Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment her Department has made of the risk that the Collect and Pay service charge system can be used to place additional financial pressure on the paying parent.
Answered by Andrew Western - Parliamentary Under-Secretary (Department for Work and Pensions)
All parents are given the option to use the Direct Pay service, where no fees apply.
If a paying parent pays on time and in full on Direct Pay and there is no reason to believe they would be unlikely to pay; they cannot be forced to use the Collect and Pay service.
The 20% collection fee for paying parents is a deterrent against non-compliance and offsets the cost of action needed to recover arrears.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential impact of fees to use the Child Maintenance Service's Collect and Pay system on people using that system.
Answered by Andrew Western - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government is dedicated to ensuring parents meet their obligations to children, taking robust enforcement action against those who do not.
Cases in Collect & Pay represent the most difficult cases, as many of these have been unwilling to pay voluntarily or have not been compliant in a Direct Pay arrangement. Cases where the paying parent has missed payments or demonstrated behaviour that suggests they are unlikely to pay, can be put on the Collect & Pay service. Fees only apply to the Collect and Pay Service. A fee of 20% is added to what the paying parent needs to pay, while 4% is deducted from maintenance paid to receiving parents.
Fees were introduced in 2014, with the objectives of subsidising the cost of the service; encouraging greater collaboration and more family-based arrangements; and encouraging compliance.
When Collect and Pay charges were introduced, an assessment was carried out by the previous government and published in The Child Maintenance Reforms; 30 Month Review of charging. The government response to the assessment was that application fees may influence some parents’ decisions regarding their maintenance arrangement.
On 8 May 2024 the consultation Child Maintenance: Improving the collection and transfer of payments was published by the previous government before being extended on the 31 July by the current government. The consultation included a range of proposals with the key one being to remove the Direct Pay service and consolidate the CMS into a single streamlined service that monitors and transfers all payments. In addition, it also proposed a new fee structure of just 2% for receiving parents, deducted from maintenance received; 2% for compliant paying parents, on top of maintenance owed; and 20% for non-compliant paying parents, on top of maintenance owed.
Following consideration of public responses concerning fees and other proposals in the consultation, and subsequent ministerial decisions, next steps will be detailed in the Government Response, which will be published in due course.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if she will take steps to address the lack of statutory inflation protection for pre-1997 defined benefit pension entitlements.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
It is for sponsoring employers to decide on what pension benefits they offer, provided they meet minimum standards. Scheme rules set out how the scheme should be run. It would not be appropriate for the Government to interfere in decisions made by individual schemes, beyond setting clear, affordable minimum standards that apply to all.
Pensions legislation does not usually apply new provisions retrospectively to rights that have already been accrued. It is generally seen to be unreasonable to add liabilities to pension schemes that could not have been taken into account in the funding assumptions that determined the contributions to be paid at the time. In some cases, the additional unplanned liabilities could result in significant additional contributions for the sponsoring employers, and ultimately threaten the future viability of some schemes.
It is extremely important to achieve a balance between providing members with some measure of protection against inflation and not increasing schemes’ costs beyond a level that schemes and employers can generally afford.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if she will make an assessment of the financial status of people (a) who received pre-1997 defined benefit pensions and (b) who received payments from schemes with mandatory increases.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
Analysis by the Pensions Regulator estimates that, as of 31 March 2023, more than three quarters of schemes provide indexation on scheme benefits accrued before 6 April 1997. This is in addition to any Guaranteed Minimum Pension rights accrued between 1988 and 1997, which must be indexed by the scheme. These schemes represent over 80 per cent of the membership of private-sector occupational Defined Benefit (DB) pension schemes. This information is published and available at: Data requests | The Pensions Regulator
The Department does not hold any data on the financial status of the members of these schemes.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if she will make an assessment of the potential impact of regulations not subjecting pre-1997 defined benefit pensions to statutory indexation on the financial wellbeing of pensioners.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
Analysis by the Pensions Regulator estimates that, as of 31 March 2023, more than three quarters of schemes provide indexation on scheme benefits accrued before 6 April 1997. This is in addition to any Guaranteed Minimum Pension rights accrued between 1988 and 1997, which must be indexed by the scheme. These schemes represent over 80 per cent of the membership of private-sector occupational Defined Benefit (DB) pension schemes. This information is published and available at: Data requests | The Pensions Regulator
The Department does not hold any data on the financial status of the members of these schemes.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if she will take steps with Cabinet colleagues to encourage private pension schemes to voluntarily offer inflation protection for pre-1997 defined benefit pension entitlements.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
It is for sponsoring employers to decide on what pension benefits they offer, provided they meet minimum standards. Scheme rules set out how the scheme should be run. It would not be appropriate for the Government to interfere in decisions made by individual schemes, beyond setting clear, affordable minimum standards that apply to all.
Pensions legislation does not usually apply new provisions retrospectively to rights that have already been accrued. It is generally seen to be unreasonable to add liabilities to pension schemes that could not have been taken into account in the funding assumptions that determined the contributions to be paid at the time. In some cases, the additional unplanned liabilities could result in significant additional contributions for the sponsoring employers, and ultimately threaten the future viability of some schemes.
It is extremely important to achieve a balance between providing members with some measure of protection against inflation and not increasing schemes’ costs beyond a level that schemes and employers can generally afford.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, if her Department will make an assessment of the potential merits of implementing measures to support pensioners whose defined benefit schemes are underfunded.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
The UK has a robust and flexible regime for protecting defined benefit (DB) pensions.
Sponsoring employers are ultimately responsible for meeting the promised pensions and DB pension schemes are subject to the statutory funding objective which requires them to have sufficient and appropriate assets to provide for their pension liabilities. Schemes must be valued, at least every three years, and where there is a funding deficit a recovery plan must be put in place, and the deficit filled as soon as the sponsor can reasonably afford.
The Pensions Regulator has a range of enforcement powers and can intervene to protect member benefits when needed.
Where an employer becomes insolvent, and the scheme winds up underfunded, benefits are underpinned by the Pension Protection Fund (PPF) which can provide compensation at 100% of scheme benefits for pensioner members and 90% of scheme benefits for deferred members.
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what information her Department holds on the number of retirees affected by the lack of statutory inflation protection for pre-1997 defined benefit pensions.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
Analysis carried out by the Pensions Regulator estimates that, as of 31 March 2023, 23 per cent of private-sector occupational Defined Benefit (DB) pension schemes have no indexation applied to pre-1997 benefits. However, this is in addition to any Guaranteed Minimum Pension rights accrued between 1988 and 1997, which must be indexed by the scheme.
This information is published and available at: Data requests | The Pensions Regulator
Asked by: Susan Murray (Liberal Democrat - Mid Dunbartonshire)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, with reference to the report by the Parliamentary and Health Service Ombudsman entitled Women’s State Pension age: our findings on injustice and associated issues, published on 21 March 2024, whether compensation proposals will form part of a future fiscal event.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
I was the first Minister in 8 years to meet the WASPI campaign group and listen to their concerns.
We need time to review and consider the Ombudsman’s report along with the evidence provided during the investigation.
Once this work has been undertaken, the Government will be in a position to outline its approach.