Scheme funder of last resort

Part of Pension Schemes Bill [Lords] – in a Public Bill Committee at 2:00 pm on 7 February 2017.

Alert me about debates like this

Photo of Richard Harrington Richard Harrington The Parliamentary Under-Secretary of State for Work and Pensions 2:00, 7 February 2017

I thank the hon. Gentleman for his positive intervention. The regulator has a huge number of powers, and the Bill gives a lot of powers that I think would prevent the problem he is talking about.

The hon. Member for Stockton North is forgetting— I understand why—the general rule that the fraud compensation scheme, which applies in many fields, does and will apply to master trusts. I therefore reject his point about fraud. I am not saying fraud could not happen, but there is already a mechanism in place to deal with that.

In our view, therefore, the risk level is already very low. We are against creating a Government-backed scheme because we think it would create a moral hazard. Schemes are currently working to ensure their systems are robust and we do not want them to feel comfortable that there is an entity that will always bail them out. That would not give comfort to scheme members. Indeed, for the Government to say we feel the risk is large enough to warrant a funder of last resort would create uncertainty—in effect, creating the very problem that the Opposition honourably are saying they are trying to avoid.

Annotations

George Morley
Posted on 11 Feb 2017 5:51 pm (Report this annotation)

" I am not saying fraud could not happen, but there is already a mechanism in place to deal with that."
How is it that the section 20 of the Pension Act is not deemed as being fraudulent and taken out because it is discriminative and immoral ?