Clause
88
Time
for discharge of
liability
Question
proposed, That the clause stand part of the
Bill.
11.15
am
Andrew
Selous (South-West Bedfordshire) (Con): May I apologise to
the Committee and to you, Mrs. Anderson, for not being here
earlier? I was not here because Mr. Speaker granted me an
Adjournment debate in Westminster Hall, which ended at only 11
o’clock. I know that this side of the Committee was in the very
capable and experienced hands of my hon. Friend the Member for
Eastbourne.
I want to
make a small point about clause 88, which will shadow some of the
discussion that we will have about the amendment tabled to clause 89. I
notice that there is provision in clause 88(3) for regulations to
extend the implementation period, but not to open up the possibility of
shortening it. I wonder whether the regulations could be worded to
allow for the implementation period to be varied, rather than just
extended. Will the Minister comment on
that?
Mr.
O'Brien:
I will consider whether the regulations should be
able to do that. I confess that I have not done so until now, but we
are still looking at the drafting of the regulations. When we come to
deal with them, I will consider whether it would be appropriate to do
that.
Question put
and agreed to.
Clause 88 ordered to stand
part of the
Bill.
Clause
89
“Implementation
period”
Andrew
Selous:
I beg to move amendment No. 7, in
clause 89, page 41, line 17, leave
out ‘4 months’ and insert ‘2
months.’.
The
Chairman:
With this it will be
convenient to discuss amendment No. 10, in
clause 91, page 42, line 24, leave
out paragraph
(a).
Andrew
Selous:
On the same theme that I raised on clause 88, I am
curious about where the figure of four months for the implementation
period has come from, given that four months is quite a long time for
someone on a low income to be without money that they should
regard as rightfully theirs. This is a probing amendment—we have
not alighted on a specific period of two months. I will be grateful if
the Minister will comment on whether that period of four months could
be reduced.
Amendment
No. 10 is another probing amendment to find out why the implementation
period can be postponed in prescribed circumstances and why that is
necessary. Again, we are looking at the matter from the point of view
of people who are in straitened financial circumstances and hardship
and do not have the share of a pension that is rightfully
theirs.
Danny
Alexander:
I echo the hon. Gentleman’s point and
query why four months is deemed to be a reasonable time period in such
cases. The Minister might have a good reason for alighting on the
particular period of four months, but it seems appropriate that in such
cases—particularly for those on low incomes who might need that
money more
quickly, such as people who are already in receipt of
pensions—four months, if that is to be the period, should be the
longest period and there should be an aspiration to get these things
done more quickly. Perhaps the Minister has picked up on the four-month
period due to the way in which arrangements work in other cases. For
some people, four months could be a significant period of time and a
cause of hardship, so I hope that the Minister will at least take that
point on board when he
responds.
Mr.
O'Brien:
The four-month time limit in the Bill is the same
as that for implementing a normal pension share, so the hon. Member for
Inverness, Nairn, Badenoch and Strathspey is quite right that we have
looked at arrangements that apply in other areas and taken that as the
standard. That same time limit was arrived at following consultation
involving the judiciary, family lawyers and trustees of pension funds.
It is important that compensation sharing does not depart unnecessarily
from established principles for pension sharing. Inappropriate changes
would lead to additional complexity and create confusion and
uncertainty, and having different time limits would seem to run counter
to our aim. We take the view that this is what would normally be the
case, and therefore we would apply those
criteria.
Andrew
Selous:
I understand that we might need to have the period
of four months. However, could it be possible—or would the
Minister like it to be best practice—to try to make the
implementation period shorter? I am wary of setting down four months in
legislation so that the solicitors and the PPF think, “We have
four months, so we do not need to worry,” or, “We have
three months, three weeks and three days, and that is our statutory
duty,” when if things could be done quicker, no hardship would
have been caused. That would be a good thing to try and
achieve.
Mr.
O'Brien:
Normally the process would be done more quickly.
Four months is a maximum, and the aim would be to get things done
within that time. However, to implement a compensation share, the PPF
must calculate how the order will reduce the transferor’s
compensation, and calculate the level of compensation due to the
transferee. That will take time and must be done accurately. Once that
is done, the PPF must ensure that correct arrangements are in place so
that the two parties receive the correct payments and are informed of
their new entitlements. They should also have the opportunity to
respond to the figures that they have been given, and to raise any
queries about the accuracy of those figures. In divorce cases, lawyers
want to query just about everything, especially if there is a level of
conflict.
Where the
transferor is already receiving monthly payments when the order, or
qualifying agreement in Scotland, is made, it would be necessary for
the PPF to give the person notice of the date that their payments will
be adjusted and, if appropriate, put in place immediate payments for
the transferee. The PPF makes payments monthly, in advance, on the
first of every month. Therefore it must have enough time to put those
arrangements for payment in place.
In that sense, the period is a
maximum. As part of best practice we would want the process to be done
more quickly than the maximum time, and I understand that in most
cases, for pension sharing, it is possible to do so. However, two
months would clearly be too short a period if, for example, a
calculation was made and the amount of that calculation and the way in
which it was arrived at led to a dispute between lawyers. That dispute
has to be resolved, and in the meantime there are lawyers who, with
their usual speed, exchange letters and do the work when something
arrives on their
desk.
Such processes
always take time, and it is unlikely that two months would be
sufficient, although I accept that the amendment is probing. I wish
that we could change the culture of lawyers, but that is, I think, a
bit beyond our ken. We should stick with the current basis upon which
changes are made. In answer to the hon. Gentleman, best practice would
be a shorter period. This is the maximum, and we want to stick with the
rules as they more generally apply to pension
sharing.
Andrew
Selous:
I am reassured by what the Minister has said about
best practice, and that he has noted the importance of trying to get
things done right and as quickly as possible. He said that four months
is a maximum, not a target to be aimed for. Having heard that
reassurance, I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Amendment made: No. 172,
in clause 89, page 41, line 24, after ‘order’ insert
‘or provision’.—[Mr.
Mike
O'Brien.]
Clause
89, as amended, ordered to stand part of the
Bill.
Clause
90
Discharge
of liability
Andrew
Selous:
I beg to move amendment No. 8, in
clause 90, page 41, line 39, at
end insert ‘and
transferor.’.
The
Chairman:
With this it will be convenient to discuss
amendment No. 9, in clause 90, page 42, line 12, leave out
subsection
(8).
Andrew
Selous:
This is a small point relating to clause 90(2),
which says that a notice must be sent to the transferee. There is
nothing wrong with that and we certainly expect that to happen.
However, that is also a significant event for the transferor, and it
seems entirely reasonable that the person who is having their pension
reduced and the person to whom a pension is rightly being paid should
be informed in writing about what is happening. The Minister might
agree, but we shall
see.
I apologise for
there not being an explanatory note to amendment No. 9, but we tabled
it before the explanatory note system was in place. My concern about
subsection (8) is that, albeit in a few circumstances because of
biology, as it were, dependent children could lose out on what would
have come to them as a result of the death of one of their
parents.
Mr.
O'Brien:
The clause sets out how the board of the PPF
discharges its liability under a compensation-sharing order following a
divorce, annulment, dissolution of a civil partnership or a nullity. It
is important that the board can be certain that it has discharged its
liabilities and that the parties to the divorce or dissolution are
properly notified about how that has been
done.
The
clause makes it clear that liability is discharged when the
notification is sent to the transferee that the sharing order has been
implemented and that they have compensation rights in the PPF. Clearly,
that cannot happen if the transferee has died, for example. Instead, we
need to look at the rights of others on the death of a person. When
members die, the PPF pays compensation to surviving spouses, civil
partners, unmarried partners and dependent children when the
scheme’s rules make the appropriate provision. That is why we
need to ensure that, when the transferee dies before the transfer is
complete, the correct compensation rights are created for their
surviving partner or children. That is no different from the way in
which the PPF would pay survivors benefits following the death of
members after the transfer was completed. However, because the
implementation is not complete, that is potentially a complex and
somewhat technical matter, which is why the necessary provisions will
be set out in regulations. Amendment No. 9 would remove the power to
make those
regulations.
Amendment
No. 8 would mean that the board would have discharged its liability
only when it had notified both the transferor and the transferee of the
new rights created for the transferee by the compensation share.
Clearly, it is right that both parties receive appropriate notification
of the outcome, but discharging liability is different from merely
providing information. It is right that information should be given to
both parties on the outcome of the compensation-sharing
order.
Regulations
made under clause 93, which covers the supply of information about
compensation sharing, can specify the information that the board of the
PPF will have to provide to the parties in consequence of the
implementation of the sharing order. The regulations will make sure
that both parties to the divorce or dissolution receive the appropriate
information about how the sharing order has been
implemented.
Amendment
No. 8 is thus unnecessary and has the potential to create ambiguity. We
need a clear determination of when the legal process for the PPF board
is completed. The clause sets out that legal process. It does not mean
that the other party will not be informed. We intend to ensure under
regulations that the other party will be informed, but it will not be a
necessary part of the legal process for the board to have ensured that
both parties were informed. Someone might have gone abroad or be
difficult to contact. I have known of divorce cases in which someone
has left the country and does not want to be
available.
11.30
am
Andrew
Selous:
I accept what the Minister is saying, but for the
avoidance of doubt—I accept that the discharge of liability is
different from the passing on information—but the transferor
will receive a letter or something in writing saying what has happened.
I would be grateful if the Minister confirmed
that.
Mr.
O'Brien:
The straight answer is that that is our
intention. There would be a requirement; not a legal requirement to
complete the process, but that the PPF board should be in a position
where it will inform both parties of the outcome of the process that
they have undertaken. So information should be given to both parties,
yes. However, there are circumstances—I am adding a slight
caveat to it—where it is not always possible to get in contact
with somebody in a divorce because, basically, they have disappeared.
There will not be a requirement that that must be done, but there will
be an obligation on the board to seek to inform so that both parties
are properly informed.
Andrew
Selous:
Again, I am reassured by what the Minister has
said about the intention of amendment No. 8. I accept that it should
not happen by way of my amendment and the arguments that he has given.
However, I am reassured because the purpose of the amendment is going
to be achieved in terms of what the Minister has said. I am also
reassured in terms of what he said about amendment No. 9, because he
has reassured me that the regulations in subsection (8)(b) will deal
with the issue that I was seeking to address. In that case, I beg to
ask leave to withdraw the amendment.
Amendment
, by
leave,
withdrawn.
Clause
90 ordered to stand part of the
Bill.
Schedule
4 agreed to.
Clause
91
Charges
in respect of pension compensation sharing
costs
Amendments
made: No. 173, in clause 91, page 42, line 32, after
‘order’ insert ‘or
provision’.
No.
174, in
clause 91, page 42, line 32, after
‘provision’ insert ‘(“provision for
apportionment”)’.
No.
175, in
clause 91, page 42, line 34, at
end insert ‘for
apportionment’.
No.
176, in
clause 91, page 42, line 35, after
‘order’ insert ‘or
provision’.
No.
177, in
clause 91, page 42, line 35, leave
out ‘such provision’ and insert ‘provision for
apportionment’.
No.
178, in
clause 91, page 42, line 39, at
end insert ‘or provision’.—[Mr. Mike
O'Brien.]
Question
proposed, That the clause, as amended, stand part of the
Bill.
Danny
Alexander:
I am sorry to slow progress for just a second,
but I have a couple of questions relating to this clause, about child
use and pension compensation-sharing costs. The clause gives, again,
very broad powers for the Secretary of State to make regulations to
allow the PPF to recover charges, and I guess that that is quite usual
in the cases of pension compensation sharing on divorce. None the less,
it would be useful if the Minister could give at least some reassurance
that these charges will not be excessive, and that they will be in line
with charges in normal such cases, so that anyone reading our
proceedings can be clear that the intention of the clause is not in
anyway to have punitive or excessive charges, and that whether he
intends through regulations to put any constraints on the PPF in terms
of the range of charges that it may or may not be allowed to levy in
such
cases.
Mr.
O'Brien:
The board of the PPF intends to charge costs
based upon the National Association of Pension Funds’
recommended scale of charges. It is broadly accepted that that is best,
so that is the basis upon which it will act. That means that divorcing
couples will be charged roughly as the pensions share compensation as
they would be charged to share aid pensions. The sharing order will
normally apportion costs, but the clause provides for the payment by
the transfer, or where that is not the
case.
Andrew
Selous:
For clarification, is that in terms of an hourly
rate, or is it a percentage of the
funds?
Mr.
O'Brien:
I can give some information about the way in
which these rates are charged. The PPF intends, as I say to follow the
NAPF charging rates. I have here some quite detailed charging rates
about pension-sharing costs for active and deferred members, which I
can pass onto the hon. Gentleman. I am looking at a table, which talks
about cash equivalent transfer values. Where the cash equivalent cash
transfer value is between £150 and
£200— [
Interruption.
] It would
probably be easiest if I passed the document around the Room. The
figures are somewhat complex but, essentially, not unreasonable. As I
have already indicated, the maximum is £3,000, but the figures
charged depend on the cash equivalent transfer values at various
different stages.
Mr.
Greenway:
I sympathise with the Minister’s
difficulty in understanding those figures. In my experience, the
biggest problem is not the fees, which seem to be wholly reasonable,
but the calculation of the cash equivalent transfer value. That is not
mentioned in the clause and is an entirely separate
matter.
Mr.
O'Brien:
The hon. Gentleman is quite right. The cash
equivalent transfer value might well be an issue, and we must ensure
that we have sufficient time to consider that. We have already
discussed that matter. However, the fees set down on the right hand
side of the document that I am handing round the Committee range from
£150 up to £2,550 through a range of different figures.
Those are the figures that run down the right hand side of the column.
I thank the hon. Gentleman for the question, and I hope that with that
reassurance we can move on.
Question put and agreed to.
Clause 91, as amended,
ordered to stand part of the
Bill.
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