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Lord Hoyle: Again I shall be extremely brief, since it is now past midnight. The amendment is also tabled in my name, along with those of my noble friend and the noble Lords, Lord Higgins and Lord Astor.
I wish to support the amendment because training is absolutely necessary. Pension provision is a difficult and complex matter and, as has rightly been said, to perform properly as a trustee you must understand the workings not only of your own pension fund but of others. You need to understand its aims and how investments work. It is vital that training is given not only to those nominated by members but also to those representing employers, so that all concerned will have the necessary expertise and skill to administer pension funds in the interests of all their members.
Lord Astor of Hever: I am happy to support the amendment moved so effectively by the noble Baroness, Lady Turner. The role and responsibilities of the trustees of occupational pension schemes are becoming increasingly onerous. As the noble Baroness, Lady Turner, and the noble Lord, Lord Hoyle, rightly pointed out, their work is increasingly complicated.
There is a danger that enthusiastic amateurs could be elected without being fully aware of their wider responsibilities as trustees. It is therefore critically important that they understand their role in sufficient depth. Members of occupational pension schemes should not be expected to hand over the future security of their pensions, which are probably one of the most important financial investments that individuals will ever make, to those who have not been properly trained to deliver with due care. The members of occupational pension schemes should have the same guarantee of customer care and a proper understanding of the issues as they would expect and demand from every other part of the financial services industry.
Lord Dean of Harptree: Those of us who have been pension scheme trustees for some years will recognise the enormous additional responsibilities and financial obligations which are now to be placed on pension trustees. Those of us involved in the last amendments, from all sides of the Chamber, are anxious that those on pension trustee boards should be more widely representative than they are at the present moment.
Lord Goodhart: I too support the principle behind the amendment. I am a little concerned with the form of the drafting because some employers have a number of different trust funds and may wish to appoint the same individual successively as a trustee of a number of those funds. It might in that case be inappropriate to require somebody who has already been on a training course to go on a further one. Subject to that point, the principle is absolutely right.
Amendment No. 151 would require all trustees to attend an approved training course within six months of being appointed or face removal. It would also require the Government to prescribe in regulations the content of such training. I sympathise with the spirit of the amendment. I accept that trustees have the job of the proper running of the scheme. It is vital that they have a full knowledge of what is expected of them and for that they need to be trained. In that regard we are at one with the amendment; that is, we all agree that trustees need adequate training to carry out their responsibilities. The question is whether, from what we currently know, given the wording of the 1995 Act, that training should be compulsory and what form it should take.
The present law stops short of making training compulsory, but it does make it a requirement that employee trustees are given paid time off to undertake training. Trustees who are employees of the sponsoring employer, that is the majority, have the right to that paid time off and it is important that they exercise that right and obtain the training that they need. If they do not, they will not be serving the best interests of their scheme, the employers, the members, or anyone involved in the scheme. So it is in everyone's interests to make sure that they are properly trained, and the substantive proposal in the 1995 Act was that they should have paid time off to receive that training. So there is no bar to that.
Whether it is appropriate to go to the lengths proposed by these amendments is another matter. There is already a great deal of quality training available for trustees. Many trustees take advantage of that training. The Pensions Management Institute holds a list of 38 providers of trustee training and so forth. The Pensions World magazine listed 27 providers who last year provided training for over 3,700 trustees. There has been an increase in demand for training since 1998.
Those not trained, or who are not coming forward, so far as the research suggests, are those who have already been a trustee for a long period of time and are very experienced; they already have relevant experience in being a trustee; or they are essentially
I could go on. As I say, it is clear that many schemes already have a good record on trustee training. There are encouraging signs that further progress is being made and more training is being made available. As I say, the Committee made it clear that there is agreement throughout the Chamber and I am willing to take the amendment away and consult further with the industry. My advice is that employers will oppose the extra costs and are hostile to it. It may be that the industry has a different view. If it feels it is appropriate to explore this further, I am willing to do so. I entirely accept the spirit of the amendment.
As I say, when I come back I may say that we have taken advice, that we have consulted but do not feel, to use the old-fashioned phrase, that the time is right to make it compulsory. But I am willing to ask the officials to explore this further, given the opinions throughout the Chamber tonight.
I am pleased that my noble friend is going to consult. The text of my amendment--I obtained it from my union--was originally drafted by the Engineering Employers' Federation so I imagine that some employers will be quite amenable to the suggestions made in the amendment. I am grateful for my noble friend's assurance this evening and, with pleasure, I beg leave to withdraw the amendment.
The noble Baroness said: In the absence of my noble friend Lady Dean, I have undertaken to ensure that this amendment is moved. The proposal to raise the age at which pensioners are obliged to use their pension funds to buy an annuity from 75 to 80 has to be welcomed as indicating that the Government are aware there is a problem surrounding annuity purchase, but it does not solve it. It can only help pensioners with very large funds, who can use the income drawdown arrangements. But they still have to hand over the remaining pension fund to the life office to buy an annuity, perhaps shortly before death. Most pensioners cannot afford to delay annuity purchase, so postponing the decision until 80 does nothing to help them.
The problem with annuity purchase is not just low annuity rates. That might change in the future. The obligation to purchase an annuity locks an individual into a lifelong and unchangeable contract at a particular point in time. With increased longevity, funding the annuity is increasingly difficult for life offices and reduces the returns on annuities. It is also far too inflexible because annuitants are required to use all of their pension fund for this purpose.
In view of the Government's desire to encourage more people to save for their own retirement, the Government should seek to provide potential savers with a much more attractive prospect--retaining control over at least a portion of their pensions funds. On retirement, the individual should only be obliged to purchase an annuity which will provide him with sufficient income to avoid state support until the end of his life, thus fulfilling his obligation to the state. The Retirement Income Working Party suggested that the level of weekly income should be set at £140 a week, including the basic state pension for a single person. For a man aged 65, the annuity purchase for an index-linked pension of about £70 a week would cost about £55,000.
Under this text, pensioners would be free to invest the remainder of their funds, subject to the appropriate tax regulations, bearing in mind that tax relief has been provided to enable them to save. The financial services industry would have an incentive to develop new products to provide income in retirement. I beg to move.
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