Select Committee on Treasury Written Evidence

Letter to the Chairman from The Pensions Regulator


  Further to my letter of 30 January, we have been considering, with the Treasury and the Department for Work and Pensions (DWP), your Committee's conclusion that the Pensions Regulator and the Treasury need to assess carefully the impact of the new regulations' on pension funding and of other requirements arising from the Pensions Act 2004 and the effect they could have on investment and the solvency of companies affected. The Treasury are responding to this in full today as part of its formal response to your report.

  In the meantime it may help if I outline our role and work in this area. The Pensions Act and its associated regulations are the responsibility of the DWP and implement in UK law the relevant provisions of the European Directive on Institutions for Occupational Retirement Provision.

  Our role is to regulate how pension schemes comply with the legislation in line with our statutory objectives to protect members' benefits and reduce risks to the Pensions Protection Fund. We set out our provisional views on how we will discharge our responsibilities in this regard in a consultation paper issued on 31 October 2005, which your Committee's report cites. Before taking this step, and because we shared your concern about understanding the potential impacts of our regime, we commissioned PriceWaterhouseCoopers to analyse the impact on the macro-economy and the viability of employers of paying off their deficits as calculated using FRS 17.  This is I would have thought very much the type of analysis your committee looks to us to undertake, and we shared its findings with the Treasury before publishing the consultation paper.

  We are now analysing the responses to consultation with a view to issuing a definitive statement of our approach towards the end of April. We agree that the issues identified by the Committee are important and will seek to monitor the wider impacts of our statement so as to keep our approach under review.

  As suggested in your letter, we have liaised with the DWP and the Treasury to enable them to make the PriceWaterhouseCoopers report available to you, and I understand that the Treasury are today placing the report in the library of both Houses of Parliament, as part of their wider response to your Committee's report. We have prepared, with the DWP, a covering note on the context of this analysis.

Tony Hobman

Chief Executive

22 March 2006

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