My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Work and Pensions to an Urgent Question in another place on private pension schemes. The Statement is as follows:
“The vast majority of employers do the right thing by their pension schemes and members can expect to receive the pension benefits they have paid for throughout their working lives. The Pensions Regulator and the Pension Protection Fund were set up in 2004 to provide pension scheme members with a safety net to ensure that their pension benefits received some protection when things go wrong—it is a fact that some businesses will fail. This PPF approach has been supported on a cross-party basis since 2004. To prevent irresponsible employers offloading pension liabilities to the PPF, the Pensions Regulator was given a wide range of powers, including the ability to recover significant assets where employers had failed to take account of the scheme. There are around 6,000 defined benefit schemes and cases like these are few and far between.
It is the responsibility of the Pensions Regulator to strike a balance between protecting members and PPF levy payers, and minimising any adverse impact on the sustainable growth of an employer when it comes to the regulation of defined benefit funding. The Pensions Regulator does not have the power to stop businesses paying out bonuses to executives or dividends to shareholders. However, if it sees a situation where it believes a scheme is not being treated fairly, the Pensions Regulator will investigate to see whether use of its powers is appropriate. However, this Government are clear that where sponsoring employers are able to meet their pension promises, they should, and must, do so, and that is why we have suggested ways that the current system could be strengthened to enable the Pensions Regulator to be more proactive.
In February 2017, we published our Green Paper, Security and Sustainability in Defined Benefit Pension Schemes, which included suggested measures that would strengthen the powers of the Pensions Regulator by introducing punitive fines for actions that harm a pension scheme. We also set out powers to enhance the regulator’s ability to demand information to ensure effective governance and spot issues before damage is done.
Our June 2017 manifesto reaffirmed this intent by proposing to give the regulator the power to impose a punitive fine alongside a contribution notice so that pension scheme members are fully protected. The details of the fine would be worked through with all relevant stakeholders but it would represent a significant strengthening of the deterrent.
Also we intend to make certain corporate transactions subject to mandatory clearance by the Pensions Regulator, but we must take care to ensure that these measures do not have an adverse effect on legitimate business activity and the wider economy.
I should also tell colleagues that we have received 800 responses to the Green Paper, and these are currently being reviewed by the department. The White Paper is in progress and will be published this spring.
Effective regulation is dependent on a prompt flow of information between parties concerned and compliance with rules and processes. Following the publication of the White Paper, we will introduce new legislation to ensure that the regulator gets the information it requires to conduct investigations and casework effectively and efficiently. It remains the case that this Government support free markets and capitalism but this has to be conducted responsibly”.