Overview

This bill amends the Pensions Act 1995 to allow the Treasury to reduce or eliminate the pensions of bank board members under specific circumstances. This applies when a bank's business is transferred to a bridge bank, comes under temporary public ownership, or the Treasury takes a majority stake due to the bank's insolvency or potential insolvency.

Description

The bill modifies Section 91 of the Pensions Act 1995, concerning the inalienability of occupational pensions. It introduces a new clause allowing for a charge, lien, or set-off against the pensions of bank board members. This action is permissible if, after the bill's enactment, the bank:

• Transfers all or part of its business to a bridge bank (as defined in the Banking Act 2009).
• Comes under temporary public ownership (as defined in the Banking Act 2009).
• Has the Treasury take a majority stake in its voting share capital because the Treasury believes the bank is insolvent or likely to become insolvent.

The amount of the pension reduction is decided by the Treasury, considering the board member's responsibility for the events leading to the bank's situation. The reduction cannot exceed the member's accrued pension entitlement, and they receive a certificate detailing the amount and its impact on their benefits.

The bill defines "bank" and "securities" as per the Banking Act 2009. It also outlines its short title, commencement date (the day after it's passed), and its extent (England, Wales, Scotland, and Northern Ireland).

Government Spending

The bill doesn't directly allocate new government spending. However, it may lead to potential savings by reducing pension payouts to board members of failed or failing banks. The exact financial impact is variable and dependent on the future actions taken under the legislation.

Groups Affected

• Board members of banks: Those serving on the boards of banks that experience the circumstances described in the bill may see a reduction or forfeiture of their pensions. The impact varies depending on the Treasury's assessment of their individual responsibility.
• The Treasury: The Treasury gains the authority to decide the amount of any pension reduction and to implement the changes.
• Taxpayers: Indirectly affected, as any reduction in pension payments may potentially decrease the overall financial burden on the government following a banking crisis.

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