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Dept for Work and Pensions

Answer

Sir Nicholas Winterton: To ask the Secretary of State for Work and Pensions what steps his Department is taking to protect the final salary pension schemes of employees; what assistance is provided to those people who are denied access to their pensions following company bankruptcy; and if he will make a statement. [156686] Malcolm Wicks: We are taking significant steps to protect members of defined benefit schemes. We are introducing the Pension Protection Fund, which will protect scheme members by paying compensation if their employer becomes insolvent and the pension scheme is under funded. We are also introducing a new Pensions Regulator that has the flexibility and powers to take a targeted and proportionate approach to protecting the funds held in pension schemes. Additionally, on 23 February, we laid Regulations that strengthen members' protection when a defined benefit occupational pension scheme starts to wind up while its sponsoring employer is solvent. On 24 February, we announced changes to the priority order which applies on wind up. This will help ensure that assets of the pension scheme are shared as fairly as possible between non-pensioner and pensioner scheme members. In the event of employer insolvency assistance is available to pension scheme members under the Employment Rights Act 1996 and the Pensions Scheme Act 1993. Under these Acts, the Redundancy Payments Directorate makes insolvency payments from the National Insurance Fund (NIF) to qualifying former employees. Claims for unpaid employees' contributions are limited to the actual amount deducted from wages during the 12 months prior to the date of insolvency. Unpaid employers' contributions for the 12 month period prior to the insolvency date are also payable, but are subject to monetary limits depending on the type of pension scheme.

Secondary information

Type

Written question

Reference

418 c832W;418 c852W; 156686

Session

2003-04

Subjects

Compensation Insolvency Workplace pensions Pensions Regulation

Link

View this Written question on www.publications.parliament.uk