Clause 101 - Applications and notifications

Pensions Bill – in a Public Bill Committee at 3:30 pm on 25th March 2004.

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Amendments made: No. 370, in

clause 101, page 62, leave out lines 34 to 36 and insert—

'(1) Where the trustees or managers of an eligible scheme become aware that—'

No. 371, in

clause 101, page 62, line 39, at end insert—

'they must make an application to the Board for it to assume responsibility for the scheme under section 100.'.

No. 372, in

clause 101, page 63, line 9, at end insert—

'( ) The duty imposed by subsection (1) does not apply where the trustees or managers of an eligible scheme become aware as mentioned in that subsection by reason of a notice given to them under subsection (5).

( ) The duty imposed by subsection (4) does not apply where the Regulator becomes aware as mentioned in that subsection by reason of a copy of an application made by the trustees or managers of the eligible scheme in question given to the Regulator under subsection (2).'—[Malcolm Wicks.]

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I feel that we have reached a milestone. We have now passed the 100-clause mark—that is, on one view, at least; we keep leaping

about the Bill, so perhaps it is not so much of a milestone after all.

People in the industry have raised a couple of points with me about subsection (1), which imposes an obligation on trustees to apply to the board, so that it can

''assume responsibility for a scheme . . . if it appears to''

the trustees that the employer

''is unlikely to continue as a going concern''.

That is a pretty imprecise phrase, and I do not recognise it as a legal term of art. If we are imposing obligations on trustees in the clause, as we are in various parts of the Bill, we should be pretty clear about what that obligation is. It seems that trustees, who may have no real internal knowledge at all about the employer, its business or its finances, will have to make a subjective judgment. Is it fair to impose such an obligation, rather than simply giving trustees the power to make an application, so that they have the option, but not necessarily an obligation?

That unease is also reflected in the views of the National Association of Pension Funds. It suggests that trustees get guidance from the regulator on how to discharge their responsibilities. There are two ways of approaching the problem, but we definitely believe that there is a problem.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

In the light of that line of questioning, it would be helpful if I explained that clause 101 relates to a scheme that is not subject to insolvency events, but for the great number there is an insolvency event and a clear trigger. The clause provides for the trustees or managers of an eligible scheme, the employer of which is not subject to insolvency events as defined in UK legislation, to apply to the PPF for the board to assume responsibility for the scheme. Examples include some public sector schemes without a Crown guarantee, or schemes with a foreign sponsoring employer.

Equally, the clause provides that, where the regulator becomes aware that the sponsoring employer of such a scheme is unlikely to continue as a going concern, it must notify the board. The PPF is keen to ensure consistency in the process of triggering its involvement with eligible schemes. We recognise that some employers will not be covered by the insolvency events as listed in clause 95, and we have therefore made provisions to cover those schemes. We are keen to ensure that legislation captures all eligible schemes whose employers will have been required to pay the PPF levy, and that those members are therefore protected by the PPF. I hope that that satisfies the hon. Gentleman as to the type of schemes—they are in the minority—that could be subject to the PPF and that do not have the formal trigger of the so-called insolvency event.

Question put and agreed to.

Clause 101, as amended, ordered to stand part of the Bill.

Clause 102 ordered to stand part of the Bill.