New Clause
5
Application
of Freedom of Information Act to Personal Accounts Delivery
Authority
(1) The Freedom of
Information Act 2000 (c. 36) is amended as
follows.
(2) In section 35
(formulation of government policy etc.) insert after subsection
(2)
(2A)
Information held by or provided by the Personal Accounts Delivery
Authority is not to be
regarded
(a) for the
purposes of subsection (1)(a), as relating to the formulation or
development of government policy,
or
(b) for the purposes of
subsection (1)(b), as relating to Ministerial
communications.
(3) In
section 36 (prejudice to effective conduct of public affairs) insert
after subsection
(2)
(2A)
Information held by or provided by the Personal Accounts Delivery
Authority is not be to
regarded
(a) for the
purposes of subsection (2)(a), as relating to the maintenance of the
convention of the collective responsibility of Ministers of the Crown,
or
(b) for the purposes of
subsection (2)(b), as relating to the free and frank provision of
advice, or the free and frank exchange of views for the purposes of
deliberation; or
(c) for the
purposes of subsection (2)(c), as relating to the effective
conduct of public affairs...[Mr.
Waterson.]
Brought
up, and read the First
time.
Motion
made, and Question put, That the clause be read a Second
time:
The
Committee divided: Ayes 5, Noes
10.
Division
No.
6
]
Smith,
Ms Angela C. (Sheffield,
Hillsborough)
Question
accordingly negatived.
New Clause
6
Review
of role and purpose of Financial Assistance
Scheme
(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..[Mr.
Waterson.]
Brought
up, and read the First
time.
5.45
pm
Mr.
Waterson:
I beg to move, That the clause be read a Second
time.
This is a
familiar argument, but no less important for that reason. New clause 6
deals with the financial assistance scheme. I shall begin with the
specifics of the new clause. It requires the Secretary of State to
commission an independent review of the FAS to consider, among other
things, the efficiency and cost-effectiveness of its administration.
Let me pause there for a
moment.
We have always
had serious concerns about the wisdom of setting up the FAS as a
completely separate body, doing its own thing in a completely different
part of the country, and we have always taken the view that the only
possible reason for doing that was a political one: to underline the
big disparity between the benefits paid by the FAS and the compensation
paid under the Pension Protection
Fund.
Just to sketch in
a bit of history, the FAS was the illegitimate child of the 2004
legislation. It was cobbled together at short notice, and announced on
14 May 2004 at a point when the Government were in real danger of being
defeated in this House by a combination of Opposition parties and
Labour rebels, simply because a large number of people who had lost
their pensions, through no fault of their own, would not fall within
the PPF. In our view, the FAS was always
misconceived.
The
announcement in May 2004 produced a figure of £400 million, but
no one was ever able to justify it. It was always as plain as a
pikestaff that it was wildly inaccurate and inadequate. It now turns
out that some 125,000 people were affectedthe estimates were
quite a bit lower at the timeso the Government have had a
rather difficult time trying to squeeze potential claimants into the
£400 million financial envelope that the Chancellor produced at
short notice.
The FAS
did not get off to a happy start. As it happens, when we were debating
the Bill that became the Pensions Act 2004, I tabled an amendment
suggesting that there should be a mini-PPF, administered by the same
people who administered the PPF, to deal with claimants who came up
prior to the
due date for the PPF. We always accepted the principle put forward by
the Government, although they rowed back from it in the latter stages
of the legislation, that it was a bit like fire insuranceone
cannot insure ones house against fire after it has burned
downso there could not be an element of retrospectivity to the
PPF, but it would have made much more sense to use the same expertise
and skill set to administer the separate fund. At the time, we argued
for it to be endowed with unclaimed assetsI shall return to
that in a momentunder the umbrella of the PPF, which was
starting its own life and which in many respects has drawn in a great
deal of expertise and effectively administered itself since it was set
up.
Subsection
(1)(a) deals with the efficiency and cost-effectiveness of the
administration. Subsection (1)(b) deals with the point that I already
made about whether the FAS could be more effective if administered by
the staff of the PPF. I have little doubt that we should scrap the FAS
as a separate entity and bring the whole administration within the PPF
in the way that I described. Indeed, a review was carried out of the
FASat the moment the name of the gentlemen who did it escapes
mewhich in many ways took the view that the administration
should be shifted into the Pension Service itself.
Subsection (1)(c) deals with
whether the FAS is adequately financed. I shall deal
with that more broadly in a minute. Subsection (1)(d)
reads,
what other sources
of finance could be made available, including but not limited to
unclaimed assets.
Subsection (1)(e) deals
with whether the
FAS
should be engaged in
the purchase of bulk
annuities.
So
how is the FAS doing? Only today, we discovered in a parliamentary
answer that it has finally provided assistance to some 871 people. That
is a massive advance on the situation a few months ago, but it is still
not terribly good when we consider the 125,000 people caught in this
nightmare. And that is despite the fact that it has been in operation
for almost 18 months. It is now, of course, closed to new applicants
and seems to be taking on average at least six months to process a
single claim.
The FAS
was set up in Yorkalmost as far from the PPF as it is possible
to getand it has already cost £7 million to
deliver payments to just 871 people. Those figures came out the day
before there was to be a demonstration outside Parliament on behalf of
the Pensioners Action Group starting its High Court case against the
Government tomorrow over compensation and the ombudsmans
report. We will come back to that report and the Governments
reaction to it in more detail when we discuss new clause 7 shortly.
However, it seems clear to us that the FAS got off on the wrong foot
and after a year and a half in operation only a tiny fraction of those
who need help are receiving it. To use a phrase current in the Home
Office, it is simply not fit for purposeI have described
already what I believe should happen instead.
So how should we deal with the
FAS? The parliamentary ombudsman said in her
report:
I am
quite clear that the FAS will not constitute an adequate and
appropriate remedy for the injustice claimed by those who have
complained to me.
We have heard that the Government
have provided extra funding for the FAS. In Department for Work and
Pensions questions yesterday, the Secretary of State was worryingly
vague about the extent of that commitment. Having carried out an
analysis, with expert help, it seems to us that the Government have
given an open-ended commitment to what is essentially a defined-benefit
scheme compensating people under the FAS. It is difficult to see a
limit on the Governments liability. I hope that the Minister
has had a chance to reflect on that since yesterday because it seems
that the Government, who are claiming a figure of £1.9 billion,
could be liable for quite a lot more, given the level of benefits
established. Presumably, it will be easier to establish the total
liability now that new claims under the FAS are out of time, as I
understand it. If the Minister has more information, I would be
delighted to hear it.
Our view is very clear. We think
that the FAS has not been a success. If it was designed as a way in
which to get the Government through a rough political patch, and
through a general election campaign, it has been mildly successful, but
it has not solved the long-term problems of so many people with
legitimate needs for financial help following events completely beyond
their control. Would it not make far more sense to fold the FAS
administratively into the PPF, which will hopefully speed up the
process by which people are
compensated?
I will
deal with all these points on finance in much more detail when we
discuss new clause 7, if that helps the Minister and you,
Mr. Taylor. Subsection (1)(c) of our new clause 6 relates to
whether the FAS is adequately financed. That is also a key question if
the Government are determined to keep it as a separate entity, subject
to the point that I made about what limits, if any, there are on the
Governments stated liability.
We have said
that unclaimed assets are an obvious place to look, given that there is
£3 billion of unclaimed pensions, which might be appropriate for
the purpose I am discussing. For a long time, the Governments
mantra was that just because assets were unclaimed, it did not mean
that they did not belong to people. That is true in theory, but a year
or two ago the Chancellor did a 180° turn and is now looking at
ways to grab unclaimed assets. I suspect that that is partly to make up
the shortfall in funding for the Olympics. Clearly they are available
and this is an obvious way to use them.
There is also a major issue
about the bulk purchase of annuities. I know all the arguments about
annuities and why they should be purchased in an ideal world, if one is
a purist. However, the money available could go a lot further. I am not
just talking about the money that the Government have already committed
from the taxpayer or the unclaimed assets. We should remember that
there are residual assets in these pensions, although they are
admittedly inadequate for the purpose of covering all the
claims.
Let us
consider those things taken together. The money could go a lot further
if, instead of buying bulk annuities with all the premium attached to
the cost of that in the marketplace, it was spent simply on paying out
to people on a regular basis the compensation to which they are found
to be entitled. These are important issues, and I want to go into the
financing of
the claims in more detail when we consider the ombudsmans report
and so on.
It is a crying
shame and, as I have said before, a stain on this Governments
record that some of these unfortunates are having to appear in the High
Court tomorrow to make a case for proper compensation. There is an
extra dimension to this, because I understand that the Government have
been playing hardball, as the Americans would put it, on the legal
costs that would be incurred if claims were to fail. I am sure that
there are precedents in respect of public interest cases, particularly
given that this is essentially a class action, where Governments should
not pursue costs because legitimate issues need to be considered. I do
not want to stray into the realms of sub judice, but the Government
should take a more emollient line. Why should these people be going to
court at all? Why should they not be looking to the FAS to look after
their legitimate interests? This situation is an enormous
shame.
My final point
comes up in spades in new clause 7, and we have made it many times,
including on Second Reading. It seems to us that the Government have a
major task to perform in clearing the ground for the new system of
personal accounts. That means removing any factors within their control
that are undermining confidence in the pensions system as a whole. I
suspect that nothing has done more to undermine confidence,
particularly among younger workers, about saving for pensions than the
regular appearance of a lot of middle-aged or older men stripping off
for the cameras at Labour party conferences or elsewhere to make their
case about their lost pensions. Such events are extremely bad news for
the whole pensions system and for the Government in terms of trying to
build up confidence in pensions. That is why it is important that we
air these issues as part of the debate on this
Bill.
6
pm
Andrew
Selous:
I agree with everything that my hon. Friend the
Member for Eastbourne has said. I have an interest, because some of my
constituents were affected by the events involving the Dexion pension
scheme in Hemel Hempstead, which is not far from my constituency, and
one or two were affected by the collapse of the Albert Fisher pension
scheme, although that is somewhat further away from
Bedfordshire.
I simply
want to continue on the point of trust which my hon. Friend the Member
for Eastbourne mentioned. I say this as someone who wants personal
accounts to succeed, and who genuinely wants to be part of this
consensus and to have a much better system of state and private pension
provision. There is unfinished business here, and the Government have
an obligation to clear the decks and try to get a slightly more just
settlement for those 125,000 people who feel incredibly hard done by in
terms of the guarantees that they thought they
had.
It is all very
well for people like us to stand up in Committee and elsewhere and make
these points. I want to quote three paragraphs from a lady called Anna
Roberts. She wrote this in 2003 when she was 33 in an excellent
document that I have referred to before
produced by Age Concern and the Fawcett Society. It was principally on
womens pensions, but the point that she makes here about trust
is so relevant and shows why new clause 6 is important in helping
personal accounts to get off to the best possible start. Anna Roberts
said:
I
dont have a private pension and have never seriously considered
joining a pension scheme, despite working full time and earning a
decent salary.
Like
the majority of people I know, I am incredibly cynical about pensions
and would rather look at other ways to plan for my retirement. I think
that buying a property or investing in a second home is a much safer
option.
I do not trust
the pensions system. There are so many stories reported in the press
about people who lose out after making years of contributions. At the
moment I just dont think it is worth taking the
risk.
I suspect
that this ladys view has become even more cynical, given the
coverage that those 125,000 people have
received.
Mark
Pritchard:
Likewise, I have constituents who have been
affected by the Motherwell Bridge pension scheme collapse. Does my hon.
Friend agree that while the financial assistance scheme gives some
compensation, in the majority of cases it has not been full and
complete compensation, which in itself has left people with a bitter
taste in the
mouth?
Andrew
Selous:
My hon. Friend is absolutely right. It was
initially very minimal compensation. The Government have increased it
somewhat. But I really come back to subsection (1)(d) of new clause 6,
particularly in relation to unclaimed assets. I am surprised that the
Government have not looked more closely at this area, particularly as
they have looked at unclaimed assets, possibly in terms of the social
investment bank which would do good works that we all would welcome in
our constituencies. I think that these people who have lost out have a
prior moral claim. As my hon. Friend the Member for Eastbourne said, we
hear rumours that this money may be earmarked for the yawning gap in
the budget for the Olympics in 2012. New clause 6 is an attempt to deal
with the issue of trust so that we can get the system of personal
accounts and this new settlement off to the best possible
start.
James
Purnell:
It is quite right to say that the key issue
around personal accounts and pension saving in general is
peoples confidence in the system. The hon. Gentlemans
quote came from before the Pensions Act 2004 was introduced
and before the introduction of the pensions regulator and the
scheme-specific funding regime which, as we were discussing yesterday
at Question Time, is in part responsible for company pension schemes
being better funded than they have been since
1999.
Andrew
Selous:
Does the Minister believe that in 2007 people of
Anna Roberts generation think that pensions are more certain
and more trustworthy than in 2003, and that they are more inclined to
go into pension schemes?
James
Purnell:
I cannot comment on the view of the public, but
it is worth pointing out that we have the pensions regulator and the
Pension Protection Fund. They give people the kind of safety net that
the hon. Gentleman knows about from his experience on the Committee. It
is important that we communicate to younger people who are thinking
about saving in a company pension that the Pension Protection Fund
exists.
If the hon.
Members for Eastbourne and for South-West Bedfordshire were attacking a
regulatory regime at all, it was the one that was put in place in the
Pensions Act 1995, and the much-commented-on leaflet describing the
1995 Act in the terms that the now shadow Foreign Secretary used when
he was the Minister taking through that Act. We have been defending
that regime in the European Court of Justice and we will also defend it
in judicial review this week. If he thinks that the regime that was put
in place by the 1995 Act is insufficient in light of the 1983
insolvency directive, perhaps he will say so
now.
Andrew
Selous:
I am grateful to the Minister, but I am a bit
disappointed with the tone of his remarks. I did not seek to apportion
blame either to his party or to mine. He is right in saying that the
issues go back many years, but the important thing now is to consider
how to provide a more just settlement for these people so that we can
move the issue on. I am not hearing a solution from the
Minister.
James
Purnell:
I was just responding to the hon.
Gentlemans challenge about how the situation has changed since
2003. Three key things have changedthe pensions regulator, the
PPF and the financial assistance scheme have been introduced. They were
not there before. If we are to discuss the matter, we need to do so on
the basis of whether we think that the regulatory regime is right, and
we have defended it in a number of court actions.
Just as important is whether
parties are proposing to put more money into the scheme. The hon.
Member for Eastbourne said on 27 June that he was not proposing to put
any more taxpayers money into the financial assistance scheme.
It would be easy if there were a pot of money out there that had not
been allocated and could be spent on this. I shall respond to his
remarks when I address that matter. What is clear, and I hope that he
will make it so to people during the demonstration tomorrow, is that
the Conservative party is not proposing to spend any more
taxpayers money on the financial assistance
scheme.
Mark
Pritchard:
Of course, in many cases there is a pot of
money availablea pension fund. It might be that a company goes
into receivership and that a pension fund is suspended. Does the
Minister agree that there might be a case for investigating
ring-fencing such pension funds and protecting them from high and
excessive professional fees from
receivers?
James
Purnell:
Of course, the remaining pension fund is used to
pay out pensions, and the FAS tops that up. The key point towards which
I think the hon. Gentleman is pointing is how quickly schemes wind up.
As he knows, we recently published our review of the winding-up of
schemes in which we made it clear that we thought that people should
wind up their schemes within two years. I hope that that addresses his
point that it should be done as efficiently as possible so that pension
funds are not depleted by excessive administration fees. If that is the
point that he was making, I strongly agree with
him.
Mr.
Waterson:
The Minister seems to be a one-club golfer when
it comes to the FAS; all he ever says is that the Tories will not
commit any more taxpayers money. However, we have put forward a
series of income and asset streams that could be used and tried to
consider sensibly how people could be properly helped. All the
Government ever seem to do is say, Oh, it will cost some vast
amount. It is a visit to another version of the Lib Dem Santas
grotto. It will cost £15 billion, and the world as we know it
will come to an end. However, they should be considering some
of the options and working them out. They have the resources to do
that; why will they
not?
James
Purnell:
I shall be talking about exactly those issues in
my speech. If the hon. Gentleman thinks that I have not addressed them,
he is welcome to intervene on me at the
end.
The
amendment calls for a review of the financial assistance scheme.
Members will know that we have been here before. The hon. Gentleman
referred to the Galvin review, which we announced on 6 June and which
reported in July. It was charged with considering what could be done to
provide the best administration and management for the financial
assistance scheme to ensure that people were paid as quickly as
possible. The review also considered how to ensure the most
cost-effective operation of the FAS and a full range of options for its
organisation and location. The review was conducted by DWP officials,
with representation from the PPF, seconded experts from the pensions
regulator and significant input from the pensions industry.
The review
explicitly considered transferring the administration of the FAS to the
PPF. In that particular case, the regulatory requirements faced by the
PPF in respect of the transfer of FAS would have placed considerable
strains on a small organisation in its first years of operation. Any
PPF option would also require secondary legislation to extend the PPF
remit, which could involve a significantly longer transfer
process.
However, the
review found that a number of recommendations should be acted on to
improve the administration of the FAS. It recommended that a different
skill set be brought in and that there should be a revised approach to
gathering data, to speed up payments. It considered outsourcing and
decided that it was not a viable option. Instead, it decided to bring
such skills in-house; I shall talk about that a bit
later.
The review
concluded that the length of wind-up and competing trustee priorities
were real constraints on making fast payments, that a detailed work
analysis of the operational unit was required and that the long-term
governance of the FAS was best placed in the Pension Service, which has
the competence to operate the payment processing effectively and
efficiently. Since July, we have worked hard to implement the
reviews findings.
Mr.
Waterson:
Having said all that, and given that the FAS has
had six months to implement the recommendations for improvement in the
service, is the Minister satisfied that as of yesterday only 871
payments have apparently been made, of the much larger number still
being
processed?
James
Purnell:
I will come to that in my speech; I shall try to
explain the main hurdle in paying more people. It is worth saying that
there is no way we should be paying 125,000 people because the vast
majority of them have not yet retired. The financial assistance scheme
pays only those who have reached retirement age, survivors and, in some
cases, the terminally
ill.
The review looked
into what the key barrier to making faster payments was. That key
barrier is data collection. We need to get data from schemes about all
individual members and the rights that they have built up so that we
can work out how much to pay them. That barrier would arise in pretty
much any scheme that the hon. Member for Eastbourne wanted to come up
with. Unless he wanted a flat rate to be paid to people regardless of
how much they had contributed, any scheme that he came up with would
have to go through the process of calculating how much individuals were
owed and to what level they should be topped up. In this first stage,
that requires significant work and has led to the six-month delay that
the hon. Gentleman mentioned. That is the up-front process, going
through all the schemes working out peoples entitlement. Once
that has been done, the process should be relatively simple. At that
stage, we shall just be paying people an amount that has been
calculated, which will be a relatively simple task, but in the first
few months, working out peoples individual entitlements is a
genuinely significant
task.
6.15
pm
For that reason,
we are currently working with the private sectorMercer Human
Resource Consulting, which is one of the leading providers of services
to the pensions industryon our processes and on the data issues
that we have encountered. Mercer is working to transfer its expertise
and to build on the knowledge already acquired by the staff at the FAS
unit.
I have also
written to key figures in the pensions industry, urging them to support
the members in the schemes for which they are responsible and to supply
FAS with the data that we need to make payments. We have urged the
pensions industry and its administrators to provide the data that we
need. We are also working with the pensions service to complete the
transfer of the FAS operational unit as quickly as
possible.
FAS staff
have already successfully handled the challenges of scheme notification
and qualificationthe process of working out which schemes will
be eligible. They have dealt with applications from more than 900
pension schemes and, since we announced the review of the FAS in June,
its staff have overseen a 10-fold increase in the number of payments
being made. I do not believe that it would be an effective use of
taxpayers money formally to review the operation of the FAS
again. That would prove a distraction to the staff and to scheme
trustees and administrators, who are now working closely together to
get those data. I want to thank the trustees who have been providing
information and making requests for initial payments and, indeed, the
FAS staff, who have been working extremely hard and effectively to
increase the number of
payments.
Now, the
amendment also calls for a review of FAS funding. In the White Paper in
May we announced an increase in FAS funding from the £400
million originally allocated to £2.3 billion. In response to the
hon. Gentlemans inquiry, we set out the forecasts on the basis
of which we arrived at the £2.3 billion, based on a review of
the people and schemes. We set that out in some detail to Parliament. I
am happy to discuss that with him again, if he wants. The key point is
that the amount that we will pay to people in a situation is clear; we
have committed £2.3 billion, which, we believe, cover our future
liabilities under the financial assistance scheme. As I said, and as I
think the hon. Gentleman agrees, there is a balance to be struck
between the real need of people in this situation and what the taxpayer
should be expected to fund. We did and do recognise the real losses
that people have had. That is exactly why we have extended the scheme
to those within 15 years of normal retirement
age.
The
hon. Member for Eastbourne pressed me to say whether we had looked at
other sources of funds. We have. His amendment proposes looking at
unclaimed assets, which continue to be seen by the Opposition as a
panacea. The challenge for them is that the Government will be
committing, on behalf of the taxpayer, to guarantee pensions for the
lifetime of the scheme, with survivors rights. That would be
for at least 50 years. I do not think that it would be responsible to
provide such a guarantee without having identified the resources needed
to underwrite it over the long term or, indeed, to establish the amount
available as unclaimed assets and then represent that amount as an
ongoing income stream.
The hon.
Member for Eastbourne cannot be sure that unclaimed assets would
provide an income stream over 50 years. It is also clear that there is
not enough in unclaimed assets to be able to pay pensions in full, even
if he thought that that stream was one that could be reliably depended
on for the next 50 years. That is the problem with relying on unclaimed
assets. It is the same problem as thinking that we could pay from the
national insurance fund surplus or the Departments contingency
reserve. They are not pots of money that can be used to make that
guarantee over 50 years and it is not fair to pretend to people that
that could be the
case.
Andrew
Selous:
Is it the Ministers argument that because
unclaimed assets are not a total solution, they are no solution at
all?
James
Purnell:
No, that is not my argument. My argument is that
if people are to make a guarantee over 50 years, they need to say how
it will be funded. It is also worth saying that unclaimed assets are
not Government money. As the hon. Gentleman knows, an independent
commissionthe Commission on Unclaimed Assetshas been
set up to propose recommendations on the use of unclaimed assets in the
UK. The commission recommended the creation of a new independent
financial institution to drive voluntary and community organisations
seeking to relieve poverty in the UK. The commissions final
report to be published before the 2007 Budget will detail a series of
technical and regulatory mechanisms
to ensure a thorough auditing of dormant accounts and a rigorous
campaign to unite account holders with their unclaimed assets.
Obviously, if that is successful, there will not be as much money in
that fund.
The
commission has made clear what the fund should be used for. If the hon.
Gentleman is saying that the money should be taken out of that fund and
that he disagrees with the proposal, that is his right. However, the
point is the same for any use of Government money. For example, if the
Government were to use taxpayers money to increase the amount
in the FAS, that money would not then be available for an alternative
use. Decisions should be looked at in that
context.
Andrew
Selous:
The point made by the Minister is, of course,
valid. Some money may be reunited with it ownersthat is fine
and we accept that. However, is he really saying that, as the Minister
for Pensions, he is happy for that money to go towards the purposes of
a social investment bank and reducing poverty? That is an objective
that all hon. Members would share, but, as the Minister for Pensions
Reform, does he really think that that should be the first call on that
money?
James
Purnell:
My job as the Minister for Pensions Reform is to
try to get more money for this scheme and that is exactly what we did
in the White Paper; we extended the money available to £2.3
billion. We clearly recognise the loss that people have suffered and we
found extra taxpayers money to extend the scheme to people
within 15 years of their normal retirement age. I have made clear, as
has my right hon. Friend the Secretary of State, our commitment to
helping people who have suffered those losses.
The other source of funding
mentioned by the hon. Gentleman was bulk annuity. He knows that the FAS
tops up an annuity purchased by the schemes trustees on the
members behalf. In concluding that that represented the best
use of taxpayers money, we considered whether pooling the
remaining assets was a viable option. The difficulty was that around
110 of the 640 schemes that qualify for the FAS have already completed
winding up and have purchased annuities. For the rest, it is not known
what proportion of assets are still being held, but a significant
proportion will already have been spent on annuities for pensioners,
therefore significantly reducing the bulk purchasing power of the
remainder. As the hon. Gentleman knows, if we do not annuitise, that
changes the risk profile of people in the future and potentially leads
to pensioners incomes going down while in payment, which,
again, may be something that people are reluctant to expose themselves
to.
Mr.
Waterson:
Can the Minister give us some idea of what data
are or could be available on which pension funds still have assets that
have not been devoted to purchasing annuities? That is a crucial issue,
but it seems quite difficult to get a handle on the
figure.
James
Purnell:
I thought that I had just given it to him by
saying that 110in fact it is 111of the 640 schemes that
have qualified for FAS have already completed winding up and have
purchased annuities.
So, in December, the hon. Member
for Eastbourne remarked that the review of FAS was
pithy and to the point.
[Official Report, 10
th
Delegated
Legislation Committee, 6 December 2006; c.
7.]
We are implementing the
reviews findings and have considered other sources of finance,
but we think that in making guarantees to people over the next 50
years, we have to know where the money will come from and be able to
identify it reliably. We completely share the Committees
sympathy for people who have lost pensions. I have met more than 100
people in that situation and, of course, it is heartbreaking to have
had an expectation that has not materialised. That was exactly why the
Government believed it right to provide extra support through the
financial assistance scheme and to introduce the pensions regulator and
the Pension Protection Fund. However, we must balance that obligation
with our obligation to taxpayers, many of whom do not benefit from
defined benefit pension schemes at all. We have great respect for the
office of the ombudsman and the motives of those who are fighting to
represent people, but both the ombudsman and the Select Committee
recognised in their reports that the Government did not cause the
pension schemes to fail. It would not therefore be right to write a
blank cheque to underwrite the losses. I hope that I have explained why
it was right to extend the FAS, but it would not be fair to the
taxpayer to underwrite schemes in
full.
Mr.
Waterson:
I am grateful to the Minister for at least parts
of his answer and for taking us through some of the practical
difficulties, but I wonder whether the matter could be re-examined. I
appreciate the Ministers point about transferring to the PPF
being somewhat troublesome when it had only just started, but now that
it is more established I wonder whether that could be reconsidered. I
was interested to hear about the work being done with Mercer, which
will hopefully bear
fruit.
The Minister
spoiled it all by saying, among other things, that the Government would
not write a blank cheque. Nobody is asking them to do that. We are
saying to them that they should stop telling us what the problems are
and consider more seriously the options that have been put forward.
They have committed £2.3 billion, but it is still
unclear to me whether there is an open-ended commitment beyond that
figure. We agree about the extra burden on the taxpayer, which is
precisely why we keep mentioning other
possibilities.
On
unclaimed assets, we have always said that the obvious safeguards must
be in place, including major attempts to reunite people with their
assets, as happened in Ireland, and an underlying guarantee that late
applicants with a legitimate claim can be compensated. There is a big
difference between the bank accounts in question in this country and,
for instance, those in Ireland, where a lot of them go back a long
waysometimes hundreds of years. The chances of anyone coming
forward are therefore much slimmer, although it is not impossible. The
Minister could have been a bit more open about how far the process of
identifying unclaimed assets and bank accounts has gone in
organisations such as the British Bankers Association, and how
far the process of
identifying the £3 billion of unclaimed pensions has gone at the
NAPF. It happily confirmed that figure to us
recently.
I suppose it
comes down to whether the Minister is happier for money to be spent on
shoring up the Olympics than on pensioners who have in many cases lost
almost everything. I shall not press the new clause to a Division, but
I will certainly wish to return to the matter on Report. I beg to ask
leave to withdraw the
motion.
Motion and
clause, by leave,
withdrawn.
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