Final Salary Pension Schemes

Oral Answers to Questions — Work and Pensions – in the House of Commons at 2:30 pm on 17th March 2003.

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Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee 2:30 pm, 17th March 2003

If he will make a statement on the number of final salary pension schemes that have closed since May 2002.

Photo of Ian McCartney Ian McCartney Minister for pensions, Department for Work and Pensions

The Green Paper acknowledges that the trend towards defined contribution schemes has accelerated over the past few years, but the trend should not be overstated. One hundred and nineteen defined benefit schemes have reported their closure to new members to the pensions schemes registry since May 2002, which is just over 1 per cent. of the total number of defined benefit schemes where members are still building up pension rights.

A number of companies—for example, Unilever, Centrica and John Lewis—have recently declared their desire to retain their existing pension arrangements, increasing their own, and in some instances their employees', contributions. That demonstrates partnership in action, an approach that the Government advocate.

Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

I thank the Minister for that answer, but the fact is that nobody denies that final salary schemes are in crisis. It might have been hoped that many people could find comfort in personal pension schemes, but the collapse in share prices over the past three years means that those are also in crisis. In the light of that difficulty facing pensioners, will the Minister make representations to his colleagues in the Treasury to the effect that it is high time that the changes to advance corporation tax—representing a tax on shares that has cost our pensioners £30 billion, or £5 billion a year—should be suspended so that we can at least for the time being, end this crisis, which is afflicting our pensioners so seriously?

Photo of Ian McCartney Ian McCartney Minister for pensions, Department for Work and Pensions

The crisis of confidence over private pensions started with the last Government and the mis-selling of £13.5 billion of pensions, and it took this Government to clear up the mess. I suggest that the hon. Gentleman, along with his colleagues on the Front Bench, should play a more active and positive role in replying to the response to the challenges put forward in the Green Paper. He might then get somewhere when he talks in such terms about the problems of second tier pensions. This Government are trying to sort out the problems caused by the last Government.