House of Commons Public Bill Committee Proceedings

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Session 2006 - 07
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163

House of Commons

Wednesday 18th April 2007

Report Stage Proceedings

Pensions Bill, As Amended

New ClauseS and Amendments Relating to the Financial Assistance Scheme

Financial assistance scheme: increased levels of payments

Mr Secretary Hutton

Added  NC38

To move the following Clause:—

‘(1)
Section 286 of the Pensions Act 2004 (c. 35) (financial assistance scheme for

members of certain pension schemes) is amended as follows.

(2)
After subsection (1) insert—

“(1A)
The Secretary of State must, in particular, make provision for securing

that (subject to any relevant restriction) the aggregate amount of—

(a)
any annual payment payable to a qualifying member of such a

scheme, and

(b)
the member’s actual pension (if any),


is not less than 80% of the member’s expected pension, irrespective of

the date of his attaining normal retirement age (or the date when he would

have attained that age if he dies before attaining it).

(1B)
A “relevant restriction” means any provision of the regulations which—

(a)
operates to restrict the amount of an annual payment by means of

a cap on the product of the calculation of a specified fraction of

the member’s expected pension, or

(b)
provides for an annual payment not to be payable where the

member’s actual pension exceeds any specified amount.”

(3)
In subsection (2), before the definition of “qualifying member” insert—

““actual pension” and “expected pension”, in relation to a qualifying

member of a qualifying pension scheme, mean the amounts which, in

accordance with regulations under subsection (1), are to be taken into

account as the member’s actual pension and expected pension,

respectively, in determining the amount of any annual payment payable

to the member;

“annual payment” has the meaning given by regulations under subsection

(1);”.”

(4)
Subsections (5) and (6) below apply where the scheme manager has determined

that an initial payment may be made under the FAS regulations to or in respect of

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a qualifying member of a qualifying pension scheme, and they so apply whether

the determination—

(a)
has been made, or

(b)
relates to a period beginning,


before or after the passing of this Act.

(5)
Subject to any relevant restriction, the amount of any such initial payment

payable to the member is to be—

(a)
the amount of the member’s expected pension multiplied by 0.8, less

(b)
the amount of the member’s interim pension (if any),


irrespective of the date of the member attaining normal retirement age (or the date

when he would have attained that age if he dies before attaining it).

(6)
The amount of any such initial payment payable to the survivor of the member is

to be—

(a)
whichever is the smaller of—

(i)
one-half of the product of the calculation in subsection (5)(a), or

(ii)
one-half of the product of that calculation as reduced by virtue of

any relevant restriction,


less

(b)
the amount of the interim pension payable to the survivor (if any),


irrespective of the date of the member attaining normal retirement age (or the date

when he would have attained that age if he dies before attaining it).

(7)
In subsections (5) and (6) “relevant restriction” means any provision of the FAS

regulations which—

(a)
operates to restrict the amount of an initial payment by means of a cap on

the product of the calculation of a specified fraction of the member’s

expected pension, or

(b)
provides for an initial payment not to be payable where the member’s

interim pension exceeds any specified amount;


but for the purposes of those subsections any such specified fraction is to be taken

to be 0.8.

(8)
Any provision of the FAS regulations which is inconsistent with subsection (5)

or (6) is of no effect to the extent of the inconsistency.

(9)
The Secretary of State may by regulations—

(a)
amend subsection (5) so as to substitute for the fraction for the time being

specified there such fraction as is specified in the regulations, and

(b)
make a corresponding amendment in subsection (7).

(10)
No regulations may be made under subsection (9) unless a draft of the regulations

has been laid before and approved by a resolution of each House of Parliament.

(11)
In this section—

“expected pension” and “interim pension”, in relation to a qualifying

member of a qualifying pension scheme, mean the amounts which, in

accordance with the FAS regulations, are to be taken into account as the

member’s expected pension and interim pension, respectively, in

determining the amount of any initial payment payable to, or in respect

of, the member;

“the FAS regulations” means regulations under section 286(1) of the

Pensions Act 2004 (c. 35);

“initial payment” has the meaning given by the FAS regulations;

“interim pension”, in relation to the survivor of a qualifying member of a

qualifying pension scheme, means the amount which, in accordance with

the FAS regulations, is to be taken into account as the interim pension

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payable to the survivor in determining the amount of any initial payment

payable to the survivor;

“qualifying member”, “qualifying pension scheme” and “scheme manager”

have the same meaning as in section 286 of the Pensions Act 2004

(c. 35);

“survivor” has the meaning given by the FAS regulations.’.

As an Amendment to Mr Secretary Hutton’s proposed New Clause (Financial

assistance scheme: increased levels of payments) (NC38):—

Julie Morgan

Sandra Osborne

Derek Wyatt

Dr Hywel Francis

Kelvin Hopkins

Dr Tony Wright

          Mr Gordon Prentice

      Alan Simpson

Not moved  (a)

Line  9,  leave out from ‘than’ to end of line 11 and insert ‘the amount that would

be paid in the same circumstances in payments made in accordance with the

pension compensation provisions set out in Schedule 7, save that references to

“the Board” shall be read as references to the Scheme Manager defined in

subsection (3).’.

Financial Assistance Scheme

Mr Nigel Waterson

Andrew Selous

Mr Mark Lancaster

John Penrose

Mark Pritchard

Not called  nc11

To move the following Clause:—

‘(1)
The Secretary of State shall commission an independent review of the Financial

Assistance Scheme having regard (among other things) to—

(a)
the efficiency and cost effectiveness of its administration;

(b)
whether it could be more effective if administered by the staff of the

Pension Protection Fund;

(c)
whether it is adequately financed;

(d)
what other sources of finance could be made available, including but not

limited to unclaimed assets;

(e)
whether it should be engaged in the purchase of bulk annuities.

(2)
The Secretary of State shall publish the findings of such review within six months

of this Act coming into force.’.

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Parliamentary Ombudsman’s Report and occupational pensions compensation

Mr David Laws

Lorely Burt

Danny Alexander

Lynne Jones

Not selected  nc21

To move the following Clause:—

‘The Secretary of State shall, no later than 1st April 2008, publish a single report

setting out—

(a)
the Government’s response to—

(i)
the Parliamentary Ombudsman’s 6th Report of Session 2005-06,

“Trusting in the pensions promise: government bodies and the

security of final salary occupational pensions” (HC984);

(ii)
the Sixth Report from the Select Committee on Public

Administration, Session 2005-06 “The Ombudsman in Question:

the Ombudsman’s report on pensions and its constitutional

implications” (HC 1081);

(iii)
the ruling of the European Court of Justice in the case C-278/05,

Carol Marilyn Robins and Others versus the Secretary of State

for Work and Pensions;

(iv)
the judicial review of the Government’s response to the

Ombudsman’s Report referred to in sub-paragraph (i);

(b)
estimates of the cost of extending the provisions of the Pension

Protection Fund benefits to all potential Financial Assistance Scheme

members including those excluded for reasons of age, taking account of

the net costs after the impact of tax revenues and means tested benefits;

and

(c)
plans to pay fair compensation to those who have lost their occupational

pensions.’.

Compliance with recommendations of the Parliamentary Ombudsman

Mr Nigel Waterson

Andrew Selous

Mr Mark Lancaster

John Penrose

Mark Pritchard

Not selected  nc22

To move the following Clause:—

‘The Secretary of State shall, within three months of this Act coming into force,

report to both Houses of Parliament on how he proposes to comply fully with the

recommendations contained in the Parliamentary Ombudsman’s 6th Report of

Session 2005-06, “Trusting in the pensions promise: government bodies and the

security of final salary occupational pensions” (HC984).’.

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Financial Assistance Scheme (No. 2)

Julie Morgan

Sandra Osborne

Derek Wyatt

Dr Hywel Francis

Mr Gordon Prentice

Dr Desmond Turner

John Austin Jenny Willott Mr David Laws

Dr Ian Gibson Paul Flynn Joan Ruddock

Mr Brian H. Donohoe Mr David Amess Lynne Jones

Mr Quentin Davies Ms Madeline Moon Adam Price

Mr Elfyn Llwyd Hywel Williams Mr Peter Kilfoyle

Mr Brian Jenkins Mr Elliot Morley Ms Gisela Stuart

Mr Clive Betts Frank Cook Colin Burgon

Roger Berry John McDonnell Mike Wood

Jon Cruddas Mr Michael Meacher Mr Frank Field

David Heyes Chris Huhne Mr Gordon Marsden

Ian Lucas Mr John Denham John McDonnell

Not called  NC24

To move the following Clause:—

‘(1)
The Pensions Act 2004 (c. 35) is amended as follows.

(2)
In section 286 (financial assistance for members etc.) insert after subsection (3)—

“(3A)
Regulations under subsection (1) must provide that the payments to be

made to or in respect of qualifying members shall be of the same amount,

and shall be paid in the same circumstances, as payments made in

accordance with the pension compensation provisions set out in Schedule

7, save that references to “the Board” shall be read as references to the

scheme manager defined in subsection (3).”.’.

Financial Assistance Scheme: eligibility where employers remain solvent

Dr Tony Wright

Mr Ian Liddell-Grainger

Jenny Willott

Julie Morgan

Kelvin Hopkins

Mr Gordon Prentice

Mr David Burrowes

Sandra Osborne

Lynne Jones

John McDonnell

Not called  nc25

To move the following Clause:—

‘(1)
The Pensions Act 2004 (c. 35) is amended as follows.

(2)
In section 286 (financial assistance for members etc.) insert after subsection (2)—

“(2A)
Conditions prescribed under paragraph (c) in the definition of

“qualifying pension scheme” in subsection (2) shall not exclude schemes

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which have been wound up in the absence of an insolvency event as

referred to in Part 2.”.’.

Financial Assistance Scheme (No. 3)

Dr Tony Wright

Mr Ian Liddell-Grainger

Jenny Willott

Julie Morgan

Kelvin Hopkins

Mr Gordon Prentice

Mr David Burrowes

Sandra Osborne

Lynne Jones

John McDonnell

Not called  nc26

To move the following Clause:—

‘(1)
Section 286 (financial assistance for members etc.) of the Pensions Act 2004 (c.

35) is amended as follows.

(2)
After subsection (1) insert—

“(1A)
The regulations must provide, save for any necessary changes, that each

person who would have had an entitlement to payment as compensation

under Schedule 7 (Pension Protection Provisions), if each qualifying

pension scheme had been an eligible scheme for which the Board had

assumed responsibility as specified in paragraph 1 of that Schedule, is

given an equivalent entitlement to payment.”

(3)
Omit subsections (6) and (7).’.

Financial Assistance Scheme (No. 4)

Mr David Laws

Not called  nc27

To move the following Clause:—

‘(1)
Section 286 (financial assistance for members etc.) of the Pensions Act 2004

(c.35) is amended as follows.

(2)
After subsection (4) there is inserted—

“(4A)
The regulations must provide (subject to any changes which the

Secretary of State may consider necessary) that each person who would

have been entitled to compensation under Schedule 7 (pension

compensation provisions) is given an equivalent entitlement to such

compensation, whether or not each qualifying pension scheme has been

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an eligible scheme for which the Board had assumed responsibility as

specified in paragraph 1 of that Schedule.”.’.

Amendments to Financial Assistance Scheme Regulations 2005 (No. 1)

Mr David Cameron

Sir Menzies Campbell

Mr Frank Field

Mr George Osborne

Mr Philip Hammond

Alan Simpson

Jo Swinson

Not called  nc39

To move the following Clause:—

‘(1)
The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are

amended as follows.

(2)
In regulation 5(1) for “Secretary of State” substitute “Board of the Pension

Protection Fund (“the Board”)”.

(3)
In regulation 5(2)(a) leave out from “Secretary of State” to end of sub-paragraph

and insert “the Board”.

(4)
In regulation 5, sub-paragraph 2(b) is omitted.’.

Amendment to the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986)

(No. 2)

Mr David Cameron

Sir Menzies Campbell

Mr Frank Field

Mr George Osborne

Mr Philip Hammond

Alan Simpson

Jo Swinson

Not called  nc40

To move the following Clause:—

‘(1)
The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are

amended as follows.

(2)
In regulation 9, paragraph (c) is omitted.

(3)
Regulations 11 to 13 are omitted.’.