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Lord Lester of Herne Hill: My Lords, before the Minister sits down, I wonder whether he could deal with one other matter of which he was given notice. It is the Government's position on effective safeguards for the accused against unfair trials going beyond the European Human Rights Convention, which is obviously not a sufficient safeguard by itself.

Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord for raising that point again with me.

We believe that we have identified adequate safeguards in our approach to Tampere. The UK paper for Tampere gives a clear indication that this will be one of the essential elements of mutual recognition. The wording reads:

A more detailed UK paper on mutual recognition, tabled in the EU Multi-Disciplinary Group on Organised Crime, made clear that some common minimum rules or safeguards will be needed. Copies of

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the paper were made available to the House of Lords inquiry on corpus juris earlier this year. I trust that that answers the noble Lord's point.

Lord Bruce of Donington: My Lords, finally before the noble Lord sits down, perhaps I may ask him whether the Government can take steps, after the conference has taken place, to obtain a properly authenticated English translation of the conclusions as put by the president.

Lord Bassam of Brighton: My Lords, I shall endeavour to ensure that that is the case and will write to the noble Lord on the point.

Welfare Reform and Pensions Bill

8.44 p.m.

Consideration of amendments on Report resumed.

Lord Higgins moved Amendment No. 19:

After Clause 1, insert the following new clause--


(“ . Participation in a stakeholder pension scheme shall not preclude participation in other pension arrangements.").

The noble Lord said: This amendment standing in my name and the names of my noble friends is to insert a new clause after Clause 1. This matter has excited some interest outside the Chamber and raises an important question. I presume that it is not the Government's intention, within the limits set by the Inland Revenue concerning contributions to a pension scheme, that if someone takes out a stakeholder pension scheme that person is not allowed to take out other forms of pension arrangements. They may be varied, for example they could be a system of ISAs as well as a straight pension arrangement of the personal pension kind or something else. In particular, it is important to consider whether--and I should be interested in the Government's view--they should stand alongside pension schemes which are operated by a company in addition to a stakeholder pension scheme.

One of our concerns is that some of those already with company schemes will cease to operate them if they think that they can simply treat the government scheme as theirs and abandon schemes which may be preferable to the stakeholder scheme. I should be interested to hear what the Minister says and whether it is the Government's intention that stakeholder schemes should be held alongside other schemes, especially in relation to the state second pension which we discussed earlier and which the noble Baroness regards as totally separate from the stakeholder pensions. I beg to move.

Lord Goodhart: My Lords, Amendment No. 21 standing in my name has been grouped with this one. My amendment is more elaborate than the one moved

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by the noble Lord, Lord Higgins, and contains a second element. It proposes a new clause, subsection (1) of which says that:

    “Nothing in regulations ... shall prohibit the payment to stakeholder pension schemes of contributions up to the [tax] limit".

That is the maximum amount that can be subscribed to a pension scheme by a prospective pensioner, an employee. It varies according to the age of the employee.

I put that in because it was originally proposed by the Government that they would provide that a person could pay up to £3,600 to a stakeholder pension but not more than that, even if they were entitled by the tax rules to contribute more than £3,600. Of course, if that had been the case it would have affected a great many employees. For example, someone aged 51 to 55 need only have had an income of £12,000 a year to find that they were entitled to contribute more than £3,600 under the Inland Revenue rules.

However, as the noble Baroness said earlier--and it has been confirmed to me that this is the case--the Government have changed their mind and will now allow contributions to be made to stakeholder schemes up to the relevant tax limits, even though they are higher than £3,600. They will keep the £3,600 limit if that is higher than the revenue limits.

That seems to me to be a substantial step forward because it involves what would otherwise have been the serious problem of what would happen to someone whose earnings made it possible for him to contribute more than £3,600 under the Inland Revenue rules. It would have compelled him at least to take out another pension if that had been possible, which it might not have been. It is now clear that somebody will not have to leave the stakeholder pension altogether or take out a separate pension with another provider under another scheme once his or her income reaches a level where he or she can contribute more than £3,600 a year.

However, the remainder of the amendment is something about which I am still anxious to inquire. It raises the same point which was raised by the noble Lord, Lord Higgins: what is the Government's position about membership of more than one scheme? It appears that there is no obvious reason why it should not be possible for somebody, if he or she wishes, to belong to both a stakeholder scheme and a personal pension scheme provided the total contributions to both schemes do not exceed the Revenue limit. I hope that the Government will be able to confirm that that is so. It may be a little more complicated in the case of somebody who belongs to an occupational pension scheme which is on a defined benefit basis. In that case it may be very difficult to work out how to ensure that the Revenue limits are not exceeded. That does not seem to me to be beyond the wit of the very clever brains in the Inland Revenue. For that reason, subsection (4) of our proposed new clause provides that the Secretary of State and the Board of Inland Revenue must lay before Parliament proposals for

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legislation to enable somebody to be a member of both a stakeholder scheme and the defined benefit occupational pension scheme.

Having said that, like the noble Lord, Lord Higgins, I await with interest the Government's response. I very much welcome what they have already said in response to the first point that I raised about the upper limits of contributions to stakeholder pensions.

Baroness Hollis of Heigham: My Lords, I am grateful to both noble Lords for the thoughtful way in which they have spoken to these amendments. I agree that in terms of the implications for pension holders this is one of the most important issues that we are discussing tonight. I am grateful that both noble Lords have recognised the degree to which the Government have responded to representations made not only by the industry but in your Lordships' House. I shall try to spell out the position, because this matter is absolutely pivotal to the implications of how the stakeholder pension fits into the web of other pension provision. As I said in the earlier debate, the consultation document came out on 16th September.

These new proposals will introduce a simpler integrated tax regime for personal pensions and stakeholder pension schemes. The proposed new arrangements will allow members to contribute up to either £3,600 a year or the age and earnings-related limit for personal pension schemes, whichever is the higher. This removes the potential awkwardness that someone who starts to pay into a stakeholder scheme and subsequently wants to pay in more than £3,600 may otherwise have to close down his or her stakeholder pension.

Where the personal pension limits would be higher they will also be available to stakeholder scheme members. There will be nothing to stop people from holding more than one such pension at the same time subject to the relevant overall contribution limits; in other words, one can have concurrent schemes. For example, people already with a personal pension will be able to take out a stakeholder pension as well if they wish. This could help those who are committed to contribute a certain amount to a personal pension but with heavy cancellation penalties who might prefer to pay any further contributions into a stakeholder scheme.

The noble Lord, Lord Higgins, asked whether one could have a stakeholder pension and also pay into the state second pension. Yes. As with SERPS, a member of a stakeholder scheme will have the option of contracting out of the state second pension and receive a rebate, but it will also be possible to be in the state second pension and make contributions to a stakeholder pension--like a personal pension--on top of that.

These proposals should help all stakeholder and personal pension schemes by reducing the costs of checking against the Revenue limits and helping to make advice simpler for potential members. The proposals also sweep away the limitation which has until now restricted pension provision to those in

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employment. We propose that any adult will be able to pay up to £3,600 a year into a stakeholder or personal pension with the benefit of tax relief, irrespective of his or her employment status. For the first time carers, people with disabilities and non-working partners will be able to build up pensions in their own right with the same tax reliefs that are on offer to the employed. This also has a very positive read across to pension sharing. It allows one to continue to build on a pot that may have come from a pension share even if one is not necessarily in the labour market. We believe that this is a major improvement which we hope your Lordships will welcome.

As to the interaction of stakeholder pensions and personal pensions, I hope your Lordships accept that these proposals fully meet the concerns which prompted the amendments. The amendments also seek to deal with the issue of dual membership of occupational schemes and stakeholder pensions. During Committee the noble Lords, Lord Goodhart and Lord Freeman, set out the arguments for dual membership. I have much sympathy with what they said. The consultation paper does not rule out dual membership, but it does make clear the practical problems which can arise when a final salary occupational scheme is held alongside a money purchase arrangement. Clearly, there are no problems if both are money purchase arrangements. A final salary arrangement is more complicated. The noble Lord, Lord Goodhart, recognises that the nature of the tax limits is quite different in final salary schemes and, therefore, dual membership is not a simple matter. We must be careful that in trying to give people the flexibility of dual membership we do not add an undue degree of complexity to the operation of schemes.

The claret/burgundy consultation paper proposes that occupational pension schemes which operate on a money purchase basis should have the option of operating under the integrated tax regime for stakeholder pensions and personal pensions. This will, therefore, provide dual membership in respect of some occupational schemes.

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