Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020

Baroness Janke Excerpts

Wednesday 21st October 2020 Lords Chamber

[Baroness Janke (LD) [V]]

My Lords, I thank the Minister for her clear presentation of complex material and her willingness to provide us with information about these regulations. We support this important measure, which gives powers to the Pension Protection Fund in the event of certain community companies being in financial difficulty under the new provisions brought in under the Corporate Insolvency and Governance Act 2020. As other noble Lords have said, it would be helpful to know just how far this extends and what other types of community companies might be included.

As the Minister explained, these regulations give the board of the Pension Protection Fund rights normally exercised by pension schemes’ trustees and managers. Under the new provisions, the Pension Protection Fund can end up picking up liabilities—for example, if the pension is underfunded. It is therefore reasonable that it should have a seat at the table, as it does for insolvencies. Given that these regulations will give the board of the PPF rights normally exercised by pension schemes’ trustees or managers, it is good to know that the PPF is required to consult with the trustees and managers who will lose their rights as a result.

The regulations give the PPF new rights relating to other community businesses, in addition to the limited liability partnerships and charitable incorporated organisations dealt with in the original measure. The new arrangements are welcome and timely, particularly in the light of the predicted economic impact of the pandemic and the further economic impact of Brexit on UK companies. However, there are still some outstanding questions that I hope the Minister will be able to answer. I apologise for not giving her notice of them. Obviously, if she would prefer to write that is perfectly acceptable too.

What specific powers are given to the PPF? Can these override the views of the trustees should, for example, a course of action proposed by them seem unduly risky? What arrangements are in place to monitor the implications of the moratorium restructuring arrangements? When this issue was raised before, the Minister said that as yet, there were no occasions when the new arrangements had been used. Other noble Lords asked whether this is still the case. Nevertheless, if it is not, I am sure it will be very important to monitor the impact and effectiveness of the new arrangements.

Have the Government also assessed the capacity and sustainability of the PPF, particularly in terms of its expected future workload? Other noble Lords raised this issue as well. As other noble Lords have also asked, what protection will the Government provide the PPF in the event of high additional financial demands that might suggest increased levy payments or potential reductions in pension compensation? I hope the Minister will be able to answer these questions but, as I said, I am more than happy to have a written response.