Malcolm Wicks: It would clearly be helpful if I explain, albeit briefly, the purpose of the clause. It reinstates a provision that was originally in the Pension Schemes Act 1993, but which was repealed as an unforeseen consequence of the Pensions Act 1995. Occupational pension schemes are required to revalue the accrued rights of members who leave before normal pension age, thus protecting the value of pension rights left in the scheme. The way in which they must be revalued will normally depend on whether the benefits are salary-related, linked solely to a period of service or on a money purchase basis.
Legislation sets out different ways of revaluing pensions. Until April 1997—an important period of our history—one method saw the scheme maintain the value of the whole pension by reference to the rise in the general level of prices. That required the approval of the occupational pensions board, which gave it on a general rather than scheme-specific basis. A result was that legislation that enabled schemes to use the RPI was inadvertently removed when the functions of the occupational pensions board were brought to an end by the 1995 Act. The clause therefore amends the re-evaluation requirements in section 84 of the Pension Schemes Act 1993. It enables schemes to continue to satisfy the statutory revaluation requirements by revaluing the total pension or other benefits fully in line with the RPI.
Column Number: 319
I am advised that the clause has nothing to do with issues of group equalisation of GMPs. They are included in any re-evaluation of deferred pensions. I am sure that what I have said is absolutely crystal clear.
Mr. Waterson rose—
Malcolm Wicks: I will give way, but I was about to say that, if that is not crystal clear, I will of course write to the hon. Gentleman.
Mr. Waterson: I just want to be clear that the Minister is using the same definition of GMP as the rest of us are. Could he remind the Committee what GMP stands for?
Malcolm Wicks: Guaranteed minimum pension.
Question put and agreed to.
Clause 215 ordered to stand part of the Bill.
Clauses 216 and 217 ordered to stand part of the Bill.
|©Parliamentary copyright 2004||Prepared 18 March 2004|