Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Dean of Thornton-le-Fylde: I thank the Minister for that helpful reply. I appreciate very much the fact that he is prepared to look at this matter again. We await the outcome. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendment Nos. 46 and 47:

Page 5, line 2, at end insert ("or").
Page 5, line 3, leave out from ("employer") to end of line 7.

The noble Lord said: I have spoken to these amendments already. I beg to move.

On Question, amendments agreed to.

The Earl of Buckinghamshire moved Amendment No. 48:

Page 5, line 7, at end insert:
(" ; and an order may only be made under this section after consultation with each of the persons mentioned in paragraphs (a) to (c) (other than any on whose application the order is made).").

The noble Earl said: Clause 10 is quite interesting in dealing with wind up powers, particularly for someone who is in the business, as one might say. An order to wind up a scheme because it has been replaced by a different scheme or if it is no longer required, can only be made on application of the trustees or the managers or by a person who has power to alter the scheme rules or the employer. That is the purpose of Clause 10.

7 Feb 1995 : Column 189

The amendment which I am moving ensures that, in an application for wind up by any of those people whom I have mentioned previously, other parties with an interest in the scheme are also consulted. The reasons are that there are circumstances where the employer, for instance, could apply for a wind up to take place where the trustees do not agree, and vice versa. The new wording will ensure that the regulatory authority talks to the interested parties before authorising the wind up.

There are two other reasons which I would like to mention quickly to the Committee. Many of the schemes have their own wind up powers included in the trust deed and rules. An application may be made where a person who can wind up under the scheme rules is unwilling to exercise that power. That is an important point and I should like my noble friend the Minister to reply to it.

As the clause is worded at present, the wind up can take place on the simple ground that there is a surplus in the fund. Curiously enough, in the 1970s I came across a scheme where there was a surplus and the scheme was wound up and the proceeds distributed directly to the active members of the scheme without reference to some of the other beneficiaries of that arrangement. There has to be some protection in such situations in the wind up, because the interests of all the members must be considered. We heard from the noble Lord, Lord McIntosh, about the active members, and in my view they were not properly dealt with on wind up. That could occur without the protection of this amendment to the Bill. I look forward to hearing what other Members of the Committee have to say. I beg to move.

Baroness Hollis of Heigham: I am not sure that I shall be able to add very much to what the noble Earl has said except to say that we strongly support the amendment. It seems entirely reasonable that under those circumstances those affected should be consulted. That is a basic principle of justice which came earlier in today's debates. We warmly support this amendment.

Lord Mackay of Ardbrecknish: The decision to issue a wind up order will only be taken by the authority after it has carried out an investigation. I suggest to the Committee that, for the reasons I gave in the previous debate, that should take place only after other possible solutions have been considered, because winding up may not be in the best interests of the scheme. Putting in new trustees and trying to get the scheme back on an even keel may be the best thing to do. If it comes to wind up, clearly that will be done only after the authority has satisfied itself that that is the only possible outcome, and therefore this amendment is unnecessary in that regard.

During the investigations the authority will have possibly talked to all the people mentioned in the subsection, but placing a statutory obligation on it to consult them is perhaps going a step too far. It could lead to delays in decisions being made—I have little doubt that somebody who is totally unscrupulous could find ways to stall and delay—and during this period the position of the scheme could further deteriorate, putting members' interests at even greater risk. While I understand the point and think it is perfectly

7 Feb 1995 : Column 190

reasonable—and this will be done, I am sure, in the position where the scheme will not deteriorate during the discussions—to make it mandatory for the authority to have these discussions could perhaps put at risk schemes where speed is of the essence.

The other point made by my noble friend Lord Buckinghamshire is that it may sometimes not be in the best interests of the scheme members to wind up a scheme with large surpluses, where members might benefit from a large cash windfall. That is not the intention we have in mind when we give the power of wind up; it is to prevent losses.

We are aware of the concerns but we do not think it is a problem. The power to wind up is designed to protect members in the rare cases where schemes are seriously under-funded. It would not be in the long-term interests of members to have their schemes wound up for what might be a relatively small, short-term gain. The level of the surplus would have to be significant for members to benefit in the way suggested. However, on that point, I shall look at the concerns my noble friend has expressed and consider them before the next stage.

Baroness Hollis of Heigham: Before the noble Earl, Lord Buckinghamshire, decides what he wants to do with this amendment, may I ask the Minister, so that we have it on the record, whether this clause as it stands give the authority power to act where there have been breaches of trust rather than simply breaches of the statute? If so, what powers does the authority have to investigate or initiate a wind-up?

Lord Mackay of Ardbrecknish: The noble Baroness has asked me a question that I cannot answer immediately. If she will forgive me, I shall either answer it later or write to her.

The Earl of Buckinghamshire: I am grateful to those Members of the Committee who have taken part in the debate on the amendment. I think it is a curious clause in the way it is being applied. I have listened carefully to what my noble friend has said and I am very pleased that he will come back to us on one of the issues I raised. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Dean of Thornton-le-Fylde moved Amendment No. 49:

Page 5, line 7, at end insert:
("(e) scheme members").

The noble Baroness said: The subsection states that an order made by the authority under this clause:

    "may be made only on the application of—

    (a) the trustees or managers of the scheme"—

we know who they are—

    (b) "any person other than the trustees or managers who has the power to alter any of the rules of the scheme"—

and the individual members of a scheme do not normally have that power—

    (c) "the employer, or

    (d) such other persons as the regulations may specify".

7 Feb 1995 : Column 191

This subsection does not contain within it the right of individual members of the scheme to seek a wind-up of the scheme. It gives that authority to a wide group of other people, some of whom have no individual vested interest or money in the scheme. We feel that it is wrong to have a provision in the Bill that provides for those various groups to seek a wind-up but excludes quite specifically the individual members of the scheme. That is what this amendment would effect. I beg to move.

Lord Mackay of Ardbrecknish: Before I speak to Amendment No. 49, perhaps I may answer the question asked by the noble Baroness at the end of the debate on the previous amendment. Having studied the matter in the past few minutes, I can state that the answer is yes.

I turn now to Amendment No. 49, which enables scheme members to ask the authority to wind up the scheme if it is not needed or is to be replaced. The right to make an application currently rests, and we believe must continue to rest, with the employer or trustees. It is not a matter for scheme members. Indeed, since a similar regulation-making power introduced by the Social Security Act 1973 has never been used we have brought forward an amendment to remove that unnecessary power.

However, if scheme members are concerned about the administration of their scheme they can, of course, inform the authority, and in extreme circumstances—I mentioned this in a previous debate—the authority has the power to wind up the scheme if that is in the best interests of the generality of the members.

It would be wrong to put scheme members into one of the classes in this part of the Bill, but that does not mean to say that scheme members do not have a route, via the regulatory authority, if they feel that there is something so wrong with the scheme that it should be wound up. I hope that that assurance will allay any fears that scheme members will have no way of suggesting to the authority that the scheme be wound up.

9.15 p.m.

Lord Monkswell: I am a little concerned that the Minister should have taken that line in his response. We must recognise the practical world of work. In negotiations over the remuneration package between employers and employees pension arrangements will form part of the scenario. Effectively, what the Minister is saying is that the advantage in those negotiations should be conferred on the employer, and the employee should not have a balancing facility. A reasonable employer probably would not use the argument in negotiation with his employees, "If you do not play ball, I will get the scheme wound up", but we must recognise that we may be dealing with unscrupulous people, particularly employers. Will the Minister reconsider the fact that scheme members should not make an application to wind up the scheme?

Next Section Back to Table of Contents Lords Hansard Home Page