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

Baroness Altmann Excerpts

Wednesday 21st October 2020 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I welcome the new regulations to ensure that the Pension Protection Fund can better protect its interests and those of pension scheme members whose supporting employers unfortunately need to enter a moratorium period or restructuring due to the current crisis. These cover the entities, including charitable organisations, friendly societies, credit unions and so on, which may be particularly vulnerable in the current circumstances.

The Pension Protection Fund is one of our flagship organisations, which has done marvellous work to protect the pensions of millions in this country and has compensated those who would otherwise have faced the potential of losing their pension rights if the employer failed, and possibly of losing their jobs too. It is vital that employers and corporate directors are not allowed to game the PPF or take advantage of financial turmoil to walk away from liabilities on which so many ordinary workers rely, as the noble Baroness, Lady Drake, just said. I congratulate the PPF and put on record that I believe its staff have done brilliant work. I am sure that they will continue to do so with efficient administration and careful stewardship.

These regulations result from new measures passed in the Corporate Insolvency and Governance Act, which potentially weaken the rights of DB scheme members, trustees and managers to funds and assets belonging to the sponsoring employer during a moratorium or restructuring. I thank my noble friend and congratulate her on the way in which she introduced the regulations.

To allow the Pension Protection Fund to represent the trustees and managers in negotiations is an important measure, since it has to safeguard the interests not only of each pension scheme but of all other schemes too, and a moratorium does not trigger a PPF assessment period. If pension sponsors can more easily find ways to walk away from their liabilities without putting extra funds into the schemes in the current crisis, because it ranks only as an ordinary unsecured creditor without super-priority, and financial firms have leap-frogged up the priority order, the Pension Protection Fund could be forced to take on extra liabilities, which will ultimately fall on other sponsors via higher levy payments. As I expressed during the passage of the Act, I am particularly concerned at the ability of the sponsor or its other creditors to ask the courts to release assets that were supposed to have been pledged to the pension scheme as part of previous scheme-specific funding arrangements, leaving the scheme far more underfunded than was ever intended. I understand that the legislation ensures that any restructuring plan must not put creditors in a worse position than on insolvency, but can my noble friend confirm that this also definitely applies to the Pension Protection Fund? If she would like to write to me on my point, that will be fine. In addition, which parts of the previous regulations that she mentioned in her introduction have been revoked by this instrument?

Finally, I will ask a few other questions of which I have given my noble friend prior notice. I note that the Pension Protection Fund will produce guidance for monitors and directors on what information it will need to receive and its general approach to a moratorium or restructuring. When will that happen? Can she confirm the assessment of the noble Baroness, Lady Drake, that no companies have yet gone into moratorium since this legislation was passed, and if any have, how many have done so and how many have a DB scheme attached?

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

The noble Baroness, Lady Greengross, and the noble Lord, Lord McColl, have withdrawn, so I call the noble Lord, Lord Hain.