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Lord Higgins: The noble Lord and the noble Baroness—and, indeed, the noble Baroness, Lady Turner, who is at the conference in Brighton—have a distinguished and long record in pension and trade union matters, so their views should be taken very seriously. However, truth to tell with regard to the trade union movement as a whole, only comparatively recently has it given the attention to pension matters that perhaps should have been the case before. That is, I suppose, understandable, because the situation with regard to pensions has deteriorated so significantly in recent times.

I do not believe that the noble Lord or the noble Baroness referred to the lead amendment, Amendment No. 297, which suggests that the number of member-nominated trustees should be increased from one third to a half—but I may have missed that point. Obviously, where the balance is struck is important. My own experience is that a significant number of member-nominated trustees is clearly necessary. However, as the noble Baroness pointed out, it requires a great deal of training, if they are members of the scheme themselves; that is less so if the person nominated happens to be an outsider rather than a member of the scheme.
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I am not quite clear about the exact import of the amendment over the question about the provisions with regard to being appointed by a recognised trade union or trade union committee. I am not sure what the situation is if there is no trade union representation for the company or the scheme itself. I presume that it is not intended, if there is no trade union representation, that the trade unions should somehow come along and suddenly start appointing trustees. But I believe that that is the implication of the amendments.

Baroness Dean of Thornton-le-Fylde: It is not my intention to prolong the debate, but I must say, with great respect, that it is not just a five-minute wonder that the trade unions have discovered pensions. When I was a young officer of 28, I negotiated pensions. My first pension course was 20-odd years ago. Over the years, the TUC has placed great importance on the matter—rightly so—even before the Maxwell days.

The amendments are not intended to place impositions on any company scheme that does not have trade union recognition and trade union members. We are talking about employee representatives and member representatives on a scheme.

Lord Higgins: I am grateful to the noble Baroness for clarifying that, although I am not sure that that is what the amendments actually do. No doubt, the Minister can confirm that the reference to being appointed by a recognised trade union would not apply in cases in which the company or pension fund was not involved.

Lord Lea of Crondall: It is industrial relations jargon. The phrase "recognised trade union" implies a situation in which a trade union is recognised for negotiations on pay and conditions. That is what it means.

Lord Higgins: Fine. If we interpret it as meaning "recognised by the employer", that clarifies the situation.

As I said, I think that it is a question of balance. I would have thought that a third was about right. We need a reasonable number of member-nominated trustees, and that is probably the right proportion, rather than a half. With a half, the number of people who are expert in the field may be reduced. I take the noble Baroness's point: it may be that the people nominated are not members of the scheme, which modifies the balance between expertise, on the one hand, and employer participation, on the other.

That said, there is still a question about whether it is appropriate for a trade union to appoint outsiders, however expert, as trustees, rather than appointing members of the union or members of the scheme. No doubt, the Minister can give us a view on that. My impression, from personal experience, is that the provision for "at least one-third"—it is not "a maximum of one third"—is probably about right.

Lord Oakeshott of Seagrove Bay: We have considerable sympathy with the spirit of the
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amendments. To the noble Lord, Lord Lea of Crondall, I say in passing that pensions are not just at the top of the trade union agenda; they are at the top of the political agenda for the whole country, as we will see in the forthcoming general election.

It is right to have a minimum of a third, which is what the position is at the moment. In many cases, a half would be appropriate, but, if the Bill said "a minimum of a half", it would be going too far. One might think that, in some situations, it would be right to have 40 per cent members, 40 per cent employers and 20 per cent independent representatives, but there would be no room for manoeuvre if the Bill stipulated a minimum of a half. However, the principle is that the members should have at least equal rights with the employers because it is their money as much as that of the employers. A deficit in the fund is, in effect, an unsecured loan by the company to the pension fund. All those points are right. The principle that the members' representation should be at least equal to that of the employers is fair, so we are sympathetic to the principle behind the amendments.

Baroness Hollis of Heigham: It has been an interesting debate. It was interesting that people emphasised words such as "balance".

We start from a situation in which the larger schemes and, if I may say so, the good schemes have at least a third—often, it is 50 per cent—of such representation. A friend and colleague who is on the board of trustees of one of the largest media companies in the country told me that 50 per cent were member-nominated trustees and that they were worth their weight in gold. When the company thought about altering the revaluation rates for deferred pensioners, those trustees insisted on consultation, as the others would not have done, which was the right thing to do. That is an example of how valuable they are.

Our problem, of course, is that many of the smaller and medium-sized companies do not have a single member-nominated trustee, or barely one. That is our dilemma. We have no doubt at all that 50 per cent, give or take, is good practice and we want to encourage it. I shall come back to that point if I may.

I shall try to pick up some of the specific points. The first is the point raised by the noble Lord, Lord Higgins. He asked whether it was legitimate that someone who was not a member of the company could be nominated as a trustee because they were a trade union representative. That happens now where there is an experienced and appropriate person—such a person is nominated. However, in such cases the employer can, so to speak, veto it if he thinks there might be a conflict of interest if, for example, the external trustee belongs to a competitive company. However, for the most part, I understand that this is an extremely successful arrangement and gives member-nominated trustees some useful additional quasi-professional spine to their deliberation. Obviously, if
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no one comes forward, the employer can nominate all the trustees. However, where firms have the relevant third, there is currently no problem.

The noble Lord asked what happens if there is no trade union. If there is no trade union, the members nominate. It may be worth describing the process. We are expecting a two-stage process, first of nomination, then of selection. On nomination, the trustees must invite nominations from all active members or organisations that they regard as adequately representing them. Of course the term "adequate" is a judgment, but they will tend to be bodies such as trade unions or, on the pensioners' side, pension schemes with the British Airways pension association or the BT one or the Post Office one. If those nominations are greater in number than the number of places available, there has to be a pre-described and pre-confirmed selection arrangement. The trustees may interview people or whatever and will produce a final list. If there are any problems about this even though it is not a matter of law there could be reference to the regulator, although his guidance will be essentially guidance rather than upholding the law.

Having said that, I want to take the opportunity to bring to the Committee's attention news that Members may very possibly have picked up today. I refer to the speech made by the Secretary of State, the right honourable Alan Johnson, to the TUC conference. I shall quote his words, so that there can be no error:

as everyone has done today—

That power will be taken by regulations. Let me make it clear at this stage that there is no question of saying what the timetable will be or how quickly it will operate. It is not an open-ended commitment, but we recognise the point made by the noble Lord, Lord Higgins, that we probably need to move to that position incrementally, especially with schemes which at the moment have no member-nominated trustees at all. What we expect and hope to see in the reasonably foreseeable future is that all schemes will have 50 per cent member-nominated trustees. The power to achieve that will be introduced by regulation. The Secretary of State will bring forward such regulations with an appropriate timetable and with consultation.

We are seeking to enrich the board of trustees while increasing the ownership and feel of responsibility of members towards their schemes, not to put an additional burden on small and medium-sized employers who may at the moment have few, if any, member-nominated trustees. I am sure that my noble friends will welcome this move. It is a balanced approach. We will get there in a reasonable time with consultation and by introducing the power through regulation. Whether that means that we roll out the
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measure in a particular size of firm or whether it means that we introduce it after certain kinds of consultation will have to be determined. However, there is an intent to introduce the measure. I thought that it would be helpful to tell the Committee that the Secretary of State announced it this morning. I could pick up on individual points about knowledge and information but we shall come to that later. I thought that this might be an appropriate time at which to make that announcement.

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