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Lord Higgins: I am grateful to the noble Baroness for her reply, but I want to consider one point. The provision that someone can go only with the agreement of all the other trustees seems to imply that, if someone wants to go, all the other trustees must agree. That is what worries the Law Society of Scotland.
Baroness Hollis of Heigham: If I am giving it an incorrect gloss, I apologise, but the arrangements must provide for removal, not voluntary retirement. I understand that to refer to something that may be happening against that individual's wish, and it can happen only with the agreement of all the other trustees. I hope that that answers the noble Lord's point.
Lord Higgins: As I said, I want to think about it. There is a fine line between the case of someone who is being removed and that of someone who, in all the circumstances, feels that he should resign. He might get the other trustees' backs up—that would be an advantage—particularly if he is being removed for some doubtful reason.
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I shall think about the drafting. I am not sure that the amendment is drafted as precisely as it ought to be, so I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 298B not moved.]
On Question, Whether Clause 230, as amended, shall stand part of the Bill?
Lord Higgins: I have one general point to make. It relates to nominated trustees. The question of the payment of trustees is not covered anywhere in the Bill. I am increasingly concerned about that.
The duties that are being imposed on trustees by this Bill and by the mass of legislation on company pensions that already exists represent an enormous burden. That is why training is so important. Indeed, in a company such as British Airways, for example, the assets being dealt with by the trustees are such that the chairman of the trustees carries far more financial responsibility than the chairman of the organisation itself. Yet, the chairman of the trustees and the other trustees may not be paid at all or are certainly paid a fraction of what the chairman and the directors of the employer company are paid. At some stage we need to address the issue of payment of trustees.
There is a particular problem that is relevant to the clause regarding member-nominated trustees, because although outsiders are nominated, as the noble Baroness, Lady Dean, has pointed out, generally nominations are of other employees. Paying someone from the shop floor as a trustee an appropriate amount in relation to the size of the company might provide a useful balance, but it might entail paying him four or five times more than he is earning on the shop floor. That is likely to cause consternation. So it is not a simple issue, but the time has come, given the particular liability of trustees—we will deal with indemnities and so on later—for us to consider carefully some sort of provision in this regard, if only in terms of encouraging more progressive companies.
Baroness Hollis of Heigham: May I just finish this? This was raised at an earlier stage by the noble Lord, Lord MacGregor, and perhaps I may repeat what I said then. There is no requirement that trustees must be paid. Some schemes pay their trustees, but it is voluntary. However, trustees must have paid time off for duties and training under the Employment Rights Act. In that sense, it reflects the situation for councillors, but without the allowances on top. So trustees are allowed paid time off for duties and training; there is no requirement for payment, although that can happen and sometimes does. But I agree with the noble Lord that it is a difficult issue, as with local government, given the other financial circumstances of the employee which may well be disproportionate to the responsibility as a trustee.
Clause 230, as amended, agreed to.
[The Sitting was suspended for a Division in the House from 4.23 to 4.33 p.m.]
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Clause 231 [Requirement for member-nominated directors of corporate trustees]:
[Amendment No. 299 not moved.]
Baroness Hollis of Heigham moved Amendments Nos. 299A to 299C:
Page 157, line 29, leave out from "which" to end of line 30 and insert "at least the following are eligible to participate—
(i) all the active members of the occupational trust scheme or an organisation which adequately represents the active members, and
(ii) all the pensioner members of the occupational trust scheme scheme or an organisation which adequately represents the pensioner members,"
Page 157, line 32, leave out "by" and insert "as a result of a process which involves"
On Question, amendments agreed to.
[Amendments Nos. 300 to 300B not moved.]
On Question, Whether Clause 231, as amended, shall stand part of the Bill?
Lord Skelmersdale: Clause 231 starts by talking about companies being trustees of an occupational trust scheme. That is perfectly obvious and reasonable; however, I am confused by the phrase,
This, I am sure, shows my ignorance, but it would be very helpful if the noble Baroness could explain how every trustee of a scheme can be a company.
Baroness Hollis of Heigham: Clause 231 serves the same purpose as Clause 230 but applies where the trustee is a company. It will ensure that in every occupational scheme where the trustee is a company, members have the opportunity to nominate at least one third of the directors. The context is that most companies have corporate trustees in order, I suspect, to protect their liability so that it does not fall on individual members. Therefore, the trustees have behind them member-nominated directors and the procedures for their nomination and selection under Clause 231 are parallel to what we have already described in Clause 230. I shall not describe it as a device, as that would suggest a degree of opprobrium, but it is a way in which many larger companies organise their affairs.
A scheme may have a corporate trustee—for example, a company—and a professional independent trustee that is also a company. Where one reads in Clause 230 the term "member-nominated trustees", Clause 231 refers to member-nominated directors of the trustee company. I do not know the most appropriate term to describe its function: shelter, protection or device? It gives trustees an added degree of protection.
Lord Skelmersdale: I readily understand that. Smaller schemes may well go to an outside company
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for management, but that would be a single corporation, if you like. The Bill says that every trustee of a scheme is a company, so surely that means that each individual trustee is a free-standing company. I do not see how that can come about.
Baroness Hollis of Heigham: The Bill does not say that all trustees are companies but refers to where there is a match between the two aspects:
"Where a company is a trustee of an occupational trust scheme and every trustee of the scheme is a company".
It does not say that all trustees, independent of this clause, are companies, because clearly under Clause 230 they are not. I am not sure where the gulf is between us. Is it simply the understanding of the opening line and a half of the clause?
Lord Skelmersdale: It is the understanding of the second half. I nearly tabled an amendment to delete,
in order to have the meaning of those words explained. I am afraid that I still have not understood.
Baroness Hollis of Heigham: I am sorry; I need some more help from the noble Lord. The phrase,
means that there can a single trustee of the company, because it is a corporate trustee and behind that there is the member-nominated directors but there could be two such companies. It simply says that every trustee of the scheme is a company. Is that all right?
Lord Skelmersdale: Yes, that is fine.
Clause 231, as amended, agreed to.
Lord Higgins moved Amendment No. 300BA:
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