Orders of the Day
Mike O'Brien (Minister of State (Pension Reform), Department for Work and Pensions; North Warwickshire, Labour)
My hon. Friend raises an interesting and important point. As I have already indicated, we will suggest to the trustees of pension funds, who have their own legal obligation and will need to take their own legal advice, that they need to look carefully at this matter. If it is the case that bulking up the various funds would enable us better to bulk purchase annuities, that would on the face of it appear to be better for the members, and the trustees have to take that into consideration. In the end, we are going to have to rely on trustees to look at the facts, examine their fiduciary duty to their members and ensure that they make the right judgment. The important thing is that the Bill moves to Royal Assent, so that we can increase the level of initial payments, meaning that more people will benefit immediately. Those are tangible commitments by the taxpayer that will make a real difference to people's lives.
Amendment No. 24 is about the FAS being at Pension Protection Fund levels. The amendment does not disguise extra public spending as a lifeboat fund or pretend that unclaimed assets could get close to covering the costs. I admire its honesty, while questioning its effect. We estimate that moving from 80 per cent. on the FAS to PPF levels just like that would cost the taxpayer £2.7 billion, or £640 million, net present value. The cost would be low at first, but then rise rapidly as more people retired.