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Pensions Bill

This Government introduced FAS, which introduced the PPF. There was nothing near it under the previous Government. Our record in helping pensioners is far superior to theirs. We have lifted 1 million pensioners out of relative poverty since we have been in office, which puts the previous Administration's record to shame. These amendments appear to me to cover three issues. First, many of them represent a potential call on the public purse well in excess of the £8 billion already committed by the Government. The noble Lord, Lord Skelmersdale, asked me about the£8 billion; he is right to say that it has a net present value of £1.9 billion. The cost of the proposals thathe supports, in cash terms, would be in excess of£10 billion, and there is an extra net present value associated with that of £640 million, which I believe is effectively a public expenditure commitment. Secondly, many of the amendments would replicate work that the Government are already undertaking to ascertain whether funding can be found from non-public expenditure. Thirdly, none of them would mean more money for more members immediately. Indeed, their effect might very well be to slow down payments for members, which I know is not the intention of the supporters of the amendments. The noble Lord, Lord Oakeshott, said that we are ignoring the findings of the ombudsman’s report. He will be well aware that we placed a detailed response to the report before Parliament in June of last year and that in November we published our responseto the report of the Public Administration Select Committee on the same issues. I also remind the Committee—I believe that the noble Lords, Lord Oakeshott and Lord Skelmersdale, referred to the High Court—that the High Court upheld the DWP’s decision to reject the ombudsman’s finding of maladministration in respect of a change made to the minimum funding requirement in 2002 and it upheld the DWP’s decision to reject the ombudsman’s conclusions that the maladministration identified led to the losses incurred by all membersof the schemes that went into wind-up between 1997 and 2004. Amendment No. 68 would transfer responsibility for managing FAS from the Secretary of State for Work and Pensions to the board of the Pensions Protection Fund. That gives me an opportunity to talk about the substantial work that FAS is, andhas been, doing and to explain why transferring responsibility for the scheme to the PPF would not, in fact, be in the best interests of members. I know that some noble Lords remain convinced that the PPF could run the FAS better than it is run under the current arrangements. Let me remind the Committee that the review of FAS administration carried out at the Government's behest last year did not agree. That review, which benefited from input from the PPF, concluded that, while lessons could be, and have been, learnt from the PPF's approach to proactive data gathering, there are significant constraints on its ability to manage FAS operations. I see no reason at this point to revisit that conclusion. I do not rule out looking at this again should the review of pension scheme assets identify a different approach to funding FAS, but I do not think that it is sensible to pre-empt those findings. Perhaps at this juncture I could update the Committee on what is happening. In most cases, FAS money is not paid until a member reaches 65. That means that there are not 125,000 people waiting to be paid at this moment. We estimate that there are around 10,000 individuals who are over 65 and should qualify for payments under the current scheme rules, but the Operational Unit has already carried out assessments on around 4,100 people: of those, 1,624 are eligible for payments of FAS; 1,236 are being paid now; 68 will be paid as soon as the members have confirmed their personal details; and 320 will be paid as soon as they reach 65. There are 2,482 who are currently ineligible because of the de minimis £520 a year constraint and other factors such as the relatively high funding level of their scheme. The legislation requires applications made by trustees, as only they can provide the data that are needed to assess payments. One factor limiting payments is relatively high levels of scheme funding; for example, schemes are able to make payments higher than the FAS initial payment level of 60 per cent. However, the Bill raises the level to which FAS will top up any interim pension being paid by a scheme that is still winding up from 60 per cent to 80 per cent. That will enable us to provide assistance with immediate effect from Royal Assent to hundreds more people who currently receive 60 per cent from their pension scheme. Other factors may prevent trustees from making applications and providing us with the data that we need to make payments, but some will have worked out that their members will not receive FAS due to the de minimis level of pension already in payment and so have chosen not to apply for payments on their behalf. We expect that to change once the FAS rules are amended to benefit such cases, as I have outlined. Other trustees will be close to completing wind-up and so will be reluctant to supply data for initial payments when they will have to submit final data for annual payments a short time later. Others are anxious to await the outcome of a current court case—the Dubery case—which will impact on how they treat their members, and do not wish to provide us with data that may turn out to be incorrect and lead to overpayments. While those are legitimate reasons for caution, they are delaying people receiving help, so we are working with trustees and administrators to help to resolve those issues. I can truthfully say that we are paying all those members for whom appropriate data have been provided and will continue to do so, but we are conscious that it is individual members who suffer if they are due to receive money at 65 and, for whatever reason, are not getting it. I can announce today that we are introducing arrangements so that, rather that relying on trustees to make applications on their behalf, individual scheme members who believe that they are eligible for payment can advise the FAS Operational Unit direct, which will then contact the scheme trustees to seek to arrange a payment. I shall shortly be writing to all noble Lords to explain the new arrangements. The Government will be seeking help from campaigners and trade unions to ensure that everyone eligible for assistance receives it as quickly as possible.