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Mr. Pond:
The hon. Member for Tatton (Mr. Osborne) sought to make us all jealous by telling us what his diary looks like for the next few weeks, given his involvement with the Finance Bill as well as this Pensions Bill. He asked why we were proposing a new clause that deals with definitions, given that we spent a long time discussing the Bill in Committee. I can tell him that new clause 25 and other new clauses that we are putting forward are consequential on the Finance Bill.
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2.15 pm
The hon. Member for Northavon (Mr. Webb) said that the Government were going in for extra complication because of the simplification being introduced in the Finance Bill. I do not go along with that characterisation, but the Inland Revenue is simplifying its procedures for exempting pension schemes and is moving away from the eight different sets of rules that currently apply to a process of registration. I think that the House will agree that that is sensible if we want to ensure that the system is more straightforward and simple, but it gives us a problem when it comes to classifying pension schemes as either occupational or personal.
The hon. Member for Northavon also said that schemes had been described in different ways throughout the Bill and our discussions, and he referred to money purchase schemes, direct contribution schemes, and so on. The important point is that those terms are descriptions of different types of pension scheme, but that we need to know whether they are classified as occupational or personal pensions. For instance, DC and DB schemes are both occupational pension schemes, but it is important to distinguish between them, as their provisions could be rather different. That is why the changes that we propose are necessary.
David Winnick (Walsall, North) (Lab): My immediate diary commitment is that I must go to the Select Committee on Home Affairs very shortly, but I want to take up the point made by both the Conservative and the Liberal Democrat spokesmen. I do not know whether this matter is the subject of some other amendment, but how much information is given to employees to ensure that they understand their pension schemes and how they differ from others? Are trade unions able to give detailed information so that their members can know whether their pensions are personal or occupational, what their rights are, and how to pursue complaints?
Mr. Pond: When my hon. Friend goes to the Home Affairs Committee, I hope that he remembers to take his identity card with him, or he might not gain entry.
David Winnick: Not if I have anything to do with it.
Mr. Pond: That is precisely why I made that point.
A very important component—of this Bill and of the Government's agenda on pensions—is that people should be able to make an informed choice. We must make sure that people fully understand their responsibilities and entitlements under the various schemes. We want to make sure that the various stakeholders involved, including the trade unions and representatives of scheme members, are given as much information as possible. That is a very important part of what we are trying to achieve, with this Bill and through the wider agenda of informed choice.
The hon. Member for Tatton also asked why the Government have adopted the different approaches evident in the Bill. I can tell him that it is because we need to make sure that the appropriate mechanism for regulation—the pensions regulator or the FSA—is used.
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The hon. Member for Northavon asked why all pension schemes should not be regulated by a single organisation. We discussed that matter in Committee, as he will recall. The regulator will be concerned not with the sale or conditions of sale of products such as personal pension schemes, but with making sure that occupational schemes are properly administered. Those are two quite different functions, and we feel that it is sensible to provide that they be carried out separately by separate organisations.
Mr. Webb: I accept that the sale of pension schemes is a separate matter, but what about schemes that are up and running? I think that I am right in saying that the Government intend that, in future, an employer can require an employee to join an employer-sponsored group personal pension scheme as a condition of employment. So an employer will make an employee join a scheme and will put money into it, and the scheme will be delivered through the workplace, but the employee, if he is not happy with how the money in a scheme is managed, is supposed to know that that is nothing to do with the pensions regulator. If the scheme were a defined benefit final salary scheme or something similar, the employee would have recourse to a different regulator. Does not that seem an unnecessary confusion for the employee?
Mr. Pond: We went round this course a number of times in Committee. Of course a number of provisions in the Bill will give protection to people in whatever sort of scheme that is operated, but our feeling is that it is important to have specific forms of regulation for the different types of scheme. When talking about the definition of schemes—whether they are occupational or personal—what is important is the focus of that regulation and trying to disentangle it from Inland Revenue arrangements for the tax exemption of schemes.
Mr. Pond: Oh, there is one further point to address before the hon. Gentleman rises to speak. He gave a hypothetical example of the French scheme and an occupational pension scheme based in another member state—a cross-border scheme. We will apply elements of pensions legislation under the provisions that we shall discuss in a few minutes when we deal with cross-border arrangements. Perhaps we could defer my response to the hon. Gentleman's point until then.
Mr. Webb: I am grateful for the Minister's response on the specific example that I gave, but the new clause refers to schemes outside member states. If the point of the new clause is to direct people to the right regulator, what dominion does the pensions regulator have over schemes based outside member states? Why is there reference to anything to do with schemes outside member states?
Mr. Pond:
As I shall explain in a few moments, the regulator will have a role in relation to schemes that have a host member state, if we are talking in EU terms, from which the contributions flow. That is what I hope
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I shall be able to clarify when we talk in a few moments about some of the cross-border and multinational issues.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
New Clause 26
'(1) Subsections (2) and (3) apply to an occupational pension scheme that has its main administration in the United Kingdom.
(2) If the scheme is not established under irrevocable trusts, the trustees or managers of the scheme must secure that no funding payment is accepted.
(3) If the rules stipulating—
(a) the benefits under the scheme, and
(b) any conditions subject to which benefits under the scheme accrue,
are not in force, or if those rules are not set out in writing, the trustees or managers of the scheme must secure that no funding payment is accepted.
(4) Subsection (2) or (3) does not apply to an occupational pension scheme if it is a prescribed scheme or a scheme of a prescribed description.
(5) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee or manager of an occupational pension scheme that has its main administration in the United Kingdom if—
(a) subsection (2) or (3) requires the trustees or managers of the scheme to secure that no funding payment is accepted,
(b) a funding payment is accepted, and
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