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

Baroness Janke Excerpts

Monday 14th September 2020 Grand Committee

[Baroness Janke (LD) [V]]

My Lords, I support this important measure, which gives powers to the Pension Protection Fund in the event of a company—specifically, a limited liability partnership or a charitable incorporated organisation—being in financial difficulty under the new moratorium provisions brought in by the Corporate Insolvency and Governance Act 2020. I also thank the noble Baroness for her introduction and for her offers of information and the opportunities to ask questions before this debate.

As other noble Lords have said, these regulations give the board of the Pension Protection Fund rights normally exercised by pension schemes, trustees or managers. Under the new moratorium provision rather than the insolvency law, the Pension Protection Fund can end up picking up liabilities. It is therefore right that it should have a seat at the table in the same way it does in the case of insolvencies. As these regulations give the board of the Pension Protection Fund rights normally exercised by the scheme’s trustees or managers, when the trustees or managers lose their rights, the board is required to consult them as a result. That seems an important point.

The regulations enable these new rights in the context of limited liability partnerships and charitably incorporated organisations in particular. As other noble Lords have said, they seem timely in the event of the likely economic events in the wake of the pandemic. Other Members have raised a number of issues about that.

The sustainability of the Pension Protection Fund must cause anxiety in the light of potential large company failures and DB schemes in deficit. I note that the noble Lord, Lord Flight, raised in his remarks the cost of levies. The noble Baroness, Lady Drake, raised questions on a number of further risks, which I am sure the Minister will reply to, but I also particularly support her suggestion that the new arrangements should be monitored and reported. The noble Baroness, Lady Altmann, raised the specific powers of the PPF and whether it would have powers to override high-risk solutions to financial difficulties, particularly as regards safe assets and loans, which again the noble Baroness, Lady Wheatcroft, mentioned.

I share the concerns expressed by the noble Baroness, Lady Ritchie, about the protection of a scheme’s members in the event of restructuring and the reactions of markets to economic events, which we seem to be seeing much more of at the moment.

The noble Baroness, Lady Wheatcroft, raised the obligations of companies going through a moratorium, payment into deficit reduction, lending to preserve the company at the expense of the pension funds, and the PPF’s powers to do something about that.

I agree with the noble Lord, Lord Bourne, that we need to know about the time lag and the impact of the delay to these regulations, and of course, pension funds and members of pension funds need to be made aware of these new regulations, so I definitely support having more information about publicity, as well as an overview of the impact of the new arrangements, which the noble Baroness, Lady Drake, and the noble Lord, Lord Bourne, talked about.

I hope that the Minister will be able to answer those questions and make things a little clearer for us in this regard. I support the regulations and thank the Minister for her time in offering to provide information.