pursue any debt due to a pension scheme by reason of transactions that it suspects were made at an undervalue. In those circumstances, the regulator may apply to the court under section 423. If the regulator can show that the transaction took place at an undervalue for the purpose of putting assets beyond the reach of the pension scheme, or of otherwise prejudicing the interests of the scheme, the court may make orders to restore the position of victims of the transaction. The application to the court can only be made if the pension protection fund, the trustees or managers have actuarial evidence that the fund's assets are less than its liabilities. The clause specifies in detail how that is defined.
As hon. Members will be aware, subsection (7) provides that the clause can apply only when the actuarial valuation is in respect of a date after the commencement of section 423. That is because an actuarial valuation can be made with reference to any date, although if it is made for statutory purpose it will have to be made within one year of that date.
Subsection (7) is designed to ensure that the regulator's powers to pursue a debt in respect of a deficit that arises before the provisions come into force are limited. If the debtor is bankrupt or is a corporate entity that is being wound up, the regulator must have leave of the court to make an application under section 423. An application made under that section is treated as being made on behalf of the victim of the transactions—the trustees, the members of the scheme or the PPF board. That power will enable
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the regulator to fulfil its objectives of protecting members' benefits and reducing calls on the PPF.
The main objective is to recover debts owed to the scheme by the sponsoring employer where the employer's assets have been depleted in order to defraud creditors. That provides the regulator with the power, if necessary, to carry out its functions and a mechanism for recovery of funds to creditors.
Mr. George Osborne (Tatton) (Con): That was the convincing explanation that I was looking forward to over my lunch break. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33, as amended, ordered to stand part of the Bill.
Register of occupational and personal
Question proposed, That the clause stand part of the Bill.
The Minister for Pensions (Malcolm Wicks): With your great help, Mr. Griffiths, my colleague and other hon. Friends steered us through this morning's discussions. I feel like one of those Arsenal substitutes running off the bench late in the game, although I may not look like one. I will not go any further or I will upset Manchester United supporters. The shadow spokesman, the hon. Member for Eastbourne (Mr. Waterson), who cannot be with us today, is probably a Manchester United supporter.
Mr. Osborne: I am the Member who represents virtually all the Manchester United players. Although I am not a Manchester United supporter, I do take an interest.
Malcolm Wicks: Most of its supporters are in the home counties, so the hon. Gentleman does not represent them. However, that is enough about football, Mr. Griffiths, as I suspect that yours is another game.
Let me deal with the first of the provisions that will be at the heart of the regulator's new proportionate and targeted approach to pensions regulation—its power to collect and analyse information about schemes. We touched on that this morning. The clause provides that the regulator must set up and maintain a register of pension schemes. The Occupational Pensions Regulatory Authority is currently under a similar duty to hold such a register in its capacity as registrar of occupational and personal pension schemes under the Pension Schemes Act 1993. To prevent there being any extra burden on schemes that are currently registered, their registrations will simply be transferred to the new register. There is unlikely to be any change in the type of schemes that are required to register and schemes with only one member will continue to be exempt from registration.
As well as fulfilling the requirement that the regulator must hold a register of pension schemes to comply with article 9 of the occupational pensions
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directive, the register will be used to assist members of the public to trace their pensions. That is an existing service, which last year provided contact names and addresses for more than 25,000 requests. Lost pensions are a significant issue which we will address later.
Clauses 35, 36, 37 and 55 set out additional details on the information to be provided by schemes for the purposes of the register, the regulator's powers to make use of the information including the provision of reports to the Secretary of State, and the duties of trustees and managers in respect of the register. The Committee may wish to discuss those powers and functions when we deal with those clauses, but it might also be helpful to do so now.
We addressed important concerns this morning. Many issues have been raised about accurate data, to which the hon. Member for Northavon (Mr. Webb) and Labour Members referred. We want to turn the position around. The information and register powers that we will discuss when we deal with these clauses will address that. At the heart will be the scheme return, which has been trialled with the industry in draft form, and which it welcomes. The scheme return will allow us to start to compile the accurate data that we need for the future. The regulator will be able to require the information covered in the scheme return, as the usual section 10 penalties referred to earlier will apply in the event of any default.
It will not be for the regulator as an institution to keep a record of every last member of every last pension scheme. That would not be sensible; there are many hundreds of schemes and at least 10 million scheme members. However, it is for the regulator to find out if a scheme's records are bad. For example, it can issue an improvement notice if a scheme cannot provide members with information. Whistleblowers will often be important in that. The regulator also has an objective to promote good administration.
Adam Price (East Carmarthen and Dinefwr) (PC): Will the Financial Services Authority have to provide details of its pension scheme in the register? Will it come under the ambit of the regulator?
Malcolm Wicks: Its own pension scheme?
Adam Price: Yes.
Malcolm Wicks: It is a public body. My understanding is that the provision will apply to private sector schemes and I suspect that the FSA does not come under that banner. However, it might be best if I deal with that by correspondence.
Kevin Brennan (Cardiff, West) (Lab): Will my hon. Friend give way?
Malcolm Wicks: Yes, I will sit down and then stand up again.
Kevin Brennan: I am sorry to tax my hon. Friend's knees, which have obviously seized up on the substitutes' bench this morning. Does he anticipate that the regulator will instantly be able to say how many members of occupational pension schemes are in wind-up, for example, if it is asked that question?
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Malcolm Wicks: Yes, we need to move towards that. It will be one of the purposes of the regulator, which will, with the PPF, sometimes be actively involved in that process.
Mr. Steve Webb (Northavon) (LD): As the Committee will have gathered, I welcome the provision of better information about schemes for the purpose of policy making and of better information to individual scheme members. As such, I welcome the group of clauses.
Information received from OPRA on the previous register always felt like a little slice of history because it was about schemes that had come to the end of the winding-up process. OPRA would not be the place to go if one were trying to work out what was happening and what would be likely to happen next year. Am I right in thinking that this register will not just be about what has happened to dying schemes, but will have a lot of information about current schemes, funding levels, and so on, thereby enabling us to get a better snapshot of what is happening now for the purposes of policy making?
Can the Minister reassure us that if we were to table questions in Parliament about the current state of occupational schemes, he would have access to such information? Clause 55 suggests that the regulator can make available information that is tangential to what the schemes are principally about. Will the register enable us to find out more about what is happening in occupational pensions and tell us more about now and the future, not just about the past?
Malcolm Wicks: While that is in my head, let me say that the brief answer to both questions is yes. We need more up-to-date information. That is one of the purposes of the regulator. Ministers will be able to answer those questions. I often sit at my desk hoping that the hon. Member for Northavon will ask me a few more questions so that I can justify my existence. I look forward to the questions that I am sure he is drafting even as he thinks.