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Pensions Bill

I was delighted to listen to the speech by the noble Baroness, Lady Hollis. I always find her persuasive, and she was particularly so on this occasion. She set out all our common objectives very well. Perhaps I put a little more emphasis on trying to amend Amendment No. 130EW, merely to set out the Government’s stated intentions more clearly in the Bill—that is perhaps a kind way of putting it—and to make clear the limits of the power. I entirely agree with the noble Baroness, Lady Hollis, that the Pensions Regulator needs the flexibility to deal with the attempts that will be made, particularly in difficult economic circumstances, to sidestep the pension fund liability. By and large, I do not think that Governments proceed with malevolence towards companies running pension funds, but I do think that they are guilty of serial idiocy. Certainly, I would convict us of that, in our 1995 Bill, in not realising how things would play out. I picked up an echo of that from what the Minister said when last we met. He said: "““On the fair value point touched on by the noble Lord, it is not the Government’s intention that a transaction, whereby a person purchases assets or securities at fair value, would normally trigger the regulator’s use of its anti-avoidance powers, provided that, as part of the transaction, the pension scheme was properly considered and adequately addressed. However, the fact that a person had purchased assets or securities at fair value would not necessarily provide the reassurances needed. That would be only the first step in ensuring that capital was available to mitigate the risks to the scheme; it does not of itself get the capital to the scheme””.—[Official Report, 14/7/08; col. 1089.]" There we are seeing part of a process—which, I agree, we started and which has carried on since—which is making the pension fund gradually into some sort of super-creditor, giving it rights over and beyond that of an ordinary, unsecured creditor, moving it ever more into a position where it has additional, superior rights. We see echoes of that in other parts of the amendment. My difficulty is that we are pushing companies in the direction of receivership, because it is the forum under which these conflicts are most clearly dealt with. I hope that we all agree with the noble Lord, Lord Oakeshott, that receivership is not the best option. The best option is for a pension fund to continue to be looked after by a company that recognises its obligations. In that way you can, over the long term, get much more for the pensioners than you ever can from receivership, particularly in difficult circumstances. To do that we must recognise that the pension fund is taking a risk, making a commercial decision and entering into a partnership with the company. We should also recognise that the company is using money that the pension fund might otherwise try to lay its hands on. We have to allow for that commercial relationship to proceed without the possibility of a great backwash retrospectively against what seemed sensible decisions at the time. As my noble friend Lady Noakes has said, clearance has grown into a great industry. There are professional clearance advisers who do nothing else and make a great deal of money. We may push companies into a position whereby every decision might be viewed as depriving the pensioners of access to assets, such as paying a dividend, selling an operation, or, in relation to the terms of trade with some associated overseas company, entering into a big contract, which has sunk many companies. If all those decisions are to be questioned and there is personal liability for the directors as a result, it will become extremely difficult to run companies with defined benefit schemes of any magnitude. We must think very carefully if we are going to threaten or enact regulations that push companies in the direction of receivership.