| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Dean of Thornton-le-Fylde moved Amendment No. 312:
Page 176, line 1, after "rights" insert ", and those of any other person contingently entitled to benefits under the scheme through him,"
The noble Baroness said: Again, this short amendment is tabled in the name of my noble friend Lady Turner of Camden. Clause 67B(8) refers to,
The amendment would add the words,
It provides that if anything should happen to the member, his or her next of kin or beneficiaries will be contingently entitled to benefits through the scheme. I gather that my noble friend is concerned that it constitutes inherited rights—I think that that is the point to which she refers. I beg to move.
Baroness Hollis of Heigham: Dealing narrowly with the noble Baroness's point rather than the wider issue of Section 67, which Members of the Committee may wish to discuss in a stand-part debate, all that I can say is that survivors' benefits are not paid in their own right. In other words, they belong not to the survivor but to the member. While the member who has accrued those rights remains alive, they can be included in the valuation of his or her own subsisting rights. In other words, under the wider discussion that we may go on to have, if the member thinks it appropriate to accept an actuarial equivalence between adjustment to survivor's benefits and, say, accrual rights, it is for that individual to decide. The rights belong to the member of the scheme, not to any potential survivor, who may or may not be married to the member, and who may or may not outlive the member concerned. Given that the rights belong to the member, it is for that individual to determine the acceptability of any changes, looking backwards on accrued rights, which is what Section 67 deals with. This may not be particularly welcome news to my noble friend, but, as I understand it, it is the case in law.
Baroness Dean of Thornton-le-Fylde: I am not dealing with the wider issues of Section 67; it is just this one simple point. I take the Minister's point, but it is a difficult issue. Over the years, attitudes about who is entitled have changed. For the moment, on behalf of my noble friend, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham moved Amendment No. 312ZA:
On Question, amendment agreed to.
On Question, Whether Clause 251, as amended, shall stand part of the Bill?
Lord Higgins: One of the complaints that I have made continually in recent times has been that, given the way in which the House of Commons programmes its legislation, the House of Lords is becoming the main scrutiny body. With this clause, however, that would be an unjustifiable criticism. It was introduced at a late stage in Committee in another place and a fairly extensive debate took place on it.
The clause reflects the recommendations made by Mr Alan Pickering in his review of occupational pension regulations, which was concerned with the difficulty of pension schemes in amending their rules
14 Sept 2004 : Column GC398
and provisions. From time to time that difficulty created a situation whereby employers decided to switch from a defined benefit scheme to a defined contribution scheme. The Government accepted that argument; I think that they were right to do so. Overall, a measure of simplification will result from the proposed changes, which is to be welcomed.
These issues have attracted considerable publicity. This morning I read in the Financial Times that we would discuss Section 67. It upset my breakfast because we had already agreed that provision, but it was an understandable mistake because Clause 251 is concerned with the same issues.
The Chairman of Committees: I am afraid that there is a Division in the House.
Lord Higgins: How does the noble Baroness think that we should proceed, given that we have started the debate?
Baroness Hollis of Heigham: I would be happy to continue to the end of this debate on what I call Section 67 issues. That may take us past 7.30 p.m. I am in noble Lords' hands.
Lord Higgins: I think that the noble Lord, Lord Oakeshott, and his colleagues have indicated agreement. The noble Baroness, Lady Dean, has gone. It would seem a shame not to finish a debate that we have started.
Baroness Hollis of Heigham: Yes, especially given that it concerns the other side of the clauses that we dealt with earlier.
The Chairman of Committees: The Committee stands adjourned for 10 minutes.
[The Sitting was suspended for a Division in the House from 7.10 to 7.20 p.m.]
Lord Higgins: I am grateful to the Grand Committee for agreeing to continue. Since we have started the debate, it seems appropriate that we should conclude it rather than break in the middle and not resume for some weeks.
I said at the beginning of my remarks that there was an extensive debate in the House of Commons, unusually, on this clause, which was introduced at a comparatively late stage of the Committee stage. The Government introduced the clause in response to Mr Alan Pickering's review of occupational pension regulations; he suggested—and I believe that there is widespread agreement on this—that the difficultly that schemes have in altering their rules in some cases may result in the employer deciding that it is appropriate in those circumstances to move from a defined benefit to a defined contribution scheme. That is something that everyone would like to avoid, as the benefits of one over the other are so clear.
14 Sept 2004 : Column GC399
The Government responded by inserting the clause. Rather surprisingly, it attracted publicity today, as a result of statements made by the Institute of Actuaries and, in particular, the chairman of its pensions board. Actuaries are at the moment a little sensitive, following the comments about the Penrose report. I must say that I agree with those comments. That report was extremely disappointing, to say the least; the ombudsman is investigating the matter further, and there remain serious problems for many pensioners.
As a result of the report, the actuarial profession has said that it has been criticised for not speaking up when it mattered and that it thought that it ought to speak up with regard to the Bill. That is an entirely desirable development; I am all for actuaries speaking up. I myself made a rather unfortunate remark about them the other day, but most actuaries are expert and progressive people. However, it is true to say that they tend to have an innate—
Baroness Hollis of Heigham: Conservatism.
Lord Higgins: "Conservatism", the Minister suggests—with a small "c". In many ways, that is entirely appropriate; it may occasionally be less so—for example, on the question whether one should change the valuation of pension assets to a market-related basis, on which they took a very long time to come to a conclusion. But they are an honourable profession, and they fulfil an important role in relation to all the matters that we have discussed with regard to the Bill.
The crucial point about the clause is that the Government sought to maintain in the Committee stage of the House of Commons that no one would lose as a result of it. The actuarial profession has said that it is impossible to alter pension provisions without making some people worse off. I believe that that is true. The profession criticised Mr Malcolm Wicks for alleging that there were no losers. I shall not repeat the remarks reported in today's Daily Telegraph but, clearly, the situation is one in which the actuaries are right. There are almost certainly bound to be losers.
One of the problems that gave rise to the clause in the first place was the fact that the actuaries were unable to approve a particular set of accounts, if anyone happened to lose as a result of the change. The clause seeks to make provision for modification of subsisting rights. There clearly will be losers. The crucial thing is that we should ensure that there is adequate communication with members of the scheme if any such change is to be made and that the members of the scheme should be clear what has been altered. It may be entirely benevolent, nevertheless it is right that they should be told their rights, should know what is being done to the scheme and, therefore, that the actuaries can act appropriately in that context.
14 Sept 2004 : Column GC400
The provisions are basically right, but we need to take account of the fact that some people are likely to lose and of how that is best dealt with. Perhaps the Minister could tell us how the position of those who lose as a result of any change can be protected as far as possible and that it is clear that a decision is taken on a transparent basis. These are not simple matters. The clause runs to a considerable number of pages, but the principles involved are fairly straightforward. The Government are trying to do something that is desirable and it is important that it should be carried out as fairly as possible. I look forward to the Minister's comments.
| Next Section | Back to Table of Contents | Lords Hansard Home Page |