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Postal Services Bill [HL]

This group includes Amendments 74 and 76. In Amendment 74, I am saying: ""The power of the Secretary of State to make an order under section 20 (a "transfer order") may only be exercised if the assets of the RMPP are sufficient, at the relevant time, to enable the RMPP to be wound up and all of its liabilities discharged in accordance with section 74 of the Pensions Act 1995 (c. 26) (discharge of liabilities by insurance, etc)"." This is an important clause, because it defines the amount of assets that can be transferred to a new public scheme or a segregated section of the RMPP, sponsored by the Secretary of State. The value is defined negatively. Clause 21(1) tells you what must be left to the RMPP, rather than what it can transfer. It says that the funding ratio in the rump RMPP must not be worse as a result of the transfer. The funding ratio can be determined in a number of different ways; the relevant ones are on an ongoing basis or a winding-up basis. The winding-up basis is more stringent; broadly speaking, it is the cost of buying out the benefits by purchasing annuities. Members of the scheme want the RMPP to be as strong as possible after the division. The strength of the new free-standing Royal Mail and Post Office companies is not all that clear—and I venture to suggest that there are not that many people either here or in any other place or in the Government who are clear on what is going to happen. That is why, when I talk about trust, it is difficult to have trust in something that is not very clear. In the case of a similar separation in the private sector, the trustees of the remaining section—that is, the rump RMPP—would insist that they are left with enough to buy out all benefits if the sponsor collapsed shortly after the separation into a number of different companies. Amendment 74 therefore says that once the assets are divided, the RMPP should be fully funded on a buy-out basis. The addition of new subsection (6) in Amendment 76 may not be strictly necessary until such times as we hear something that blows away some of the fog about the future of the company. I have raised the question under Amendment 74, so I shall leave Amendment 76 as it stands and hope that it is not necessary to return to it. We want to suggest that the scheme should not be wound up. In an earlier contribution, the noble Lord, Lord Razzall, put his finger on it. If you go outside this building and talk to a Post Office worker who remembers what happened in the early days of my Government with pension funds—the way in which they took money out of not only that but many other pension funds—you will find that they are not terribly keen on seeing something that has been in place since 1969 being swept aside. It was made clear that this could be overcome by saying simply that there was a problem with the deficit—but why muck up the whole of the other scheme? Why destroy the trustee-based scheme that has served well, other than in the question of the deficit? Massive surpluses of billions of pounds used to be run up, until such time as both Conservative and Labour Governments allowed the terrible business of a holiday, with no money going into the scheme from the employer, although 6 per cent of members’ money still went in. That is why I speak very forcefully about the fact that it is our members’ money that we are talking about and not something handed down as some sort of gift. There is suspicion, and these amendments attempt to put that suspicion to one side and to clarify things. In fairness, I ought to say that even though we have been on a break I have been very pleased to have contact with Ministers about the need to get these things right. I am sure that there will be time between now and Report to see whether some of the fog can be blown away and we can come back with something that the Government can be proud of in its transparency, accountability and commitment to a structure allowing trustees to pay their full part. I shall be very interested to hear what my noble friend has to say.