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" . A person shall be able to hold both a stakeholder pension and an occupational pension concurrently and without financial penalty."
With reference to the previous amendment, I must say that in all my years in the House, I have never before been present for a Division in which every vote for the amendment would have cost £1 billion.
Lords amendment No. 18 deals with concurrency. I will not detain the House for long. The Government have met the spirit of the amendment through the recent announcement by the Inland Revenue that concurrency with stakeholder pensions would be allowed on salaries up to £30,000 a year. That covers 87 per cent. of people in defined benefit schemes--a considerable number--at a cost of £155 million. Full concurrency would cost up to £400 million. In other words, it would cost about £250 million to cover the remaining 13 per cent. of people, which cannot be justified.
Mrs. Jacqui Lait (Beckenham): I, too, welcome the fact that the Government have moved to accept concurrency up to a salary of £30,000. Originally they were reluctant to contemplate such a figure, regarding it as a tax break for the rich, and said that they would consider concurrency for low and moderate earners.
Throughout our deliberations on the Bill, we have discovered how interesting are the Government's definitions of lower and moderate earners, which vary from time to time. For example, stakeholder pensions are available for "moderate earners" on £10,000 a year. My definition of a moderate earner is not someone who earns £10,000 a year, but we shall go with the Government.
By increasing the limit to £30,000, the Government have responded to industry concerns that people should be able to take advantage both of an occupational pension scheme with defined benefits and a stakeholder pension. That makes it easier for people with a stakeholder pension to decide, for example, to accept a job that has an occupational pension scheme with a defined benefit. Other arrangements could have created a barrier.
There is also a benefit for people who have not provided for themselves as well as they should have done over the years, even under an occupational pension scheme. In those circumstances, the stakeholder pension can be used for an additional voluntary contribution.
An irony remains in the regulations. Perhaps the Minister cannot explain it; it may be down to the Inland Revenue. It is ironic that higher earners--those who are in an occupational pension scheme and earn more than £30,000--are barred from buying a stakeholder pension for themselves, but can buy one for their non-working spouses, children or grandchildren. That applies to every Member of Parliament. It contradicts the class-conscious attitude reflected in the views on the tax break for the rich. The 13 per cent. to whom the Minister referred could take out stakeholder pensions for members of their families, who would consequently be able to take advantage of the tax break.
Conservative Members would prefer full concurrency, to avoid the ironies that I described. I understand that the Liberal Democrats also support full concurrency. Having pointed out some aspects that still require amendment, we welcome the Government's realisation that there is a need to make stakeholder pensions concurrent up to £30,000. We therefore do not want to disagree with them.
Mr. Webb: Like the hon. Member for Beckenham (Mrs. Lait), I shall be brief, because we support the important concession that the Government have made. I believe that they made it during proceedings on the Finance Bill last week--but I stand to be corrected on that.
We have taken the view throughout our proceedings that the Government pay lip service to the notion of simplicity, while creating an awful jumble in the pensions regime. Full concurrency would be ideal, and far simpler than the Government's proposals. They have had to introduce a threshold and devise laws for the years to which the threshold will apply; it is not yet clear whether it will be indexed. Such matters add to the complexity of the system. We would therefore prefer full concurrency. However, we recognise that the Government have travelled a long way from their initial intransigence.
The hon. Member for Beckenham said that people who earned more than the threshold figure might contribute money to a pension for their non-working spouses or children. Good luck to them. Many such non-working spouses might not be those people's spouses when they reach retirement age. If we can ensure that they have pensions in their own right, so much the better.
Lords amendment: No. 19, in page 59, line 38, at beginning insert
("Except so far as regulations otherwise provide,")
Amendments Nos. 19 to 22 would provide a power to make regulations that may specify exemptions to the current provisions of clause 54. Amendments Nos. 59 and 60 would delay the commencement of the clause by amending clause 83. The amendments relate to directive 98/49/EC, and are designed to safeguard the occupational pension rights of workers who move to other member states of the European Union.
The Government supported the directive because it protects workers who have occupational pension rights, and wish to exercise their rights to move freely in the European Union. The directive extends good practice that already applies in the United Kingdom to the treatment of occupational pensions throughout the European Union. It therefore promotes labour mobility in the EU. The terms of the directive state that provisions to implement it must be included in domestic legislation by July 2001.
When the directive was adopted, the Government's understanding, which was based on extensive consultation with the pensions industry in the United Kingdom and elsewhere in the European Union, was that UK schemes already complied with its provisions. During the Bill's passage through the other place, we were alerted to the practice of a small number of UK schemes that pay annual increases in pensions based on the rate of inflation of the country of residence, not that of the UK. That point was never raised during consideration of the directive.
We have tabled the amendments to avoid UK legislation causing UK schemes to be in breach of current UK law, even though the directive might not be breached. I can give further and better particulars if the House desires. The amendments have been tabled to include in UK law provisions that, because we did not know about the few schemes whose practice is slightly different from most pension schemes, we believed already operated.
Mrs. Lait: I shall be brief. I congratulate the Government on listening to pension industry worries so late in the day when the problem was identified. It is perhaps a lesson to us all that no one should introduce legislation at the last minute, before it has been thoroughly discussed with all the relevant groups.
We do not want to hold up the amendment, and we are glad that there is time for matters to be rectified and for necessary action to be taken. However, the lesson that needs to be learned is that EU directives need long and careful consultation. A new pensions directive is floating around; I sincerely hope that we shall not experience the same problems with it.
Lords amendment: No. 23, in page 62, line 42, after ("qualified") insert
(", persons with knowledge or experience of service in Her Majesty's naval, military or air forces")
Mr. Rooker: Clause 59 provides for a more flexible composition of the pensions appeal tribunals by permitting the Lord Chancellor to appoint to the pool of tribunal members who are available to hear individual cases lay members alongside legally and medically qualified members.
The amendments recognise anxieties that the clause as originally drafted may have restricted the numbers of people with knowledge or experience of service life who would be available to serve on tribunals. The amendments would give the Lord Chancellor a duty to appoint
The Bill continues to provide for the appointment of people with other experience, including persons with knowledge or experience of matters relating to the disabled. It was always intended that the Lord Chancellor would continue to appoint people with knowledge or experience of service life to the pool of tribunal members, and it is important that that is crystal clear in the Bill.