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(1) The Secretary of State shall by regulations, not later than twelve months after the passing of this Act, establish a scheme (the Scheme) for the transfer of such unclaimed assets as the regulations shall prescribe to the Lifeboat Fund.
(d) penalties to be imposed on any person holding assets prescribed under subsections (1) or (2)(b) who fails to transfer them or such proportion of them as is prescribed in accordance with the Scheme.
The Secretary of State shall, as soon as is reasonably practicable, by regulations require the trustees of qualifying schemes as defined by the Financial Assistance Scheme Regulations 2005 which have not yet completed winding-up to desist from purchasing (except where, on or before 18th April 2007, they have entered into a binding contractual commitment so to do) or making binding commitments to purchase, annuities on behalf of scheme members, for a period of nine months from 18th April 2007..
(1) Pursuant to his powers under section 286(3)(d) of the Pensions Act 2004, the Secretary of State shall as soon as is reasonably practicable make regulations requiring trustees of qualifying pension schemes to make on-account payments to qualifying members, or persons who would be qualifying members if the qualifying age for the Financial Assistance Scheme were set at the level of the qualifying scheme retirement age.
(2) The Secretary of State may make such loans to trustees of qualifying schemes as appear to him to be expedient to enable them to make such on-account payments where adequate scheme assets appear to him not to be available to them and regulations may prescribe for the recovery of such loans upon completion of wind-up of a qualifying scheme.
(3) Regulations made under subsection (1) above shall provide that on-account payments shall equal the amounts that would be payable if the qualifying scheme was accepted into the Pension Protection Fund.
(4) The regulations shall provide for payment to trustees of a qualifying pension scheme of payments due to a qualifying member of that pension scheme (or a person who would be a qualifying member if the qualifying age for the Financial Assistance Scheme were set at the level of the qualifying scheme retirement age) by the Financial Assistance Scheme or by the Lifeboat Fund (as defined in section [Transfer of unclaimed assets]) in respect of periods for which on-account payments to that member have been made in accordance with subsection (1)..
|Citation||Extent of repeal|
Pensions Act 2004 (c. 35)
Section 286(6) and (7)
James Purnell: New clause 38 deals with the important issue of failed company pensions and the financial assistance scheme. In my speech, I want to set out three things: first, how the scheme will now guarantee 80 per cent. of expected core pensions to all 125,000 people affected, in contrast to the Opposition, who said that they would not put any more taxpayers money into the scheme; secondly, how a review, led by industry experts, will look at topping up that 80 per cent., looking in particular at pooling assets; but thirdly, how we should wait for the outcome of that review, rather than voting for the Conservative amendments, which have already been condemned by the Association of British Insurers.
Many Members in the Chamber today have constituents who lost their pensions because their companies went into insolvency with the scheme underfunded. I have met dozens of people who have been affected. I think of Willie Riggins, Bill Adams and Bob Duncanpeople who worked all their lives and whose pension was taken away through no fault of their own. Members on both sides of the House have experience of that and have great sympathy for people in that situation. That is exactly why, in the Pensions Act 2004, we introduced the financial assistance scheme, and why we put in place the Pension Protection Fund, to ensure that todays workers do not face the same threat again.
Mr. Weir: ApologiesI am getting ahead of myself. The Minister talks about the financial assistance scheme. Changes are welcome, but many peoples schemes have been wound up when the company is not insolvent, and the scheme does nothing to help them. Has he given any consideration to what help, if any, can be given to those people?
I am just getting into my stride, but I will come to that at the end. The issue throughout has been whether we could make a clear difference between companies that were affected before the financial
assistance scheme came into place and companies that are still trading today. We would not want to open up a loopholeI am sure that the hon. Gentleman would not want to do sowhereby perfectly healthy companies could dump their scheme on the taxpayer, but I will come to that issue later.
Given that sympathy, the Government have always sought a satisfactory solution for those who have suffered, but there has always been a debate about the level of that assistance. As the ombudsman herself made clear,
it was the sole responsibility of Government or that the taxpayer should pick up the tab was not what I said... I did not say, Write a blank cheque, but organise a remedy.
The Government have organised a remedy, but let us be clear about why have we had to do so. As the European Court of Justice found during our proceedings in Committee, the then Tory Government failed to implement the 1980 insolvency directive and to protect peoples pensions. As the judicial review found, the 1996 leaflet published by the then Tory Government was misleading and maladministrative. In 1995, when the Labour party in opposition proposed creating a pensions lifeboat, the now shadow Foreign Secretary, then the Pensions Minister, opposed it, and this Labour Government had to introduce the PPF.
The hon. Member for Runnymede and Weybridge (Mr. Hammond) said during his winding-up speech yesterday that there was no need to introduce a pension lifeboat in 1995. If he and the Conservative party had taken our advice, there would be no need to introduce one now, and we needed to wait for a Labour Government to do so. The Government had previously defended that Tory record, but those court cases have made it clear that those actions were wrong, and we have therefore reconsidered the level of the financial assistance scheme.
at no stage have the official Opposition ever committed taxpayers money to this issue above and beyond what the Government have already committed.[ Official Report, 27 June 2006; Vol. 448, c. 175.]
We look forward to finding out whether they will support the money that we are putting in, but there is a very clear difference for people between the Conservative amendments, which would try to find money by taking it from one set of pensioners and giving it to another, and our amendments, which will guarantee money from the taxpayer to get to at least 80 per cent. of people.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): Perhaps I should just make it clear to the House that Conservative Members will support new clause 38, and that our amendments are not an alternative to that new clause; they assume the acceptance of new clause 38, which will essentially implement the commitments that the Chancellor and the Secretary of State for Work and Pensions made at Budget time and build upon them.
James Purnell: We will be grateful for that support, but the House will notice a pattern in Conservative policy making: not to make any policy, and when we come up with a policy, to back it. The Conservatives said that they would not put in any more taxpayers money; now that we have done so, they are saying that they want to. The problem with the hon. Gentlemans policy is that, even before it has been debated in the House, the Association of British Insurers has been condemning it as another raid on pension funds. So the Tory party was yesterday complaining about a raid on pension funds, and today it is having a row with the ABI about one that it is proposing. The Conservatives need to decide which way they are facing.
Mr. David Laws (Yeovil) (LD): Is there not a pattern in Government policy making as well: three times, the Government have been dragged perhaps not kicking and scheming, but kicking and screaming into providing some pension compensation, first with the financial assistance scheme and then with two increases in its size? Given the amount that is now being put in and the feeling of concern and injustice, why on earth cannot the Government go the final step today to deliver what most hon. Members on both sides of the House want: fair compensation at PPF level, with the other changes that are in the cross-party amendments?
James Purnell: Again, I will turn to that in my speech slightly later on, but I want to contest what the hon. Gentleman has just said. We could have just looked at the outcome of those court cases and continued to defend them. That would have benefited only a very small number of people. The ECJ made it very clear that it thought that damages would not be payable, so the case would have affected only people who went into insolvency after the case. Similarly, the judicial review only asked us to reconsider the decision. Given that the courts had made it clear that the Conservative Governments decisions that we have defended had been wrong, we decided that it was time to come up with a scheme that would provide at least 80 per cent. and to listen to the suggestions that the hon. Gentleman, other Opposition Front Benchers, the ombudsman and my honourable colleagues have been making and set up a review. That is the right way to proceed, but I will turn to his precise point later in my speech.
Mr. Philip Hammond: The Minister again mentions the review. It is important that we clarify the situation because hon. Members will have heard the Prime Minister talking about the review. The Minister has carefully talked about the review considering pooling assets, but the Prime Minister said that it will consider the use of unclaimed assets. Will the Minister confirm that the Prime Minister made a mistake?
James Purnell: No, the Prime Minister did not make a mistake. The hon. Gentleman knows very well the terms of reference, which say that we will consider all suggestions that people put forwardwe look forward to his submission. All that we are saying is that this needs to be based on proper work by experts, rather than amendments that, with great respect, the hon. Gentleman does not know are workable.
Mr. Frank Field (Birkenhead) (Lab): May I take the Minister back to what the ABI said? If it was saying that Members on either side of the House wanted to transfer the unclaimed assets of pensioners, they could not have misunderstood the position more severely. We have been saying that we should use the unclaimed assets of banks and building societies, which are separate from any unclaimed assets of pensioners and from unclaimed moneys that insurance companies hold that have clear ownerseither policyholders or shareholders.
James Purnell: We will be happy to read any submission that my right hon. Friend makes to the review. However, this debate shows exactly the need for that review. Rather than accepting amendments that people do not know are workable, it is right to hold a review involving experts, such as lawyers, people from the insurance industry and scheme administrators, who can come forward with proposals that will be workable and properly thought through.
Mark Pritchard (The Wrekin) (Con): Given that Conservative Members are happy to support Government new clause 38, are there any Conservative new clauses before the House today that Labour Members would accept equally graciously?
Mark Pritchard: The logic of what the Minister says is that he is happy to accept only Government new clauses ahead of the review and that any new clauses that we have tabled cannot be accepted until after the review.
James Purnell: The problem with the Conservative amendments is that they could expose the Government to compensation if annuity rates were to fall. They could expose the Government to moral hazard if people started to manipulate the rules. They could also expose the Government to legal challenge, including in the European Court of Justice. The last thing that the House should do is to raise pensioners expectations on the basis of amendments that have been hastily drawn up for this debate. Instead, we should have a proper review.
Mr. Clive Betts (Sheffield, Attercliffe) (Lab): I want to return to an issue that was raised before. I know that the Minister said that he would address it later in his speech, but I hope that this is the right time to make this point. I have visited him with pensioners from my constituency who worked for the firm Tinsley Bridge, which is still in existence. Given that the firm is not in liquidation, its workers cannot at present be covered by the financial assistance scheme. However, the firm is not in liquidation only because the pension scheme decided not to pursue from the company the full amount due to it. The pension scheme has thus been wound up, so the workers in the scheme cannot join the PPF. The companys pensioners and future pensioners are thus caught in a situation in which they cannot be part of the PPF or receive any help from the FAS. About 8,000 people in the country are affected in such a way. Can my hon. Friend give us any assurance that those workers will now be included in the FAS?
James Purnell: I was going to come on to this point later, but I will deal with it now because I have been asked about it twice. My hon. Friend has campaigned on the matter long and persuasively and brought a delegation to see me. The Public Administration Committee has raised the matter, too. We have always been clear that we wanted to ensure that we did not create a loophole, as I said to the hon. Member for Angus (Mr. Weir).
I am delighted to be able to tell my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) that we can announce today that we will further extend the FAS to cover members of schemes that began winding up between 1 January 1997 and 5 April 2005I believe that that covers the Tinsley Bridge schemewhen a compromise agreement is in place and when enforcing the debt against the employer would have forced the employer into insolvency. We estimate that that will benefit an additional 8,000 members of some 15 schemes.
Mr. Betts: May I put on record my thanks and those of my constituents, the workers at Tinsley Bridge and those at all the other firms? A lot of people woke up this morning worrying about their future because they thought that their pensions would be either non-existent, or greatly reduced. My hon. Friends statement has certainly given those people a lot of cause for cheer.
James Purnell: I thank my hon. Friend for his comments. I hope that hon. Members will thus think that it would be inappropriate to press new clauses 25 and 40 to a Division. Those measures would bring into the FAS any failed scheme, regardless of the solvency position of the employer.
Mr. Cash: The Minister was good enough to meet Mr. Richard Nicholl and me to discuss amendments that are adequately covered by the excellent new clause 25, which was tabled by the hon. Member for Cannock Chase (Dr. Wright), who also wishes to intervene at this stage. Would the Minister be good enough to confirm that the arrangements proposed in new clause 25 would come into effect under the proposals that he has announced in response to the questions raised by the hon. Member for Sheffield, Attercliffe (Mr. Betts)?
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