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Lord Skelmersdale: I beg leave to withdraw the amendment.
Amendment No. 203ZA, as an amendment to Amendment No. 203, by leave, withdrawn.
On Question, Amendment No. 203 agreed to.
Baroness Hollis of Heigham moved Amendments Nos. 203A to 203C:
Page 94, line 5, leave out "which limits the amount of its" and insert "rules which limits the amount of the scheme's"
On Question, amendments agreed to.
On Question, Whether Clause 135, as amended, shall stand part of the Bill?
Lord Higgins: I have only one or two brief questions on the clause. It refers to cases within subsection (1) of Section 119 and 120, so I am not clear why it appears at this point in the Bill. At all events, the procedure seems to be rather strange. Pension trustees in the normal course of their duties ask for valuations, usually triennially and sometimes more frequently. But they leave that valuation to the actuaries. I am therefore rather puzzled why Clause 135(4) states that the,
I should have thought that the valuation would take place on the normal basis employed by an actuary. Why will the regulations prescribe the way that it has to be done as regards the board's obligation? The board is surely in the same position as normal trustees.
I am also a little puzzled by subsection (6). It states:
"In calculating the amount of any liabilities . . . a provision of the scheme which limits the amount of its liabilities by reference to the value of its assets is to be disregarded".
I do not understand what that subsection means. There are further subsections regarding ill-health provisions. I think we have probably gone over that sufficiently to express doubts about it. But it seems to me that if the board wants a valuation, it would simply ask for the actuary to do it in exactly the same way as a normal trustee board would. I am not clear why it does not.
Baroness Hollis of Heigham: Regulations will set out the methodology and key principles relating to the valuation. The detailed assumptions and actual discount rates to be applied were set out in guidance issued by the board. The obvious point is that the valuation will be done by actuaries, but it will be specifically for the purpose of deciding whether a scheme requires PPF assistance. It will compare the
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assets of the scheme with liabilities assessed on the basis of the PPF level of compensation for the defined benefit members of the scheme.
A scheme, for example, might not be sufficient to meet 100 per cent of all its promises, but it might still be able to offer a level of benefit higher than that which an individual would enjoy within the PPF. That would be the kind of consideration that the PPF would wish to know. I am not sure whether we are making unnecessarily heavy weather on this. Obviously, any such guidance will be given as appropriate in consultation with the bodies concerned. But the PPF valuation has a specific function, which is to see how the protected liabilities and assets correlate with the compensation that would be offered by the PPF. I am not really sure why the noble Lord thinks there may be a problem here.
Lord Higgins: Clearly, the board will need to make assumptions. Any board of trustees, or presumably the PPF board, will have to make certain assumptions. That is normally crucial. I simply do not understand why regulations have to specify how the actuary will take on the job. That is not so as regards ordinary trustees. The board is a trustee to all intents and purposes. In the sense that a valuation is required, one asks an actuary for a valuation on specific assumptions for which the board is responsible.
Baroness Hollis of Heigham: I am thinking back to the Pension Act 1995. The Bill was introduced by Lord Mackay. I am fairly sure he introduced a similar methodology for the minimum funding requirement, which is in regulations, and for carrying out those valuations. I do not see that this provision is any different from that. I do not really understand what the noble Lord is concerned about.
Obviously, any such regulations are introduced in consultation with the industry. We are usually pressed by the industry for clarity and so on regarding the intention. To the best of my memory similar procedures were followed when we dealt with the 1995 Act to establish the MFR, in which the methodology was in regulations. When Lord Mackay proposed this no one said that actuaries did not want, need or welcome that description in regulations. So I do not understand where the noble Lord is coming from on this.
Lord Higgins: I simply do not understand why the regulations need to prescribe the way in which the actuary will carry out his normal duties. However, I will consider the matter in relation to various actuarial bodies and whether they think that the provision is appropriate.
Clause 135, as amended, agreed to.
Clause 137 [Binding valuations]:
Baroness Hollis of Heigham moved Amendments Nos. 203D to 203F:
"( ) the Regulator,"
Page 95, line 6, at end insert "and"
On Question, amendments agreed to.
[Amendment No. 204 not moved.]
Clause 137, as amended, agreed to.
Clause 138 [Schemes which become eligible schemes]:
Baroness Hollis of Heigham moved Amendment No. 204A and Amendment No. 204B:
Page 95, line 19, leave out "withdrawal notice" and insert "notice to that effect (a "withdrawal notice")"
"(3) For the purposes of this Part a withdrawal notice issued by virtue of this section is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
(4) Where a withdrawal notice issued by virtue of this section becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(5) Notices under this section must be in the prescribed form and contain such information as may be prescribed.
(6) A notice given under subsection (4) must state the time from which the Board ceases to be involved with the scheme (see section 140)."
On Question, amendments agreed to.
Clause 138, as amended, agreed to.
Clause 139 [New schemes created to replace existing schemes]:
Baroness Hollis of Heigham moved Amendment No. 204C and Amendment No. 204D:
Page 96, line 7, leave out "withdrawal notice" and insert "notice to that effect (a "withdrawal notice")"
"(3) For the purposes of this Part a withdrawal notice issued under this section is not binding until—
(a) the period within which the issue of the notice may be reviewed by virtue of Chapter 6 has expired, and
(b) if the issue of the notice is so reviewed—
(i) the review and any reconsideration,
(ii) any reference to the PPF Ombudsman in respect of the issue of the notice, and
(iii) any appeal against his determination or directions,
has been finally disposed of and the notice has not been revoked, varied or substituted.
7 Sept 2004 : Column GC171
(4) Where a withdrawal notice issued under this section becomes binding, the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding notice to—
(a) the Regulator,
(b) the trustees or managers of the scheme, and
(c) any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
(5) Notices under this section must be in the prescribed form and contain such information as may be prescribed.
(6) A notice given under subsection (4) must state the time from which the Board ceases to be involved with the scheme (see section 140)."
On Question, amendments agreed to.
On Question, Whether Clause 139, as amended, shall stand part of the Bill.
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