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

Baroness Ritchie of Downpatrick Excerpts

Monday 14th September 2020 Grand Committee

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, I thank the Minister for providing a detailed explanation of this statutory instrument, the details of which I welcome because they will act as a measure of protection for members who work for companies in financial difficulty which face restructuring.

It is important to remember that companies and those who work for them are not working in normal times. There is the Covid pandemic and the uncertainty around a possible no-deal Brexit, the news last week of a run on the pound and the potential impact of the United Kingdom Internal Market Bill on markets and businesses. References to the Chancellor’s potential raid on the coffers and reserves of businesses that pay for Covid financial measures can also precipitate further anxiety in the marketplace. Many companies have been the bulwark of our economy, as well as their employees, in both the public and the private sector.

As the Minister has explained, and was also explained by the noble Baroness, Lady Drake, these regulations will enable the Pension Protection Fund to participate in key decisions in the process by enabling it to exercise creditor rights that would otherwise be exercisable by the scheme trustees or managers. It provides compensation for eligible pension scheme members whose employer has become insolvent and cannot meet the scheme’s liabilities. I understand that it will be funded mainly by a levy collected from pension schemes.

In considering the impact and legislative effect of these regulations under the Corporate Insolvency and Governance Act, I have some questions for the Minister. Does she think that there will be sufficient money within those pension schemes to pay for a scheme’s liabilities? When the compensation is in payment, could it increase in such insolvency circumstances? If I am an employee, what happens if my scheme is potentially eligible for that but is facing all these difficulties as a result of insolvency? Will it be possible, in such circumstances, for the employee to contribute during the assessment period? Does the assessment period operate in such different circumstances? Is it possible to define the potential costs of such schemes? Will they reduce, bearing in mind that many people have left defined pension schemes? Will that categorisation apply in circumstances to do with restructuring and insolvency? What impact will that have on the Pension Protection Fund in its work with companies? Finally, what other benefits, including social security, are those pension scheme members eligible for if their employers have become insolvent and cannot meet the scheme’s liabilities other than those that may be provided for under the Pension Protection Fund?