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Baroness Seear: The noble Baroness, Lady Turner, has already referred to my Amendment No. 5. I strongly support the idea of having a representative of pensioners on the authority. The Bill lists very worthy people who will be members of the authority for the various contributions they can make. To have a pensions authority without a pensioner on it is rather like playing

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"Hamlet" without the Prince. I hope that the Minister will consider making provision for an additional member of the authority who is a pensioner. He or she is likely to know things about pensions and the administration of them which may have escaped the attention of some of the other people appointed to the body.

3.45 p.m.

Lord Mackay of Ardbrecknish: The two amendments refer to the constitution of the authority as set out in Clause 1(3). The subsection outlines the kinds of qualifications and the background of those from whom the Secretary of State will appoint the six members of the authority. I should explain how we have come to the conclusion that what we propose is the right number and mix for the authority.

The primary purpose of the Bill is to safeguard the interests of occupational pension scheme members. None of us disagrees with that objective. To achieve it the authority's membership will be varied enough to ensure that it embraces a broad range of expertise and knowledge but is not so large as to be unable to make robust and effective decisions that can be implemented quickly. Under subsection (3) the membership is drawn from a number of groups. Paragraphs (a) and (b) specify members who are representative of employers and employees; paragraphs (c), (d) and (e) mention those with expertise in the management of pension schemes. There is a degree of confusion as to what one is seeking among the membership of a trustee body of an individual pension scheme and what one looks for in an authority that is regulating all pension schemes. I appreciate the point made by the noble Baroness, Lady Seear, that pensioners may have an interest in pensions. I am not sure that, unless they come from one of the backgrounds laid out in the Bill, they will have the necessary expertise to act as the regulatory authority.

I am afraid that I cannot accept the amendments to enlarge the authority or to alter its balance. The six members will be appointed primarily on the basis of their expertise. As I hope I have illustrated by pointing out the background of those people whom the Secretary of State will be considering for appointment, they will bring to the authority a wide range of knowledge and experience. They will not be there to serve in a representative capacity. They will be required to set aside any vested interest they may have.

I have explained the composition. I believe that the employers' representative is the person who will look after, and be particularly mindful of, the interests of both current and future pensioners. We believe that the balance is the right one. It follows the model adopted by the Occupational Pensions Board which has enjoyed a reputation for impartiality and integrity under successive governments. To appoint representatives of particular interest groups or classes of scheme members will cause other groups or classes to feel that they have been unfairly excluded. We will then begin to see an increase in the number of people on the authority. I do not believe that that is either sensible or wise. It will undermine the authority's independence and objectivity.

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For those reasons I feel that we must look to experts with the backgrounds set out in Clause 1 for membership of the authority, not to people who represent specific interest groups in specific pension funds mentioned in the two amendments.

Baroness Seear: Surely the Minister does not wish to give the impression that his mind is closed to all the suggestions which will come from this side of the Committee. I should like to give him the opportunity to think again, if he will, about Amendment No. 5. Perhaps he will examine Clause 1(3) (e) which refers to the appointment of two members who appear to the Secretary of State to be knowledgeable about schemes, one of whom can be a pensioner. At the moment, there is no proposed amendment but if the Minister will at least agree to think again it will not increase the numbers and it will show that he is flexible. I was about to say that flexibility is not always a characteristic of those from north of the Border, but I believe that that would not enhance my case.

I agree that such a person should not be representative of an interest but a pensioner may be able to ask some very awkward questions about what is going on—questions that may not occur to people who are not themselves pensioners.

Lord Eatwell: The Minister's argument is extraordinarily weak. Let us consider the words that he used. He argued that a pensioner would not have the skills and experience to be able to be an effective member of the regulatory authority. He then said that a pensioner would not have the knowledge and expertise. Finally, he argued that the employer's representative would be able adequately to represent the interests of pensioners. We have seen in the past that employers have not necessarily adequately taken pensioners' interests into account. Surely the noble Lord's argument is extraordinarily weak. He cannot stand on such a weak case. It is clear that a pensioners' representative may be very highly skilled and would be chosen by representative organisations because he or she had those skills and that expertise. If we are to have someone who is representative of employers and someone who is representative of employees, surely it is logical, consistent and entirely in tune with the character of the organisation that there should be a representative of pensioners.

Lord Mackay of Ardbrecknish: The noble Lord has made my point for me. Subsection (3) (b) states:

    "a member appointed after the Secretary of State has consulted organisations appearing to him to be representative of employees".

That person is likely to be drawn from the people who are involved, directly or indirectly—they could well be officials of a union or something like that—in the pensioners' (either future or present pensioners) interests. If I said in my speech "employers", that was a slip. It should have been "employees". If that is the argument on which I am accused of being on weak ground, I think that I have got on to much firmer ground by underlining the point that I am making about the employees' representative being the most likely person. I would hope that we are not looking for someone to represent particular groups. We are

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looking for people who will look after the whole of the scheme and make sure that the regulations are properly enacted and that if a pension fund is going wrong action is taken to put it right. The pensioners and potential pensioners will see the person who is the representative of the employees as the person who, if one likes, directly represents them.

The noble Baroness, Lady Seear, quite cleverly asked me whether I would consider the point she made about amending subsection (3) (e). I would not like the Committee to think that my mind is always going to be closed. It is never closed to a good argument. As the Bill progresses I may well find some things which I think ought to be taken away and considered. After each day we shall study what has happened and look at what has been said. But I would not be telling the noble Baroness the truth if I said that I would take this point away and think about it in a serious manner so as to change my view. All I would say is that there is nothing in paragraphs (a) to (e) which would prevent someone who was a pensioner coming in.

Of course there may well be pensioners who have a great deal of background in the matter and in fact obey one of these statements. The point I made to the noble Lord, Lord Eatwell, and about which he became so irritated is that the great bulk of pensioners and potential pensioners—I certainly include myself, although perhaps that will change when I have finished the Bill—are not in a position to feel that they could sit on a regulatory authority and make sure that the rules and regulations required in a pension fund would be carried out.

Baroness Seear: The former chairman of ICI is a pensioner.

Lord Stallard: The noble Lord referred to employees. Is it not a fact that sometimes employees' interests are not exactly the same as pensioners' interests? They certainly do not have the same understanding of the problems as active pensioners have. There is a difference between pensioners' interests and the interests of current employees. The noble Lord should take that into account.

Lord Marsh: The noble Lord, Lord Stallard, has put his finger on exactly the danger of this kind of amendment. Pensioners do not act on behalf of all of the people who may in the future depend on the fund. They represent the pensioners. The views of pensioners of one time are not necessarily representative of the interests of people who have yet to become pensioners. The key point in these roles is that people should be responsible to the fund.

Of course the former chairman of ICI is a pensioner. One of the points that makes this amendment probably less crucial is that we are all pensioners. I am pleased to say that I am a member of six pension funds and am in receipt of a pension from each of them. They are all different and the interests are different. The concept

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which is central to this kind of problem has to be that those concerned are responsible to the fund and that no one represents an interest.

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