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Occupational Pension Schemes (Levies) (Amendment) Regulations 2006

rose to move, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee]. The noble Lord said: My Lords, this statutory instrument sets the rate for the administration levy for the Pension Protection Fund for the financial year 2006–07. It also provides that there will be no levy for   2006–07 for the Pension Protection Fund ombudsman. The Government have a commitment to ensure that members of defined benefit occupational pension schemes can be confident that they will still get a protected level of income in retirement if their employer unfortunately becomes insolvent and the scheme is underfunded. The Pension Protection Fund, which opened its doors on 6 April 2005, forms a key part of meeting this commitment and, to date, more than 25,000 members of around 53 schemes are in an assessment period to establish whether they will enter the PPF. While it is right and necessary to protect those benefits, it is not right that taxpayers should foot the bill. As such, the PPF is financed through levies on schemes that are eligible for PPF assistance. The pension protection levy, together with the assets of schemes that are transferred in, provides for the compensation fund itself, but it is important that this    money is ring-fenced for the payment of compensation. There must always be funds in place to meet the compensation awards made by the PPF. In light of that, the Pensions Act 2004 sets up a separate administration levy that is raised to meet the ongoing running costs and the initial set-up costs of the board of the PPF. The set-up costs of the PPF were originally financed by money provided for by Parliament, and these are being recovered over a three-year period. The PPF legislation also provides for a disputes process so that interested parties can ask for a review of a range of key decisions by the board where appropriate. These are described as ““reviewable matters”” and are set out in Schedule 9 to the Act. There is also a right of complaint about alleged maladministration by the board. There is a two-stage internal process within the PPF for people to have such cases reviewed and reconsidered. However, if people are still dissatisfied, they can refer the case to the independent and newly established PPF ombudsman. Information about referring a case to the ombudsman is on the PPF’s website, and also has to be given by the PPF to people it notifies of a second stage reconsideration decision. To date, no matters have been raised for internal review, so no matters have been referred to the PPF ombudsman. The Secretary of State initially funds the PPF ombudsman’s work from money provided by Parliament. A levy can be raised to recover this expenditure, but for the financial year 2006–07, as for the financial year 2005–06, no PPF ombudsman levy will be needed. With no cases yet referred, the cost of the ombudsman to date has been very small, and it is not practical to levy such small sums at this time. As to the regulations before the House themselves, Regulation 2(2) provides that the PPF ombudsman levy is not payable for the financial year ending on 31   March 2007. It amends Regulation 4(4) of the principal regulations, so that they now read:"““The PPF Ombudsman levy is not payable in respect of the financial years ending with 31st March 2006 and 31st March 2007””." I understand that so far no reviewable matters have been raised with the PPF for the internal review process. I also understand that there have so far been no complaints of maladministration against the PPF. The PPF administration levy is calculated using a rate per member of a scheme. This is a variable rate, based on the number of scheme members on a scheme’s reference day. Regulation 2(3) brings the administration levy reference day into line with that for the pensions regulator’s general levy, a year sooner than we had thought feasible. The change is technical, for simplicity. The main provision in this instrument is that in Regulation 2(4). It provides that the administration levy amounts payable in the financial year ending 31 March 2007 will be the same as in the financial year ending 31 March 2006. Regulations 2(5) to 2(7) make some very technical amendments relating to the pension protection levy. Regulation 2(5) amends the principal regulations to add the pension protection levy to the list of levies covered by the general provisions of those regulations. The addition of the pension protection levy at this ““general”” regulation is needed so that an exception can be then made in respect of multi-employer schemes in a later regulation, Regulation 2(7). Regulation 2(6) makes a consequential amendment to the principal regulations to take out reference to the pension protection levy there, which is no longer needed. Regulation 2(7) amends the principal regulations to provide that that regulation, which is about multi-employer schemes, does not apply to any pension protection levy. Regulation 2(8) amends the principal regulations to add a reference to the corresponding Northern Ireland provision to the pension protection levy. As the pension protection levy is new for 2006–07, it needs to be added to the current list of levies for which such provision is made. This list already includes both the PPF administration levy and the PPF ombudsman levy. These levies regulations clearly impact on business, as they provide the administrative resources that are needed by the PPF. This was considered in the Pensions Act 2004 regulatory impact assessment, which estimated the annual administrative cost of running the PPF to be around £15 million a year. That continues to apply. I confirm that I am satisfied that the statutory instrument before us is compatible with the rights in the European human rights convention. I commend it to the House. I beg to move. Moved, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)