Clause 99

Part of Pensions Bill – in a Public Bill Committee at 12:00 pm on 19th February 2008.

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Photo of John Greenway John Greenway Conservative, Ryedale 12:00 pm, 19th February 2008

This is an important issue and my hon. Friend the Member for Eastbourne is on to something in raising it, but listening to the hon. Member for Inverness, Nairn, Badenoch and Strathspey reminds me what the issue was about originally, which is not quite what we are discussing. My understanding is that it is about ensuring that members of schemes have reassurance and confidence that the funding of their schemes by employers is adequate. Of course, in the great debate about public sector pensions that does not quite apply in the same way. Many public sector pensions are unfunded; one thinks particularly of the police service. What to do about the burgeoning liabilities of public sector pensions is a major political issue for this Government and any future Government. The Minister will remember a point I made on Second Reading, which is that it will be a huge tragedy if we continue to move away, right across the piste, from final salary schemes, simply on the argument about what is affordable. I have real concerns about what future generations may be entitled to in retirement, which in a sense is linked up with this issue.

On the issues that my hon. Friend the Member for Eastbourne has raised, there must be a concern if the regulator is to use the new power in clause 99 to impose an actuarial calculation regime on schemes that until now everybody has regarded as being well-managed, prudent and properly funded. I would share his concern if that were the case, however, my reading—I may have it completely wrong—is that this is actually a provision to assist members of schemes who feel that employers are not contributing sufficiently. That has been a major scandal in many schemes. The new power would enable the Pensions Regulator, which is the watchdog on behalf of scheme members, to make an intervention even if the cosy relationship between trustees and employers means that they think that all is well, which has also gone on in the past.

This is a critical issue. For the reasons I have stated, we need this power in the Bill. What we need from the Minister is a reassurance it will not be used across the board to impose new funding requirements on all kinds of schemes, in response to the longevity information that my hon. Friend the Member for Eastbourne rightly drew attention to. Those two points are different. Those schemes that the regulator feels are underfunded can now be dealt with even if the trustees and the employers think that they are funded sufficiently.

My understanding is that at the moment, the regulator cannot intervene—with this power he could, and that is important. I entirely share the concern of my hon. Friend the Member for Eastbourne. If the provision enables the regulator to interfere right across the board in employer pension schemes, particularly in the private sector, that could potentially impose funding requirements which would drive even more schemes into defined contribution arrangements and away from defined benefit arrangements. That would add to the problem of levelling down about which we are all concerned.