Mr. Webb: Are the trust-based stakeholder pension schemes the same as the individual pension accounts, which the Treasury launched but which never really took off?
Mr. Pond: I am seeking inspiration on that; I think that it will take so long in coming that I had better write to the hon. Gentleman.
Amendment agreed to.
Amendments made: No. 568, in
No. 513, in
schedule 11, page 232, line 20, at end insert—
'( ) After that paragraph insert ''; and
(c) Chapters 4 and 5 of Part 2 of the Pensions Act 2004 (fraud compensation and information gathering).''
( ) After sub-paragraph (5) insert—
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Schedule 11, as amended, agreed to.
Repeals and revocations
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: The clause introduces schedule 12, which specifies the legislative provisions that the Bill will repeal in the case of Acts and revoke in the case of statutory instruments.
Question put and agreed to.
Clause 243 ordered to stand part of the Bill.
Repeals and revocations
Malcolm Wicks: I beg to move amendment No. 101, in
schedule 12, page 232, line 29, leave out '1' and insert '2'.
The hon. Member for Eastbourne said that earlier in his career he took a comma all the way to the House of Lords. The purpose of the amendment is to leave out a '1' and insert a '2'.
Amendment agreed to.
Malcolm Wicks: I beg to move amendment No. 543, in
schedule 12, page 233, line 16, in column 2 at end insert—
The Chairman: With this it will be convenient to discuss the following:
Government amendments Nos. 544 and 545.
Government new clause 26—Voluntary contributions.
Malcolm Wicks: This is a great moment. New clause 26 removes the requirement on schemes to provide facilities for members to pay voluntary contributions. Amendment Nos. 543, 544 and 545 are consequential technical amendments to the list of repeals in schedule 12.
Until April 2001, tax rules meant that an individual could not generally be a member of an occupational pension scheme and have a personal pension at the same time. Against that background, the Government introduced a rule in 1986 that occupational pension schemes must have a facility for members to make additional voluntary contributions to their occupational scheme. In 2001, individuals could contribute to an occupational pension scheme and a personal pension at the same time if their earnings were below £30,000. The forthcoming tax changes in the Finance Bill will remove that restriction.
In the light of that change, it is no longer necessary to require occupational pension schemes to offer AVC facilities to members. Anyone wanting to make additional pension savings will be able to do so in a personal or stakeholder pension of their choice. I am
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sure that many occupational schemes will choose to continue their existing AVC arrangements as a matter of good practice, but with other options readily available it is no longer necessary to place a statutory requirement on every scheme to offer AVC facilities.
Mr. Webb: So, the fact that the existing AVC arrangements were facilitated by the employer was, in a sense, neither here nor there. They had nothing to do with the occupational pension scheme and were just the employer helping the worker to do a bit more saving. Therefore, getting rid of the requirement to allow additional voluntary saving does not deprive the worker of a right. I want to be clear that the AVC does not give them any rights in the occupational pension scheme that we are now denying them by removing the obligation on employers to offer that facility. Is that correct?
Malcolm Wicks: In a regime in which someone could not have both a works pension and a personal pension, the Government thought it right to enable employees to increase their pension contribution through an AVC, separate from the main works pension, as it were. Now, slowly but surely, and very fundamentally in the Finance Bill, we are saying that people can have both. We do not think that we need to require the employer to offer that facility because other arrangements can be made, such as a stakeholder pension. We are removing a requirement of burden that is no longer necessary, given the current circumstance.
Mr. Webb: That is a helpful reply. Why were people prohibited from having a separate pension on top of their occupational pension while it was perfectly acceptable for them to have an AVC that had nothing to do with the works pension and just happened to be administered by the employer? As I do not understand that, I cannot understand why we can get rid of the requirement. Does the Minister understand what I am trying to convey?
Malcolm Wicks: I understand the question clearly. My difficulty is that I do not understand the answer very clearly. On the one hand, the Treasury and the Inland Revenue make available generous provisions to encourage people to take out pensions, but on the other, they have always had concerns, and there have always been restrictions. The Finance Bill tries to adopt a more—pardon the expression—liberal approach to the issue, with the lifelong earnings limit and so on. There have always been those concerns.
I imagine that the original restraints—they were not set up on my watch, if I may say so; the hon. Member for Eastbourne may want to explain the reasoning behind them—probably had something to do with those tax concerns. That may have been thought easier to police or monitor—I do not know. I am not lost in the sands of time; my guess is that it was something to do with the fiscal arrangements.
The new clause is a straightforward consequence of the Finance Bill and the culmination of a series of deregulatory steps to make pension provision progressively more flexible.
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Mr. Waterson: Getting rid of section 111 of the 1993 Act is a necessary and sensible provision. We welcome it; it enables us to tick off yet another provision that people were surprised not to see in the Bill originally. Here it is, just in the nick of time.
I am also grateful for the Minister's confirmation that it will still be possible for AVCs to continue on a purely voluntary basis, as before, if that is what people want. I have no tribal recollection of why the arrangements were made in the first place. I presume that it was something to do with tax, and that is why the Finance Bill is leading on the issue, and we have to follow it up in this Bill. That is eminently sensible, and it is one example in this Bill—it is difficult to think of any other—of making life easier, less complicated, more flexible and less bureaucratic. It may be a straw in the wind, but I do not think so; almost everything else that we are doing seems to have the opposite effect.
However, let me not be churlish; I welcome the new clause. I could tell from the way in which he was speaking that the Minister, by his standards anyway, was getting quite frisky at the prospect of the end of the Committee stage, and I do not want to ruin that mood.
Mr. Webb: I hope that nobody will accuse me of being frisky at this juncture, but at the risk of depressing the Minister, I want to gnaw away a little further, because I am not yet sure that I understand—[Interruption.]—the groans from the Whips notwithstanding.
We are clearly getting rid of a worker's right to make additional voluntary contributions through the employer. The Minister's argument is that they do not need that right anymore, because the tax rules have changed. However, there must have been some reason why the powers that be decided that although one could not have a company pension and a personal pension, one could have basically the same thing—a company pension and AVCs, which were entirely separate from the work pension—and that that was somehow okay.
Clearly, tax was the underlying reason; we do not want people getting vast amounts of tax relief. I suspect that the reason might have been administrative; if everything is all under one employer's roof, one can spot what people are up to, but if a person runs off and buys a personal pension somewhere else, one cannot be sure that they are not getting pots and pots of tax relief. However, I am still not clear that there was no advantage at all—an advantage that we may now be losing—from doing things through the employer.
I have to smile, because I want to record my appreciation of the Department and its officials, who prepared admirable briefing notes for us on almost all these new clauses. A little bird tells me that we had no briefing note on this one because it was self-explanatory. There may be places in which it is self explanatory, but not in my back yard, as it were.
I feel uncomfortable about nodding the provisions through; I still do not really feel that I understand them. The Minister has been honest enough to suggest
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that although he understands 99 per cent. of them, there is just that little niche that he does not. I feel a little uneasy nodding through a new Act of Parliament when no one in the Room—with perhaps one exception—understands all of it. That worries me a bit.
Malcolm Wicks: I do not want to have a debate about the difference between fiscal and frisky; that would be dangerous, at my advanced age.
I must say to the hon. Gentleman—I think honesty is always a good tactic to use against him—that I do not fully understand the fiscal history, stretching back a few decades, on this point; the provisions almost certainly have to do with tax arrangements. He may have put his finger on it when he said that, although we are talking about AVCs, if everything is under one employer's roof, it is probably administratively easier to monitor and police. That might be the situation.
I am more concerned to explain the future: I am very clear about that. As we had removed the restriction and enabled people to have both a personal pension scheme and an occupational pension scheme, it no longer seemed sensible to impose the obligation—some might call it a burden—on all employers.
In future there will be a regime—encouraged, of course, by the tax changes with the lifetime limit of £1.5 million—whereby those fortunate enough to be members of occupational pension schemes may be offered AVCs by their employers. I imagine that many employers who currently offer them will continue to do so, but the employee has the right to put money into a personal pension scheme. I am very clear about the future, even if I am not chapter-and-verse, footnote and subsection (1), (2) and (3) clear about the past 20 years.