| Previous Section | Index | Home Page |
Mr. Peter L. Pike (Burnley): Will the Minister assure the House that the new pensioner trustee representatives,
the Pensions Act 1995, and what we are agreeing now will prevent a fraud such as that which took place in the Belling scheme--a large amount of money was misused, and members and trustees were not aware of what a couple of the trustees had done?
Mr. Heald: The proposals are part of a package of measures that will make it extremely difficult for anyone to commit fraud of the type committed by Robert Maxwell. I am not able to comment on the Belling case, but the proposals impose tough penalties if audited accounts are not produced on time, and place a duty on the scheme administrators to provide those accounts to members on request. I am sure that the hon. Gentleman will agree that the disclosure provisions, the occupational pensions regulatory authority and minimum funding provide a powerful package that will go a long way towards obviating future problems.
Opposition Members often say that there is too much regulation, and the hon. Member for Burnley (Mr. Pike) may feel that it would be rather odd to propose measures that would be much more prescriptive than those of the Government. It is possible to combine flexibility and security, and the provisions do that. We have said that we will carefully monitor the provisions, which are being presented as regulations. In view of the multiplicity of schemes, the prize of flexibility is valuable, but if it is abused, the Government will certainly take action to correct such abuse as it occurs.
Sir Donald Thompson (Calder Valley):
My hon. Friend speaks about flexibility, but I am concerned--as are Opposition Members--about the problems of Maxwell and Belling, which should never arise again and perhaps should not have arisen in the first place. At the other end of the scale are people such as my friend and constituent Harry Wright, who, because of a technicality, was given a pension of £14 a month when he could reasonably have expected one of £140 a week. Will the new scheme allow the trustees to look into individual cases more carefully--and flexibly, to use my hon. Friend's term--than under the present arrangements?
Mr. Heald:
The measures are part of a regulatory package and will enable the trustees to act. The regulations as a whole, of which this is a small part, will allow the disclosure that is necessary for the trustees to do that. That is also provided for scheme members.
Mr. Bennett:
Is it appropriate at least to apologise to the House for the mistake in the measure, especially as it was the Minister who signed it?
Mr. Heald:
I am grateful to the hon. Gentleman. A consequential amendment was not made, and I apologise to the House for that. We should have done better.
10.32 pm
Mr. Chris Smith (Islington, South and Finsbury): I wish to speak on motion No. 5:
- That the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996 (S. I., 1996, No. 1216), dated 2nd May 1996, a copy of which was laid before this House on 10th May, be revoked.
-
The order is inadequate and is based on inadequate legislation. The Government should take it away and think again. Before turning to the detail of that order, however, I should like to comment on the other three.
We take most severe issue with the procedure for member-nominated trustees. The background to that is, first, the Goode committee and, secondly, the Pensions Act 1995. The aim, which I am sure that we all share, is for a fair balance of control between employers and members, including pensioner members, in the running of company schemes. Hon. Members should always remember what can happen if things go wrong, and Maxwell and Belling provide telling evidence of that.
In the aftermath of Maxwell, the Goode committee recommended, first, that, for final salary schemes, active members should be entitled to a point that is at least one third of that of trustees. Secondly, it recommended that for money purchase schemes, active members should nominate at least two thirds of trustees--a distinction that the Government now seem to have dropped entirely. Thirdly, it recommended that there should be encouragement to take pensioner trustees on board. Fourthly, it recommended that there should be a proactive regulator and a minimum solvency standard. The Pensions Act 1995 and the regulations that we are now debating water down all those Goode proposals.
During the passage of the Pensions Act 1995, Labour Members consistently proposed two simple and important provisions. The first was that at least 50 per cent. of scheme trustees should be member-nominated trustees. Secondly, we proposed that at least one of the member-nominated trustees on large schemes should be chosen by the scheme's pensioner members. We still stand firmly by those two objectives.
Mr. Phil Gallie (Ayr):
When the hon. Gentleman referred to the Goode report, he mentioned the fact that there was encouragement to take on board pensioner trustees. It seems that my hon. Friends have adopted that encouragement. Is the hon. Gentleman suggesting that that should be mandatory? If so, I have some sympathy with that position. But he used the words "large schemes".
Mr. Smith:
The hon. Gentleman is right to point to a difference between Goode and ourselves. We want to go further than Goode. We believe that in large schemes--obviously it is not appropriate in very small schemes--there should be a pensioner-nominated trustee. Had that proposal been accepted, we would have had a simple, fair and effective procedure in place. Instead, we do not.
Mr. Stern:
May I refer the hon. Gentleman back to the discussions that we had during the passage of the Pensions Bill? There are large schemes and there are large schemes.
Mr. Smith:
I am surprised at the hon. Gentleman, because the regulations that we are considering today--from a Conservative Government--require that pensioner members should be consulted at many stages of the procedure. If it is possible to consult them at those stages of the procedure, surely it is possible to consult them at the final stage, when members are nominated.
Sir Andrew Bowden (Brighton, Kemptown):
On the subject of pensioner trustees, is there any reason why pensioners should not be able to nominate someone who is not a pensioner to act on their behalf?
Mr. Smith:
That would be a sensible solution, but it would not be possible under the fallback scheme that the Government are proposing in the regulations. That is one of our particular objections to the regulations.
Mr. Heald:
Would the hon. Gentleman care to define a large scheme?
Mr. Smith:
I would have thought that we would be talking about a scheme with, say, 1,000 members, as the Government would conclude if they were capable of taking a sensible approach.
Our first objection to the regulations is the absurd complexity of the provisions. The Department of Social Security letter accompanying the draft regulations for consultation said:
If the members do not object, the employer can proceed to implement the new regulations. If, however, they object, the employer can either go to a ballot or withdraw the proposals and come forward with further proposals. If he comes forward with further proposals, the same procedure starts all over again. A tenth or 10,000 of the active and pensioner members can decide to object, and if they are succesful, we go back into the same loop.
Let us suppose that the employer--having tried twice and been rejected twice by more than 10,000 or a tenth of the members--then decides to proceed to a ballot. The active and the pensioner members have the right to participate in that ballot. If a majority of those voting vote against the employer's proposals, the employer can go back and start all over again with a further set of
proposals. Or the employer can say, "I have had enough. I am not going to make any alternative proposals. I will put it to the trustees."
The trustees--a majority of whom are, of course, appointed by the employer--can again activate the procedure and can make proposals for alternative arrangements. Again, 10,000 or one tenth of the membership--whichever is the lower--can object. If they do, the procedure has to go back for further decision and proposal by the trustees or to a ballot. If the ballot then rejects the trustees' alternative proposals, they can go back and propose a further scheme. Finally, if all this fails, they go to the fallback scheme that the Government have put in place.
"the rules must be quick to implement, easy to operate and avoid unnecessary cost."
However, the House must examine what can happen under the regulations. First, the employer decides whether to put forward proposals for alternative arrangements to replace the member-nominated trustee requirements. If he decides to put forward alternative arrangements, he must put those proposals out for consultation. The active and the pensioner members then have the right to object to the proposals by a specified procedure, and if either 10 per cent. or 10,000 members--whichever is the lower--object, the employer must go back and think again.
| Next Section
| Index | Home Page |