Seventeenth Standing Committee on Delegated Legislation

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Mr. Waterson: So that I understand the Minister: when schemes that have had one qualifying insolvency event have their second, would they come within the terms of the PPF and have all regulations apply to them retrospectively?

Malcolm Wicks: I would not use “retrospectively”. When a scheme that has already gone into administration has its second insolvency event and goes into liquidation, the PPF will assess its eligibility. It is a moot point whether one wishes to call that retrospective, but I do not think that it is, because the second insolvency event triggers the PPF’s examination of the scheme.

The set of questions about bulk transfers was useful. Our prime aim is to ensure that those scheme members who are not transferred are no worse off, and that there is no added liability to the PPF. I think I am right to say that an example would be where the administrator tries to sell off bits of the business, such as a factory, that someone else wants to buy. We must ensure that the new owner takes on the appropriate pension liability and that there is no wheeling and dealing to do down other scheme members or to put an additional financial burden on the PPF. That is the broad answer. If there is anything I can usefully add in writing, I will do so.

We must be clear that the board of the PPF must be satisfied that bulk transfers are in the interest of some scheme members and that they are in their interest as workers, so that they can maintain their employment.

Mr. Webb: On a practical level, one can, as the Minister said, imagine a business with lots of bits, in which there is an interest in buying one bit and taking on one group of workers. Will the Minister clarify for me what the rules on valuation would be for a person who wanted to buy one factory with one group of workers? How is what the buyer would have to put in to the fund valued to ensure, as the Minister said, that the PPF does not have any worse liability? In other words, will the workers who get transferred to the new scheme end up with PPF benefits or the full benefits that they would have got had the firm continued?

Malcolm Wicks: I will write to the hon. Gentleman to make sure that I get the answer absolutely right, because that is an important question. Having the PPF
 
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in place sets a benchmark. Do not forget the trustees, who are important in this area. In the future, trustees will be loth to make any agreements that enable some scheme members to have pension rights of less than the PPF levels of 90 per cent. That is a critical benchmark. I envisage situations in which a company taking over a factory, or whatever it might be, could guarantee full pension rights or at least PPF pension rights. However, I want to be absolutely certain that I am right about that so, while that is my broad answer, it is always sensible to reflect on such things and put them in writing.

 
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While I feel a demand that I reiterate some of the finer points of the debate for the next 20 minutes, I will disappoint colleagues from all parts of the House by simply commending the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Occupational Pensions Schemes (Modification of Pension Protection Provisions) Regulations 2005.

Committee rose at seven minutes past Three o’clock.

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Prepared 11 March 2005