Pensions

Mr. Jim Cunningham
To ask the Secretary of State for Work and Pensions what steps the Government have taken to protect and regulate pensions in each year since 1997.

James Purnell
[holding answer 30 April 2007]: Since 1997, the Government have introduced or strengthened a number of safeguards to protect and regulate defined benefit occupational pension schemes.

In August 1998 the Financial Services Regulator announced a further stage of the review covering those not in the priority categories to identify cases where people were badly advised to opt out of, not join, and/or transfer funds from an occupational pension scheme in favour of a personal pension.

From 30 December 2005 new scheme funding requirements require trustees to develop prudent scheme funding strategies, on a scheme specific basis, for meeting their scheme’s pension commitments.

A series of other Regulations between 2002 and 2005, strengthened the employer debt for schemes in wind-up, resulting in a ‘full buy-out’ debt for schemes sponsored by solvent and insolvent employers, or where an employer withdraws from a multi-employer scheme.

The Pensions Act 2004 introduced:

The Pensions Regulator, which replaced Opra from 6 April 2005 this has a broad range of powers to help fulfil its statutory objectives. These include protecting the benefits of occupational pension scheme members. The Regulators act quickly to anticipate and tackle any risks to the benefits of those members.

The Pension Protection Fund, which provides protection to members of eligible defined benefit occupational pension schemes where the employer becomes insolvent (after 6 April 2005) and leaves the scheme under-funded. The Pension Protection Fund went live on 6 April 2005.

The Financial Assistance Scheme, which provides support to members of defined benefit occupational pension schemes which started to wind up, under funded (between 1 January 1997 and 5 April 2005). The Financial Assistance Scheme began operations on 1 September 2005.

Government legislated to create a new FSA-regulated activity of establishing, operating or winding up a personal pension scheme, with a new rules taking effect from 6 April 2007. This change will extend consumer protection to all aspects of personal pensions as well as open the market up to greater competition.