Clause 203 - Conditions for pension protection

Pensions Bill – in a Public Bill Committee at 3:30 pm on 18th March 2004.

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Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions 3:30 pm, 18th March 2004

I beg to move amendment No. 278, in

clause 203, page 128, line 17, after 'if' insert

', after the date on which he became employed by the transferor,'.

I shall put the amendment in context. Clause 203 sets out the conditions in which employees involved in a business transfer may be eligible for the pension protection provided by clause 204. Employees can benefit for the first time from a statutory minimum standard of pension protection. Subsections (2), (3) and (4) provide that the pension protection provisions in clause 204 will apply to each of the following three categories of employee: those who are active members of the employer's pension scheme at the time of the transfer; those who are eligible to be a member of the scheme; and, when the scheme has a qualifying period before new employees are eligible to join, those who would have been eligible if they had continued to work for the transferor employer—the old employer—for a longer period. The definition is fairly comprehensive.

The clause recognises that in some cases employers may provide an occupational pension scheme offering money purchase benefits to which they do not make any employer contribution over and above the contracting-out rebate. In such cases, it would be unfair to require the transferee employer to have to make an employer contribution to a scheme. There is a risk that some unscrupulous employers might deliberately remove employees' occupational pension rights prior to a transfer to make a business look more attractive to potential buyers. Therefore, subsection (5) determines that if such action has been taken by the old employer by reason of a transfer, and is proven, the right to protection from the transferee employer will be unaffected.

The amendment clarifies the drafting of the clause, which sets out the conditions that must apply before employees can benefit from pension protection on transfer of employment.

Amendment agreed to.

Clause 203, as amended, ordered to stand part of the Bill