WELFARE REFORM AND PENSIONS BILL
Amendments to be introduced at Lords Committee
I am writing to let you know that I tabled a number
of amendments to the Welfare Reform and Pensions Bill earlier
today which either introduce new delegated powers or affect delegated
powers currently in the Bill.
Stakeholder Pension Schemes
Clause 8 defines terms that are used within Part
I (Stakeholder Pension Schemes) of the Bill. It also clarifies
this part of the Bill's application to the Crown. The proposed
amendments introduce a new subsection after the definitions at
the beginning of clause 8.
The new subsection enables the Secretary of State
to make regulations to ensure that occupational pension scheme
regulation will apply to stakeholder pension schemes only where
appropriate. It is possible that some stakeholder pension schemes
could fall under the definition of an occupational pension scheme
in the Pension Schemes Act 1993 even though they were not employers'
schemes. This might arise in the case where a scheme was restricted
to persons in particular types of employment (for example, a scheme
for plumbers) since this forms part of the definition of an occupational
scheme in the 1993 Act, even though it is not set up, or funded,
by any employer. In these cases it would not be appropriate for
the whole range of occupational pension scheme regulation to apply.
Employers of those who joined the scheme might find themselves
unnecessarily caught by that regulation.
The new subsection therefore provides powers to prescribe
that such schemes should be treated as personal pension schemes
for all or any specified purpose. The intention is to prescribe
that schemes which, for example, give employers no powers, and
whose liabilities are not guaranteed by an employer, should be
treated as personal pensions for the purposes of the Pension Schemes
Act 1993 and the Pensions Act 1995.
The Department believes that the details of which
schemes should be treated as personal pensions in these circumstances,
and for what purposes, is appropriate to secondary legislation.
This will allow the flexibility to adapt regulations in the light
of experience of scheme operation and will ensure, that as stakeholder
pension scheme structures develop in practice, the correct legislation
is applied to them.
Government amendments to alter the family framework for pension sharing on divorce
The Lord Chancellor announced earlier today that
Part II of the Family Law Act 1996 would not be implemented in
2000. The pension sharing provisions in Parts III and IV of the
Welfare Reform and Pensions Bill have been drafted on the basis
that the 1996 Act will be brought into force before the pension
sharing provisions of the Bill. This is no longer certain. It
therefore becomes necessary to make implementation of provisions
in this Bill independent of the divorce framework which would
be established by Part II of the Family Law Act 1996. As a consequence
the Government has brought forward a number of amendments to the
pension sharing provisions in the Bill. These amendments are intended
to make pension sharing possible either under the current divorce
law as established by Part I and II of the Matrimonial Causes
Act 1973 or under the new divorce procedure which would be established
if the 1996 Act were to be implemented. The amendments will relate
only to England and Wales because Scotland has its own system
of family law.
The Government's amendments are described in detail
in the enclosed supplementary explanatory note. [not printed]
The amendments affect clauses 22, 80, 83 and 84.
Of these, only clauses 22 and 80 contain a delegated power. The
Government's amendments have no impact on the scope of those delegated
powers, the intention behind them, or how they are intended to
The amendments also affect Schedules 3, 4 and 12.
Again, it is important to note that the amendments make no impact
on the scope, or intended use, of any of the delegated powers
contained in these Schedules. The main effect of the Government's
amendments is to move text from one place to another in order
to make the current divorce framework the base family law structure
in Parts III and IV of the Bill; and to make the consequential
technical amendments necessary to make pension sharing operable
under, and consistent with, the ancillary relief provisions in
the Matrimonial Cases Act 1973. The Committee may find Table
A in the supplementary explanatory notes of assistance in
understanding the impact which the amendments will have on the
structure of the Bill.
The Committee will wish to note that the amendments
propose adding a new delegated power to the Bill in a new clause
which would follow clause 22. This power would enable the Lord
Chancellor to make consequential amendments to Part III, including
Schedule 3, or the Welfare Reform and Pensions Act 1999 if any
amendment by the Family Law Act 1996 of Parts II and IV of the
Matrimonial Causes Act 1973 came into force before clause 19 -
ie the clause which would give effect to Schedule 3 - is brought
into force. This power will enable the proposed amendments to
the Matrimonial Causes Act 1973 (and also the relevant provisions
in the Matrimonial and Family Proceedings Act 1984 which flow
from the 1973 Act) in the Bill to be adjusted to ensure that they
are consistent with the text of the 1973 Act, which would, by
virtue of the 1996 Act, then be in a different form from that
on which the amendments in the Bill are designed to operate.
The Government believes it would be important for
any use of this power to be subject to proper Parliamentary scrutiny
as it is a Henry VIII power which enables primary legislation
to be amended by order. It has, therefore, taken the view that
in this important case use of this power should be subject to
the affirmative resolution procedure.
In addition, as a result of the change from the divorce
law framework in the 1996 Act to that of the 1973 Act, the Government
needs to make its intentions clear on the use of two delegated
powers contained in clauses 24 and 44, which relate to pension
sharing by qualifying agreement. Clauses 24(2) and 44(2) each
provide a delegated power for the Lord Chancellor to prescribe
circumstances in which an agreement would have to be reached and
the requirements it would have to meet in order to be a 'qualifying
agreement' and thereby able to trigger a pension share. The Government's
intention is that neither of these powers will be brought into
force under clause 83 until such time as the 1996 Act is brought
into force, for the following reasons.
First, pension sharing by agreement is conceptually
related to the concept of 'negotiated agreements' under section
9(2) of the Family Law Act 1996. It would be anomalous to encourage
the use of pension sharing agreements before 'negotiated agreements'
were available in relation to divorce generally. Secondly, under
the Matrimonial Causes Act 1973, couples may not make agreements
which cannot be over-ridden by the court. This Bill is not an
appropriate vehicle for making more substantive or wide-ranging
changes to family law. The aim is to treat the pension asset in
the same way as other assets in relation to the making of financial
arrangements on divorce. Thirdly, as at present, there will be
nothing to prevent a couple from entering into negotiation. Parties
will remain free to seek a consent order if they are in agreement
as to the financial relief which the court should award.
I am copying this letter to Lord Higgins and Earl
Russell and placing copies in the Library.
BARONESS HOLLIS OF HEIGHAM
16 June 1999