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Lord Skelmersdale: My Lords, before the Minister sits down may I say that one date that I have
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established from the Minister's long and very helpful explanation is that the eligibility of the scheme will start some time after April 1988? I have no other clue whatever. Could the Minister go a fraction further before I withdraw the amendment?
Baroness Hollis of Heigham: My Lords, I did not even say that. At one stage we were going to say that it might be restricted only to people before 1988 and now we shall not bring such restriction into place. In our very early thinking months ago an argument was put to us that people had no choice because it was laid down as a condition of the job. Therefore, it was a question whether that should be a consideration as opposed to people who have more voluntarily entered an occupational pension scheme. That is why I hinged on that. I cannot go further at this stage: when I can I will. I am sorry.
Lord Skelmersdale: My Lords, even that does not hold out much hope of satisfaction for the 65,000 members of schemes who, we believe, will be affected and could be helped by the financial assistance scheme.
Baroness Hollis of Heigham: My Lords, if the noble Lord were to pursue this matter he could unintentionally do more harm than good. Issues as to whether or not we should have the de minimis rule for very small sums would be removed from the possibilities. As a result, one would end up with potentially more serious losers than gainers. I can understand the noble Lord's frustration. I urge him not to go after this issue. What we propose allows us to deliver the contours of a scheme that I hope will become apparent once we can make it possible.
Lord Skelmersdale: My Lords, of course all these areas have to have times. They will be prescribed, as the noble Baroness said. I believe she said that this clause is littered with regulations. At least they are all affirmative so we can have another go at them. That said, the noble Baroness gave me the impression that she was protesting just a fraction too much. I knew exactly what the amendments did, but I explained in my opening words, I hope, that I wanted to find out when. To that there came no answer. These were all probing amendments. The probe has been extremely unsatisfactory, but it is not an occasion for seeking the opinion of the House. If I thought it were, I certainly would. I beg leave to withdraw the amendment.
The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 272 which is grouped with it. The first amendment deals with the insolvent winding up scheme where the assets are insufficient to meet the liabilities of the scheme.
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The clause, as drafted, neither rules in nor rules out the situation where the scheme winds up insolvently, but the employer itself is still solvent. His is the usual intended outcome of a Bradstock compromise. We had talked about Bradstock earlier in connection with an earlier section of the Bill where the trustees agree to take less than full payment of the debt properly due from the participating employers so that the employer or employers do not go bust, but as a consequence of the compromise the pension scheme's liabilities are not met in full.
The Bill as drafted requires the employer to meet prescribed requirements. This gives the Government the opportunity to include the Bradstock cases or to exclude them by statutory instrument. The purpose of the amendment is to provide explicitly that solvent employer/ insolvent schemes are within the FAS.
Amendment No. 272 deals with very much the same sort of issue except that it deals with a situation where the wind up has already been completed. With that difference the issue is exactly the same. I beg to move.
Lord Skelmersdale: My Lords, I accept that clearly one cannot have a government compensation scheme which picks up the pieces of solvent employers. That is turning the argument the other way round to the one which the noble Baroness, Lady Turner, produced.
Amendments Nos. 270 and 272 relate to FAS treatment of multi-employer schemes. The amendments are worded identically. Amendment No. 270 applies to the part of the clause which defines qualifying members who are members of schemes at a prescribed date. Amendment No. 272 applies to the part of the clause which defines qualifying members who ceased to be members of schemes, either because that scheme no longer exists or because the member has taken a cash equivalent transfer value.
These amendments, as the noble Lord identified, would force the FAS to offer assistance to members of multi-employer defined benefit occupational pension schemes that have lost accrued rights in the event of their winding up, where one or more of the participating employers are insolvent. It is also worth noting, however, that due to the qualification "or otherwise" at the end of the amendments, the actual effect of these amendments may be that the FAS would have to offer assistance to members of all schemes whose entitlement is unlikely to be satisfied in full irrespective of solvency status. The noble Lord was right to home in on that because they are the danger words.
As I will make clear as we move through the clause, it is still to be decided whether members of schemes that are connected to solvent employers will be eligible for
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assistance from the FAS. While we believe that solvent employers should support their schemes and provide the benefits that members were expecting, issues of employer solvency remain under consideration. One of the issues which we are considering is that the treatment of multi-employer schemes where participating employers are solvent or possibly where one is insolvent and others are solvent.
It may be helpful if I give some information on this. There are a number of different types of multi-employer schemes and there are different relationships between employers that may participate in these schemes. For example, multi-employer schemes may be set up by large groups of associated employers which belong to the same group of companies or they may be set up by separate employers within the same industry. In these schemes there may be no association between participating companies.
On the one hand, in structure, multi-employment schemes may be sectionalised or non-sectionalised. If they are sectionalised different sections of the scheme apply to different employers or groups of employers. On the other hand, in non-sectionalised schemes assets and liabilities are shared across the employers within that scheme. Thus the structure of these schemes and the relationship between participating employers is diverse. So while the amendments are helpful in highlighting the special circumstances of the schemes, given their complexity, it is obvious that one cannot simply use the FAS to make a blanket statement as to how we will approach their treatment.
For example, while the responsibility for providing pension benefits in a sectionalised scheme might rest with a single employer, that responsibility is held by all employers when the scheme is not sectionalised. In that type of multi-employer scheme, all participating employers have in effect made a promise to fund the scheme.
Added to that, irrespective of the structure of the particular scheme, there may be groups of connected companies participating within a scheme that are able and willing to provide the pension benefits that members expect. It would obviously not be prudent to provide all members of those schemes with assistance on the basis of the insolvency of one of those connected schemes.
I could go on, but I hope that I have said enough to my noble friend. While we take on board those issues, they are extremely complex. We do not want a situation where other employers in an associated group could pick up the pension liabilities but choose not to because we have let them off, and it then comes to FAS. That would mean that there would be less resources for other people who fall under FAS where there is no opportunity to share that responsibility.
Earl Ferrers: My Lords, I hesitate to join this rather cosy party, but in the past 10 minutes the noble Baroness
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has used the term "FAS" 13 times. I am sure that almost everyone knows what FAS is, but not all of us. It would be helpful if the noble Baroness would be kind enough to talk not in acronyms but in English so that we can understand what she is saying.
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