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Lord Lea of Crondall: All my noble friends are encouraged by what the Minister has said; it is a significant move forward. My noble friends will study Hansard with more than usual interest, and we look forward to the amendment on Report which the Government have signalled in the Secretary of State's speech in Brighton today. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 297A not moved.]
Baroness Hollis of Heigham moved Amendment No. 297B:
Page 156, line 25, leave out from "which" to end of line 26 and insert "at least the following are eligible to participate—
(i) all the active members of the scheme or an organisation which adequately represents the active members, and
(ii) all the pensioner members of the scheme or an organisation which adequately represents the pensioner members, and"
The noble Baroness said: I shall speak also to Amendment Nos. 297C, 299A, 299B and 299C. When our provisions for simplified procedures were debated in the other place, opposition Members were concerned that they might give preference to active members, to the disadvantage of pensioner members. It was a perfectly honourable concern. Of course this was not the intention; we simply aimed to keep the procedures as simple and non-prescriptive as possible. None the less, we agreed to think further about the position of pensioners. My noble friend Lady Dean—and the noble Baroness, Lady Turner, were she here—will remember that we pressed the issue of pensioner representation on scheme trustee boards when we debated the 1995 legislation through those long nights back in 1994.
We seek to introduce as much simplicity and flexibility as possible in individual schemes so that they determine their own procedures. Unfortunately, the amendments will none the less introduce some complexity. We are giving schemes a choice. As I suggested in response to my noble friend's amendments in the previous group, the schemes will be able to invite all the active members and all the pensioner members to make nominations, or they will be able to invite nominations from an organisation that represents the interests of active members—the presumption is that it would be a staff association or trade union—or pensioner members. Some of the
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bigger companies have very well established pensioner member schemes. There is nothing to stop them doing that. As Members of the Committee will see, exactly the same requirement applies to both active members and pensioner members.
The amendments include the term,
and I hope that I have addressed that. The regulator will produce a code of practice on member nomination trustees. What counts as an adequately representative organisation will be one of the issues that he will cover in the code of practice so that we do not get a handful of self-nominated people claiming special status.
We have also taken the opportunity to make a minor amendment to subsections dealing with selecting member-nominated trustees and directors—Amendment Nos. 297C and 299C. The amendments provide slightly more flexibility by requiring that the selection process must always involve scheme members but not exclusively so.
I hope that the Committee will recognise that the amendments are an attempt to make clear that pensioner members may be invited to nominate to the trustees, and that they may be included as part of the scheme trustees. The amendments seek to respond to a concern raised nearly a decade ago. The time is now right to honour it. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendment No. 297C:
On Question, amendment agreed to.
[Amendment No. 297D not moved.]
[Amendment No. 298 not moved.]
Lord Higgins moved Amendment No. 298A:
(e) may include details of a member-nominated trustee's term of office and that the member-nominated trustee ceases to be a trustee when he ceases to be a member of the scheme."
The noble Lord said: In moving the amendment, I shall also speak to Amendments Nos. 298B, 300A and 300B. The genesis of the amendments is in the representations made by the Scottish Law Society. To some extent, they are drafting amendments, but they also raise some broader issues.
Amendment No. 300B would insert, after "director",
As drafted, the clause suggests that member-nominated directors can be removed from office only with the agreement of the other trustees. The Law Society is concerned that there could be provision for giving a term of office in the arrangements. Therefore, the amendment seeks to clarify the position.
The Law Society also seems to be of the view that a member-nominated trustee would cease to be a trustee when he ceases to be a member of scheme. That raises
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the point made by the noble Baroness, Lady Dean, as to whether a member-nominated trustee can be other than a member of the scheme. Until the noble Baroness spoke this afternoon, I had normally thought of member-nominated trustees as being people who are members of the scheme and nominated by members of the scheme. If one is going to have members nominating non-members, that raises a series of issues. As the Minister pointed out, there may be objections from the employer in that regard. Will the noble Baroness clarify whether that is the position?
The other issue that is of some concern is to what extent there is provision in these clauses for member-nominated trustees not to be removable. There is danger of a conflict between the other trustees or the employer. Could the noble Baroness clarify to what extent the position of a trustee is protected and whether he is obliged to leave if he leaves the scheme? I beg to move.
Baroness Dean of Thornton-le-Fylde: I hope that what I said earlier does not set any hares running about members of a scheme being able to nominate someone to be a trustee who is not a member of a scheme. I have actually been one—and on the employer side, on a board of directors, when I was not a member of the scheme but was nominated as a management nominee. In another scheme to which I did not belong I was nominated by the employees. So that does happen, and I hope that we are not going to disturb that arrangement, as it is a way of getting people on to schemes who may bring some outside knowledge.
Lord Skelmersdale: Yes, but the point is, how did the noble Baroness withdraw from being a member of either of those schemes?
Baroness Dean of Thornton-le-Fylde: I was not a member of the fund when I was nominated as a trustee, and I never would be. Periods of office are set for a period, such as three or four years.
Baroness Dean of Thornton-le-Fylde: I am sorry but I thought that was known, as it is a normal situation.
Baroness Hollis of Heigham: I wonder whether the noble Lord's concerns have not been largely answered by my noble friend. First, the rules of the scheme will normally specify the period of time for the trustees. Four years, for example, might be a typical period. After that, the procedure must be gone through again; it may be that most of the trustees will be expected to stay on, but that would be for the rules of the scheme to decide.
Secondly, to make clear the point about non-members. I understand the noble Lord's concern, but they can represent a real asset and bring experience from other pension schemes on which they serve, particularly for relatively new and inexperienced scheme trustees. We are asking new trustees to offer themselves for training, take on responsibility, make decisions on the advice of the actuary and so on. In
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particular, it would seem to me that the experience of somebody in a related but not necessarily competitive industry could be extremely valuable to a scheme that has not had the experience of member-nominated trustees. However, I repeat: the employer must give his approval to nominated non-members—in other words, those who are not employed by the employer. The employer may feel that there is a possible issue relating to competition or something of that kind. It must be done with the employer's consent. That seems to get the balance about right.
The noble Lord asked me whether a particular trustee could be removed. I refer him to subsection (6):
"The arrangements must provide that the removal of a member-nominated trustee requires the agreement of all the other trustees".
That is a safeguard. One may wish to remove a trustee who fails to attend or whatever, but, none the less, if someone is seen as being inconvenient, all the other trustees would have to be persuaded before that person could be removed.
The thrust of the amendments is to specify terms of office and to provide that,
I have no problem with that, in principle. It would be for the rules of the scheme to specify such matters, and most schemes will do that. However, it is not necessary to make the amendments. Obviously, it is open to the regulator to issue a code of guidance, should that prove necessary, particularly for schemes that have not hitherto had member-nominated trustees. At the moment, we expect that the rules of a scheme will determine such matters.
I hope that, with those reassurances, the noble Lord will withdraw the amendment.
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