Amgueddfa Cymru - National Museum Wales: Pension Protection Fund Crown Guarantee
The purpose of this Statement is to inform the National Assembly, in compliance with Standing Order 21, of a contingent liability that I propose to authorise in respect of a Crown Guarantee under the Pension Protection Fund (Entry Rules) Regulations 2005 for Amgueddfa Cymru – National Museum Wales. The Statement sets out the information in respect of the proposed contingent liability specified in Standing Order 21.21.
Amgueddfa Cymru – National Museum Wales is an independent Royal Charter body and a registered charity which receives its principal funding through grant-in-aid from the Welsh Assembly Government as an Assembly Sponsored Public Body. NMW’s Pension Scheme is a funded scheme and is operated by the Museum in conjunction with the Pension Scheme Trustees. A combination of factors, in particular the performance of the Stock Market and rising life expectancies, has meant that the Scheme currently has a funding deficit (ie liabilities over assets) of approximately £24 million.
The Museum is already taking prudent steps to address the situation, but the Trustees are seeking a “crown guarantee” from the National Assembly for Wales under Regulation 2.d of the Pension Protection Fund (Entry Rules) Regulations 2005.
The Pension Protection Fund (PPF) was established under the Pensions Act 2004 to pay compensation to members of eligible defined benefit pension schemes when there is a qualifying insolvency event involving the employer. The PPF covers certain defined benefit occupational pension schemes, although schemes that meet certain eligibility requirements are exempt from the PPF. The following list is not exhaustive, but generally speaking the following pension schemes are exempt:
- unfunded public schemes (ie civil service);
- public sector schemes providing pensions to local government employees;
- schemes to which a Minister of the Crown has given a guarantee.
The majority of ASPB pension schemes are based on the local government, NHS and civil service pensions schemes, all of which are already exempt from the regulations.
The guarantee would:
- enable the Pension Scheme Trustees to take a longer term view in relation to addressing the Scheme deficit
- secure the Scheme’s liabilities should a “qualifying insolvency event” occur at some point in the future, although it is extremely difficult to imagine the circumstances in which this may happen
- exempt the NMW Pension Scheme from the Pension Protection Fund levy, which would result in savings of some £170,000 per annum.
There are no immediate funding implications to providing this guarantee, apart from the fact that the Museum would not be required to pay the Pension Protection Fund Levy. The guarantee would constitute a contingent liability that could exceed £100,000 which is a notifiable transaction under Standing Order 21.16. The contingent liability would only mature if the Museum were to become the subject of an insolvency event.
If during the period of 10 days beginning on the date on which this statement was laid before the Assembly at least 10 Members table a notice requiring the Assembly Minister to seek the approval of the Assembly for the Notifiable Transaction, then the Assembly Minister shall table a motion seeking the approval of the Assembly for the Transaction and the Assembly Minister shall not authorise the Transaction until such approval has been given.