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Examination of witnesses (Questions 180 - 186)
WEDNESDAY 8 JULY 1998
MR PETER
MURRAY, MR
PETER THOMPSON and MRS
JANE MARSHALL
180. Do you think we broadly
now have the right balance between traditional trust law and statutory
regulation or not?
(Mr Murray) I think the balance is right but we
have a regulatory framework which is far too complex. It has grown
up layer upon layer over the years and there are areas such as
the contracting-out regulations which are really a complete nightmare
and we believe that there is a case to be made for a greenfield
look at areas such as contracting-out to sweep away whole areas
of regulations. Another area where we believe there is great scope
for simplification is, indeed, in the Inland Revenue regulations.
We have recently published a report[5]
which recommends a very significant simplification of these and
we believe that there would be little or no risk to the Exchequer
if many of these arcane and rather old rules were swept away and
simplified limits were put in.
181. Finally, can I urge, if this process
that we are undertaking is to have any value at all, people like
you have to use people like us to convince the Government when
it brings in new legislation that it brings it in with as light
a regulatory touch as possible. There is very little time in a
public session like this to deal with the detailed complexities
of what we are talking about, but do come back to us with written
submissions because we can make various recommendations and might
well make your life easier in the future, because if we do not
get this right we do not want to move into a future where it is
becoming less and less attractive for employers to provide final
salary schemes?
(Mr Murray) We would certainly echo that very
much indeed and we would be very happy to provide the Committee
with copies of this recent report which we did on simplification
of Inland Revenue regulations. We would be very happy to do that.
Chairman: Thank you.
Finally, could we stay with the process because that is important
to us. This is the first pure legislative inquiry that we have
undertaken ourselves as a Committee and Frank Roy has some questions
about that.
Mr Roy
182. Pension sharing is one of seven intended
Government Bills that they want to put forward in draft. Could
I have your thoughts on the process by which the policy outlined
in the White Paper has become enshrined in a draft Bill?
(Mr Murray) Could I comment in general terms and
then I will ask Jane to comment more specifically. We welcome
this new way of producing legislation. In addition to publishing
a draft Bill, there was, of course, a consultative committee on
which we provided a representative, as, indeed, did many other
pensions organisations, which also input into the process before
the draft Bill was produced, so we believe that pre-scrutiny of
this sort reduces the chances of errors and gives the opportunity
for useful refinements to be suggested to Bills which we hope
will be incorporated, and we will end up with better, simpler,
more effective legislation. So we very much welcome that. In fact,
we are so enthusiastic about the process that we would also like
to see draft regulations produced at a reasonably early stage
because really it is only when you look at how the primary and
secondary legislation knits together—the devil is in the
detail, as we all know, but if you see that then there may be
still further insights which are helpful. I do not know whether
Jane would like to comment.
(Ms Marshall) Yes. It is very helpful indeed to
have a draft of the legislation, as we have had in this case.
We found the explanatory notes helpful as well. This is a very
complex area because it is not just the pensions, it is the interrelation
of the pensions, the family and the tax law. So I think that the
notes have been very helpful. We have welcomed the opportunity
to discuss it with the DSS officials who have been responsible
with parliamentary counsel for drafting it, and we are in discussion
with them on a number of these details which we hope will result
in something that is more workable. So generally I think it is
very helpful. We have found it difficult, not impossible, because
we will be responding in detail to the consultation process, but
it has been difficult for organisations where people obviously
have real jobs as well as being on associations to comment in
detail but within the time constraints that we have had we have
found it very helpful to see in black and white, because until
you see that you cannot envisage how it is actually going to translate
into practical action.
Ms Stuart
183. Could I ask a very quick question in
terms of total numbers and percentages. How many of the NAPF's
membership, in terms of total funds and in terms of the members
involved, offer final salary schemes and how many of them offer
defined contribution schemes?
(Mr Murray) The majority of our members, over
90 per cent. of them, offer final salary schemes. Some offer money
purchase schemes but quite a number offer both because with the
large organisation you will have some schemes for some people
and other schemes for other people and, of course, in a situation
where a large employer is moving away from final salary to money
purchase, then conventionally that is done by closing the final
salary scheme to new members and opening up the money purchase
for the new members.
184. Do you think we could have some figures
on the composition of both and what the number of uptakes has
been?
(Mr Murray) Yes, I am very happy to provide the
Committee with copies of our annual survey,1[6]
which contains this and much other information about the 580 pension
schemes that we surveyed.2[7]
Mr Roy
185. You were speaking about responding
in detail on the key points and suchlike. Would it be possible
for you actually to respond to the Committee here in detail about
the key points before the end of September?
(Mr Murray) We will be making a detailed response
to the Department of Social Security. We would be delighted to
send you a copy of our response. That will contain our detailed
comments. If that will be helpful we will be happy to provide
that.
Chairman
186. Thank you very much. That is an appropriate
point, I think, to bring the session to a close. May I welcome
the fact that you are so engaged in the process. We too are learning
as we go along but I think we can demonstrate with this important
piece of legislation that it does add value and it will encourage
Governments obviously in future to consider adopting this procedure
more in the future and that must be terribly important. We like
to think so anyway, but thank you very much. We could obviously
have spent longer but I hope you will consider this as the start
of a process of dialogue which we on our side will encourage to
continue. We are very grateful for the time you have taken, both
with the submission you made and the evidence you have given us
this morning, which has been very helpful. Thank you very much
for coming.
(Mr Murray) Thank you, Chairman, for the opportunity
of coming.
5 The National Association of Pension Funds, Making
Pensions Easy-NAPF's tax simplication report. Back
6
National Association of Pension Funds Annual Survey. Twenty-third
Annual Survey of Occupantional Pension Schemes 1997. Back
7
Note by Witness: The number of schemes covered in our Annual
Survey was 833, not 580 as stated. Back
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