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Postal Services Bill [HL]

The hour is too late. I start by picking up on the point made by the noble Lord, Lord Skelmersdale, about the current nature of the RMPP. The senior executive scheme is outwith the RMPP and not covered by the Bill, as with the DC scheme. Furthermore, although the RMPP scheme is described as divided into five sections, those are in fact just descriptions of the different pension arrangements in the plan. It is not currently divided into separate sections but is one plan. Clause 17, particularly subsection (1), allows the Secretary of State, by order, to divide the existing RMPP into different sections, for different participating employers to be in the different sections, and for assets and liabilities in the RMPP to be divided between the different sections. The Government intend that responsibility for rights accrued prior to 16 December 2008 will be transferred to the Government. We also intend that the strategic partnership will not include Post Office Ltd, which, in contrast to Royal Mail Group, will remain 100 per cent in public ownership. As a result, when the transfer of responsibility for qualifying accrued rights to the new government scheme and the restructuring of the Royal Mail Group take place, the RMPP will need to be divided so that there is a section for Post Office employees and another for Royal Mail Group employees. These sections will contain rights built up after the cut-off date for the transfer of liabilities to the Government. Post Office and Royal Mail Group will each be responsible for their own section. I should add that Post Office Ltd is currently staffed with people seconded from the Royal Mail Group, who participate in the current unsectionalised RMPP scheme. As part of the restructuring, such persons will be transferred to Post Office Ltd, and their pension provision in respect of benefits that arise after the qualifying time will be in a section of the RMPP for Post Office Ltd employees funded by the Post Office. After separation into sectionalised schemes, the transfer of employees between Royal Mail Group and Post Office Ltd will be an operational matter for the company. At the point of any transfer to a new government scheme, it is the Government’s intention that the new sections for Post Office and Royal Mail Group will have sufficient assets to cover their current liabilities at that date. Clause 17 also provides the Government with a power to create further sections, separate from the sections containing the ongoing pension liabilities of Post Office and Royal Mail Group. This power could be used, as we have discussed, to create a section which contained qualifying accrued rights, defined in Clause 15. It is not the Government’s intention to use the power for this purpose, other than in circumstances where it proved that the power provided in Clause 16 to transfer the qualifying accrued rights to a new scheme could not be implemented. A section created for this purpose would operate on a similar basis to the public service scheme created under Clause 16, and would not hold any assets. Benefits would be funded directly by the Government as they fell due, as provided for in subsection (2). The existence of this power is purely a contingency measure should, for whatever reason, the Government’s preferred option prove impossible. Creating a new section for qualifying accrued rights would be quicker than creating a separate scheme under Clause 16, and there may be circumstances where this additional flexibility is advantageous. The remainder of the provisions in Clause 17 relate to the establishment of the new subsection for qualifying accrued rights. On Amendment 51, we need the power to sectionalise the RMPP to provide for different Post Office and Royal Mail Group sections. Maintaining Post Office Ltd in 100 per cent government ownership is a key part of the overall restructuring of Royal Mail. The Government therefore need the ability to ring-fence the Post Office and its pension liabilities. Amendment 52 concerns the segregation of the sections of the RMPP created by the Secretary of State. Under the Government’s proposals, the sections would contain rights built up after the cut-off date for the transfer of liabilities to the Government. Post Office Ltd and Royal Mail Group would each be responsible for their own section. I reassure my noble friend that it is the Government’s intention that any such sections would be segregated, with no scope for cross-subsidy so that, for important areas such as scheme funding and Section 75 debt legislation, each section will be regarded as an effectively separate pension scheme. This is very important, and the rules of the RMPP on sectionalisation will be amended to meet the conditions in the scheme funding, Section 75 and other pensions legislation that recognises that segregated sections in a sectionalised scheme are to be treated as separate schemes. Post Office Ltd should not, therefore, be liable for the Royal Mail Group’s pension arrangements. Similarly, it would not be acceptable for the Royal Mail Group, including a partner, to be liable for pension arrangements relating to the Post Office. Neither the Royal Mail Group nor Post Office Ltd should be liable for any section containing qualifying accrued rights, which would be the responsibility of the Secretary of State. At the point of any transfer of liabilities and assets to the Government, the Government intend to leave the sections of the RMPP with sufficient assets to cover their liabilities at that date, as I have stated. Going forward, the intention is that the assets and liabilities in each section will be attributable only to that section, and that each section would carry out its own separate actuarial valuations. Assets in one section should not be transferable to any other section. The Government intend to discuss with the trustees and the company the most appropriate governance for the new sections going forward before a final decision is made. One option is that the existing trustees of the RMPP continue to act as trustees for the different sections of the RMPP, which involves the least change for members, with members of the Post Office section represented on the trustee board. I hope that for once I have been able to satisfy the proposition that each noble Lord has advanced in dealing with these amendments. Therefore, I am confident that the amendments might not be pressed.