Baroness Altmann (Non-Afl)

My Lords, in moving Amendment 26, I shall speak to my similar Amendment 39, to both of which I am grateful for the noble Baroness, Lady Bowles, adding her name. To follow on from the words of the noble Lord, Lord Davies, I am introducing these amendments as a marker, because I genuinely believe that it is important, if we are talking about distributing assets—I agree with the noble Lord on that terminology—to employers, that members should participate in the benefits that the excess funding has delivered. My particular concern revolves around protecting members’ pensions against rises in the cost of living over many years. To go back to the Goode committee report of 1993, which followed the Maxwell scandal, that was the first talk of protecting private pensions in a similar way to state pensions, which would automatically be expected to have some kind of protection against either rising living standards or the rising cost of living. The protections put in place for pension schemes, however, were watered down to some degree and not introduced until 1997, so there are many people now retired who have a significant chunk of their private pension without any inflation protection at all. As inflation has become a much greater concern in recent years particularly, I hope we will be able to agree that attention should be paid to looking after what will be the most elderly of the pensioner population—those with pension accruals since before 1997. If there is to be an enhancement of member benefits, I would argue that the first consideration should be helping to rectify and remediate the shortfalls that many of these people face when trying to afford to live in 21st-century Britain. I have included in the amendment the option of a one-off payment instead of enhancing the actual pension. In Amendment 26, it is a “may” rather than a “must”. The aim would be to make sure that some money is received by the member who has lost out, while bearing in mind that immediately lifting the pension from the pre-1997 accrual—which could be half or more of the person’s pension—up to a new level and then requiring the employer scheme to continue enhancing from that position, could add a significant extra strain on the scheme in the future if funding deteriorates. However, we know that currently, in a scheme considering distributing surpluses, there is much more than is required on the current expectations, and for the likely nearer-term future, to meet the liabilities that will arise in, say, the next five to 10 years. Thereafter, one does not know; many of the members affected will not, sadly, be with us in that timeframe. But if actuaries are concerned about a permanent rise in the base level of pensions that must be paid by the scheme and then ongoingly increased over the very long term, payment of a one-off surplus amount to reflect the lack of inflation linking that the member has suffered over past years would, in my view, be easier to absorb but would also significantly enhance the well-being of the members themselves. These amendments do similar things, although one is more definite than the other. I hope the Government and Minister can confirm that there is sympathy with this idea. Obviously, in a wider context, we will talk about enhancing members’ benefits more generally—I will come back to that on the next group—but, on that basis of the need for inflation protection in particular, I beg to move.