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Lord Dean of Harptree: I greatly admire the stamina of the noble Baroness, although I do not quite go as far as that in relation to the arguments that she has used.

I do not intend to argue the toss at this hour of the night, nearly midnight. I shall study carefully what the noble Baroness said and, if necessary, return to this very important subject. I believe that she has underestimated the practical difficulties involved for pensioners in achieving effective representation. I may well return to this matter at a later stage, but in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 145 not moved.]

Baroness Turner of Camden moved Amendment No. 146:

("(5A) In subsection (6)(b) for "one-third" there shall be substituted "one-half."").

The noble Baroness said: The purpose of the amendment is to ensure that at least 50 per cent of trustee boards are member-nominated trustees rather than the one-third currently in legislation.

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The general conclusion on member-trustees is that they improve the working of trustee boards, both by their input and by ensuring that trustee boards conduct their business in accordance with pensions legislation. They also add to employee confidence in pension schemes, which was, of course, rather badly shaken by the Maxwell scandal.

Many large firms have operated for years with a 50 per cent member trustee board; for example, British Aerospace, Prudential, Rolls Royce, Shell, Unilever and many others. I understand that the Government themselves--and we heard something about that this evening--favour 50 per cent, as does the NAPF, but there is a reluctance to make it a statutory obligation.

I believe that the main concern expressed about giving member trustees parity is that employers fear that they will lose control of the cost of their schemes. But, of course, trustees can normally improve member benefits only if the employer agrees. Moreover, unions have long understood the difference between negotiating terms and conditions, including pensions, and representing beneficiaries' interests in a pension scheme. They are quite different functions.

It is true that trustees control investment policy but they must, in any event, act in accordance with the best professional advice available. I think that the time has come to make 50 per cent a statutory requirement. I hope that the Government will move towards that this evening. I beg to move.


Lord Hoyle : I too support the amendment which is extremely sensible. If large companies do not fear 50 per cent of the members of the board being employee trustees, I do not see why the Government are so fearful of making it a statutory requirement. As has rightly been said, particularly after Maxwell, many employees have little confidence that schemes will be administered sensibly and in the interests of employees. In many cases, employees regard pensions as salaries that have been rightly deferred for the benefit of members. I believe that the way to ensure that their confidence is retained is by way of a statutory 50 per cent membership. I cannot see why the Government are hesitating when so many large firms find this to be a practical and reasonable proposition.

Lord Dean of Harptree: I believe that this is a good advance on the present practice. I support the amendment.

Baroness Hollis of Heigham: I am intrigued by all this support for proposals which, as I recall, were bitterly opposed when we debated the 1995 Act, when my noble friend, with support from me, tried to press many of these points.

I sympathise with the amendment. However, our priority is to get members on the trustee boards of all occupational pension schemes. As my noble friend Lord Hoyle stated, some schemes already have 50 per

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cent member-nominated trustees, and I applaud that. However, I do not believe that the exact proportion is as important as getting some members on to every board. The schemes we are proposing will have at least one-third.

Having ordinary members on the board is not about having individuals to represent the interests of scheme members; nor is it about creating a voting block to balance the power of employers. It is about bringing a different set of skills and experiences to bear and about providing board discussions with a different perspective.

All trustees have the same responsibilities to run the scheme in the interests of the beneficiaries; a point made by the noble Lord, Lord Goodhart. I believe the overwhelming majority of trustee boards work together in that way for the interests of members as a whole. Indeed, I believe that trustee decisions are rarely made by anything other than complete consensus.

I have no issue with the principle of 50 per cent member-nominated trustees, but I think it would be an unfair burden on business to require it now. I hope that my noble friend will agree that it is important to work with the industry, particularly after we have gone against the wishes of the industry earlier tonight, at least temporarily. We may therefore need to do even greater work with industry in order to overcome some of the problems we dumped on it in an unfriendly way tonight. I hope that we shall work with the pensions industry and sponsor employers to continue to encourage good quality occupational pension schemes.

Like my noble friend, we believe that ordinary scheme members add real value to trustee boards and we want to see more of them. We have worked with the industry to develop these new arrangements. We believe that they represent a real step forward. With that in mind, I hope that my noble friend will feel able to withdraw the amendment.

Baroness Turner of Camden: I thank the Minister for her explanation of the Government's policy as regards statutory requirement. However, I had the impression that she was sympathetic to the points put in our argument.

Baroness Hollis of Heigham: Absolutely.

Baroness Turner of Camden: Nevertheless, there is no point in prolonging the argument at this time of night. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 147 to 149 not moved.]

[Amendment No. 150 had been withdrawn from the Marshalled List.]

Baroness Turner of Camden moved Amendment No. 151:

    Page 39, line 24, at end insert--

("(10) The Secretary of State shall make regulations providing that all trustees should be required to have attended an approved training course explaining the role and responsibilities of trustees

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within six months of being either elected as a member-nominated trustee or appointed as a trustee by the scheme's sponsoring employer.
(11) These regulations shall also prescribe the content of such an approved training course.
(12) The failure of a trustee to attend such a course within six months of being either elected or appointed as a trustee shall nullify the trustee's election or appointment.").

The noble Baroness said: Amendment No. 151 stands in my name, that of my noble friend Lord Hoyle, and other noble Lords.

The amendment concerns the training of trustees. As we all know, pension provision has become a rather complicated matter. Successive governments have introduced legislation with the laudable aim of protecting beneficiaries, but the result has often been to add to the complication. Owing to the reforms introduced by the previous government in the wake of the Maxwell scandal, there is now an obligation for occupational pension schemes to make provision for employee trustees. We discussed that earlier this evening.

Pension fund trustees are expected by the employees who elect them to look after the interests of beneficiaries. They will be held responsible in the eyes of employees for anything that goes wrong. The trustees will be held to be accountable and they must also ensure that--to use another frequently used term--there is transparency. So trustees need to be familiar not only with their own scheme rules but also with the legal requirements. They must know when to seek advice and where to get it.

Employees must have confidence in their scheme and the way in which it is administered. Unfortunately, despite the very good record of occupational pension schemes--they are the reason why many pensioners are able to live in rather more comfort than they might otherwise be able to do--that trust has been sorely dented by scandals such as the Maxwell affair. The recent legislation has been designed to try to restore confidence and employee trustees play an important role in that regard.

The idea that trustees should be trained has the support of unions and employers. The text of this amendment has been supported by unions, in particular my own, MSF, and also by the Engineering Employers Federation. Many organisations offer courses of a high standard. Unions do so as well. My union has its own residential college at Bishops Stortford and training courses have been available there for some time.

Furthermore, it is not only employee trustees who need to be trained. Management normally nominates trustees, and they may well be people who hitherto have had little to do with pension provision. It is therefore necessary for them to be trained as well.

Unions well understand the difference in function between those nominated and elected as trustees and union representatives with the duty of negotiating terms and conditions. Our training course makes this difference quite clear. Trustees have an obligation to

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act for all beneficiaries and are not concerned with negotiating terms and conditions. They are quite separate functions.

I hope that the Government will feel disposed to accept this amendment. If for any reason the wording is not acceptable, perhaps the Minister will accept the principle here and come back with an alternative form of words on Report. I beg to move.

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