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Mr. Webb: I am not sure that the Minister has responded to the point that the hon. Member for Tatton (Mr. Osborne) made about the danger of the new clause being circumvented by certain schemes. If a given scheme has to count someone in straightaway, new rules could be set up that prevent someone from being in the scheme for the relevant period. Is there not a danger that the new clause could indeed be circumvented in the way that he suggested?

Malcolm Wicks: I think that one or two such schemes—in which one serves a probationary period, as it were—already exist, and I regret that fact. Of course, this issue touches on a wider question. The Government
 
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are committed to what we call the voluntary approach to spreading good practice and to encouraging and enabling employers to have proper pension schemes; we are not in the business of compulsion. However, many urge that approach on us, and the Pensions Commission will one day report on such matters. The logic that follows from the hon. Gentleman's question requires that we move towards compulsion, but that is not where we are at the moment.

Mr. George Osborne: I am grateful to the Minister for giving way, and to the hon. Member for Northavon (Mr. Webb) for pointing out that the Minister has not in fact answered my question. Indeed, in talking about some of the representations that they had received, the Government raised this issue themselves in their White Paper. They said:

"There were a number of concerns, not least the extra administrative burdens that would arise and the risk that these might prompt employers to introduce waiting periods, which would be a regressive step".

The Government have not answered a question that they themselves posed.

Malcolm Wicks: Such a step would be regressive, but the question is whether the Government should be able to legislate to prevent that from happening. As I said to the hon. Member for Northavon, that raises the wider question of compulsion. We do not want to go there, but of course, the door remains ever open.

It is very useful that the hon. Member for Northavon is prompting the hon. Member for Tatton on certain questions. Given that the Conservative Front Bench is only 50 per cent. full and that the shadow Minister of State cannot be here today, such co-operation is important.

In the light of my comments, I ask that the new clause be accepted.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 25

Categories of pension scheme

'(1)   Section 1 of the Pension Schemes Act 1993 (c. 48) (categories of pension scheme) is amended as follows.

(2)   The provisions of the section shall become subsection (1) of the section.

(3)   In that subsection, for the definitions of "occupational pension scheme" and "personal pension scheme" substitute—

   ""occupational pension scheme" means a pension scheme—

(a)   that—

(i)   for the purpose of providing benefits to, or in respect of, people with service in employments of a description, or

(ii)   for that purpose and also for the purpose of providing benefits to, or in respect of, other people,

is established by, or by persons who include, a person to whom subsection (2) applies, and

(b)   that has its main administration in the United Kingdom or outside the member States;

   "personal pension scheme" means a pension scheme that—

 
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(a)   is not an occupational pension scheme, and

(b)   is established by a person within any of the paragraphs of section 144(1) of the Finance Act 2004;".

(4)   After that subsection insert—

"(2)   This subsection applies—

(a)   where people in employments of the description concerned are employed by someone, to a person who employs such people,

(b)   to a person in an employment of that description, and

(c)   to a person representing interests of a description framed so as to include—

(i)   interests of persons who employ people in employments of the description mentioned in paragraph (a), or

(ii)   interests of people in employments of that description.

(3)   For the purposes of subsection (2), if a person is in an employment of the description concerned by reason of holding an office (including an elective office) and is entitled to remuneration for holding it, the person responsible for paying the remuneration shall be taken to employ the office-holder.

(4)   In the definition in subsection (1) of "occupational pension scheme", the reference to a description includes a description framed by reference to an employment being of any of two or more kinds.

(5)   In subsection (1) "pension scheme" (except in the phrases "occupational pension scheme", "personal pension scheme" and "public service pension scheme") means a scheme or other arrangements, comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of people—

(a)   on retirement,

(b)   on having reached a particular age, or

(c)   on termination of service in an employment.

(6)   The power of the Treasury under section 144(4) of the Finance Act 2004 (power to amend sections 144 and 145) includes power consequentially to amend—

(a)   paragraph (a) of the definition in subsection (1) of "personal pension scheme", and

(b)   any provision in force in Northern Ireland corresponding to that paragraph.".'.—[Mr. Pond.]

Brought up, and read the First time.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Michael Lord): With this it will be convenient to discuss Government amendments Nos. 76, 132, 169, 170 and 172.

Mr. Pond: New clause 25 introduces new definitions of the occupational pension scheme and personal pension scheme in section 1 of the Pension Schemes Act 1993. The changes are a consequence of the tax simplification provisions in the Finance Bill, and they also ensure that the UK is compliant with the European Union directive on institutions for occupational retirement pensions. I shall also deal with Government amendments Nos. 76, 132, 169, 170 and 172, which are directly consequential to the changes to the definitions.

The current definition of "occupational pension scheme" is very similar to that for "personal pension scheme". If we had had to rely on those definitions alone, it could have proved difficult to decide how some schemes should be classified. In practice, that has not proved to be a problem until now, because the Inland
 
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Revenue system has always made it clear within its eight categories for determining tax approval whether a scheme is given tax approval as an occupational pension scheme or as a personal pension scheme. However, that will change under the simplified tax regime introduced in the Finance Bill. In future, schemes will register for tax purposes, rather than having to obtain approval.

Clause 143 of the Finance Bill will introduce a single simplified regime that will apply the same registration treatment to all schemes, no longer distinguishing between occupational and personal pension schemes. The definitions in the Pension Schemes Act 1993 will therefore become critical in determining to which regulatory regime a scheme will be subject—the pensions regulator for occupational pension schemes or the Financial Services Authority for personal pension schemes.

2 pm

The new definitions in the new clause will ensure that pension schemes are correctly classified. For example, the group personal pension scheme is properly classified as a personal pension scheme, not as an occupational scheme. Subsection (3) provides that an occupational pension scheme is a scheme that provides

"benefits to, or in respect of,"

employees and ex-employees in a particular employment, as described in the scheme documentation. It may be a single-employer scheme or a multi-employer scheme. It further provides that, for the purposes of definition, an "occupational pension scheme" is one

"that has its main administration in the UK or outside"

the EU. The definition of personal pension scheme is in line with that in the Finance Bill, but includes the words

"is not an occupational pension scheme".

That is to ensure that, where a company—an insurance company, for example—is authorised under clause 144(1) of the Finance Bill to establish a personal pension scheme and it has an occupational pension scheme for its own employees, that scheme is correctly classified as an occupational scheme.

Subsection (4) makes it clear that an occupational pension scheme can be established by a single employer, a group of employers or by a person representing such employers or their employees. It further defines a pension scheme as a scheme or arrangement that provides benefits "on retirement", at "a particular age" or "on termination of service". It does not include arrangements that provide only death benefits. As now, those will be excluded from the scope of the Pensions Act.

Government amendments Nos. 76, 132, 169, 170 and 172 are directly consequential on the new definitions of occupational pension scheme and personal pension scheme introduced by new clause 25.

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