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Lord Ezra: I am most grateful to the noble Lord for the care with which he has dealt with this subject. I am not surprised at the conclusion that he has reached, but I regret it. I feel as the noble Lord, Lord Haskel, does, that the Government have spoken time and time again

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about the need for us to take a long-term view of investment. The vast mass of investment in this country is handled through the institutions of which the pension funds form a very large part.

Therefore, this would have been an opportunity to translate exhortation into obligation without in any way in my opinion—or indeed that of the noble Lord—harming the interests of beneficiaries. It must be in their interests to take a long-term view of investment and to persuade the companies that they invest in to take a similarly long-term view. No doubt this is a matter to which we shall try to return, but in the circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendment No. 128:

Page 16, line 14, after ("the") insert ("written").

The noble Lord said: In moving this amendment I shall speak also to Amendment No. 129. The purpose of these amendments is to ensure that when preparing or revising their statement of investment principles, trustees obtain advice in writing from a person who is properly qualified to give appropriate advice to pension schemes. The effect of Amendment No. 128 is to require trustees to obtain advice in writing. Amendment No. 129 develops further the qualifications required from a person from whom trustees must take advice. I beg to move.

The Earl of Buckinghamshire: My Amendment No. 129A is joined with these amendments. Members of the Committee will be aware that at Second Reading I expressed some concern about the overall impact of Clause 31. I wish to return to that matter at Report stage. At this point I wish to say in general that I believe the words in this clause "consult the employer" seem to change the current status quo where the trustees have to take into account the interests of all parties including the employer, as a contingent beneficiary. The amendment does not deal with that issue, which is why I wish to return to the matter on Report. However, the provisions make clear that the trustees have to consult and that failure to do so will carry penalties under Clauses 3 and 9. I am sure that, in most circumstances, the trustees will consult the employer but there may be circumstances where the relationship has broken down to such an extent that consultation does not take place.

The amendment refers to the penalties, but I am somewhat diffident about loading more penalties onto the trustees. Again, that is a point that I made on Second Reading. However, as there are limited powers to get rid of trustees, I believe that the provisions complete the circle of the trustee requirements set out in the Bill.

Lord Lucas: To answer my noble friend, we too feel diffident about involving OPRA in these matters, but I can advise him that we shall be giving further consideration to the matter. Therefore, I hope that my noble friend will not seek to move his amendment.

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On Question, amendment agreed to.

Lord Lucas moved Amendment No. 129:

Page 16, line 16, after ("matters") insert ("and to have the appropriate knowledge and experience of the management of the investments of such schemes").

On Question, amendment agreed to.

[Amendments Nos. 129A and 129B not moved.]

Lord Haskel moved Amendment No. 129C:

Page 16, line 26, at end insert:
("( ) The trustees of a trust scheme must include in the annual report of the scheme a statement by the trustees that they have carefully considered the investments and are satisfied that they conform to the statutory criteria.").

The noble Lord said: In moving Amendment No. 129C, I should like to speak also to Amendments Nos. 138, 140A, 141A, 142A and 142B. Amendment No. 129C is yet another Goode recommendation which the Government accepted but have not included in the Bill. It is designed to ensure that the trustees do not approve the annual report on investments and other matters on the nod but that they pay attention to what has gone on. That is similar to the responsibilities that are laid on directors in relation to the annual accounts of a company. We are talking about the same objective. It is a matter of good practice which needs to be encouraged and specified in the Bill. I beg to move.

Lord Mackay of Ardbrecknish: The first five of these amendments concern the requirements on trustees to obtain and make available certain information. The amendments would require the Government to make regulations which would require trustees of all schemes to produce scheme documents which are readily comprehensible to members within a given maximum time limit. They would also require trustees automatically to send an annual benefit statement to all members.

Amendment No. 142B inserts a new clause which would require scheme advisers who provide information to the employer in relation to the scheme to disclose such information to scheme members and independent trade unions.

Amendment No. 129C mirrors a recommendation made by the Pension Law Review Committee which has been accepted by the Government. However, we consider it more appropriate to give force to that recommendation in secondary legislation. We intend that new regulations concerning the provision of information to members shall be made under the powers at Section 113 of the Pension Schemes Act 1993 and Clause 35. These shall include detailed requirements for the content of scheme annual reports.

Amendment No. 138 would provide a mandatory power rather than a permissive power to make regulations concerning the provision of information to members. The effect would be to require the trustees or managers of all occupational pension schemes to obtain certain documents and make them available to members. Such a requirement would not be appropriate. Certain types of occupational schemes will need to be treated differently and the power to make regulations must provide for this. We have in mind, for example, certain

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exemptions for public service schemes. Those schemes are in the main unfunded and it would clearly be inappropriate to require them to produce accounting documents in the same way as for funded schemes.

The effect of Amendment No. 140A would be to require audited accounts, auditors' statements and actuarial valuations, which are by their nature very technical documents, to be produced in a readily understandable format with important information highlighted. We support the principle behind this amendment, which is to provide members with information which is meaningful and written in plain English. We consider that that is particularly important for documents such as the annual report and scheme booklet which are intended primarily for scheme members. It is perhaps of lesser importance for the documents of the sort covered by the amendment which concern technical issues and are intended to be read by relative experts.

As the Committee will be only too aware, whether something is readily understandable or whether information is important is a matter of opinion. It is not at all something for which we can legislate. Therefore, while we wish to encourage the use of plain English, we do not believe that the Pensions Bill is the place to do so.

Amendment No. 141A would require trustees to provide annual statements of accrued rights to members and others. We support the principle that members of all occupational schemes should have the right to receive an annual benefit statement if they want one. Members of money purchase schemes will continue to receive annual benefit statements automatically and we shall continue to encourage salary related schemes to do the same. However, we appreciate the practical difficulties that requiring all schemes to issue statements automatically would place on some schemes and have no wish to increase their administration costs unnecessarily.

The amendment would also require trustees to obtain and disclose specific items of information within set time limits. We consider that secondary legislation should specify the time limits for the provision of information and should set out all of the information which is required to be disclosed in the scheme annual report or booklet. We intend new regulations concerning the provision of information to members to cover the points made in this amendment.

Amendment No. 142A mirrors two of the recommendations made by the Pension Law Review Committee, both of which have been accepted by the Government. But again we consider it more appropriate to give force to those recommendations in secondary legislation.

Amendment No. 142B seeks to tackle a problem which does not seem to us to exist.

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I hope that I have covered all the main points in the amendments in the group and that the noble Lord, Lord Haskel, having listened to me, or, more sensibly, having read in the morning what I have had to say, will be content.

9.45 p.m.

Lord Haskel: I thank the Minister for his response. He replied to a couple of amendments to which I did not speak. However, from what the Minister said, it appears that he intends to introduce secondary legislation to encourage best practice. I do not wish to stand in the way of that. My only regret is that he is going to encourage best practice in administration only and not in the management, which was the matter to which I was trying to refer previously. However, in view of what the Minister has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31, as amended, agreed to.

Clause 32 [Choosing investments]:

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