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Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, I am happy to respond to the points that have been made. I believe that noble Lords opposite will realise that these are important amendments which they can support. If I am unable to give them all the answers that they would like, I shall certainly write to them about the matter. I certainly appreciate that we have had to deal with the issue at Third Reading for the simple reason that we had to consider it most carefully in order to ensure that pensions and similar benefits were being properly treated. Those of us who spent many happy hours debating the Pensions Bill will know that certain considerations involve actuarial calculations and the like. People are making a decision on each and every one of us as to what our risks are or are not when deciding whether they will insure us and the amount of premium they will charge for doing so. These provisions are part and parcel of the difficulties of actuarial work which enables pension funds and insurance companies to take people on and to deliver the benefits that they have promised.

I shall try to deal as best as I can with the points that were made by the troika which came at me from the Opposition Front Bench. The noble Lord, Lord McCarthy, no doubt appreciates the fact that the whole Bill breaks new ground. We have had to tackle some difficult issues and translate them from hopes and expectations into a legislative framework which will work. I accept that, as a result of such factors, I am putting these proposals forward rather late.

The noble Lord asked about costs, referring to Amendment No. 4 in particular. I can do no better than refer him to what I said in my main speech. I tried to speak fairly slowly because I realised that the issue is complicated but I shall repeat it. As regards costs, noble Lords will see that in Amendment No. 4 we are saying that we shall consult on the use of these powers. The example that I gave was the additional cost which could justify less favourable treatment. Therefore, we will be

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consulting on that matter. In order to help the noble Lord, perhaps I may put on the record the fact that we have absolutely no intention of legislating for what might be trivial costs. We are looking at serious costs which will fall under those powers—

Lord McCarthy: My Lords, is the Minister prepared to say that in the regulations there will be reference to "significant" or "substantial" costs and not "insignificant" costs?

Lord Mackay of Ardbrecknish: My Lords, I am not sure that the regulations will be so vague. I suspect that they will be a little more detailed and will not use words such as "substantial" and so forth. I believe that the idea will be to attempt to show the kind of figures—perhaps not the exact figures—which may be encompassed. However, I shall check the detail of that and ensure that I am right in my appreciation of this complicated issue.

The noble Baroness, Lady Hollis, asked me a number of questions. First, she asked whether it was intended that contributions should be weighted according to risk for disabled people. The answer is not more so than for anyone else. We are preventing the weighting of risk on grounds of disability but retaining it for health, which has always been the case. In my main speech I tried to make the point that, looking at the whole provision, it would be illegal for someone to discriminate solely on the ground of disability as regards pensions. However, if there are actuarial reasons and justifications for that discrimination, that is accepted. As I said in my speech, the disabled person may not have a disability that is in any way life threatening or suggests that he may have to retire early or to take sick pay. The noble Baroness rightly pointed out that many disabled people have good attendance records. If that is the kind of person that we are talking about, it would be unfair discrimination if he were refused access to the pension scheme. It is only if there are actuarial reasons and the like to justify the decision to exclude that it would not be discrimination. I hope that that is helpful.

Baroness Hollis of Heigham: My Lords, many of our amendments at previous stages of the Bill dealt with the issue of perceived disability which was not well-rooted; in other words, when a condition of disability was believed—perhaps falsely and probably falsely—to give rise to an actuarial risk which did not exist. The Minister has made a distinction which we understand between disability and health. But given that he would not accept a previous amendment dealing with mis-information, how can he sustain that distinction, if accountants or actuaries give contrary advice to trustees?

Equally the Minister says that he is consulting. Will he set up a forum on those issues, as recommended by the Disability Alliance and the Disability Income Group, so that we can ensure further that accountants and actuaries do not confuse the issues of disability and health to the disadvantage of disabled people?

Lord Mackay of Ardbrecknish: My Lords, I do not believe that actuaries would confuse those issues because it is their business to be very clear about what are the risks and what each individual situation is,

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especially as regards insurance claims and pensions. Therefore, I believe that the noble Baroness is being a little more than unfair to actuaries when she thinks that they may make their decisions for flippant reasons.

But if they do that, there is the backstop, which I mentioned, that the person may test that and the evidence will have to go before a tribunal. But I believe that actuaries usually take their decisions based on facts and not on prejudice. However, there is the backstop that if a person feels that the actuarial reasons are not justified, he may have that tested before a tribunal.

As regards why I cannot rest my case on "reasonable adjustments" without coming forward with this series of amendments dealing with pensions, the proposed amendments will not confer a duty on employers to make a reasonable adjustment in respect of occupational pensions. Where a disabled person has been lawfully refused access to part of an occupational pension scheme—for example, based on a reasonable belief that his health condition presents an unreasonable risk—the employer will not have to consider ways in which his overall remuneration package can be brought up to the level enjoyed by other employees; for example, by increasing his salary.

Even if we accepted that reasonable adjustments were required, any calculation would be an additional burden on employers with considerable scope for disagreement. Also, the duty of reasonable adjustment was never intended to provide income for disabled people that was not as a result of the output of their employment. Therefore, we believe that pension provision raises some difficult points which need to be addressed separately, quite separate from the general position of making alterations or changes in the workplace and work procedures and so on in order to allow a disabled person to take a job.

The noble Lord, Lord Carter, asked me about self-employed people, personal pensions and so on. Any service offered by an insurance company to members of the public is covered by Part III. Therefore, for these purposes, self-employed businessmen who are disabled cannot be discriminated against unreasonably. As I have tried to explain to the House, we shall introduce regulations stipulating the circumstances in which it will or will not be reasonable for an insurance company to refuse a service to a disabled person.

I return to the point that I made at the beginning that there are actuarial considerations to be taken into account. At the risk of straying back to the Pensions Act, the last thing that we want to do is to make the provision of pension arrangements for the generality of people so difficult and expensive that employers decide to back away from making such provision. That would serve nobody.

However, I wish to make clear that there are many disabled people whose disability will not represent a risk to the pension trustees and the pension fund. Any disabled person in the category will, ought to and must, under this legislation, be received into the pension fund. The out—if I can call it that—is an out which can be exercised only on serious and justifiable grounds which will largely come from actuarial considerations.

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Baroness Darcy (de Knayth): My Lords, perhaps I may intervene in this debate because this is a serious matter. The noble Baroness, Lady Hollis, referred to perceived disability. The Government may choose to leave the issue of perceived disability in the Bill. But if they remove it in the other place and a person with a perceived disability is then not covered by the Disability Discrimination Bill, will a person who feels that he is being discriminated against be covered by other legislation if he wishes to appeal about a matter in relation to pensions? Will he be covered by this Bill or by other legislation?

5.15 p.m.

Lord Mackay of Ardbrecknish: My Lords, I think that I follow the question. At previous stages, we have discussed at some length the whole question of somebody who is not disabled, but is, for whatever reason, perceived to be disabled. I believe that I have made my position clear on a number of occasions. This Bill is designed to deal with people who are disabled and I believe that the inclusion of such factors as perceptions will cloud the issue to the disadvantage of the disabled.

People whose disability is only perceived will not be protected in this part of the Bill any more than they are elsewhere in the Bill. I return to the point that if a pension fund, pension trustees or an insurance company will not take somebody on board, that will have to be justified for actuarial reasons. As I said earlier, if that is not justified, the matter can be taken to an industrial tribunal. Having spent many hours dealing with pensions, I find it extremely difficult to imagine circumstances in which actuaries and pension funds would act on a perception of disability. I think that that is very unlikely.

On Question, amendment agreed to.

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