Danny
Alexander: I understand what the Minister says about the
need for flexibility in designing this, and I was encouraged by what he
said at the beginning of his remarks about following best practice. In
the interests of brevity, can I ask him whether the ideas contained in
subsections (3F) and (3G) of the amendment—which relate to the
way in which the representations made by the panel have to be listened
to, and the advice and research functions of the panel—do in
fact follow best practice, particularly relating to the financial
services consumer panel? Are they are the sorts of things that he would
like to see the panel carry out in relation to personal accounts under
the
Bill?
Mr.
O'Brien: Members of the trust board would want to have
regard to the views of the panel. We would not want them necessarily to
be bound in this sense. The trustees are going to have to make
decisions. That is what they are there for. When they make decisions,
they will no doubt listen to the views of the panel and the members. I
suspect that if they went very strongly against either, they would have
to have very good reasons for doing so.
However, we
are creating a trust-based pension scheme here, in which the trustees
have to make decisions. We can say, “Look, we are creating for
you a larger scheme than anything that exists at the moment anywhere
else in the country, and you probably have greater responsibilities
than any other trustees”. One of those obligations is to have
regard to the views expressed by the panels. I do not, however, think
that we should change the decision-making capacity of trustees so
fundamentally that we effectively create a new type of body that has to
do what members’ panels say.
The members’ panels are a
way of getting soundings. They are not a way to make final decisions.
That responsibility must lie where the legal responsibility lies, and
that is with the trustees. That is the way other pension schemes work.
That is where trust comes from. A genuine sense of responsibility
should lie on the trustees’
shoulders. Amendment
No. 64 would give the employers’ panel a similar function to the
members’ panel to nominate members of the trustee corporation.
The role of the employers’ panel is important. It will be
charged with providing advice on matters relating to the scheme as they
affect employers. It will be the main channel for consultation between
the trustee and the employers. The requirement to have member-nominated
trustees stems from the desire to ensure that the scheme is run
primarily for the benefit of members. It is the scheme members who
ultimately benefit from the introduction of the scheme, especially
those people for whom no pension is available at the moment. That is
why the Bill ensures that members will be able to nominate trustees,
and this is in line with the current legislative requirements. Trusts
are there for the benefit of members, not employers. They are
beneficial organisations and the beneficial owners are the members. The
trustees hold the organisation and its assets in trust for the
beneficial owners. That is the way the system works.
All the
individuals who form the corporate trustee will have the sole
obligation to act in the members’ best interests, rather than
representing employers or any other particular interest group. It will
not be possible for the trustee to meet its duty of acting in the
members’ best interests without taking account of
employers’ concerns, but it is not appropriate to appoint
members of the trustee with this as a specific role or indeed in any
sort of representative capacity for the employers. Employers should not
be represented on that board, because the trustees are all there to
represent the members.
I want to say
a brief word about the effects of amendment No. 27. The amendment as
written provides that the trustees will determine the composition and
function of the panels under an order. However, the trustees cannot
make an order, this being the prerogative of Government. So they would
have to set the detail out in some administrative document that would
not necessarily be open to any debate, let alone a debate in
Parliament. The trustees would later amend the rules to include this
detail, but the panels must be established first because the trustees
cannot make any rule changes without first consulting the panels. The
consequence of this amendment, therefore, would be to delay setting up
the panels and remove the public or parliamentary debate about their
constitution and functions. I am sure that is not the intention of it,
but that would be the consequence, so I just lay that out as a
warning. Turning to
amendments Nos. 154 and 155, I note the reference to payments being
made to the chair and members of the members’ panel and the
points being made about appropriate recompense for those who are acting
in that capacity. I would like to take this opportunity to say that I
was looking to introduce an amendment to subsection (5) of this clause
to make it clearer that all members of both employers’ and
members’ panels could receive such payment for their time spent
on panel duties and reimbursement of any necessary expenses.
As PADA will
be advising on the constitution and functions of these panels, it would
also consider and advise on what payments may be appropriate in order
to secure the services of the most suitable people to be panel members.
So I do want to flag up that, on this particular issue that the hon.
Member for Inverness, Nairn, Badenoch and Strathspey is raising, I do
propose to table an amendment that will address at least one of the
points that he made in his intervention. I hope with those reassurances
and some of the concerns about the detail of these particular
amendments the hon. Gentleman will feel able to withdraw the
amendment.
Danny
Alexander: On the last point that the
Minister made about the payments to panel members, I am reassured by
what he said. What he is proposing—to bring forward another
amendment to widen the scope slightly—will have a beneficial
effect, particularly on the range of people who will feel able to take
on the duties of involvement in a members’ panel. I do
understand what he is saying about the need to think through the scope
and range of the panel, and that is what he is asking PADA to do. That
will be brought forward in
regulations. I would
wish to stress again the importance of the point about research. The
Minister has not addressed in his response the question of resources
for the panels.
Clearly, a practical arrangement must be reached. The advantage to
having at least some reference to this on the face of the Bill, or a
clear undertaking from the Minister that it will be included in
regulations, is that it is important for the members’ panel
especially—there is a difference, as the Minister accurately
described, between the employers’ panel and the members’
panel—that it is able to commission and carry out research
independently where it deems that to be
necessary. Mr.
O'Brien: Just to give the hon. Gentleman
some reassurance, I take his point in relation to proper resourcing. It
will be noted by those on PADA, who look at the detail of this, that we
regard both the members’ and employers’ panels as vital.
They will therefore need to be appropriately and properly resourced. He
also makes a valid and interesting point about research, which I will
consider further. I cannot give him any further reassurance on that,
but I am sure that those on PADA who will be listening to these debates
will be aware that there may well be a requirement that the
members’ and employers’ panels should be properly
informed. I am conscious, however—I am conscious, too, of the
length of this intervention—that there are cost implications
which need to be properly factored into it. Rather than trying to deal
with that now, we should let PADA do it in due course and
advise.
Danny
Alexander: I am grateful to the Minister
for that necessarily lengthy intervention and I am reassured. He is
right that there has to be a proper balance between the costs found; no
doubt PADA will bring that forward. However, an understanding now of
the importance of the members’ panel having access to
independent research is important. My other point, which relates to the
intervention from the hon. Member for Carmarthen, West and South
Pembrokeshire, concerns the process by which the panel members are
chosen—the Minister has addressed that adequately in his
response. It also relates to the way in which the views of the panel
have to be listened to and responded to by the trustees.
The Minister
is right in saying that there is a clear difference between the
trustees, who are the sole people for taking decisions, and the panels,
who have a responsibility to represent the interests of members and
employers and to offer their views. However, it is
important—this is something that will have to be borne in mind
by PADA—that in constructing the relationship between the panel
and the trustees, there are some clear obligations about how the
trustees must receive and respond to representations that are made to
them by the panel; that is the practice in some other such panels. I
hope that those comments will also be noted.
Given much of what the Minister
has said, I am happy to withdraw the amendment concerned. However I
hope that those points will be noted on the record and by PADA as they
go forward to construct the way that the members’ panel works. I
beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Danny
Alexander: I beg to move amendment No. 100, in
clause 52, page 25, line 31, at
end add— ‘(6) The Secretary
of State must provide the panels with—
(a) an annual report considering the impact of
means-tested benefits on members of the scheme established under
section 50, (b) an annual
report assessing the quality of qualifying
schemes’. I
will not take long with this. The amendment makes a point which,
although extremely important, is one that we have debated at an earlier
stage. The amendment proposes that, in order to support the work of the
panels, it is important that the panel members understand the broader
context—the backdrop—against which the scheme is
operating. Clearly, members and their representatives, particularly
those on the members’ panel, will therefore have a specific
interest in how the benefits that members are receiving, or are likely
to receive, are interacting with the wider pensions environment. This
is particularly true in the pensions environment, as it relates to
means tested benefits, but also the wider environment that pensioners
are exposed to in terms of means tested benefits. Throughout the
earlier stages of the Committee’s deliberations we looked at the
importance of housing benefit in this context for some
pensioners. The
amendment seeks to oblige the Secretary of State to provide the panels
with information: first, that concerning the impact of means tested
benefits for members of the scheme; and secondly, whether the way in
which the concept of levelling down is happening or not. That will also
be a matter of concern for the panels. That is the point of the part of
the amendment that refers
to “an annual report
assessing the quality of qualifying
schemes”. In
case the Minister is in any doubt, I repeat that I welcome the
commitment he made earlier in our deliberations to undertake a report
suggested by Help the Aged on the broader issue of means testing. That
will be subject to further consideration and debate in due course. It
is also important that information is provided to the panels as they
carry out their work, to enable them to understand the context in which
the personal accounts are operated. I look forward to the
Minister’s response on that
point. 2.30
pm
Mr.
O'Brien: I am slightly perplexed by this amendment. It is
entirely appropriate that we should debate whether it pays to save and
also issues around levelling down. The members’ panels, however,
are primarily going to be looking at how the scheme itself operates. It
is primarily an internally-focused operation looking at whether this
pension scheme is properly run, adequately delivering to the members
and whether its strategies are taking account of the views of the
members. I think that is a pretty big job.
What the hon. Gentleman is
suggesting is that members of the panel should be more outward-looking,
examining the impact of personal accounts on levelling down, the
benefit system, whether it pays to save and that they should be aware
of these things because of the impact on members. I appreciate that
these things will have an impact on the members, I am just not sure
what impact the members’ panel could have on those things as a
members’ panel. It is essentially looking to the board of
trustees and ensuring that the board of trustees is doing things that
are in the interest of the members. It is a sort of sounding board for
the trustees on the operation of the pension
scheme. So while I
think these are perfectly proper and legitimate issue which we can
debate in a wider context, I am just not sure that they are what I
would expect the members’ panel to be focusing on. They will
have enough work to do without focusing on those issues. I have no
problem with them having information about these things, I am just not
convinced that this is what they ought to be up
to. I am confident
there will be a proper flow of information between the trustee and the
panels, the trustee board will be as keen as the government to make all
this work. I do not think it is appropriate to specify the types of
information they need to fulfil their duty, to some extent that is for
the members’ panels to determine for themselves. I hear what he
says about research and if they wanted to get reports on pays to save
and whether there is any levelling down, I do not see any reason why
they should not get that, but what I would hope if I were ever a member
of personal accounts is that whoever is on the members’ panel
will be watching the decisions being made by the trustees board and
ensuring the trustee is acting in the interest of the members and that
investment decisions, the management, the operation, the procedures,
the processes of collection and administration and payment are all ones
which are in the interests of the members. I just see a different role
so I am a little perplexed by the amendment. I do not dispute that the
issues are ones we need to discuss, I am just not sure they are issues
for the members’ panels. I do not object to them discussing
them, it is a matter for
them.
Danny
Alexander: I am sorry if the Minister is perplexed. The
amendment was not meant to be perplexing and he is right to say that in
carrying out their work, the members’ panel obviously has to be
focused primarily on the operation of the scheme, decisions made by the
trustees and so on, but as he also said, one of the roles of the
members’ panel is to make sure the scheme is adequately
delivering to members. The point of this amendment is simply seeking to
draw this out and in his comments I think he accepted that this was an
area where the members’ panel might wish to have information
from time to time, and, if they did, there would be no problem with
them having it. So, in a sense, I regard my point as having been
satisfied by the Minister, and therefore I beg to ask leave to withdraw
the
amendment. Amendment,
by leave,
withdrawn. Clause
52 ordered to stand part of the
Bill.
Clause
53Contribution
limits
Mr.
Waterson: I beg to move amendment No. 28, in
clause 53, page 25, line 34, at
end insert ‘save that the employers’
contribution shall be fixed at 3 per cent. of the amount of
jobholders’ qualifying earnings in any pay reference
period.’.
This is a fairly simple
amendment, harking back to earlier clauses—which is very much
welcomed by employer organisations like the CBI—and clearly sets
out a 3 per cent. employer contribution in the Bill. We had a fairly
prolonged debate about this issue only the other day, in the context, I
think, of a Liberal Democrat attempt to jack that up to 5 per cent. But
we managed to defeat that—or at least persuade them of the error
of their ways—on the basis that this was all part of the
post-Turner settlement, as it were.
It is important that that be in
the Bill and I cannot imagine that there can be any controversy about
also writing it in to clause 53, which deals with contribution limits.
There are other issues regarding what should be in the Bill and we will
come to those in later
amendments.
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