To ask the Scottish Parliamentary Corporate Body, further to the answer to question S2W-1861 by Mr Duncan McNeil on 28 August 2003, why experience has shown that the SPCB could not guarantee to make payments by the 19th of the month following the pay run in which the contributions are collected and what that experience has been; why the SPCB is unable to make an arrangement which complies with this time deadline using direct debit, and when the SPCB will provide a full explanation of this matter to MSPs.
Previously,contributions were paid by a combination of BACS, cheques and direct debits. Inthe case of the direct debit facility, it gave pension providers authority tocollect contributions direct from an SPCB bank account. However, experienceshowed that:
if anindividual’s pension contribution increased by a small amount certain pensionproviders continued to collect the amount previously agreed and refused toaccept any increases of less than £10.00 per month;
pensionproviders were able to take money out of the bank account in situations wherethe Personnel Office had not been notified that a pension wasin place;
pensionproviders were collecting contributions in lump sums making it very difficultto identify for whom the contributions were being collected;
pensionproviders continued to collect contributions for several months after anindividual had ceased employment despite being advised that their employmenthad been terminated;
once a pensioncontribution rate had been set some pension providers would not accept anyrevised amounts, for example, increases due to pay awards, changes to contractedhours or backdated payments.
More importantly, however, new pension legislation changescame into effect from 6 April 2001 which required the SPCB to review itsprocedures. Under the Occupational PensionsRegulatory Authority (OPRA) the new rules for employers’ state that they havean obligation to:
calculate the employers’ and employees’ contributions foreach individual member of staff;
pay the correct amount of contributions over by the 19th of the month following the pay run in which the contributions are collected;
maintain a record of payments made;
provide each pension provider with a schedule as a recordof payments made.
Because of the problemsbeing experienced the SPCB believed that it could not comply with the new OPRArules whilst the then existing direct debit arrangements remained and deemed itnecessary to review and change its procedures. The decision was taken to closedown the direct debit facility and pay all contributions either by cheque, BACSor by standing order. This change gave the SPCB control over this matter toensure that it met its obligations under the new OPRA rules. All pension providers were informed in writing of thedecision.
The SPCB does not believe itcould comply, on behalf of members with all of the obligations placed on themas employers under OPRA rules were it to reinstate the direct debit facilityand therefore has no intention of doing so. This full answer ensures that membershave a full explanation of the matter.