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Ports for its approval, which it shall not unreasonably withhold, plans of the work showing the general mode of construction and such work shall not be constructed otherwise than in accordance with such plans as may be approved by A.B. Ports or as may be determined by the Secretary of State as hereinafter provided and all such works shall be executed to the reasonable satisfaction of A.B. Ports : ()


When submitting plans to the Secretary of State pursuant to section 6 (Tidal works not to be executed without approval of Secretary of State) of this Act, the Company shall send a copy thereof to A.B. Ports and the Company shall, on receipt of approval of plans or of any conditions or restrictions imposed under that section, send a copy to A.B. Ports :


In the event of A.B. Ports failing to express its disapproval of any plans within 56 days after they shall have been delivered to A.B. Ports under this paragraph, A.B. Ports shall be deemed to have approved them :

(d) If it appears to the Company that A.B. Ports has unreasonably withheld its approval to any plans under this paragraph, the Company may appeal to the Secretary of State whose decision shall be final : (

(e) The Company shall at all reasonable times afford to the duly authorised representative of A.B. Ports all reasonable facilities for inspecting any tidal work in the course of construction : (3) The Company shall give to A.B. Ports not less than 14 days' written notice of its intention to commence the construction of a tidal work and, not more than 14 days after completion of such construction, shall give to A.B. Ports written notice of such completion :

(4) After the purpose of any temporary structure has been accomplished the Company shall with all reasonable dispatch, or after a reasonable period of notice in writing from A.B. Ports requiring them so to do, remove any such temporary structure or any materials relating thereto which may have been placed below the level of high water by or on behalf of the Company and, on its failing so to do within a reasonable period after receiving such notice, A.B. Ports may remove the same and charge the Company with the reasonable expense of so doing, which expense the Company shall repay to A.B. Ports :

(5) The Company shall not exercise the powers conferred on it by section 5 (Dredging) of this Act except with the written consent of A.B. Ports (which it shall not unreasonably withhold) and in accordance with such conditions and restrictions as may be reasonably prescribed by A.B. Ports :

(6) The provisions of section 8 (Abatement of works abandoned or decayed), section 9 (Survey of tidal works), and section 11 (Lights on tidal works during construction) of this Act shall extend for the protection of A.B. Ports and, for that purpose, shall have effect as if for any reference therein to the Secretary of State, there were substituted a reference to A.B. Ports :

(7)(a) Without prejudice to the other provisions of this section, the Company shall be responsible for, and make good to A.B. Ports, all losses, costs, charges, damages and expenses however caused (including a proper proportion of the overhead charges of A.B. Ports) which may reasonably be incurred by or occasioned to A.B. Ports-- (

(i) arising from the perusal of plans and the inspection of any tidal work by A.B. Ports or its duly authorised representative ; (

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(ii) by reason of the construction of any of the works or the exercise by the Company of the powers conferred on it by section 5 (Dredging) of this Act, the failure of any of the works or the undertaking by A.B. Ports of works or measures for the prevention of danger to navigation arising from such failure ;

(iii) by reason of any act or omission of the Company or its servants or agents whilst engaged in the construction of any of the works or the exercise of the powers conferred by the said section 5 ;

and the Company shall indemnify A.B. Ports from and against all claims and demands arising out of, or in connection with, such construction, exercise, failure or act or omission as aforesaid ; (

(b) A.B. Ports shall give to the Company notice of any claim or demand made against it which is a claim or demand for which the Company may be liable under this paragraph and no settlement or compromise of any such claim or demand shall be made without the consent in writing of the Company :

(8) Nothing in this Act shall be construed as imposing upon A.B. Ports, either directly or indirectly, any form of duty or liability to which A.B. Ports would not otherwise be subject which is enforceable by proceedings before any Court :

(9) Nothing in this Act shall affect prejudicially any statutory or other rights, powers or privileges vested in, or enjoyed by, A.B. Ports at the commencement of this Act or any title of A.B. Ports in, to or over any lands or foreshore held or acquired by it."

Amendment proposed to the Lords amendment, in subsection (8), leave out "Nothing" and insert

"With the exception of any duty owed by A.B. Ports to the Company expressly provided for in the foregoing provisions of this section, nothing"-- [The Chairman of Ways and Means.]

Question, That the amendment be made, put and agreed to. Lords amendment, as amended, agreed to.

BUCKINGHAMSHIRE COUNTY COUNCIL BILL [Lords] (By Order) As amended, considered.


That Standing Order 205 (Notice of Third Reading) be suspended and that the Bill be now read the Third time.-- [The Chairman of Ways and Means.]

Bill accordingly read the Third time, and passed, with amendments.

7.7 pm

Mr. Andrew F. Bennett (Denton and Reddish) : On a point of order, Mr. Deputy Speaker. I hope that you will allow me to put on the record the fact that Opposition Members who want to reform the private business procedure have not delayed the House tonight by forcing a series of votes, which could have been of considerable number, on the amendments. It is a token of our good will. We hope that the private Bill procedure will be speedily reformed and there will not be any further necessity to delay private business.

Mr. Deputy Speaker : I suspect that rarely does the Chair take a point of order that is so welcome. I am much obliged to the hon. Gentleman for his comments.

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Orders of the Day

Pensions (Miscellaneous Provisions) Bill

Considered in Committee.

Clause 1

Qualifying conditions

7.8 pm

Mr. Paul Flynn (Newport, West) : I beg to move amendment No. 1, in page 1, line 17, leave out from men)' to the end of line 18 and insert

the words "is a woman who" are hereby repealed.'.

The First Deputy Chairman of Ways and Means (Sir Paul Dean) : With this we shall discuss amendment No. 2, in page 1, line 28, leave out subsection (4).

Mr. Flynn : The main reason for clause 1 is that the public service pension schemes presently discriminate between the sexes in a way that, from January 1993, will no longer be permissible under the European directive on equal treatment in occupational schemes. The discrimination is found in a rule that provides for pension increases to women under 55 with dependent children. Men in the same position do not qualify for pension increases unless they have retired because of ill health or, having retired on other grounds, are disabled by physical or mental infirmity.

The discrimination operates only up to the age of 55. A man whose pension starts before that age will not get increases, except on health grounds, unless he is 55. When he reaches that age, his pension is increased to the level that it would have reached if the discrimination did not exist. The loss of pension to a policeman who, for example, retires--as many do--in his 40s can be considerable. At the age of 54, he could be drawing a pension worth half or less its original value.

On Second Reading, the Minister said that if the discrimination was removed, by bringing men up to the level of entitlement that women now enjoy, about 7,000 police pensions would have to be increased and that if analogous arrangements were made for the armed forces, another 50,000 would be affected. That would be expensive, but public service pensions are not public charity : they are paid for in exactly the same way as all other occupational pensions, either by direct contributions by employees and employers or by an adjustment of salary in the case of a non-contributory scheme, such as the Civil Service scheme. Neither the employers nor the Government have a moral right to make unilateral decisions of that sort without consulting the members of the scheme and discussing the alternatives and how any additional costs might be met. No such consultations appear to have taken place.

The Minister argued that equalising in favour of men would mean increasing the pensions paid to those who retire at comparatively young ages and who can then enjoy second careers. That is an extremely worrying argument for those who are affected, such as the police, who have good historical reasons for retiring at an early age. If it is acceptable to pay a retired policemen a pension that falls

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in value every year because he can make up for the loss by taking another job, the implication must be that he does not need the pension at all.

How long will it be before the Government decide, in the interests of efficient targeting, that no public servant should receive a pension below the age of 55? That is the logical conclusion of the Government's decision to which clause 1 inexorably leads us. Our amendment would tackle the problem of discrimination from the other end--equalising in favour of men, rather than removing the rights enjoyed by a small number of women. The Opposition do not propose to divide the Committee at this stage, but we hope to hear a statement about the Government's views on the issue, since no such statement was forthcoming on Second Reading.

The National Union of Teachers and the Assistant Masters and Mistresses Association--practically the only bodies that seem to be aware of the Bill- -say that they oppose the Government's proposals. The NUT believes that there should be legislation with the opposite effect--that equality of provision should be achieved by levelling up rather than levelling down, as proposed.

The Assistant Masters and Mistresses Association is opposed to the clause as drafted and regrets the removal of an entitlement to pensions increased to female pensioners under 55 with dependants. That organisation writes :

"The removal of this benefit is wholly unnecessary as regards the Teachers' Superannuation Scheme as the scheme's fund is well able to bear the financial cost of treating men on equal terms."

While comparisons can be made with the police--a profession from which traditionally people retire at an early age--few male teachers would be caught in the net. We are told that the cost to the teachers superannuation scheme would be small.

It is worrying not to have heard a statement about the Government's thinking on the equalisation of pensions, especially as equalisation is just over the horizon, or will happen within a few years. Seven of our 12 EEC partners have already equalised their basic pensions, most of them at the age of 65, with France equalising at 60.

Perhaps more significant is what has happened recently in occupational pension schemes in Britain. With a view to equalising pensions in that sector, many have taken action and, from May to August 1988 of those occupational funds that equalised their pensions between the sexes, only 21 per cent. had equalised at age 60, while 55 per cent., by far the majority, had equalised at 65.

May we be told what plans the Government have? As I said, the amendment attempts to solve the problem of discrimination by ensuring that we level up rather than down. Although, as I said, we shall not divide the Committee on the issue, it is clear that much consultation with members of the schemes affected is necessary. We hope that that will take place.

The Economic Secretary to the Treasury (Mr. Richard Ryder) : I thank the Opposition, and in particular the hon. Member for Newport, West (Mr. Flynn), for enabling us to take the Committee stage on the Floor of the House.

As the hon. Gentleman said, we discussed the important issue of levelling up and down on Second Reading, when he signposted the fact that he would be taking a further interest in the subject. He has deployed the same arguments at this stage, and the answer that I shall give the Committee is along the lines that I adduced on Second Reading.

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Clause 1(2)(b) and subsection (4) provide for the phasing out of the payment of pensions increase paid to women below the age of 55 if they have dependent children, a point stressed by the hon. Member for Newport, West. The existing law--that is, section 3(2)(c) of the Pensions (Increase) Act 1971--discriminates against men and must be changed to comply with the United Kingdom's obligations under European Community equal treatment law, which is EC directive 86/3/78.

7.15 pm

As I explained on Second Reading, the existing provisions benefit very few women ; to our knowledge, only eight women fall into this category. But extending it to men would be costly. Equal treatment can, therefore, be secured only by removing that provision. The clause does that by phasing out the provision in a way which fully protects the accrued rights of female scheme members and pensioners. Acceptance of the amendment would mean that pensions increase would be payable from 1 January 1993 on pensions paid to men below the age of 55, provided they had dependent children, even on the parts of those pensions earned by service before that date. That, as the hon. Member for Newport, West pointed out, would be very costly indeed, and retrospective improvement to the superannuation provisions would benefit almost exclus-ively the younger retired members of the police, fire service and armed forces schemes at an age at which many of them can and do enjoy second careers.

I advise the Committee to reject the amendment because, as I said on Second Reading, the total cost of it would be substantial. It would be about £80 million a year at today's pension levels, rising to over £100 million a year at today's pension levels after about 20 years.

Those who have retired on ill health grounds or who are physically or mentally disabled already receive pensions increase when below the age of 55, and when other pensioners in the schemes reach 55--that is, still five years younger than the normal retirement age for most public service schemes and 10 years below the state pension age--their pensions are increased and the increase built up since they retired is paid up to then.

The Committee will agree that we could not give priority to targeting extra support on a group of public service pensioners who already enjoy some of the best pension provisions of any groups of public sector employees.

The hon. Member for Newport, West raised the issue of the equalisation of pension ages. The Government recognise the arguments for equalisation of pension age, but a great many complex issues must be considered, including demographic factors and the long-term economic and financial implications of any change for individuals, employers and the state.

The hon. Gentleman spoke of what was happening in Europe and was right to suggest that some European countries have a common pension age. The common pension age in Denmark is 67, and in Germany, Ireland, Luxembourg, the Netherlands and Spain it is 65. I do not imagine that women nearing pensionable age would be delighted were the British Government to raise the pension age to 65.

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Five countries have different pension ages. They are Belgium, where men retire at 65 and women at 60 ; Greece, where men retire at 65 and women at 60 ; Italy, men at 60 and women at 55--the only country with a 55 pension age for women ; Portugal, men at 65 and women at 62 ; and the United Kingdom, men at 65 and women at 60.

I hope that, having heard my reasons why we cannot accept the amendment, plus the additional background information on the equalisation of pension ages, the hon. Member for Newport, West will feel able to withdraw the amendment.

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I support the thrust of the case that has already been made by the hon. Member for Newport, West (Mr. Flynn). However, I am puzzled by the size of the sum of money involved. I agree that if I was in the Minister's shoes I would not wish to spend £180 million in such a way, because there are other claims on the money that also come under the social security heading.

If I understand the situation correctly, we are talking about extending pensions, after 1 January 1993, to men under 55 with dependants, and the amendment aims to give them a larger increase than that provided for in the Bill.

Presumably we are talking about the cost over a period and not expenditure of £180 million in the year commencing 1 January 1993. Either there are more people within the category that would get the increase if the amendment were passed than I imagined, or the sums of money to be paid to them are larger than I imagined.

What I am trying to say, in a cack-handed fashion, is that either the increases are large or a huge number of people will benefit from them.

I know that this is a technical question and the Minister may not have the information immediately available to answer, but I think that the Committee would like to know why such substantial sums of money would be involved if the amendment were passed. Will a few men under the age of 55 get a substantial increase in the short term, or will thousands of new pensioners benefit from the amendment? That is an important question. Why do the Government estimate that the costs will be greater if this amendment is made?

Mr. Ryder : I shall do my best to answer the understandable and legitimate question of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).

I shall again paint some of the backcloth. As I said earlier, only eight women in the schemes for which data are available--the Civil Service, the National Health Service in Great Britain and teachers in England and Wales- -currently benefit from the provisions. The cost of the pensions increase to be paid to them is approximately £3,000. Home Office estimates for the police scheme in England and Wales show that no more than 50 or 60 retired policewomen could benefit from the provision, and the actual number is thought to be somewhat less. There are no retired female firefighters or armed forces personnel who would benefit from the provision. Paying a pension increase to men under 55 with dependent children would be very costly, as some 7, 000 retired policemen and firefighters would benefit-- mainly policemen, as proportionately more firemen retire early on grounds of ill health and they already qualify for an increase on those grounds.

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The annual cost of such a provision would be about £6 million in 1989 to 1990, at 1989 to 1990 pension levels, rising to £14 million, at 1989 to 1990 pension levels, after 25 years.

The cost of a pensions increase for some male pensioners under 55 could be met by an additional contribution of approximately one half of 1 per cent. of the payroll. The costs of increases on pensions payments in the future, in respect of the past service of current and retired employees, could not be met in that way for the police scheme, which is the main scheme to be affected, because the costs would have a capital value of approximately £120 million at 1989 pension levels.

When I first saw the figures, I was as surprised as the hon. Gentleman, but they have been worked on in detail by the Treasury and by other interested parties and, to the best of my knowledge, the figures are accurate.

The amendment moved by the hon. Member for Newport, West (Mr. Flynn) does not propose to phase in the provisions. If it did, the cost in 1993 would be small.

I hope that I have answered the hon. Member for Roxburgh and Berwickshire. If I have missed any technical matters, I shall try to answer them later.

Armed forces personnel can draw a pension from the age of 38 and the police, I think, from the age of 48.

Mr. Kirkwood : I am grateful to the hon. Gentleman--and I am not trouble-making, honestly. Perhaps it is because I am not a specialist in this subject, but I do not understand the £120 million capitalisation figure that the Minister mentioned. I think that it means that the Treasury, however indirectly, would have to put that sum into the schemes to meet the increments over a period of some years. If that is the case, I shall go away a relatively contented man. As a lay person, it seems to me that it is possible to phase in the cost of meeting the increase if males under 55 are to benefit from the scheme.

I remain surprised that the scheme will cost so much money. Is the simple answer that £120 million will have to come out of the Treasury's pocket to be paid into pension funds? I am still somewhat puzzled about the cost of the scheme, bearing in mind the small number of people likely to benefit from it.

Mr Ryder : As the hon. Gentleman has conceded, we are dealing with sizeable amounts of public money. Some of that money could be better spent by looking after people who are less fortunate than many of the people who subscribe to, or gain from, the schemes that we are debating.

To elaborate on the hon. Gentleman's last point, the schemes are not funded. Therefore, we are talking about the amount that we would have to put in if the payment were applied to pensions derived from service before the change was made.

Mr. Flynn : I share the unhappiness of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) with the Minister's replies. I should like to draw hon. Members' attention to the unusual nature of the work of the police and the armed services, and the fact that it is universally accepted that people in those services need to retire early.

I mentioned the teachers. Two teachers' unions have said that they would be happy to see the costs provided for in the amendment funded out of their superannuation fund. They believe that the cost would be tiny, protozoan

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or minute, and they would be prepared to pay that for the principle that is at stake. It is an important principle : equal treatment of the sexes represents a great international reform. We should compare that reform with others in the world. At the time of the emancipation of slaves, we did not create equality by making all working people slaves ; we did not spread the misery. The Government, however, seem in this instance to wish to spread not the advantages enjoyed by either sex --sometimes men, sometimes women--but the disadvantages. 7.30 pm

On Second Reading, the Minister used the words "the ultimate cost". Ultimate" refers to a long period, and I share the cynicism that has been expressed about the arrival of the year in question. It is with some regret that we note the resistance from this regressive, backward-looking Government to the ideal being pushed by the far-sighted, progressive Europeans. Much of the contribution involved should be a matter for negotiation, as the funds are provided not by a public charity but by working people, in the same way as with other occupational pensions. Surely this is a matter for those people to decide rather than a matter for Government edict.

Mr. Ryder : May I repeat what I said in my opening remarks and on Second Reading? If we were to accept the amendment on the levelling-up or levelling-down principle, considerable public expenditure would be involved. Therefore, we cannot accept it. The hon. Gentleman alluded to the equalisation of pension ages. As I said in my earlier speech, equalisation of pensions in Europe is not always equalisation downwards. The majority of countries that apply such equalisations equalise up to the age of 65, while Denmark equalises up to 67. Such an arrangement in this country would make women less happy than they are with the present arrangements, which specify an age of 60.

I am advised that one problem of the amendment is that, perversely--I am sure that this was not the intention--it could discriminate against women. The children involved must be dependent children and, other things being equal, male pensioners are more likely to be regarded as heads of household than female pensioners, especially if the husbands of the female pensioners are still working.

Mr. Flynn : In these days of equality and the spread of "house husbands", I do not think that that would pose a serious danger. In view of what the Minister has said, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2

Periods of further service

Question proposed, That the clause stand part of the Bill.

Mr. Kirkwood : May I ask again a question that I asked on Second Reading about the legal propriety of legislation to amend Acts that have been repealed? As I said then, it strikes me as absurd in the extreme and, indeed, incompetent for clause 2(5) to be included in the Bill without some discussion and some explanation of why the Treasury solicitors consider it necessary to amend the

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repealed Pensions (Increase) Act 1965. If it is competent to do so, I should like an explanation of why it is necessary. The Minister addressed the matter briefly on Second Reading and, as far as I can remember, said that he thought that it was necessary so that people could understand what was supposed to have been the position between 1965 and 1971. Following the coming into effect of the Pensions (Increase) Act 1971, the appropriate increases were implemented. If the Treasury solicitors are going to make the amendment of repealed Acts a habit in the future, we shall all be led a merry dance. I could suggest a number of candidates for amendment among repealed Acts, but I think that those outside the House will not understand, and will think that we have nothing better to do with our time. I was not satisfied with the explanation that I was given on Second Reading, and I should be obliged if the Minister would have another stab at it tonight.

Mr. Ryder : I will have a shot at it.

Clause 2 amends the law on two small, technical aspects of pensions increase to align it with the actual practice followed by public service schemes. There are two separate issues. First, subsections (1), (2), (3) and (5) amend the Pensions (Increase) Acts 1965 and 1971 to make the law relating to the increase of pensions of certain re-employed scheme members what it was always thought to have been. The Acts include provisions to ensure that re-employed scheme members--that is, those who have left, and rejoined with a break in service--do not have a lower pension because of the way in which the Acts would otherwise apply on their cases.

However, special provision then had to be made for the teachers' schemes because of provisions in those schemes that allowed teachers to qualify for a pension in certain types of employment or other absence from teaching which did not count towards their eventual pension. The relevant words have always been interpreted by the Departments concerned in a particular way which they believed that the Acts prescribed. The clause validates that interpretation and the practice that those schemes have followed since 1965. I should emphasise that the practice of scheme managements will not be changed, and in that sense no pensioners will be affected. No doubt you, Sir Paul, followed those remarks with particular attention in view of your previous responsibility for pension matters some years ago. Clause 2(4) corrects an unintended anomaly in the application of the same provisions to the dependants of re-employed scheme members. As it is now worded, section 4(3) of the Pensions (Increase) Act 1971 would apply only to dependants' pensions calculated as a proportion of the scheme member's pension. It would not appply to a dependant's pension calculated directly by reference to the scheme member's salary and years of service. The practice of scheme managements has always been to apply section 4(3) where appropriate to dependants' pensions, however calculated.

The 1965 Act was repealed by the 1971 Act, but without prejudice to the operation of the repealed provisions in respect of the period ending 31 August 1971. The aim of the clause is to ensure that the provision has the effect that it should have had since 1965.

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The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked why clause 2 was necessary. I think that I have explained the reason in general terms, but let me explain more specifically : if we left it out, there would be an obligation to trace all past pensioners, and to compensate any who had not benefited but should have. That would probably be impossible and certainly very costly. It would be unfair and possibly illegal not to do so.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3

No increase for additional lump sums arising from recalculation

Question proposed, That the clause stand part of the Bill.

Mr. Flynn : Clause 3 removes the right to inflation proofing when a lump sum retirement benefit is reassessed to take account of a retrospective pay increase. That is a frequent occurrence in certain professions, particularly the teaching profession, as the normal retirement date is the end of August and not spread throughout the year as it is in other professions. I understand that each year about 16,000 applications for retirement are received to come into effect at the end of August. When that happens the lump sum payments are calculated before the annual pay settlement is concluded. In due course those pensioners receive an additional lump sum based on the increase in salary. That addition is increased, where appropriate, under the Pensions (Increase) Act. Under clause 3 that will no longer apply.

There seems to be only one argument in favour of clause 3 and that is that interest is not paid on salary arrears resulting from a pay rise and therefore pensioners should not be treated more favourably than employees. That argument has a familiar ring because of our discussions on clause 1, under which women are to lose their entitlement to a pension increase because men do not have the same entitlement. In clause 3 pensioners are to lose entitlement to inflation proofing of arrears because employees do not have the same entitlement. In short, the Government are saying that equality is a many-splendoured thing. They have suddenly become fanatical about being egalitarian, but only when the results of equality achieve a saving in public funds. That is a questionable devotion to the principle of equality.

Perhaps the Minister can tell us how many people would have received those increases in recent years and whether they would have been affected by clause 3. Perhaps he could give us some idea of what the average loss would have been and the total savings to be made. What consultations have taken place with the unions and other representatives of the members of the scheme? Again, clause 3 represents a small change, but a mean, penny- pinching and unnecessary one.

Mr. Ryder : Clause 3 ends a provision that gives rise to extremely small one-off payments to pensioners but with a disproportionate administrative burden for the scheme managements concerned. The problem we seek to solve is this. The Pensions (Increase) Act protects the real value of preserved lump sums awarded to "early leavers" from public service

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schemes. That is entirely appropriate, but, of course, it was never intended that the provisions should operate once the lump sum had been paid.

Unfortunately, they apply to lump sums that are recalculated when a retrospective pay award is made. If a scheme member retires after a retrospective pay award comes into force but before that award has been announced, his final salary for pension purposes will be increased and his pension and lump sum recalculated. An additional amount of lump sum is paid, and the Pensions (Increase) Act also requires pensions increase to be paid on that additional lump sum. However, the amount of that increase cannot be calculated and paid until the next pensions increase order is made. So the scheme management may have to make no fewer than three payments of lump sum when a scheme member retires : on the date he retires ; when a retrospective pay award is announced ; and when the next pensions increase order come into force.

The last payment will normally be very small, no more than a few pounds and perhaps even a few pence. Clause 3 relieves schemes of the requirement to make this third payment and of the associate administrative burden. I must stress that the entitlement under scheme rules to an additional lump sum and the recalculation of pension if a retrospective pay award is made is completely unaffected by the clause. The clause simplifies the administration of pensions increase at an insignificant cost to pensioners.

7.45 pm

It is important to establish clearly that the minor administrative simplification is made at a negligible or insignificant cost to some pensioners. It does not undermine the principle that all pension benefits are protected against inflation. Pensions increase legislation has always taken account of practical considerations and the need to avoid excessive administrative costs.

The effect on pensioners is very small. In many cases, the amount is less than £1. A hypothetical calculation based on a civil servant retiring on a salary of £25,000 after a full 40-year career might have benefited from an award six months delayed of only £11.25, or 0.03 per cent. of the total lump sum involved.

The hon. Member for Newport, West (Mr. Flynn) was right to ask one particular question. The salary arrears do not attract interest. Another anomaly is that if the scheme makes a mistake no pensions increase is paid on the extra lump sum. I hope that that goes some way towards answering the hon. Gentleman's points.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

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