Pensions Bill

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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 It reinstates a provision that was originally in the Pension Schemes Act 1993, but which was repealed as an unforeseen consequence of the Pensions Act 1995.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.

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5.15 pm

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.

Clause 218

Restrictions on commutation and age at which benefits may be received

Question proposed, That the clause stand part of the Bill.

Mr. Waterson: I shall be brief, because I know that hon. Members' constituencies are beckoning.

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The clause deals with removing age and commutation limits, and deals with them in great detail, although I shall not. This is a useful moment to draw the Committee's attention to the considerable disappointment in the pensions industry about the fact that the Bill does not contain provisions permitting schemes to convert the famous GMPs into scheme benefits on the basis of actuarial equivalents. Nor does it seek to amend section 67 of the 1995 Act to allow retrospective modifications to scheme rules, or remove the requirement to obtain member consent for the commutation of equivalent pension benefits.

At least some of those issues, which are clearly important to people, were flagged up as possible subjects of additional amendments to the Bill. Will the Under-Secretary confirm that and tell us, if he can, where those amendments are in the pipeline?

Mr. Pond: Given the lateness of the hour, and given that the hon. Gentleman has raised a specific question, I propose to write to him in response, saying where we are in that process.

Mr. Waterson: Does the Under-Secretary not know?

Question put and agreed to.

Clause 218 ordered to stand part of the Bill.

Clause 219 ordered to stand part of the Bill.

Further consideration adjourned.—[Margaret Moran.]

Adjourned accordingly at nineteen minutes past Five o'clock till Tuesday 23 March at half-past Nine o'clock.

The following Members attended the Committee:
Cran, Mr. James (Chairman)
Baird, Vera
Brennan, Kevin
Cairns, David
Cunningham, Mr. Jim
Dean, Mrs.
Edwards, Mr.
Hamilton, Mr. Fabian
Jones, Mr. Kevan
Keeble, Ms
Khabra, Mr.
Moran, Margaret
Pond, Mr.
Price, Adam
Rosindell, Mr.
Waterson, Mr.
Webb, Mr.
Wicks, Malcolm


Liam Laurence Smyth, Sarah Hartwell, Committee Clerks

 
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