Select Committee on Delegated Powers and Deregulation Nineteenth Report



Amendments to be introduced at Lords Committee Stage

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 be used.

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.


16 June 1999

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