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The Minister for Pensions (Mr. Ian McCartney): I would not normally intervene in the debate, but the hon. Gentleman should be absolutely honest in his remarks. I held a debate in the House, met the workers and met a group of Members of Parliament who are working on behalf of the workers. The hon. Gentleman never turned up to the debate. When he raised the issue on the Floor of the House, I offered to co-operate with him on these matters, and I do so now. I received a letter from the work force thanking me for the work that I am trying to do on behalf of them and their Members of Parliament in an extremely difficult situation. I do not mind the hon. Gentleman backing up what he is trying to do in support of his constituents, but he should not do so by misrepresenting what I am trying to do on their behalf and on behalf of the other Members of Parliament who have raised the matter with me.
On the occasions to which I referred, and others, and in several letters to two Ministers, I received assuranceswhich I can read out word for word, if the right hon. Gentleman wishes, as I have them with methat measures already existed to protect such pension schemes. However, the point that has been made repeatedly by me and by other Members of Parliament who have UEF-owned firms in constituencies from Scotland to Lincoln to London is that no law was broken in either the UEF case or the Dema Glass case.
In both cases, clever use of existing regulations allowed the company pension schemes to be legally plundered. That was legalised robbery. The regulation and public transparency of such schemes must be improved. Again, I ask the Secretary of State or the Minister for Pensions to consider the suggestions and questions that I put to them, for example on 26 November. What action do the Government intend to take to ensure that company work forces receive much clearer guidance on the dangers, as well as the attractions, of final salary pension schemes?
In both the Chesterfield cases quoted, the work force were persuaded to keep the schemes going last year, and even to increase their payments into the scheme in the case of UEF. Had they known the real business position and financial situation of their companies, they probably would not have agreed to that. What action will the Government take to ensure that work forces are provided with all relevant financial information in similar situations?
Should the actuary for a company pension scheme provide annual reviews, rather than just three-year forecasts? In the UEF case and the Dema Glass case, the forecasts seemed to suggest that if workers continued to pay into the scheme or increased payments by 2 per cent., the scheme would be safeguarded. When the figures finally became available, after the firm went into receivership or closed down, it became apparent that that was not the case.
Should actuaries be required to make new forecasts whenever a new issue arises that could seriously affect the viability of the pension fundfor example, when a company faces financial problems, when a company encourages workers to take early retirement as an easy form of redundancy, and so on?
Following the Maxwell affair, the mis-selling of endowment policies, the Equitable Life problems and now the examples related to company pensions, it is imperative that the Government undertake a major review of the financial services industry, if they are to restore public confidence in the schemes on which the Government insist people should rely to look after them in their old age.
Sandra Osborne (Ayr): I welcome many of the positive measures that the Government have taken for pensioners, particularly poorer pensioners, but I shall concentrate my remarks on final salary pension schemes, largely based on a tragic situation in my constituency. In that regard, the hon. Member for Chesterfield (Paul Holmes) has rather stolen my thunder, as the case also involves United Engineering Forgings, which is located in my constituency, his constituency and four others throughout the United Kingdom.
For those who have benefited from occupational schemes, they can be said to be one of the most positive social developments in the post-war years, encompassing a partnership in retirement between the private sector, employees and the state. That is why the Government must take steps to ensure not only that final salary schemes are preserved, but that the millions who do not currently benefit are brought into an effective, workable and fair system. As other hon. Members have said, if it is good enough for Members of Parliament, it is good enough for the rest of the work force. I echo the comments in relation to compulsion that have been made this evening. That is well worth serious consideration.
I shall elaborate on my constituency problem, on which I have been working for some time. My right hon. Friend the former Secretary of State for Work and Pensions, who has taken on the task of sorting out the transport system, often said that occupational pensions are part of the remuneration package agreed by employers and their employees or their representatives. It should therefore be seen as part of a contract that one party cannot just abandon at will.
I have previously raised the matter in a Westminster Hall debate, to which my right hon. Friend the Minister for Pensions referred. I have a copy of the debate, and I do not see any record of a contribution from the hon. Member for Chesterfield (Paul Holmes), and he certainly did not raise with me the possibility of taking part. It is unfortunate that he has failed to recognise the efforts of other hon. Members in that regard. I make no apology for raising the issue again this evening, as it is extremely important and involves more than 1,000 people. As was obvious from his intervention, my right hon. Friend is well aware of the situation. I thank him for meeting me and other hon. Members, and for his helpful response so far.
The UEF workers had a final salary scheme introduced in 1974 as part of the annual wage award. As my hon. Friend the Member for Bradford, North (Mr. Rooney) said, many people regard their contributions to their occupational pension as part of their terms and conditions. The workers from UEF in my constituency call it their wages for retirement.
The work force include many long-term employees who believed that they were following the advice of successive Governments in making provision for their retirement. That has not come about in the past couple of years; it has been on the go for 20, 30 or 40 years. People have faithfully contributed over that time, but as matters stand, they will not get their expected pension from their accrued final salary scheme when they most need it, as they enter retirement and old age.
As the hon. Member for Chesterfield stated, it was not until the company went into administration in June 2001 that a shortfall of £12 million was identified by the independent trustee and the pension scheme was wound up immediately. Time does not allow me to recount the whole sorry tale, but a number of aspects are relevant to the debate and have wider application. I shall try not to repeat what he has already said.
The majority shareholder was Prudential Portfolio Management Ventures Limited, a member of the Prudential Group that, as hon. Members know, has a major involvement in pensions. It is rather strange that the hon. Member for Chesterfield did not even mention the role of Prudential. I can assure him that the work force feel that it is crucial. I would have welcomed him, had he joined me at the various meetings with Prudential management and at the protests outside the company to try to get it to live up to its moral responsibility to the work force. If he wants to join the campaign in future, he is more than welcome to do so.
The company took short-term decisions to benefit its shareholders and, I believe, had a conflict of interests that meant that it did not take responsibility for the proper management of the pension scheme, as it should have done even under current regulation. As the hon. Gentleman said, an important factor in the demise of the UEF pension scheme was the abuse of early retirement benefits as a carrot for voluntary redundancies, which ensured that many employees of 55 years and more received their fully accrued pension when they accepted redundancy. Many hon. Members have commented on the added pressures on pension funds that are caused by increasing life expectancy. We are all aware of that issue, but the problem is made worse if the number of people who receive their full pension at a lower age is greatly expanded, even if there is no health reason for them to retire early, and if the fund does not have sufficient assets to withstand the extra pressure.
The final decision in the UEF case lay not with the Government, but with the company, as it decided to allow people to go for early retirement in order to cut its wages billand that is exactly what happened. The misuse of funds is deterred by restrictions on the amount that can be invested from the fund to the employer's business, but what if the fund is over-burdened and due account is not taken of future requirements? As things stand, it appears that that is not illegal. The bottom line is that, after paying in all their working lives, the former UEF workers will be entitled to a greatly reduced amount and may have to rely on state benefits. Despite all that has happened, and much to the surprise and consternation of those who will suffer, there is nothing illegal about that.
I and representatives of the work force from throughout the UK met Mr. Jonathan Bloomer, group chief executive of Prudential, on 13 March to try to salvage something from the situation and get Prudential to face up to its moral obligations. I received a very timeous replyI do not thinkon 19 June. Mr. Bloomer stated that Prudential could not redress the shortfall in the pension fund by drawing on the assets of policyholders of Prudential products, which is fairly obvious. He has apologised for the fact that PPMV did not manage its relationship with the union as he would have expected. I do not know how all that squares with the reputed £18 million bonus that Mr. Bloomer will receive over three years, but I can tell the House that it is of scant consolation to my constituents, who will continue to campaign for justice. We will welcome anyone who wants to join us in that campaign.