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"( ) Any order to modify a scheme established under subsection (1) may not be made until a draft of the order has been laid before and approved by a resolution of each House of Parliament."

The noble Lord said: My Lords, Amendment No. 2 is a relatively straightforward amendment. We have seen details of the schemes going through by negative instrument. On the whole, they are satisfactory. However, there is still the capacity for subsequent modifications to be made without any parliamentary scrutiny. In theory, the Government could modify the whole scheme by changing from defined benefit to defined contribution. We argue that any modification should be by affirmative procedure. I look forward to some reassurance on that point from the Minister. I beg to move.

Lord Hodgson of Astley Abbotts: My Lords, this is familiar territory for those of us who were involved in Grand Committee. But, as my noble friend has pointed out, a fundamental change is proposed; namely, changing a defined benefit to a defined contribution. Amidst all the controversy in the country about pensions as a whole, it is the ending of defined benefit and final salary schemes that is causing so much concern. Therefore, to allow such a major change to take place with merely a negative statutory instrument must be unreasonable. It puts a coach and horses through what the Government propose in the Pensions Bill.

As I pointed out before, Security, Simplicity and Choice makes it clear that major changes—I refer the Minister to page 69, paragraphs 99 and 100—should
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be consulted on and proper consultation and agreement should be obtained. On page 68 there is a very helpful guide where the Government set out how they see changes could be made from defined benefit to defined contribution and the sorts of procedures that should be followed—none of which are provided for in the Bill as presently drafted.

In Grand Committee, the noble Baroness, Lady Crawley, resisted the proposal for an affirmative resolution. She said:

I do not believe that the proposals in Clause 1 contain routine powers; nor, indeed, is it a routine change. For the reasons that I have just explained, it is a fundamental change. Defined benefit to defined contribution is a very fundamental change indeed. As regards the noble Baroness's wish to be able to do that quickly, I have no wish to see those sorts of things introduced quickly. If changes that might cause concern, upset and resentment are to be accepted, they need to be carefully thought through and scrutinised.

On those grounds, I think that the noble Baroness was wrong in the assertion she made to the Grand Committee on 28 June. I hope that the Government have taken some time to think again and will listen to my noble friend's proposal.

Baroness Crawley: My Lords, I hope that I can give noble Lords the reassurance that they seek even while I am going to resist the amendment. The approach that we have proposed, whereby the detailed scheme rules are set out in statutory instruments subject to negative resolution, is appropriate and consistent with practice elsewhere in public service schemes. As noble Lords will know, that level of parliamentary scrutiny is greater than for the current Armed Forces pension scheme where the scheme rules are laid out in Parliament simply for information.

I note that the amendment is focused on subsequent modifications to the new schemes, allowing the schemes which have already been subject to consultation and considerable parliamentary oversight to be introduced through negative resolution. I am grateful to noble Lords for the recognition that this latest amendment gives to that process.

However, I should like to reassure noble Lords that the Ministry of Defence has never taken advantage of the lack of parliamentary scrutiny schemes in the past with respect to the current schemes. We have introduced beneficial changes, including the introduction of widower's pensions, post-retirement widows' benefits and entitlement to preserved pensions. We have not, and would not, seek to introduce significant changes without informing Parliament unless that was clearly beneficial to the scheme members or simply implementing wider government policy already considered by Parliament.

As I said, we have adopted that approach to be consistent with other public service schemes; namely, police, fire service, teachers, local government and the
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House of Commons. While service personnel do not have trade unions to negotiate with them on such issues—a point which noble Lords have raised—successive governments have recognised that the interests of service personnel are properly represented by the chain of command and, in particular, by the principal personnel officers.

That arrangement includes well proven systems to identify and explore the views of serving personnel across the age groups and ranks and has been found to work well. Further, we will continue to work closely with the ex-service community who have been closely engaged during the reviews of our pension and compensation schemes and who can be proud of the positive influence that they have had on the final schemes. In addition, the consultation requirements set out in the Pensions Bill will also apply to the Armed Forces pension scheme, which will place an obligation on us to consult members in specified circumstances.

Perhaps just as importantly, the Armed Forces Pay Review Body has agreed to provide independent validation of the new Armed Forces pension scheme. As noble Lords will be aware, the AFPRB is a well respected body, which I believe should offer the reassurance that the interests of our service personnel will be well looked after with respect to pensions, as well as pay and allowances.

On that basis, I do not consider that it is necessary for the statutory instruments which modify the schemes created under Clause 1 to receive this greater level of parliamentary scrutiny. I recognise from our Grand Committee debate on that issue that noble Lords do not wish to make the routine management of the scheme more difficult; that is what I mean when I talk about quickness and speed. But, as drafted, the amendment would make it hard to administer and maintain the scheme. It would be difficult to introduce routine amendments in an efficient fashion. They are often beneficial and simply provide compliance with wider legislative changes that have already been agreed by Parliament.

The amendment would inevitably delay implementation of beneficial change and would require Parliament to set aside substantial blocks of time on matters that do not generally merit that level of attention. No other public service scheme adopts that approach. We see no reason for the Armed Forces scheme to be treated differently from those other public service schemes.

The noble Lord, Lord Hodgson of Astley Abbots, referred to the possibility of a change of pension scheme from defined benefit to defined contribution. There are no plans to introduce a defined contribution scheme as part of the Armed Forces pension scheme that is due to go live next year. While subsection (1)(b) gives the flexibility to provide money purchase arrangements, should that be a desirable or necessary approach for future pension provision, were the department ever to consider that necessary in the future, of course we would ensure that Parliament was
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informed and that any consultation requirements were met. With that, I hope that the noble Lord will withdraw the amendment.

Lord Astor of Hever: My Lords, I thank my noble friend Lord Hodgson for his support. His point on defined benefit and defined contribution was well made, and I too agree that any changes need to be carefully thought through and not rushed.

I thank the noble Baroness for her reply. I realised that she would resist this amendment, although she has given the House some reassurance, in particular by saying that the Government would not make significant changes without notifying Parliament. I shall read her response carefully in Hansard, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Astor of Hever had given notice of his intention to move Amendment No. 3:

"(2A) The Secretary of State may, by regulation, make provision for extra benefits to be provided for current members of the existing scheme during the transitional period.
(2B) For the purposes of subsection (2A), the transitional period is the time between the date of the new scheme coming into force for new servicemen and women and the date on which existing servicemen and women are given the opportunity to transfer."

The noble Lord said: My Lords, in speaking to Amendment No. 3 I shall speak also in support of Amendment No. 10, tabled by the noble Baroness, Lady Dean.

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