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Baroness Hollis of Heigham: Two things are taking place. First, existing pensioners will receive 100 per cent under the PPF compensation fund and others will receive 90 per cent, but the crucial difference is the issue of indexation. Under the old system the indexation for pensioners took precedence over the payment of benefit for active and deferred members. That will no longer be the case. Indexation follows the meeting of the obligation to pensioners and to active and deferred members.
7 Sept 2004 : Column GC181
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendments Nos. 205C to 205E:
"( ) modifying section 31 of the Welfare Reform and Pensions Act 1999 (c. 30) (reduction of benefit where a person's shareable rights are subject to a pension debit), in its application in relation to cases where benefits accrue under the scheme by virtue of regulations under subsection (2)."
On Question, amendments agreed to.
Clause 141, as amended, agreed to.
Clause 142 [Application for reconsideration]:
Baroness Hollis of Heigham moved Amendments Nos. 205F to 205Q:
"(a) a scheme failure notice has been issued under section 116(2)(a) in relation to the scheme, that notice has become binding and the trustees or managers have received a copy of the binding notice under section (Binding notices confirming status of scheme)(3),"
Page 98, line 25, leave out from "a" to end of line 28 and insert "scheme failure notice under subsection (2) of section 122 in relation to the scheme, that notice has become binding and the trustees or managers have received a copy of the binding notice under subsection (7) of that section,"
Page 98, line 44, at end insert "of the binding"
Page 99, line 1, leave out "were notified" and insert "received a copy"
Page 99, line 4, at end insert "of the binding"
Page 99, line 6, leave out "were notified" and insert "received a copy"
Page 99, line 7, at end insert—
"( ) Where the Board receives an application under subsection (1), it must give a copy of the application to the Regulator."
Page 99, line 11, after "scheme" insert "rules"
Page 99, line 19, leave out first "to" and insert "for".
Page 99, leave out lines 31 to 48.
On Question, amendments agreed to.
[Amendment No. 206 not moved.]
Baroness Hollis of Heigham moved Amendments Nos. 206A and 206B:
"( ) For the purposes of this section—
(a) regulations may prescribe how the cost of securing the benefits mentioned in paragraph (a) of the definition of "protected benefits quotation" is to be determined, calculated and verified, and
(b) subject to any provision made under paragraph (a), that cost is to be determined, calculated and verified in accordance with guidance issued by the Board."
Page 100, line 9, at end insert—
"( ) Where the scheme is being wound up, for the purposes of determining the benefits which fall within paragraph (b) of the definition of "protected benefits quotation" in subsection (7) no account is to be taken of the winding up of the scheme."
On Question, amendments agreed to.
Clause 142, as amended, agreed to.
7 Sept 2004 : Column GC182
Clause 143 [Duty to assume responsibility following reconsideration]:
[Amendment No. 207 not moved.]
Baroness Hollis of Heigham moved Amendments Nos. 207A and 207B:
"(4A) But where the Board is satisfied of the matters mentioned in subsection (2), it is not required to assume responsibility for the scheme under subsection (2) until the determination notice issued under subsection (3) becomes binding.
(4B) For the purposes of subsection (4A) a determination notice 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.
(4C) Where a determination notice issued under subsection (3) 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 trustees or managers of the scheme, and
(b) the Regulator.
(4D) A notice under subsection (4C) must be in the prescribed form and contain such information as may be prescribed."
Page 100, line 29, after "date" insert "(within the meaning of section 142(4))"
On Question, amendments agreed to.
Lord Hunt of Wirral moved Amendment No. 208:
"(b) audited accounts covering the period from the date of the latest statutory annual accounts of the scheme to a date no later than three months prior to the day the application is made."
The noble Lord said: I would like to refer to the situations within which trustees apply to the Pension Protection Fund for it to assume responsibility for a scheme. It is stated that an application under the clause must be in the prescribed form and contain,
"an auditor's valuation of the scheme as at a date ('the reconsideration date') within the prescribed period ending with the day on which the application is made".
I was a little confused at the wording of the clause, because auditors do not undertake valuations of the scheme. Their responsibility is to audit scheme accounts. I hope that the noble Baroness will agree that there is a powerful case for arguing that the correct procedure should be to require the scheme trustees to obtain audited accounts to submit to the PPF. I am not at all clear, however, about what is meant by,
"as at a date . . . within the prescribed period ending with the day on which the application is made".
It would surely be better to state a clearly specified period for the preparation of such audited accounts.
I therefore ask the Committee to change the wording so that the application should contain,
"audited accounts covering the period from the date of the latest statutory annual accounts of the scheme to a date no later than three months prior to the day the application is made".
That will allow a three-month period for preparing the accounts and also for having them audited. I stress that such accounts should contain the accounting information required by the regulations in respect of the annual accounts for the scheme. I beg to move.
Lord Lucas: My name is attached to this amendment. I am happy to support it. If I had thought, I would have attacked it through Clause 142(4)(b). My basic concern, as my noble friend has said, is that auditors do not carry out valuations. If one requires them to do a valuation they will resign rather than do it. It is not part of being an auditor. There is a misconception as to what an auditor does, is capable of doing and can do within the remit of an audit. I understand what is required, but it is not asking for the right thing.
Baroness Hollis of Heigham: I am a little surprised because I thought, in light of the wording of the amendment of the noble Lord, Lord Lucas, that he was about trying to ensure up-to-date valuation, whereas it is about who provides the accounts. I am in a little difficulty because the noble Lord has not spoken to his amendment at all but to something that is not in his amendment.
Given that I am dealing with the amendment on the Marshalled List and given his point, I accept any linguistic correction relating to an auditor or an accountant. We are certainly in consultation with the ICAEW about the role of an auditor in undertaking valuations and we are currently considering the matter. We may return to the issue on Report, so in terms of the language we shall be happy to return to the matter.
In terms of the substance of the point that I expected him to make had he spoken to his amendment, and given what the noble Lord, Lord Hunt, has said, in terms of ensuring that we do not restrict ourselves to not having an up-to-date valuation, I am perfectly happy to take the matter away and see whether we should include some version so that we have a series of options, an (a) or a (b) or a (c), whichever is more up to date and, therefore, appropriate to the situation under review. I am happy to move some way towards the amendment that is down in the name of the noble Lord, Lord Lucas, but to which he did not speak. I hope that the noble Lord will feel able to withdraw the amendment that he did not move.
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