Overview

This bill amends the Pensions Act 1995 to allow the Treasury to reduce or seize the pensions of bank board members if their bank has experienced financial distress requiring government intervention, such as temporary public ownership or transfer to a bridge bank.

Description

The Bankers' Pensions (Limits) Bill modifies the 1995 Pensions Act. Specifically, it adds a clause (section 1) allowing the Treasury to impose a charge, lien, or set-off against the pension entitlements of board members of banks under specific circumstances.

Circumstances for Pension Reduction

These circumstances include:

• All or part of the bank's business being transferred to a bridge bank or onward bridge bank under the Banking Act 2009.
• The bank coming under temporary public ownership under the Banking Act 2009.
• The Treasury taking a majority stake in the bank because it was deemed insolvent or likely to become insolvent.

The amount of the pension reduction will be determined by the Treasury, considering the board member's responsibility for the bank's financial problems. The reduction cannot exceed the member's accrued pension entitlement and they will receive a certificate detailing the amount and impact.

Definitions

The bill defines "bank" and "securities" according to the Banking Act 2009.

Government Spending

The bill does not directly increase government spending. Instead, it aims to recover potential losses incurred by the government through bank bailouts by reducing the pension benefits of responsible board members. The precise financial impact is dependent on the number of cases where the Treasury chooses to exercise these powers and the value of the pensions involved. No figures are provided in the bill text.

Groups Affected

The bill primarily affects:

• Board members of banks: Those whose banks face the circumstances outlined in the bill may experience a reduction or forfeiture of their pension benefits.
• The Treasury: The bill grants the Treasury the power to decide on and enforce pension reductions.
• Pension schemes: The schemes will have to implement the decisions made by the Treasury concerning pension reductions.

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