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Baroness Barker: My Lords, I thank the Minister for that reply. I take what she says about the ombudsman being in a quasi-judicial position. That has more force as an argument than saying that the provision is already in the 1993 Act for the Pensions Ombudsman. There is still a question in my mind on whether it is
 
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appropriate in practice to give such a blanket degree of privilege. However, I listened to what the noble Baroness said and shall take the matter away and think about it again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 220 [The statutory funding objective]:

[Amendment No. 234A not moved.]

Clause 233 [Supply of information for purposes of section 232]:

Baroness Hollis of Heigham moved Amendment No. 235:


"(6) This section is subject to sections 86 and 200 (tax information disclosed to the Regulator or the Board)."

On Question, amendment agreed to.

Clause 236 [Information and advice to employees]:

Lord Higgins moved Amendment No. 235A:

The noble Lord said: My Lords, in Committee we expressed some concerns about Clause 236. We are all in favour of employees having as much information as possible, but it is very important that they should not receive information that leads them to make mistaken decisions. By regulation, the clause,

We are concerned that that puts the onus on the employer. It is extremely difficult for employers who are not technically qualified to give information and advice to carry that into operation.

A debate in Committee was concerned with the problems that trustees have—they had it in Equitable Life, for example—in giving advice to their employers. The clause seems to say that employers, but apparently not pension fund trustees, will be enabled to give advice about pensions and savings. The noble Baroness shakes her head. If it is so, no doubt she will say so in a moment.

We have serious doubts about whether it is practical for employers to fulfil the functions specified. The noble Baroness was kind enough to say earlier that the regulations involved in the Bill were now in draft form and that, as on previous occasions, she would courteously enable us to see them. I was not absolutely clear whether that remark was made in the context of the Bill as a whole—whether all the regulations were in place—but she shakes her head. I did not think that it could be so; I imagined that she was referring to the clause that we were debating at the time.

Baroness Hollis of Heigham: My Lords, I was lucky. The regulations for which the noble Lord,
 
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Lord Skelmersdale, asked were ones that we had ready to offer for scrutiny. I am not so fortunate with the other regulations yet.

Lord Higgins: My Lords, we hope that the noble Baroness will be as successful as she can be, as she has always been very courteous.

My main concern about the clause is the use of "advice". Perhaps it would have been more appropriate had our amendment, instead of leaving out the whole clause, merely left out "and advice". However, the regulations, of which we know nothing at the moment, may impose very considerable burdens on employers if they are required to give even information on pensions and saving for retirement. After all, it is not their function, although it may be the function of the Department for Work and Pensions. To put the onus on employers seems likely to be an excessive burden. I beg to move.

Lord Lea of Crondall: My Lords, the clause is very important if we are looking to the future. The Turner report and all that goes with it would make for a much wider debate than falls within the scope of the Bill. The advice that in the broader national sense goes to people is to save more, to have more faith and trust in the pension arrangements being made, to respond to what employers say and so on. Can anyone doubt that a major qualitative step forward is required in the arrangements if people are to trust and believe in that on which they are told to embark?

There have been so many schemes that, for a variety of reasons, have caused people to get into difficulty. It is difficult territory and I suspect, although I may be wrong, that the noble Lord, Lord Higgins, is worried about the word "advice" in the sense of getting into legal difficulties about the giving of individual advice. The noble Lord is shaking his head. Again, that cannot be a reason, if we are looking at the future, for an employer not to be in a position where the concrete reality of increased savings and so on for the people involved starts to constitute something that we can call "advice". Whether or not that word has technical connotations that cause a problem here, the principle of the clause, which is not just an add-on, is vital and indispensable, the more we look at the changing demands of savings for people at work.

Baroness Wall of New Barnet: My Lords, perhaps I may contribute to the debate as someone who has come late into the House and not been party to the whole discussion, and as someone who has negotiated on pensions for many years as a trade union official, including with Norwich Union, ICI and other organisations. They would be concerned about implementing the amendment.

Clause 236(1) states:

Most employers would not be qualified under the Financial Services and Markets Act to do so anyway, but in my experience of negotiating with employers in a partnership arrangement, it is most likely that they
 
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would see it as part of their social responsibility towards their employees to ensure that any information that was helpful to them was made available. In many instances they provide that on the premises and make arrangements for that to happen. So I cannot see any way forward other than to welcome this clause.

Lord Oakeshott of Seagrove Bay: My Lords, I am not sure how much difference there is between the different sides of the House in this matter. I am struck by the good sense of the contributions made from the Government Benches. But in practice there seems to be a possible, rather technical, problem with "advice". It was noticeable that the noble Baroness, Lady Wall, said "information". I would have thought that the right compromise was to stick to "information" and take out the term "and advice" which has a slightly technical ring.

Lord Fowler: My Lords, I agree entirely with the comments of the noble Lord and the noble Baroness who have just spoken. The House needs more information on the Government's intention. In principle I am entirely in favour of enabling employees to obtain the maximum amount of information and to receive advice—a point to which I shall return in a moment. Without wishing to be unduly controversial, one of the Government's failures has been that they have not encouraged sufficient saving over the past few years. That is a great pity and future generations will pay for that.

My concern is about the practicality of the clause, a point mentioned by my noble friend Lord Higgins. The noble Baroness, Lady Wall, referred to Clause 236(1), which states:

It is regarding that word "advice" that one really wants to find out exactly what is envisaged. Is it envisaged that employers will be required to give advice? The Minister shakes her head, but I notice that subsection (2)( c) makes,

What will that action be? Employers will rightly be concerned, as should employees for that matter, about any legal liability which would then be involved. In principle I find myself in sympathy with the way in which this is moving. In practice, I need to be reassured that it will not have effects that the Government do not intend.

Baroness Hollis of Heigham: My Lords, this has been an interesting debate. I am particularly grateful for the contributions of my noble friends who, as former trade union officials or, indeed, staff members, speak with real expertise on this issue.

There may have been a little misunderstanding here. I thought that my noble friend had clarified matters to the satisfaction of Members opposite, but perhaps that was not the case. The clause provides a reserve power to require certain employers to provide their employees with access to sources of information and
 
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advice about pensions and savings for retirement. That is very clear. It does not say that regulations may require employers to "provide" information and advice; it states that they must,

The clause is drafted in exact terms precisely to avoid the understandable concerns that noble Lords may have about where the liability lies.

What is going on here? If one reads this across to the regulatory impact, I think that the situation is clear. If employers make little or no contribution to their employees' pensions—that is, less than 3 per cent but usually nil—in consequence, there will be low levels of scheme membership.

Perhaps I may digress for a moment. I think that I am quoting the figures broadly accurately when I say that L&G has shown that, where employers contribute to stakeholder pensions, take-up by members is between 70 and 80 per cent; where they do not, the take-up by members is 13 per cent. Therefore, the degree of employee saving is conditioned by the actions of the employer in the workplace. That is not to say that the employer must be responsible for giving advice—nor should he be, unless he is a licensed IFA, which is extremely unlikely.

In that situation, we believe that employers who fail to provide a contribution to a pension scheme should, at the very least, have responsibility for ensuring that their employees have access to the information and advice that they need in order to make informed retirement planning decisions. We are currently carrying out the scheme on a pilot basis. It will be rolled out and then, if your Lordships' House agrees, we shall have the reserve powers to extend it nationally.

A significant number of employees work for such firms. Around 6 million employees work for firms that offer contributions of less than 3 per cent to at least some of their workforce, and most are working in firms that make no contributions at all. As a result, pensions are simply not on those employees' radar screens. From all the research that I have read, I know that the real push into pension provision comes about when it is focused on within the workplace. Therefore, removing this clause would remove an opportunity to help employees who would benefit most from access to pension information and advice.

This is a reserve power. It is broad, and any regulations will go through the affirmative procedure so that they can be scrutinised by both Houses. I think that that is proper. Proposals for regulations would also be subject to consultation with all interested stakeholders, such as the representatives of employers, employees, consumers, pensioners and the financial services industry. Of course, any employer who does not wish to go down the route of enabling employees to have access to information and advice can take himself out of the frame by making a 3 per cent contribution to a pension. If that encourages employers who currently do not do so—particularly
 
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for stakeholders—then that is a not unintended consequence of what the clause seeks to achieve. Employers have that choice.


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