Transfer Payments and Preserved Benefits

Part of New Clause 1 – in the House of Commons at 3:37 pm on 20th July 1987.

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Photo of Sir Brandon Rhys Williams Sir Brandon Rhys Williams , Kensington 3:37 pm, 20th July 1987

People are going to take different views about the quality of a man in mid-career who is footloose and wants to change his employment. The first employer may say, "He has been working for us for 20 years, and we know his limitations. We do not think that he will ever make it to the board or to the head of his department. We do not think that he is of that calibre. Therefore, his trajectory, if he stays with us, will not be that progressive. You may think that he is a wonderful chap and you may be willing to pay him all sorts of bonuses to take him over, but our opinion is based on experience. Therefore, we do not think that his trajectory should be as high as all that." That may be the case; but at any rate my formula takes a realistic trajectory into account with the first employer. If the second employer is putting a rather ridiculous premium on the man, that is up to the second employer. He can use golden hallos, or whatever it may be, to tempt the person across.

It is not only salary or pension rights that have to be taken into account in the negotiations to tempt a senior person to change jobs. Other factors may include location, housing or many other matters. But we have to arrive at a fair method of assessment of the size of the asset that has accumulated for the employee in his first employer's fund. Therefore, one has to get the first employer to focus on the eventual salary that that person might receive if the stayed in that employment, rather than the figure that he happened to be earning when he got so fed up that he decided to leave the firm. At that stage the employee was probably making a fair assessment that he was underpaid for what he could do; that would be why he was thinking of going.