Gordon Marsden – 2014 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Gordon Marsden on 2014-04-01.

To ask the Secretary of State for Work and Pensions, what the rationale was for the provisions in the Pensions Bill which allow employers to differentiate pension conditions between previous public sector employees now working in privatised companies and protected persons.

Steve Webb

The Pensions Bill creates a statutory override designed to allow employers, to a very limited extent, to make changes to the scheme to recover the increased cost of National Insurance that follows from the introduction of the single tier pension.

Protected persons are a small group of individuals (approximately 60,000) employed in some formerly nationalised industries, namely rail, including Transport for London, electricity, coal, nuclear waste and decommissioning, where the employers are limited in their ability to change scheme rules by legislation made at the time of privatisation. This legislation prevents employers from making changes to the pension benefits offered to those employees who were previously employed by the State. The Pensions Bill reaffirms that restriction.

This is a very different situation to other privatisations where a trust deed, rules or other undertaking was made at the time of privatisation, which was not endorsed by Parliament in the same way.

The important distinction we have made is that where duties to restrict changes to the future pension rights of specific workers, in specific industries have been enshrined in law and endorsed by Parliament, the statutory override should not allow employers to disregard that legislation.

It should also be noted that contractual agreements between public sector organisations and third parties, which may provide pension protection for staff now working in private companies, are not affected by the statutory override