Written question asked by Lord Flight (Conservative) on Monday, 20 January 2003, in the House of Commons. It was due for an answer on Monday, 27 January 2003. It was answered by Ian McCartney (Labour) on Monday, 27 January 2003 on behalf of the Department for Work and Pensions.

Dept for Work and Pensions

Question: To ask the Secretary of State for Work and Pensions, what assessment he has made of the effect of closing a final salary pension scheme upon a firm's financial risk.

Answer: Mr. Flight:: To ask the Secretary of State for Work and Pensions what assessment he has made of the effect of closing a final salary pension scheme upon a firm's financial risk. [92829] Mr. McCartney: When employers close their defined benefit schemes, they are seeking to put a limit on the long term liabilities of the company. Given the nature of these liabilities, however, closure is unlikely to have an immediate or even necessarily a short term impact. This is because the existing liabilities will still have to be met for the continuing life of the scheme irrespective of whether new members are being accepted. The Green Paper `Simplicity, security and choice: working and saving for retirement' (Cm5677) sets out the Government's view that, for this and other reasons, closing or winding up pension schemes are not in the interests of either employers or employees. The Green Paper, therefore, sets out a range of proposals to simplify the regulatory regime for pensions, which could save employers £150 to £200 million a year in administration, and thus make it easier for employers to continue to provide final salary schemes and other types of pension arrangements for their employees. We have launched a wide ranging consultation in which we are seeking views on this approach including its impact on employers.

Secondary information