Pension Protection Fund

Lord Watts Excerpts

Tuesday 13th September 2016 Lords Chamber

[Lord Young of Cookham]

Like the noble Lord, I saw the comment in today’s business news. It is worth remembering that at the beginning of the previous Parliament we asked the noble Lord, Lord Hutton, to conduct an independent review of public sector pensions. He recommended that defined benefit should remain the core principle of public sector pension schemes. That is the case with the Bank of England, as with the rest of the Civil Service. He also recommended that it should be based on a career average, rather than final salary, and made other recommendations about the appropriate contribution. It is important to distinguish this question from QE. QE has a number of impacts on all defined benefits but, in addition to increasing the deficit, one could argue that it has increased asset values, which has helped the pension funds, and has had a benign effect on the UK economy, from which the pension funds also benefit.

[Lord Watts (Lab)]

My Lords, does the Minister agree that it is a national scandal that the Pension Protection Fund may have to bail out the BHS scheme, given the way that this company has been run?

[Lord Young of Cookham]

I think anybody who has read the Select Committee report on BHS, particularly an employee of BHS, will feel anger at the history of mismanagement of that company. As the noble Lord will know, there are a number of inquiries going on into that collapse: the Pensions Regulator is conducting an inquiry, the Serious Fraud Office is conducting an inquiry, and so is the Insolvency Service. So I think it makes sense to await the outcomes of those inquiries to see whether any fresh legislation is necessary to deal with any gaps there may be at the moment.