Skip to main content

Private Pension Funds

Volume 406: debated on Monday 9 June 2003

The text on this page has been created from Hansard archive content, it may contain typographical errors.


If he will make a statement on the current value of private pension funds. [117283]

At the end of 2001, the most recent year for which Office for National Statistics figures are available, it was estimated that the total assets of self-administered pension funds were about £712 billion.

One of the concerns that my constituents express when faced with the decline in value of their pension funds relates to how they could live off the annuity that the funds would purchase. What thought have the Government given to relaxing the ways in which such funds can be used, so that pensioners could maximise their income and thus reduce their dependency on means-tested benefits?

The hon. Gentleman will have seen the Green Paper that was published recently. My right hon. Friend the Secretary of State will publish further proposals soon. As the hon. Gentleman will know, there are suggestions in the Green Paper.

The news that the Minister has given today will be welcomed by about half the population, who have a stake in occupational pensions. But will she give us some idea of what the Government plan to do for those who, having thought that they had a stake, find that their schemes have been wound-up and their claims have either disappeared or largely disappeared? Are the Government thinking of using some of the £13,000 million of unclaimed assets that lie idle in the balances of banks and building societies as an endowment, to ensure that the loss of funds that people thought they had for their retirement can be made good?

As ever, my right hon. Friend has advanced interesting ideas about this in his Pensions (Winding Up) Bill. I know that over the weekend he spoke to the ASW pensioners, who organised a march to draw attention to their circumstances. Such cases bring into sharp focus the need for action to reduce the risk of such developments. There is no doubt that those who lose their pensions—and their families and friends—will be less likely to save for the future. It behoves us all to come up with arrangements that will protect pensions better, otherwise people simply will not save.

The right hon. Gentleman mentioned unclaimed assets. "Unclaimed" does not necessarily mean that the assets do not belong to someone. The right hon. Gentleman knows as well as I do that these issues are fraught and difficult, especially for those currently affected, but we are willing to consider any suggestions that he or anyone else may have. That has been the aim of our consultation. The response to the Green Paper will enable us to change the arrangements so that similar problems do not occur in the future.

As was pointed out by the right hon. Member for Birkenhead (Mr. Field), the value of a pension fund to a worker whose employer goes bankrupt is often a tiny fraction of what the worker expected. The Government have let it be known through the media that they are considering an insurance-based solution. Does the Minister agree that any insurance scheme must be underwritten by the Government? Otherwise there could be yet another fraud, and people could not just lose the pensions they had expected but find that the insurance schemes have gone bankrupt as well.

The hon. Gentleman refers to speculation in the press about what might be in the response to the Green Paper. It is for my right hon. Friend the Secretary of State to present that response to Parliament; I cannot speculate on suggestions in the newspapers.

Does the Minister understand—I am sure she does—that when a company goes into administration with the pension fund in tow, as has happened at Chart Industries, Incorporated in my constituency, it takes years for workers to become aware of their pension entitlements? That is a very anxious time for people. Would the Minister consider telling her friends in the Treasury that it might not be a bad idea for those with company pensions to be preferential creditors pari passu with Government demands, rather than ordinary creditors not knowing, at the end of the day, what is left with which to pay the pensions?

That is one of the most distressing aspects of the winding up of pensions—apart from the fact that it occasionally takes far too long. Suggestions in the Green Paper about the time it takes have been welcomed throughout the House, and outside. People are often left not knowing what percentage of their original pensions they will be left with.

This is a crucial challenge. Proposals in the Green Paper for assets to be shared more fairly when schemes are wound up have been widely welcomed, but we need to ensure that action is taken. We also need to speed up the winding up of schemes, and try to ensure that most of the assets of what may be small funds are not swallowed up in fees. We want savers to feel confident that it is sensible to put their money into pensions.

These are serious issues, raised by Members in all parts of the House. I know that the Minister recognises that. Is it not a shame that the Prime Minister appears not to recognise the seriousness of the issues, having failed to appoint a replacement for the Minister for Pensions in the last 60 days?

May I say to the hon. Gentleman and others who have raised this matter in the House that the absence of my right hon. Friend the Member for Makerfield (Mr. McCartney) makes me the smallest Pensions Minister on the Government Front Bench? I can also assure the House that his absence has not delayed the work that is being done by the Department to deal with the Green Paper and the arrangements that need to be made. I can assure the hon. Gentleman that it has not delayed the date at which we shall produce our response to the Green Paper.