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Pensions Bill

As ever, my hon. Friend and fellow Select Committee member makes telling points. I would have preferred us to address this matter in a more direct up-front way. We did not, and we now have to do it through an indirect route of a loan and the expectation that assets will be recovered. If that is the way to get the commitment, let us have it by that route; it is better than no route at all. The Select Committee has become preoccupied with the solvent employer schemes. We have had continuing dialogue with the Government on that and while it may seem arcane to some, people who have lost their pension in those schemes are in exactly the same position as those in all the other schemes. The Government have said that they are prepared to help members of schemes where trustees have agreed to a compromise agreement with employers because the alternative would have been to force the employer into insolvency, but they have not addressed the position, despite much prompting, of those whose schemes were closed before June 2003. That is an important date; it is when schemes could be closed without funding full buy-outs. The Government, rightly, have repeatedly refined the rules governing the closure of pension schemes, and after 11 June 2003 employers were allowed to close their pension schemes only if they provided a full buy-out value for both those receiving pensions and scheme members who had not yet reached pensionable age. However, before that date employers were able to close company pension schemes provided that certain funding requirements were met. There was no question of trustees being able to prevent it. We asked the Government directly whether it was correct that until 11 June 2003, it was legal for employers to close a pension scheme funded to the minimum funding requirement level even if the benefits promised could not be secured; and, if so, whether trustees or scheme members would have any legal means by which they might ensure full benefits were paid. The Government said:"““No legal recourse would be available in relation to the employer debt legislation for pre 11 June 2003 wind-ups, if solvent employers had met their legal obligation to pay the debt calculated in accordance with the legislation.””" We know now that the Government and the regulator are considering what more can be done to compel employers. However, it is okay for the Government to talk about the need to compel employers and to talk about their moral obligation, when they clearly do have a moral obligation. There has been deplorable behaviour, but the point is that what was done was legal. For the members of the schemes, the effect is just the same—they have lost their pensions. That is the point from which we should start. Amendment (a), which reflects the continuing discussion that we have been having with the Government about the importance of the sequence of events and the dates, is intended to secure support for those who suffered because of the inadequate legal framework before June 2003. My amendment answers completely the Government’s worry that somehow the floodgates will be opened and they will not be able to exercise moral suasion on employers. There is none of that, because it simply establishes the legal position. After that date, the Government are right that there is a case for supporting only schemes where the trustees correctly decided that compromise was in the best interests of members. Before that date, compromise, as I understand it, was not a relevant consideration. The question to be decided now is whether we simply trust to the process that is under way—I understand that the Government want that and have moved in that direction. They have said that we can always take care of such issues through secondary legislation. However, it is only now that we can ensure, through primary legislation, that the solvent employer schemes are brought within the FAS. I accept the Government’s worries about opening the floodgates; but in that case they should bite the hand off with amendment (a), which would give them a circumscribed statement of the kind of schemes that should be properly brought inside the FAS. It is on that basis that I shall be asking the House to support it.