This Government introduced a more powerful and proactive pensions regulator to protect the benefits of occupational pension scheme members. We also established the Pension Protection Fund, which provides protection to more than 12 million members of eligible defined benefit occupational pension schemes. About 140,000 people will receive help from the financial assistance scheme.
I thank the Minister for that answer. With the CBI and the TUC telling both employers and employees that now is not the time to withdraw or withhold pension contributions, what can the Government do to strengthen that message and get it across to people that pensions are now safer and a better long-term investment than they have ever been in the past?
My hon. Friend is right. I welcome the consensus on such a long-term approach. Obviously, fluctuations in markets will affect the value of assets in the short-term, but the fact is that it is the long term that is important for pensions. The framework that we put in place in 2004 is stable and durable, but it is important that we continue to work with the pensions industry to ensure that we respond to the points that are made. It is also important that we work together to give out the message that pensions are one of the best means to save for retirement.
The Pension Protection Fund has been increasing the levy that it charges on company pension schemes each year, and it might now be approaching the ceiling that it is allowed to levy over the next few years, particularly as company schemes close. Once it reaches that ceiling, the only other way for it to make ends meet will be to cut pensions in payment. If it approaches the Government requesting permission to cut the value of pensions in payment, will the Minister guarantee that she will refuse such a request?
The PPF has made it clear that it does not believe that it needs to increase the levy. In fact, it has frozen the current rates for the general levy and for the PPF administration levy. Of course, the hon. Gentleman will know that we have a rolling deregulatory review to see how we can make the systems simpler and less burdensome, and that we have reduced the revaluation cap from 5 to 2.5 per cent. These are all measures that we are taking to support pensions at the moment.
In view of the fact that some employers have announced their intention to close their occupational pension funds not only to new members but to existing members, is the Minister’s Department having discussions with such companies to try to dissuade them from taking such steps?
As I have said, we are trying to set the general framework, so that we can do everything we can to support companies and the industry at this time. I have outlined a number of the measures that we are taking, but we will continue to work with the industry on some of the concerns that is has raised, to ensure that we maintain that dialogue with it.
But does the right hon. Lady accept that the last line of defence for occupational pensions is the Pension Protection Fund, which some experts now believe to be heading for a £1 billion deficit? Does she believe that the extra burden should fall on struggling companies, or that the benefits paid by the PPF should be cut? Or is she now reviewing whether the Government should stand behind the PPF as guarantor?
As I have said, the PPF has made it very clear that liquidity is not a problem. It has £3 billion in assets, and it is paying out about £4 million a month in compensation. It provides reassurance and an essential safety net, and it has made it very clear that liquidity is not a problem at this point.