Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020

Viscount Trenchard Excerpts

Wednesday 21st October 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend for introducing this debate on this corrected statutory instrument, which puts right a defect in its predecessor. It is important that there should be no risk that the Pension Protection Fund might be unable to intervene and protect its rights as a creditor in the event of a co-operative and community benefit society obtaining a moratorium under the Corporate Insolvency and Governance Act.

Since we started to debate the new measures introduced by the CIGA, my noble friend Lady Altmann and others have been assiduous in arguing for the strengthening of the powers and rights of the PPF. I agree that this is highly desirable, so I welcome the Government’s action in closing this loophole. Since entering into a moratorium under the Act is not in itself an insolvency event, without these regulations the PPF would be unable to exercise its rights as a creditor of a defined benefit pension scheme. The trustees might be placed under pressure to agree to the sale of an asset pledged to the pension fund in the knowledge that the PPF would be required to step in without taking account of the wider interests of the members of the scheme or, indeed, the payers of the levy which funds the PPF.

These regulations have been introduced without consultation in the context of the Covid-19 pandemic, so it is welcome that we have the opportunity to discuss them today. While it is not directly the subject of today’s debate, I think it would be appropriate to hear a little more from the Minister on how the new provisions of CIGA are bedding down. My noble friend Lord Leigh of Hurley and others were concerned that a moratorium under the Act could not be applied for in order to rescue a company’s business, rather than the company itself. Further, I think it was unduly restrictive to exclude companies that have issued bonds in the amount of £10 million or more. As of 29 July, my noble friend Lord Callanan told your Lordships’ House that only one company had successfully entered into a moratorium. How many companies and other entities have now used the new moratorium process? I look forward to the contributions of other noble Lords and to the Minister’s reply to the debate.

Social Security (Up-rating of Benefits) Bill

Viscount Trenchard Excerpts

2nd reading
Tuesday 13th October 2020 Grand Committee

[Viscount Trenchard (Con)]

My Lords, I too offer my congratulations to the noble Lord, Lord Field of Birkenhead, on his excellent and thought-provoking maiden speech. As your Lordships know well, he has made a huge contribution to pensions and benefits matters over the years and comes highly regarded on all sides of the House.

I was particularly struck by what the noble Lord said about the importance of education and apprentices. In an age when statues wobble on their plinths, I thought I would mention to your Lordships that I have been invited to Royal Air Force College Cranwell on Friday to attend the installation ceremony of a statute of my grandfather, about which I am most honoured and proud. One hundred years ago, my grandfather devised the Halton apprentice scheme, which was approved by Winston Churchill. It started in 1920 and provided a technical education to many who joined the Royal Air Force from poorer homes. Many subsequently became air marshals or industrial leaders. Through this and other means, the Royal Air Force became an agent for social mobility throughout the interwar years and later. I am well aware of the huge importance of providing apprentice schemes, especially in technical subjects.

I also congratulate the noble Baroness, Lady Stuart of Edgbaston, on her most impressive and interesting maiden speech. She, too, has had a distinguished political career and has made a great contribution to social security issues. Those of us who supported the decision to leave the European Union are hugely encouraged that there is a highly regarded new noble Baroness and new noble Lord who can help explain to other noble Lords what the upside is for an independent Britain after Brexit and help your Lordships’ House to send out a more optimistic and outward-looking message to the public.

I thank my noble friend the Minister for introducing this very necessary Bill today. The triple lock, a clear and widely publicised manifesto commitment, promised that the state pension and certain other benefits would be uprated by a minimum of 2.5% each year, whatever happened to wages or inflation. The Bill demonstrates the Government’s action in doing what they said they would do, and I welcome it.

The coronavirus has caused untold damage to many sectors of the economy, especially the hospitality and leisure sector. The Government have done much to help those businesses stricken by the pandemic but there remains much more that they must do. In particular, the arbitrary nature of the allocation of grants under the Arts Council’s cultural recovery fund raises questions of fairness and would seem to conflict with the need to maintain a fair, competitive playing field between similar music festival businesses which have lost 100% of their income this year. I declare my interest as a director of such a business. However, that is not a subject for debate today.

I welcome the support given by the Bill to pensioners. It will give this large section of our community peace of mind as we move into winter against the background of an increasing rate of Covid-19 infection. A consequence of rising longevity, which is to be celebrated, is that more pensioners wish to work either full or part time. The more secure financial platform that this measure creates for them will encourage them to engage in economic activity after retirement, and that will assist the recovery of the economy from its current parlous state.

Do the Government intend to introduce a similar Bill next year? Could they not have taken the power to do the same thing next year in the unfortunate event that wages do not bounce back from the current levels and we do not see the creation of new jobs as people change their working patterns and new types of businesses emerge to replace those whose survival is now compromised? Of course, we all hope that wages will bounce back strongly in 2021, and I ask the Minister to tell the Grand Committee what the Government’s plans in relation to the triple lock will be in those circumstances.

Several noble Lords mentioned the problem of the very low take-up of pension benefit. Apparently more than 1 million people are entitled to this benefit but do not take it up, against the background of 2 million living in poverty or on wages lower than the living wage, according to the Joseph Rowntree Foundation. What steps are the Government taking to increase awareness of this benefit and to assist those who should be taking it up but need help in doing so?

Lastly, why have the Government not chosen the Bill as the means of correcting the anomaly that the pension payments of 510,000 pensioners have been frozen simply because they have moved to a country with which the UK does not have a reciprocal agreement requiring an uprating of benefit? It is shocking that Australia and Canada are among those countries, given our historical and kinship ties with them. This is especially regrettable against the background of our anticipated accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which should increase trade and investment involvement with those countries. I commend the activities of the End Frozen Pensions pressure group for bringing this unfortunate anomaly to your Lordships’ attention.

I look forward to the wind-up speeches and the Minister’s reply.

Pension Schemes Bill [HL]

Viscount Trenchard Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, while the Bill has generally been welcomed by the pensions industry and members of pension schemes, I worry that it may give the Pensions Regulator too much power. The new criminal offences contained in Clause 107 affect not only employers and senior associates of pension schemes. They could apply to anyone involved in such schemes: for example, trustees, banks and insurers. I therefore support Amendments 46 to 49, proposed by my noble friend Lady Noakes so eloquently and so well supported by my noble friends Lady Altmann and Lady Neville-Rolfe, which confine the new criminal offences to the employer and persons connected with the employer. It is absolutely right that the Government have acted to ensure that failures such as that of Carillion and BHS will no longer have a negative effect on members of pension schemes.

The offences created in Clause 107 are serious. They carry a potential seven years’ imprisonment and a civil penalty up to a maximum of £1 million. It is therefore right that these offences should apply as broadly as they do, but they should be limited in effect to the employer and the trustees of the pension scheme concerned. These penalties seem proportionate to the gravity of the crimes in certain cases, but both offences apply very broadly to “persons”, with no requirement for association with the pension scheme. The Government’s intention may be that the measures are there to catch wilful and reckless behaviour, but the problem is that their potential ambit is wider—much wider—than just the reckless.

As currently drafted, the criminal offences could impact ordinary pensions and business activity, and, in distressed situations, they might act as a disincentive to corporate or business rescue—for example, by encouraging directors to file for insolvency to avoid the risk of criminal liability that might arise through seeking a turnaround plan or a pension scheme compromise. So far, attempts at making the measures clearer and more targeted have not succeeded. Regulator guidance on how the new powers will be used has been promised, but this has no special status in law.

The Pensions Regulator is not the only possible prosecutor in Clause 107 offences, as the noble Lord, Lord Hutton, eloquently pointed out in Committee. My noble friend Lord Howe explained that the Secretary of State would prosecute only as a last resort, such as if the regulator ceased to exist or changed. I find it hard to envisage that in such circumstances the whole of the current pensions legislation would not be changed.

I think that it is necessary to confine those who might commit these two new offences to connected parties; otherwise, many other persons might unwittingly, or unintentionally, become exposed to prosecution. For example, the fund manager of a pension scheme, in handling investments entrusted to him by the trustees of the scheme, might make investments or realise sales that negatively affect the value of a pension fund’s assets.

I think that these amendments are very sensible and I look forward to hearing the Minister’s reply.

[The Deputy Speaker]

The noble Baroness, Lady Sherlock, has withdrawn. Have we had any success in finding the noble Lord, Lord Blencathra? Alas, no, in which case I call the Minister, the noble Earl, Lord Howe.