Letter to the Chairman from The Pensions
Regulator
TREASURY COMMITTEE REPORT ON THE PRE-BUDGET
REPORT 2005
Further to my letter of 30 January, we have
been considering, with the Treasury and the Department for Work
and Pensions (DWP), your Committee's conclusion that the Pensions
Regulator and the Treasury need to assess carefully the impact
of the new regulations' on pension funding and of other requirements
arising from the Pensions Act 2004 and the effect they could have
on investment and the solvency of companies affected. The Treasury
are responding to this in full today as part of its formal response
to your report.
In the meantime it may help if I outline our
role and work in this area. The Pensions Act and its associated
regulations are the responsibility of the DWP and implement in
UK law the relevant provisions of the European Directive on Institutions
for Occupational Retirement Provision.
Our role is to regulate how pension schemes
comply with the legislation in line with our statutory objectives
to protect members' benefits and reduce risks to the Pensions
Protection Fund. We set out our provisional views on how we will
discharge our responsibilities in this regard in a consultation
paper issued on 31 October 2005, which your Committee's report
cites. Before taking this step, and because we shared your concern
about understanding the potential impacts of our regime, we commissioned
PriceWaterhouseCoopers to analyse the impact on the macro-economy
and the viability of employers of paying off their deficits as
calculated using FRS 17. This is I would have thought very
much the type of analysis your committee looks to us to undertake,
and we shared its findings with the Treasury before publishing
the consultation paper.
We are now analysing the responses to consultation
with a view to issuing a definitive statement of our approach
towards the end of April. We agree that the issues identified
by the Committee are important and will seek to monitor the wider
impacts of our statement so as to keep our approach under review.
As suggested in your letter, we have liaised
with the DWP and the Treasury to enable them to make the PriceWaterhouseCoopers
report available to you, and I understand that the Treasury are
today placing the report in the library of both Houses of Parliament,
as part of their wider response to your Committee's report. We
have prepared, with the DWP, a covering note on the context of
this analysis.
Tony Hobman
Chief Executive
22 March 2006
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