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Baroness Hollis of Heigham moved Amendment No. 5:

Page 35, line 46, leave out ("a description or category of") and insert ("an").

The noble Baroness said: My Lords, after that tour de force I turn to a very minor amendment. I shall be brief. We seek clarification. The effect of the amendment would be to set a time limit for claims of six months from the date of leaving the employment to which the scheme relates. The reason for tabling the amendment is not that we believe that the time limit should be even more stringent than that proposed by the Government; we simply have some doubts as to what the Government intend.

So far as our legal advisers can tell, the words "description or category of employment" do not appear in any other employment legislation. What is meant by

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it? Does it mean moving from part-time to full-time employment, or from the banking to the retail sector? What will the Government do to ensure that women are not inadvertently caught by time limits as they move jobs or, as the Government have it, move description or category of employment? We should be grateful if the Minister can help us. I beg to move.

Lord Mackay of Ardbrecknish: My Lords, perhaps I would be wrong if I assumed that the noble Baroness, Lady Hollis, referred to my speech as a tour de force. I suspect that it was her noble friend's speech which she regarded as a tour de force. I am happy to try to explain what on the surface appears to the noble Baroness to be legalistic wording. As she explained, the amendment seeks to simplify the wording of Clause 57(4) (c) concerning the period for bringing claims under the equal treatment rule. It would refer to,

    "an employment to which the scheme relates"

rather than to,

    "a description or category of employment to which the scheme relates".

Clause 57(4) (c) was inserted at Report stage and is intended to replace Section 2(4) of the Equal Pay Act 1970 for the purposes of Clause 57. As noble Lords will know, much of the equal treatment provisions are to be read as one with the Equal Pay Act. However, in this instance we were concerned that without this particular change there might have been confusion about the operation of Section 2(4) of the Equal Pay Act in the context of pensions.

I have some sympathy with the amendment moved by the noble Baroness because it appears to have the benefit of simplifying the rather legalistic wording of the original. However, we have concluded that the original wording is the most appropriate. We have taken that wording from the definition of an occupational pension scheme in Section 1 of the Pension Schemes Act 1993. The definition is framed so as to include not only schemes which are operated by one employer solely for the benefit of his own employees but also schemes which provide benefits for groups of employees who may not have the same employer, such as sectoral or industry-wide schemes.

We believe that we should keep to the current wording of Clause 57(4) (c), both for consistency with the Pension Schemes Act and, more importantly, to ensure that all scheme members are treated in the same way regardless of the nature of the scheme. I hope that with that explanation of why we feel that the rather more complex wording is best, the noble Baroness will feel able to withdraw her amendment.

Baroness Hollis of Heigham: My Lords, I thank the Minister for that reply. We shall study it. With the permission of the House, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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5.45 p.m.

Clause 60 [Equal treatment rule: effect on terms of employment, etc.]:

Lord Mackay of Ardbrecknish moved Amendment No. 6:

Page 37, line 14, at end insert:
( ) In section 4(1) of the Sex Discrimination Act 1975 (victimisation of complainants etc.)—
(a) in paragraphs (a), (b) and (c), after "Equal Pay Act 1970" there is inserted "or sections 56 to 59 of the Pensions Act 1995", and
(b) at the end of paragraph (d) there is added "or under sections 56 to 59 of the Pensions Act 1995".").

The noble Lord said: My Lords, I am pleased to be able to move the amendment. As those noble Lords who are season ticket holders will know, it is normally my noble friend Lord Lucas who moves government amendments. In this case I am moving the amendment because it results from a weakness highlighted by the noble Baroness, Lady Hollis, in Committee. I undertook to consider the points that she raised, and I am pleased to be able to redeem that pledge this afternoon.

As the noble Baroness explained at the time, the purpose of the amendment is to bring the equal treatment provisions of the Bill within the ambit of Section 4(1) of the Sex Discrimination Act 1975. That section currently deals with protection against discrimination by way of victimisation in relation to persons bringing proceedings under the Sex Discrimination Act or Equal Pay Act. The amendment would extend that protection to those bringing claims for equal treatment under Clauses 56 to 59 of the Bill.

I congratulate the noble Baroness on spotting the need for the amendment. I beg to move.

Baroness Hollis of Heigham: My Lords, we are obviously delighted that the Minister has responded to our point. I claim no credit for the amendment which, needless to say, is an extremely technical one. I only wish that the Minister's conciliatory stance had been so generously extended to many of the other amendments on which we sought to persuade him.

On Question, amendment agreed to.

Clause 67 [Preferential liabilities on winding up]:

The Earl of Buckinghamshire moved Amendment No. 7:

Page 41, leave out lines 39 and 40 and insert:
("(b) any liability for—
(i) pensions, or other benefits, entitlement to payment of which has arisen, or
(ii) increases to pensions if entitlement to payment of the pensions has arisen before this section comes into force and the rules of the scheme would, apart from this section, require assets of the scheme to be applied in satisfying the liability for those increases before satisfying the liabilities mentioned in paragraph (c),").

The noble Earl said: My Lords, in moving Amendment No. 7 I shall speak also to Amendment No. 8. Amendment No. 7 is intended to protect the position of those who are already drawing their pension on the date when the provisions within the Bill come into force. I should like your Lordships to consider the situation on the winding up of a pension scheme in a few years' time

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when, regrettably, there is not enough money to meet everyone's benefits in full. Such circumstances may continue to arise, even though the new minimum funding test should help to reduce the number of occasions when they occur.

At present, if those unfortunate circumstances arise, the trust deed of a pension scheme is the document which sets out the order in which the claims on the funds are to be satisfied. Those people who are higher up the queue will usually receive more than those who are lower down. Indeed, most trust deeds give priority to those who are already drawing their pension at the date of the wind up. This should usually enable those pensioners to receive not only their pension at the current level of payment but also any future guaranteed increases which are provided under the scheme.

Frequently, the pensioners' benefits, including future guaranteed increases, particularly in smaller schemes or when the benefits were bought out at times when the markets were right, have been secured by purchasing a suitable insurance policy out of the fund's assets. The future increases thus purchased are not intended to improve the position of a member and his spouse but merely to maintain whatever protection is guaranteed by the scheme against the threat of inflation to their present standard of living.

As I understand it, under the Bill as currently drafted, future pension increases would come at the bottom of the priority clauses, together with some other benefits. The effect would be that a pensioner could still be reasonably sure of continuing to draw his pension at the current level, but he could possibly lose the future guaranteed increases which he would receive if the scheme were wound up now. When I raised this matter on Report the Minister made it clear that the Government continue to favour the principle that if a scheme which is wound up is under funded pensioners may have to share some of the pain from which they have previously been insulated. I am uneasy about that. I do not share the Government's view on the point. I still believe that a preferable principle is to continue to give full priority to those people on pension including future increases in pensions.

Quite apart from being fairer, the provision would also avoid the practical difficulty inherent in my noble friend's proposal in relationship to those schemes which have purchased annuities from insurance companies in the trustees' names when a member retires. The Minister has not explained how the trustees would be able to achieve the reallocation of moneys from such pensioners to active employees if the insurance company refuses, as is likely, to make such a refund.

However, even though I do not agree with the Government's decision on this point of principle, on the assumption that they will have thought through all the means of overcoming the practical difficulties to which I referred, I agree that that is the position to which we shall hold. However, I cannot accept—I feel strongly about it—any suggestion that the new principle should be applied to those people who are already on pension at the date the new provisions come into force. I believe

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that that will be a totally unacceptable diminution of the pension expectations of those people in the event of a wind up. Indeed, I believe that it reflects a major attack, made retrospectively, on their pension and property rights.

I was therefore pleased to hear the Minister's statement at Report. He said that the clause as currently drafted would not represent any retrospective worsening of anyone's accrued rights and that no one's pension expectations would be reduced by the clause. I take it that he accepts that at the date the provisions come into force existing pensioners should not have their position worsened on future wind up. The Minister may wonder why I have elaborated on the whole discussion. It is because I believe that he may well have overreached his brief. I wish to give him the opportunity to put the matter right.

The amendment makes clear that the provision would not distort the principle favoured by the Minister so far as concerns future pensions but would conserve the rights of those people who are already on wind up before the provisions come into force. I believe that the amendment is the only fair way to do that. I hesitate to think how we shall cope with the health warnings regarding the possible difficulties of pensioners on such wind ups. What will go into the booklet may well be different from what will go into the scheme rules. I look forward to hearing what the Minister has to say. I beg to move.

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