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

Baroness Wheatcroft Excerpts

Monday 14th September 2020 Grand Committee

[Baroness Wheatcroft (Non-Afl) [V]]

My Lords, I thank the Minister for the way in which she introduced the regulations and for the time she made available to talk to those of us who were interested. She is always keen to be helpful and it is much appreciated.

Obviously, these regulations are needed, and as quickly as possible, but there are issues. I associate myself with the questions raised, particularly by the noble Baronesses, Lady Drake and Lady Altmann. All were interesting questions that deserve answer. I will then specifically query the possibility of companies going through a moratorium and restructuring being obliged to continue paying into deficit reduction funds. My understanding is that, during a moratorium or reconstruction, the obligation to pay staff remains and therefore the obligation to continue paying their pension contributions remains. However, there seems to be a question mark over payments into deficit reduction. I would be grateful if the Minister could give some clarity on that.

Secondly, can the Minister give clarity on the issue that was certainly highlighted during the Bernard Matthews fiasco a couple of years ago? During the course of a reconstruction, what must be termed quite risky—and extremely expensive—lending was taken on to preserve the company, and the result was certainly to disadvantage the pension fund. Will that still be possible under these regulations? In addition, when a company is going through a reconstruction, what is the significance of a floating charge to the pension fund? Does that floating charge continue to take priority?

More generally, since we are heading into a period where corporate collapses could, sadly, happen at far greater a rate than that to which we are used, as other noble Lords have pointed out, does the PPF have the manpower to monitor the situations in so many companies and to keep on top of the situation?

My final question is an overarching one about the ability and the independence of trustees. Much of the thinking behind these regulations seems to imply that, faced with choosing between the longest period of saving the company and looking after the interests of pensioners, the trustees, despite having a duty to pensioners, may well move towards safeguarding, as far as possible, the future of the company and its investors. That seems to highlight a potential failing in the system which has long been a matter of interest.