Clause 43 - Information relevant to the Board
Pensions Bill
3:00 pm
Mr Malcolm Wicks (Minister for pensions, Department for Work and Pensions; Croydon North, Labour)
The amendment would require the regulator to assess the benefit of each piece of information that it collects that is relevant to the functions of the PPF. That is not unreasonable. The clause exists for a number of reasons, not least to ensure that the two organisations—the PPF and the regulator—do not seek the same information with the additional cost burdens that that would impose on schemes. Those two bodies will work closely together, but they do not have the same functions. Given the closeness of the relationship between the two, it would be wrong if they both had to seek the same information.
Hon. Members will realise that the gathering and analysis of information is fundamental to the risk-based approach of the regulator and the protection fund. The regulator needs to gather information for its own functions, some of which will be directly relevant to the PPF. It is sensible to put in place arrangements so that the two bodies will not have to ask schemes to provide the same information twice.
To reduce even further the burdens on schemes, the regulator will be able to ask for information that it may not need for its regulatory functions, but which it believes the pension protection fund needs for its functions. Information collected in that way must appear to the regulator to be relevant to the exercise of the functions of the board. An example of that type of information is the data required to apply the risk-based element of the pension protection levy. Of course, the information collected by the regulator may be of use in the exercise of its functions, thus enabling it to take early action when problems appear to be imminent and step in as early as possible to try to get things put right. In doing so, it may be able to prevent scheme members from losing out financially. It may also be able to prevent a scheme from having to become a customer, as it were, of the pension protection fund when it would otherwise have done so, which in turn will protect the members of all pension schemes that are liable to pay the PPF levies.
In the unfortunate circumstances when the PPF—a term that we will, perhaps, get used to—becomes involved with a scheme, the regulator will be able to disclose to the board any relevant information that it has collected using the power. That means that the PPF will immediately have a large part of the information that it needs to fulfil its functions and will be able to act quickly if necessary to protect the scheme members and prevent the scheme funding level from deteriorating further. That is important.
There will, of course, be circumstances in which the PPF will need to gather information itself to carry out its functions. If that were so, the regulator and PPF would work together to reduce any possible duplication. Although I do not think that we should
tempt Committee members to discuss the pension protection fund per se, the interface is important.
There are differences. Although the regulator will gather information on behalf of the PPF, there will also be circumstances in which the PPF will need to gather information to carry out its functions. At that point it would be normal for the regulator to step back and allow the protection fund to take the lead in gathering information about a scheme—this is the crucial part—once the sponsoring employer has entered insolvency proceedings. If that happens the two bodies will work together, but the PPF will mainly take the lead.
Let me give two examples. The protection fund will normally become involved with a scheme because its sponsoring employer has entered insolvency proceedings. As soon as the PPF is notified of those proceedings, it will carry out a detailed valuation of the assets and liabilities of the scheme to help it assess whether it should enter the protection fund. The regulator will not have gathered all the information needed for that valuation, therefore the actuary working for the protection fund will need to gather and analyse data that is fully up to date. Similarly, a scheme with an insolvent employer may apply for fraud compensation. That is another aspect that we should not forget. At that point it would be appropriate for the PPF to collect data relevant to the fraud application. The regulator will not play a part in the payment of fraud compensation.
There will be more to say on that when we deal with the protection fund clauses. Nevertheless, I hope that I have persuaded the hon. Member for Tatton that the information we are seeking is proportionate and that it makes sense for the regulator to play a leading role in collecting information just once—albeit on a regular basis—even if some of it is primarily for the purposes of the PPF.