The Commons Social Security Select Committee decided at a closed session yesterday to investigate whether the Government had a 'hidden agenda' to take over the pension funds of state-owned enterprises after privatisation.
The committee was asked by Robert Adley, Conservative chairman of the Transport Select Committee, to hold a formal inquiry into the future of BR's pension funds following an announcement in January that the Government may take over part of British Rail's pension fund assets, estimated to be worth pounds 8.5bn.
Mr Adley, MP for Christchurch, said that BR staff feared that the Government planned to seize the pension fund assets due to them, just as the late Robert Maxwell raided pension funds of companies that he ran.
'I believe that the Secretary of State (John MacGregor) has a duty to remove the fears of people who see the shadow of Maxwell hanging over them,' he said.
The committee has received letters from pensioners and employees who are worried about the security of their pensions after fears that the Government had similar plans for their funds to help to reduce the budget deficit, which is expected to be pounds 44bn this year and pounds 50bn next.
The social security select committee decided to ask ministers to explain what proposals they have for acquiring other pension funds. Mr MacGregor and Michael Portillo, Chief Secretary to the Treasury, are to be invited to give evidence. The committee is to write also to the chairmen of trustees of pension funds of eight organisations, including British Rail, British Coal, the Post Office and London Transport, to ask for their views.
British Coal pension fund, with assets of pounds 12.79bn, is the richest in the UK, and the Post Office's fund is the fifth richest with pounds 8bn. London Transport's fund, at pounds 1.7bn, is the 29th richest.
In a consultation paper, Mr MacGregor said the Government could take over the administration of BR's pension fund for pensioners. Pensions for contributors who are still working for BR would be taken over by the new franchise winners after privatisation.
The pensioners' assets, of up to pounds 4.25bn, would be absorbed by the Treasury and any surplus after pension payouts could be used to reduce the budget deficit. Rail unions claim the pensioners would be worse off and want to maintain a single fund on existing terms.
Earlier this month, British Coal told the trustees of its pension fund that the Government was likely to offer the same deal to miners and staff.
The committee, which has investigated Robert Maxwell's theft of millions of pounds worth of pension funds, will seek the views of trade unions involved with British Rail, British Coal, the Post Office and London Transport.
Jimmy Knapp, general secretary of the National Union of Rail, Maritime and Transport Workers, said: 'A clear picture of the future is emerging. It is one where we have a government preparing the closure of large parts of the rail network while it raids BR's pension funds. This is a trial run and a blueprint that could lead to the Treasury seizing assets belonging to British Coal, the Post Office and even local authority pension funds.'
Bill Flaherty, secretary of the Post Office Unions' Council, said: 'Our fear is the same thing could happen to our pension fund as British Rail's. The union's view is that the pounds 1.2bn surpluses in the scheme belong to the members and should be used to improve pensions. That should hold good no matter who takes it over, whether it is the Government or new owners of the Post Office.'
The top 10 pension funds in the UK are: British Coal ( pounds 12.79bn); British Telecom plc ( pounds 12.40bn); Electricity Supply ( pounds 9.49bn); Post Office ( pounds 8bn); British Railways Board ( pounds 7.56bn as at March 1992); Universities Superannuation Scheme ( pounds 6.23bn); British Gas plc ( pounds 5.98bn); Barclays Bank plc ( pounds 5.37bn); The British Petroleum Company plc ( pounds 4.88bn); National Westminster Bank ( pounds 4.73bn).
Source: Pension Funds and their Advisers 1993; published by A P Information Services.Reuse content