Session 2013 - 14
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349

 

SUPPLEMENT TO THE VOTES AND PROCEEDINGS

 
 

Tuesday 29 October 2013

 

Report Stage Proceedings

 

Pensions Bill, As Amended


 

New Clauses and new schedules relating to, and amendments to, part 4

 

Work-based schemes: power to restrict charges or impose requirements

 

Secretary Iain Duncan Smith

 

Added  NC1

 

To move the following Clause:—

 

‘Schedule [Work-based schemes: power to restrict charges or impose

 

requirements] permits the Secretary of State to make regulations—

 

(a)    

restricting the charges that may be imposed on members of certain work-

 

based pension schemes;

 

(b)    

imposing requirements relating to administration or governance that

 

must be satisfied in relation to certain work-based pension schemes.’.

 

As an Amendment to Mr Iain Duncan Smith’s proposed New Clause (Work-based

 

schemes: power to restrict charges or impose requirements) (NC1):—

 

Gregg McClymont

 

Negatived on division  (a)

 

Line  6,  at end add—

 

‘(2)    

In this section—

 

(a)    

“charges”; and

 

(b)    

“transaction costs”

 

    

shall be defined in regulations by the Secretary of State.

 

(3)    

Before making regulations under subsection (2), the Secretary of State must

 

undertake a public consultation, which must include the views of—

 

(a)    

the Financial Conduct Authority; and

 

(b)    

the Pensions Regulator.

 

(4)    

With reference to paragraph (2)(a), any public consultation must consider the

 

different elements which comprise charges and not just the annual management

 

charge.

 

(5)    

Such charges, together with any transaction costs incurred by the funds in which

 

qualifying schemes are invested, shall be declared on an annual basis to the

 

Pensions Regulator, which shall maintain a public register thereof.


 
 

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350

 

Pensions Bill, continued

 
 

(6)    

The Secretary of State shall by regulations set the standards by which pension

 

schemes must declare charges and transaction costs for the purposes of the

 

register and for declaration to their members and their members’ employers.

 

(7)    

The standards set out in regulations under subsection (6) shall be reviewed every

 

three years.

 

(8)    

The Secretary of State shall have power to make regulations ordering other

 

disclosure arrangements on administration charges.

 

(9)    

Regulations under this section may not be made unless a draft has been laid

 

before and approved by resolution of both Houses of Parliament.’.

 


 

Railways pension scheme

 

John McDonnell

 

Grahame M. Morris

 

Not called  NC7

 

To move the following Clause:—

 

‘(1)    

The Railways Act 1993 is amended as follows.

 

(2)    

In Schedule 11 (Pensions), after paragraph 11 there is inserted—

 

“Employers insolvency

 

11A(1)  

This paragraph applies if an insolvency event occurs in relation to the

 

employer or former employer of a protected person.

 

      (2)  

Where this paragraph applies the Secretary of State shall become

 

liable to discharge any liabilities in respect of relevant pension rights,

 

to the extent that they are not discharged by the trustees of a new

 

scheme in which the employer was a participating employer.

 

      (3)  

For the purposes of this paragraph—

 

(a)    

“insolvency event” has the meaning set out in section 121 of

 

the Pensions Act 2004;

 

(b)    

“relevant pension rights” means the relevant pension rights

 

referred to in paragraph 6(3) above.

 

11B      

The duty referred to in paragraph 11A also applies if an insolvency

 

event has occurred in relation to the employer or former employer of

 

a protected person on or after 1 October 1994.”.’.

 


 

Fiduciary duty of independent trustees

 

Gregg McClymont

 

Not called  NC9

 

To move the following Clause:—

 

‘(1)    

The Secretary of State may by regulations—


 
 

Report Stage Proceedings: 29 October 2013                

351

 

Pensions Bill, continued

 
 

(a)    

require any pension scheme, which is not already overseen by

 

independent trustees, to appoint a board of independent trustees; and

 

(b)    

set out the powers and duties of a board appointed under paragraph (1)(a).

 

(2)    

Regulations under this section—

 

(a)    

shall be made by statutory instrument; and

 

(b)    

may not be made unless a draft has been laid before and approved by

 

resolution of each House of Parliament.

 

(3)    

The board of independent trustees shall have a fiduciary duty towards members

 

of the scheme overseen by them.

 

(4)    

The fiduciary duty set out in subsection (3) shall take precedence over any duty

 

to—

 

(a)    

the shareholders in, or

 

(b)    

other owners of,

 

    

the operators of the scheme.

 

(5)    

In relation to any matters of member interest, decisions of the board of

 

independent trustees shall be binding on the board of directors or other analogous

 

management board of any undertaking operating a pension scheme.’.

 


 

Promotion of good value in scheme size

 

Gregg McClymont

 

Not called  NC10

 

To move the following Clause:—

 

‘(1)    

The fiduciary duty of pension scheme trustees shall include a duty to consider

 

whether the scheme has sufficient scale to deliver good value for members.

 

(2)    

Where trustees take the view that the scheme has insufficient scale, they must

 

consider whether merger with another scheme would be in the members’

 

interests.

 

(3)    

The Pensions Regulator shall have power to direct merger of pensions schemes

 

where it would be in the interests of the members of each of the relevant schemes

 

for merger to take place.

 

(4)    

The Pensions Regulator shall exercise this power in accordance with a

 

methodology on which it has publicly consulted and which has been agreed with

 

the Secretary of State.

 

(5)    

The methodology set out in subsection (4) shall be kept under regular review and

 

revised when necessary, subject to further consultation and agreement from the

 

Secretary of State.’.

 


 

Decumulation

 

Gregg McClymont

 

Negatived on division  NC11

 

To move the following Clause:—


 
 

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Pensions Bill, continued

 
 

‘(1)    

Any qualifying money purchase scheme must direct its savers to an independent

 

annuity brokerage service or offer such a brokerage service itself.

 

(2)    

Pension schemes shall ensure that any brokerage service selected or provided

 

meets best practice in terms of providing members with—

 

(a)    

an assisted path through the annuity process;

 

(b)    

ensuring access to most annuity providers; and

 

(c)    

minimising costs.

 

(3)    

The standards meeting best practice on decumulation shall be defined by the

 

Pensions Regulator after public consultation.

 

(4)    

The standards set out in subsection (3) shall be reviewed every three years and, if

 

required, updated.’.

 


 

Sustainability of private pensions: review of implications of climate change and natural

 

resource constraints

 

Caroline Lucas

 

Not called  NC12

 

To move the following Clause:—

 

‘(1)    

The Secretary of State shall commission an independent review of the

 

implications of climate change and natural resource constraints for the

 

sustainability of private pensions.

 

(2)    

In particular, the review must consider the implications for long-term investment

 

outcomes for members of work-based pension schemes of potential—

 

(a)    

systemic risks posed by high levels of exposure to fossil fuels and other

 

carbon-intensive assets;

 

(b)    

economic and physical impacts of climate change under various climate

 

mitigation scenarios; and

 

(c)    

constraints on the availability of non-renewable resources.

 

(3)    

In subsection (2)(c), “non-renewable resources” includes food, water, land and

 

energy resources.

 

(4)    

A report of the review’s findings, including recommendations to government,

 

must be laid before Parliament no later than 30 October 2014.

 

(5)    

The government must lay before Parliament its response to the review’s

 

recommendations no later than 30 January 2015.’.

 


 

Secretary Iain Duncan Smith

 

Added  NS1

 

To move the following Schedule:—

 

‘Work-based schemes: power to restrict charges or impose requirements

 

Power to restrict charges

 

1    (1)  

The Secretary of State may by regulations make provision—


 
 

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353

 

Pensions Bill, continued

 
 

(a)    

prohibiting administration charges which are of a specified class or

 

description, or which exceed specified limits, from being imposed on

 

a member of a relevant scheme;

 

(b)    

prohibiting a relevant scheme from containing provision under which

 

administration charges which are of a specified class or description, or

 

which exceed specified limits, will or may be imposed on a member

 

of the scheme.

 

            

“Specified” means specified in the regulations.

 

      (2)  

The regulations—

 

(a)    

may make provision for the manner of, and criteria for, determining

 

whether an administration charge is of a specified class or description

 

or exceeds specified limits;

 

(b)    

may provide for the determination to be made in accordance with

 

guidance issued from time to time by the Secretary of State.

 

      (3)  

The regulations may impose duties on the trustees or managers of a relevant

 

scheme or others.

 

      (4)  

The regulations may provide that a scheme is not a qualifying scheme in

 

relation to a jobholder for the purposes of Part 1 of the Pensions Act 2008 if a

 

provision of the regulations—

 

(a)    

is contravened, or

 

(b)    

is contravened in a way specified in the regulations.

 

      (5)  

In this paragraph—

 

“administration charge”, in relation to a member of a pension scheme,

 

means any of the following to the extent that they may be used to meet

 

the administrative expenses of the scheme, to pay commission or in any

 

other way that does not result in the provision of pension benefits for or

 

in respect of members—

 

(a)    

any payments made to the scheme by, or on behalf or in respect

 

of, the member,

 

(b)    

any income or capital gain arising from the investment of such

 

payments, or

 

(c)    

the value of the member’s rights under the scheme;

 

“relevant scheme” means a work-based pension scheme of a description

 

specified in the regulations.

 

Power to impose requirements relating to administration or governance

 

2    (1)  

The Secretary of State may by regulations impose requirements relating to the

 

administration or governance of a relevant scheme that must be satisfied in

 

relation to the scheme.

 

      (2)  

The regulations—

 

(a)    

may make provision for the manner of, and criteria for, determining

 

whether a requirement is satisfied;

 

(b)    

may provide for the determination to be made in accordance with

 

guidance issued from time to time by the Secretary of State.

 

      (3)  

The regulations may impose duties on the trustees or managers of a relevant

 

scheme or others.

 

      (4)  

The regulations may provide that a scheme is not a qualifying scheme in

 

relation to a jobholder for the purposes of Part 1 of the Pensions Act 2008 if a

 

provision of the regulations—

 

(a)    

is contravened, or

 

(b)    

is contravened in a way specified in the regulations.


 
 

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Pensions Bill, continued

 
 

      (5)  

In this paragraph “relevant scheme” means a work-based pension scheme of a

 

description specified in the regulations.

 

Compliance

 

3    (1)  

The Secretary of State may by regulations make provision with a view to

 

ensuring compliance with a provision of regulations under paragraph 1 or 2.

 

      (2)  

The regulations may in particular—

 

(a)    

provide for the Regulator to issue a notice (a “compliance notice”) to

 

a person with a view to ensuring the person’s compliance with a

 

provision of regulations under paragraph 1 or 2;

 

(b)    

provide for the Regulator to issue a notice (a “third party compliance

 

notice”) to a person with a view to ensuring another person’s

 

compliance with a provision of regulations under paragraph 1 or 2;

 

(c)    

provide for the Regulator to issue a notice (a “penalty notice”)

 

imposing a penalty on a person where the Regulator is of the opinion

 

that the person has failed to comply with a compliance notice or third

 

party compliance notice or has contravened a provision of regulations

 

under paragraph 1 or 2;

 

(d)    

provide for the making of a reference to the First-tier Tribunal or

 

Upper Tribunal in respect of the issue of a penalty notice or the amount

 

of a penalty;

 

(e)    

confer other functions on the Regulator.

 

      (3)  

The regulations may make provision for determining the amount, or the

 

maximum amount, of a penalty in respect of a failure or contravention.

 

      (4)  

But the amount of a penalty imposed under the regulations in respect of a

 

failure or contravention must not exceed—

 

(a)    

£5,000, in the case of an individual, and

 

(b)    

£50,000, in any other case.

 

Interpretation

 

4    (1)  

Expressions used in this Schedule and in Schedule 16 have the same meaning

 

in this Schedule as in that Schedule (see paragraph 17 of that Schedule).

 

      (2)  

In this Schedule “relevant scheme” is to be construed in accordance with

 

paragraphs 1(5) and 2(5).

 

Crown application

 

5    (1)  

This Schedule applies to a pension scheme managed by or on behalf of the

 

Crown as it applies to other pension schemes.

 

      (2)  

Accordingly, a reference in this Schedule to a person in the person’s capacity

 

as a trustee or manager of a pension scheme include the Crown, or a person

 

acting on behalf of the Crown, in that capacity.

 

      (3)  

This Schedule applies to persons employed by or under the Crown as it applies

 

to persons employed by a private person.

 

Overriding provision

 

6    (1)  

The Secretary of State may by regulations provide that specified provisions

 

override any provision of a relevant scheme to the extent that it conflicts with

 

them.

 

      (2)  

A “specified provision” is a provision of regulations under this Schedule

 

specified in regulations made under sub-paragraph (1).


 
 

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Pensions Bill, continued

 
 

Other provision relating to regulations under this Schedule

 

7    (1)  

The Secretary of State may by regulations amend or otherwise modify any

 

enactment (whenever passed or made) in connection with any provision made

 

by regulations under the preceding provisions of this Schedule.

 

      (2)  

In this paragraph “enactment” includes an enactment contained in subordinate

 

legislation within the meaning of the Interpretation Act 1978.

 

8          

Before making any regulations under this Schedule, the Secretary of State

 

must consult such persons as the Secretary of State considers appropriate.

 

Amendments

 

9    (1)  

The Pension Schemes Act 1993 is amended as follows.

 

      (2)  

In section 94(2A) (right to cash equivalent)—

 

(a)    

in paragraph (a), after sub-paragraph (viii) (inserted by Schedule 16 to

 

this Act) insert—

 

“(ix)    

regulations made under Schedule [Work-

 

based schemes: power to restrict charges or

 

impose requirements] to the Pensions Act

 

2013;”;

 

(b)    

in paragraph (b), after sub-paragraph (vi) (inserted by Schedule 16 to

 

this Act) insert—

 

“(vii)    

regulations made under paragraph 6 of

 

Schedule [Work-based schemes: power to

 

restrict charges or impose requirements] to

 

the Pensions Act 2013.”

 

      (3)  

In section 101AI(8) (rights to cash transfer sum and contribution refund:

 

further provisions)—

 

(a)    

in paragraph (a), after sub-paragraph (viii) (inserted by Schedule 16 to

 

this Act) insert—

 

“(ix)    

regulations made under Schedule [Work-

 

based schemes: power to restrict charges or

 

impose requirements] to the Pensions Act

 

2013;”;

 

(b)    

in paragraph (b), after sub-paragraph (vi) (inserted by Schedule 16 to

 

this Act) insert—

 

“(vii)    

regulations made under paragraph 6 of

 

Schedule [Work-based schemes: power to

 

restrict charges or impose requirements] to

 

the Pensions Act 2013.”

 

10         

In section 256 of the Pensions Act 2004 (no indemnification for fines or civil

 

penalties), in subsection (1)(b), after “or paragraph 10 of Schedule 16 to the

 

Pensions Act 2013” (inserted by Schedule 16 to this Act) insert “or paragraph

 

3 of Schedule [Work-based schemes: power to restrict charges or impose

 

requirements] to that Act”.

 

11  (1)  

Section 16 of the Pensions Act 2008 (automatic enrolment: qualifying

 

schemes) is amended as follows.

 

      (2)  

In subsection (3), omit paragraphs (a), (aa) and (ab).

 

      (3)  

After subsection (3) insert—

 

“(3A)    

See also paragraphs 1(4) and 2(4) of Schedule [Work-based schemes:

 

power to restrict charges or impose requirements] to the Pensions Act

 

2013, which confer power to make regulations providing for a scheme


 
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