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

Lord Bourne of Aberystwyth Excerpts

Wednesday 21st October 2020 Lords Chamber

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Loomba, and I thank him very much for his analytical review, which I found very helpful. I thank my noble friend for setting out the background to these regulations so clearly. I welcome the regulations, which I understand are needed because of an oversight.

My noble friend Lord Trenchard is quite right that a moratorium or restructuring against creditor enforcement is not an insolvency proceeding, which is the reason we need these regulations to facilitate pension protection, and I strongly support that. I have several questions for my noble friend the Minister, of which I have given her some notice, but I understand that she may want to correspond in writing on some of the points and will copy answers to the Library if that is necessary.

First, what is comprehended by “co-operative and community benefit societies”? I strongly agree about the protection for them, and I understand that the term includes credit unions. Do we also need to take special measures to protect the pension schemes of friendly societies, building societies and other mutual societies—and, indeed, trade unions? Are they also covered? Perhaps my noble friend can answer that point.

Paragraph 3.9 of the Explanatory Memorandum talks of an ongoing risk that, during any break in the application of the provisions, a relevant co-operative and community benefit society could obtain a moratorium from its creditors, or a relevant society could propose a plan to restructure its business, without the Pension Protection Fund being able to intervene as a creditor to protect its interests. How real is that break and how much of a danger is there of that eventuality?

How healthy is the position of the Pension Protection Fund? I know that the Minister for Pensions spoke to the chair and chief executive of the fund over the summer and was reassured about its resilience. Indeed, my noble friend also gave us reassurance in September. However, when did a Minister from the department last speak to the chair and chief executive about the standing and resilience of the fund? It would be good to hear about that.

More generally, can my noble friend give an update on the institution of the moratorium, a point that several noble Lords have raised? I believe that it has not been used much since its inception, although there is clearly a difference of opinion between the noble Lord, Lord Callanan, and the noble Baroness, Lady Drake, on whether it has been used at all. Is the Minister in a position to shed some light on this and whether the moratorium is likely to be used much, if it has not yet been used?

Finally, has there been any contact with the Insolvency Practitioners Association to obtain its views on the regulations, regarding the need for more protection for bodies other than those covered? Is there an ongoing dialogue with the association, which would be desirable because it is expert in these areas and steeped in insolvency and related restructuring proceedings? Subject to those considerations, I strongly support the regulations.