Oral Answers to Questions

Richard Graham Excerpts

Monday 18th July 2011 Commons Chamber

[Mr Duncan Smith]

My hon. Friend definitely may. We are working closely with BIS in all it tries to do and my Department is doing quite a lot to help small employers. We listened carefully on auto-enrolment, we made a change to give a little more time and that helped small businesses enormously.

[Richard Graham (Gloucester) (Con)]

2. What steps he is taking to address incentivised transfers out of defined-benefit pension schemes.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We recognise that employers need some flexibility to manage their scheme liabilities and that well-managed transfer exercises can be a useful tool, but we are concerned about scheme members being offered cash inducements to encourage them to take a transfer that might not be in their best interests. We have discussed the issue with a number of industry groups and we are actively looking to see what action needs to be taken to combat any bad practice.

[Richard Graham]

As the Minister knows, I support him on the principle that enhanced transfers do not necessarily advantage many members of pension schemes. What does he think about the other side of the equation, however? In my constituency of Gloucester, we have at least a dozen very successful family-owned manufacturing firms whose ability to grow is impeded by the residual liabilities of their closed DB schemes. How does the Minister think we can balance our responsibilities to members of the scheme with the desire to help such companies grow?

[Steve Webb]

I enjoyed my visit to my hon. Friend’s constituency, when we discussed pension issues with local employers. The important consideration is fairness, as he says. We have no problem with people transferring out of such schemes in a fair exchange, but because these are complex and difficult financial transactions we must ensure that people have the proper advice and information on which to make such choices.