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Baroness Hollis of Heigham: I have never been involved in a Bill with so many linguistic difficulties concerning the rules of a scheme and scheme rules and closed schemes. I shall check the language. At this point I can say only that clearly my difficulty in relation to the choice of language is that not only has it come through parliamentary counsel, who are very careful to ensure that words are consistent with previous usage, but it has also gone through the other place. If it makes sense to change the words and if the concerns expressed today by the Committee have any reverberations outside—that is, that we have introduced ambiguity with the use of these words—we shall be happy to help. But basically we are keeping the scheme in the assessment period until the fraud is investigated. That is why we went for a 12-month period.
Lord Skelmersdale: I thank the noble Baroness and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 151, as amended, shall stand part of the Bill?
Lord Higgins: Perhaps I could say a word or two about this as it relates to the moment of transfer of a scheme from the existing trustees to the PPF. In the light of the discussion that we had earlier about the length of the assessment period, I am worried about the position of the scheme's trustees whose responsibilities finally terminate with the transfer notice. It seems that there may be some considerable danger that, given that an assessment is being carried out, there will be very little incentive for the trustees to remain in post. They may as well say, "Well, this is the situation. It could stagger on. We may manage to do a buy-out and so on, but otherwise we see no future and therefore we shall all resign en masse". I am not clear how one prevents that happening.
I am trying to be realistic about this. A transfer notice is made at the end of the assessment period if the assessment is found to be unfavourable, but I am not clear how one keeps the thing going meanwhile and I suspect that some practical danger may arise here. I do not know whether one has any thoughts on that point.
Baroness Hollis of Heigham: I think that the noble Lord is pressing me on whether there may be a risk of the trustees taking their bat and walking away when the transfer notice is issued—which is what the clause is about. However, is that so very different from a wind-up of the scheme? What is happening here is that the scheme is going across to the PPF. However, if it were being wound up and if the annuities or whatever were bought—the trustees role would the taper out in that situation—would there theoretically be any difference? In both cases the trustees would be presiding over the endgame of a particular scheme.
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I do not see why the trustees would be more likely to walk away, precisely because the scheme is coming into the PPF. Members' benefits would therefore be lower than they would if the wind-up was taking place outside the scheme, where by definition there are more assets. I should have thought that the trustees would expect to continue their role to the end.
It is a technical point, but there should still be provision in the scheme rules in terms of the resignation or replacement of the trustees, so that if they were to go they could be replaced. If they ultimately wished to walk away from their duties, there is no doubt but that it might have to be tested in court. However, I am not sure that that situation is different from any other wind-up, where as I say the trustees are watching the scheme taper out.
Perhaps I can invite the noble Lord to come back to the responsibilities of trustees when we reach the chunk of provisions relating to trustees. I think there is a real set of issues about the education, support, training and long-term commitment of trustees in this situation. It may be better to look at it in that context rather than in this clause.
Lord Higgins: By all means, let us do that. However, I think that there is a distinction. If the thing is being wound up, the trustees will feel that they are winding it up and that it is their responsibility; they are not handing it over to someone else. I think that there is a slight difference of approach here—that if the PPF is going to take it anyway, let it get on with it. However, let us come back to that later.
Clause 151, as amended, agreed to.
Clause 152 [Effect of Board assuming responsibility for a scheme]:
Baroness Hollis of Heigham moved Amendment No. 215A:
The noble Baroness said: I assure the Committee that Amendments Nos. 215A, 215E and 215F are all minor drafting or technical changes. If the Committee is happy for me to circulate my speaking notes to save the Committee's time, I would simply ask the Committee to agree the amendments. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendments Nos. 215B to 215D:
(a) "
Page 107, line 26, at end insert ", and
(b) such other liabilities as may be prescribed"
Page 107, line 37, at end insert—
"(7) Without prejudice to the generality of subsection (6), regulations may authorise the Board to modify a term of a relevant contract of insurance if—
(a) any rights or liabilities under the contract are transferred to the Board by virtue of subsection (2)(a), and
(b) as a result of the transfer, the Board is required, by reason of that term, to pay a specified amount or specified amounts to a specified person who, immediately before
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the time mentioned in subsection (2)(a), was a member of the scheme or a person entitled to benefits in respect of such a member.
(8) In subsection (7)—
"relevant contract of insurance" means a contract of insurance which—
(a) is entered with a view to securing the whole or part of the scheme's liability for—
(i) any pension or other benefit payable to or in respect of one particular person whose entitlement to payment of a pension or other benefit has arisen, and
(ii) any benefit which will be payable in respect of that person on his death, and
(b) is a contract—
(i) which may not be surrendered, or
(ii) in respect of which the amount payable on surrender does not exceed the liability secured;
"specified" means specified in, or determined in accordance with, the contract of insurance."
On Question, amendments agreed to.
On Question, Whether Clause 152, as amended, shall stand part of the Bill?
Lord Borrie: I follow what my noble friend the Minister said about her amendments to Clause 152. I have felt, in relation to Clauses 151 and 152, a certain sense of relief—not really the light at the end of the tunnel, but that we have arrived at the point where, after the assessment period, the transfer notice will put things into the hands of the PPF.
I should simply like to ask a question about Clause 152(2)(a). We have, fairly naturally, the scheme's property rights and liabilities being transferred with effect from the time when the trustees and managers receive the transfer notice. But there are three words in the middle, "without further assurance", and I just do not know what that means.
Baroness Hollis of Heigham: The words mean that it takes effect immediately.
Lord Borrie: I see. I still do not know quite why they are there. Assurance from whom? It is a very odd phrase.
Baroness Hollis of Heigham: All I can say is that this is the parliamentary draftsman's way of expressing that this is without delay; it takes effect immediately. Why that form of words? I would have to revisit my Latin, I suspect.
Lord Borrie: I thank the Minister.
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): The Question is whether Clause 153, as amended, should stand part of the Bill.
Lord Higgins: This is a very important clause indeed as it is concerned with the pension compensation
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provisions that are to be made by the PPF. But in fact I think that nearly all the important points arise on Schedule 7, as this is really a paving provision for Schedule 7. In particular, there is an important series of debates on the percentage of protection that should be made available. I think that it is probably better to defer our discussion until we come to those amendments rather than to debate it in general terms on Clause 153.
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