Clause 38 - Unpaid scheme contributions

Pensions Bill – in a Public Bill Committee at 3:00 pm on 11th July 2013.

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

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

Clause 38 amends the Pension Schemes Act 1993, so that if an employer becomes insolvent, protection is available to workers and agency workers as well as to employees. This protection allows schemes to make claims for payment from the National Insurance Fund of pension contributions that remain unpaid in the 12 months leading up to the employer’s insolvency. To explain: at the moment if one is an employee of a firm that becomes insolvent, there is a mechanism by which the National Insurance Fund can pay pension contributions that should have been paid—and were not—in a period up to insolvency. But the way that “employee” is defined excludes the growing number of agency workers and others who are not employed earners.

In the context of automatic enrolment, which brings in many people who do not currently have workplace pension provision—such as many agency workers—it is important that they have the same rights as employed earners in the event of insolvency.

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport

Is my hon. Friend willing to say whether the Maxwell pensioners would have been safeguarded in this matter?

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

It would be nice to think so. What we are trying to do with clause 38 is extend existing protection for employed earners to other categories of earners. There is a long list of what was wrong with Maxwell—theft was on the list—so it went far broader than the provisions of this clause. This is quite a narrow provision, as I am sure my hon. Friend appreciates. It is designed to recognise the modern labour market, the nature of employment relationships and to make sure that temporary and other workers are included.

If we did not do this, there is a possibility that existing legislation could be considered to be in breach of article 8 of the insolvency directive, whereas amending the existing legislation mitigates this risk. So clause 38 provides consistency of treatment for scheme members in the event that an employer becomes insolvent. Without extending this protection, two people doing similar or identical work for an employer, who are both automatically enrolled into a qualifying workplace pension scheme, could receive different treatment under the existing legislation, depending on whether they were classified as an employee or a worker or agency worker. I hope that the Committee will agree that we want to make sure that these provisions are applied in a fair and equal manner. Clause 38 makes an important contribution to that and I commend it to the Committee.

Question put and agreed to.

Clause 38 accordingly ordered to stand part of the Bill.