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Lord Fowler: My Lords, is the request for this information and advice—perhaps the noble Baroness will say where the advice will come from—triggered by the employee or is it given compulsorily to all employees who are not covered?
Baroness Hollis of Heigham: My Lords, we have various pilots which deal with information packs, and so on, and I am happy to write to your Lordships about the different types available. But basically, under the Bill, any employer who does not make contributions of at least 3 per cent to a scheme will have a duty—once the reserve powers through regulations may be extended—to provide his employees with information and advice. The information could be a factual pack that the employer puts together. Beyond that, however, it is the territory of independent financial advisers. Only they are regulated to provide financial advice.
So, as my noble friend absolutely rightly picked up, the wording of the clause is not that the employers must provide financial advice and information, but that they must enable employees to have financial advice and information. The understandable concern expressed by the noble Lord, Lord Higgins, about whether they would be accountable for mis-selling would not arise in this case. It would be a matter for the IFA.
As I say, we would expect the sessions to be delivered face to face and in private by an independent financial adviser and to follow the current financial services industry practice. They will be driven by the individual employee's requirements and deal with what they need and the connections with state benefits and so on.
Employers would not be liable because the pension information packs will set out what employers may and may not say to their employees. The packs can provide factual information about what the employers currently offer, but they are not entitled to give advice. Employees will be given access, but there is no requirement that they must attend. In other words, the duty will be on the employer to offer, not on the employees to receive; they may have a perfectly comfortable personal pension and want nothing to do with it. So they can decide not to attend.
I hope that, in a slightly more conversational way, I have addressed all the concerns that your Lordships have raised. We know that if people do not have access at the right time to information about pensions and savings for retirement, they do not take it up. That point can also be seen in the context of some of the Secretary of State's comments on issues such as auto-enrolment. It is all part of trying to persuade employees to value pensions and to say to employers who have chosen not to contribute—which would make me very sorry—that they should at the very least
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provide in lieu the alternative of information and access to financial advice. I hope that that helps your Lordships.
Lord Higgins: My Lords, it was helpful to have the noble Baroness put those comments on the record. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 239 [Requirement for member-nominated trustees]:
[Amendment No. 236 not moved.]
Clause 241 [Member-nominated trustees and directors: supplementary]:
Baroness Hollis of Heigham moved Amendment No. 237:
"(A1) The Secretary of State may, by order, amend sections 239(1)(a) and (4) and 240(1)(a) and (4) by substituting, in each of those provisions, "one-half" for "one-third"."
The noble Baroness said: My Lords, in moving Amendment No. 237 I shall speak also to Amendments Nos. 238 and 298.
When we debated the clauses on member-nominated trustees and directors in Committee, the Secretary of State had that very morning announced at the TUC conference that the Government intended to raise the minimum proportion of member-nominated trustees from one third to one half. I said at that time that what we expect and hope to see in the reasonably foreseeable future is that all schemes will have 50 per cent member-nominated trustees. I have been going round meeting chief executives of blue chip companies and have often been told by those who have 50 per cent member-nominated trustees just how valuable their contribution is.
Amendment No. 237 will allow us to make that change. Everyone agrees that member-nominated trustees and directors are a good thing. They bring value to any trustee board by offering a different set of skills and experience and by bringing a different perspective to bear on trustee discussions and decisions.
We think that it is right that we should proceed down this path. I would remind your Lordships that we have general powers in Clause 313 which would allow us to implement the change at different times and in different ways for different types of scheme. This provision will give us the opportunity to work with the industry to determine the best way of meeting the challenge of moving to 50 per cent MNTs, which is something that we intend to do. We will certainly give time for the new provisions in the Bill to bed in before moving to 50 per cent MNTs. In other words, we will move to it over time.
In Committee, the noble Lord, Lord Oakeshott, in supporting the principle of an equal proportion, suggested that some flexibility might be needed in certain circumstances. He cited the case, I think, of schemes with independent trustees in particular. I think that that is a genuine issue and we are looking at it. However, my thinking on this is that we would
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expect an independent trustee to be, so to speak, ring-fenced outside the divvying up of the rest of the board membership. However, we will look at that. Your Lordships will know that we have the power in Clause 241(1)to modify application of the provision in prescribed cases, and schemes with independent trustees could well be such a case.
The amendment to Clause 314 will require any order to be subject to affirmative resolution, as I am sure your Lordships would wish. We are moving towards 50 per cent MNTs, but we have made no decisions yet on timing. There are issues of detail to be resolved, including the independent trustees. I have tried to give the noble Lord some indication of our thinking. It is a perfectly proper and important consideration, but we shall consult fully on all these issues in the coming months. With that explanation, I hope that your Lordships will accept the government amendments. I beg to move.
Lord Lea of Crondall: My Lords, those of us who have been arguing for this for some time—my noble friend Lady Turner did take the lead—would say that to see this matter almost reaching fruition is a very happy moment indeed. The psychology of this matter is tremendously important. I repeat the wider point that I made a few minutes ago about the next few years being very difficult for people organising pensions within industry.
Of course, there is a need for people to take responsibility and ownership. There is no better way for people to take ownership of these difficult decisions than to be equally responsible, with the rest of the people carrying out the work, as trustees. This is not a collective bargaining matter, but it is a matter on which taking joint responsibility means that there is nowhere to hide. I am quite sure that when we come to the final version of the Turner report and various degrees of obligations on companies to do something in this area—it is already at the top of the agenda—it will be a very taxing and challenging matter for people at work. I think that this is a very good foundation stone on which to make this a successful development.
Baroness Turner of Camden: My Lords, I, too, thank the Minister and the Government for the amendment. I referred to it in discussions on previous amendments. I am absolutely delighted that this has happened. We have wanted such a provision for a very long time, not only in this Bill, but the issue has also been raised on previous occasions. I am very pleased that the Government have decided to accede to what is a very reasonable request.
As my noble friend Lord Lea has said, it involves people directly in the provision of pensions at a difficult time. They will have to be trained to take difficult decisions, but I am sure that they will be very capable of doing so, with the assistance of the training that we know will be provided. I thank the Minister for all she has done to bring this about.
Lord Oakeshott of Seagrove Bay: My Lords, the Minister is right to say that I expressed some sympathy
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in Grand Committee with the objectives made by, I think, the noble Baroness, Lady Turner, that in many cases it is appropriate and perfectly sensible to have 50 per cent of member representatives or trustees on pension fund committees. But what I did not say, and what I do not agree with, is the idea that it has to be 50 per cent. I find it surprising. I ask the noble Baroness how this has come about. Whether one agrees with having 50 per cent of members is a fairly clear principle.
Why has it come up in the past few weeks at this very late stage? It could perfectly well have been put forward in the Commons. As she said that very day, what a happy coincidence it is that the new Secretary of State can have a nice big sticky lollypop to take down to his former colleagues at the TUC. I am delighted, although surprised, to hear her say that chief executives of blue chip companies say how happy they are to have a composition of 50 per cent member trustees. I invite the Minister to tell me of one chief executive of a blue chip company who wants to be told in regulation that he has to have such a membership.
I believe that there is some misunderstanding here. While in many cases it is a good idea to have 50 per cent of the board composed of member trustees, I do not support making it compulsory in this way and I would oppose the amendment.
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