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The Deputy Chairman of Committees (Lord Hogg of Cumbernauld): If Amendment No. 204F is agreed to, I cannot call Amendment No. 205 due to pre-emption.
Baroness Hollis of Heigham moved Amendment No. 204F:
"(2) For this purpose the following are withdrawal events in relation to a scheme—
(a) a withdrawal notice issued under section 116(2)(b) (scheme rescue has occurred) becoming binding;
(b) a withdrawal notice issued under section 122(3) (scheme rescue has occurred) becoming binding;
(c) a withdrawal notice issued under or by virtue of section 138 or 139 (refusal to assume responsibility) becoming binding;
(d) a withdrawal notice issued under section (Withdrawal following issue of section 116(4) notice) (no insolvency event has occurred or is likely to occur) becoming binding,
and references in this Chapter to a "withdrawal event" are to be construed accordingly.
(3) Subsection (4) applies where a withdrawal notice mentioned in subsection (2) is issued in relation to a scheme and becomes binding and—
(a) an insolvency event in relation to the employer occurs during the interim period and, if subsection (4) did not apply, the event would not be a qualifying insolvency event within the meaning given by subsection (3) of section 119 solely because the condition in sub-paragraph (ii) of paragraph (b) of that subsection would not be satisfied, or
(b) an application under section 121(1) is made, or a notification under section 121(5)(a) is given, in relation to the scheme during the interim period and, if subsection (4) did not apply, the application or notification would be disregarded for the purposes of—
(i) subsection (1) of section 120 by virtue of subsection (4) of that section, and
(ii) subsection (4) of section 124 by virtue of subsection (5) of that section.
(4) In such a case, the withdrawal notice is to be treated for the purposes of subsections (1) and (2), as if the time when it became binding was the time immediately before—
(a) in a case falling within subsection (3)(a), the occurrence of the insolvency event, and
(b) in a case falling within subsection (3)(b), the making of the application under section 121(1) or, as the case may be, the giving of the notification under section 121(5)(a).
(5) For the purposes of subsection (3), the "interim period" in relation to a scheme means the period beginning with the issuing of the withdrawal notice in relation to the scheme and ending with that notice becoming binding.
(6) For the purposes of this Chapter—
(a) the occurrence of a withdrawal event in relation to a scheme in respect of a withdrawal notice issued during a particular period ("the specified period") is a possibility until each of the following are no longer reviewable—
(i) any withdrawal notice which has been issued in relation to the scheme during the specified period;
(ii) any failure to issue such a withdrawal notice during the specified period;
(iii) any notice which has been issued by the Board under Chapter 2 or this Chapter which is relevant to the issue of a withdrawal notice in relation to the scheme during the specified period or to such a withdrawal notice which has been issued during that period becoming binding;
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(iv) any failure to issue such a notice as is mentioned in sub-paragraph (iii), and
(b) the issue of, or failure to issue, a notice is to be regarded as reviewable—
(i) during the period within which it may be reviewed by virtue of Chapter 6, and
(ii) if the matter is so reviewed, until—
(a) the review and any reconsideration,
(b) any reference to the PPF Ombudsman in respect of the matter, and
(c) any appeal against his determination or directions,
has been finally disposed of."
The noble Baroness said: I beg to move.
Lord Skelmersdale: I had not appreciated that pre-emption would occur. I learnt only this afternoon of the possible length of the assessment period or the early closure of the assessment period in certain circumstances; namely, in subsection (2)(a), (b), (c) and (d).
My problem is that one of these matters is an actuarial re-visitation during the assessment period which says that the assessment period is no longer needed because the scheme has now become fully funded due to outside activities. That is fine and super; that is what we all want. However, the valuation of a scheme surely takes place at a particular time—almost on a particular day and certainly within 24 hours. Rather like advertisements that one sees in the financial pages of newspapers, valuations can go down as well as up.
Baroness Hollis of Heigham: It is like the advertisements that say, "Take the waiting out of wanting", although the noble Lord may not want to.
Lord Skelmersdale: Not just at this moment. All that thinking led me to wonder why the six months was required and whether it is the correct period. As actuarial valuations will have to be made under the Bill at regular intervals, I would have thought that the regular interval should be the right time for the withdrawal of the assessment period rather than the six months which is dictated under this clause. I would be grateful for an answer to that.
Baroness Hollis of Heigham: This concerns not whether the insolvency practitioner has determined that the scheme has been rescued or that it cannot be rescued; it is whether he is in a position not to make that order. In other words, we expect it to be fairly rare. It concerns the situation where an insolvency practitioner has issued a notice confirming that it is not possible to determine whether or not a scheme rescue has occurred; and where no further insolvency event has occurred within six months, that is to be considered a withdrawal event.
We would expect that it is not possible to determine situations in which that applies. They happen very rarely and only in instances where the insolvency practitioner has been appointed to resolve one insolvency issue for
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one creditor and has no overall view of the solvency of the company as a whole. This could occur, for example, under an administrative receivership. With such an insolvency procedure, which triggers an assessment period, the administrative receiver who represents an individual lender, for example, with a security for a loan, has the power to deal only with a claim of the relevant security creditors. If the company continues in whole or in part once the administrative receiver has recovered a specific debt, the administrative receiver will not necessarily be aware of the outcome of the pension scheme or indeed the business and would issue a notice saying that he was unable to issue either a "scheme rescue" or a "scheme rescue not possible" notice.
In practice, it is likely that the position of the company and the scheme will be reasonably clear, but not within the remit of the specific administrative receiver; and, of course, the PPF will be closely involved in understanding the wider picture. In many cases, it is likely that the company will continue to exist—perhaps in a rationalised form—or a separate insolvency trigger may occur with a separate liquidator appointed to deal with the rights of all the other non-secured creditors. In either case, we understand that a period of six months should be adequate both to clarify the insolvency position and to complete any further steps in the scheme valuation process. We do not want to continue that indefinitely as members' benefits are reduced.
I have checked to see whether any concern was raised by insolvency practitioners about the timetable, as that would be the key. I understand that none was raised. Should any doubt be raised I would reconsider the matter. Currently, I have no reason to think that going from six to eight months would have any particular benefit to insolvency practitioners, but it could have some detriment to members of a scheme.
Lord Skelmersdale: Again, I am very grateful to the noble Baroness for acquiescing to my slight bending of the Committee's rules of order and explaining that she is not entirely sure that six months is correct.
Baroness Hollis of Heigham: I have every reason to believe that six months is fine. All I am saying is that I am not aware of any support anywhere for the amendment of the noble Lord. Were there to be any, I would be open-minded about it and I would see whether that evidence was substantial. However, none has been made. I believe that that is an argument for saying that the six months is appropriate and acceptable.
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