Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Hollis of Heigham moved Amendment No. 249:
The noble Baroness said: My Lords, Amendments Nos. 249 and 250 amend new Section 67(1) of the Pensions Act 1995, contained in Clause 260, by
4 Nov 2004 : Column 530
introducing a power to exempt prescribed schemes or schemes of a prescribed description from the requirements imposed by new Section 67. They are technical amendments to ensure that we have the necessary powers to exempt certain types of scheme from the Section 67 provisions. The schemes that we have in mind are "non-approved" or "not registered" for tax purposes. They are currently known as funded unapproved retirement benefits schemes, and unfunded unapproved retirement benefits schemes. From April 2006, they will be known as employer-financed retirement benefit schemes.
Those schemes do not receive tax privileges and are mainly top-up schemes providing benefits to senior employees in excess of Inland Revenue limits. They are exempt from most of the provisions in the Pensions Act 1995, on the grounds that they do not need the protection afforded to ordinary occupational pension schemes. The power contained in the amendments will allow us also to exempt them from the new Section 67 provisions. That seems sensible; I hope noble Lords agree. I beg to move.
Lord Higgins: My Lords, is the cap imposed by the Chancellor of the Exchequer on the total or maximum that anyone can draw in pension schemes affected at all by the provisions?
Baroness Hollis of Heigham: My Lords, my immediate response is to say that I cannot see how it could be. If I am wrong, I shall write to the noble Lord.
On Question, amendment agreed to.
Baroness Hollis of Heigham moved Amendment No. 250:
(a) a public service pension scheme, or
(b) a prescribed scheme or a scheme of a prescribed description."
On Question, amendment agreed to.
Baroness Turner of Camden moved Amendment No. 251:
Page 196, line 19, after "rights" insert "and those of any other person contingently entitled to benefits under the scheme through him,"
The noble Baroness said: My Lords, the clause contains complex new procedures to allow, under prescribed rules, past-service benefits to be modified so long as their overall value is not reduced. It modifies Section 67 of the Pensions Act, which places a rigid restriction on changes that affect past-service rights and has been criticised as inflexible and a barrier to simplification.
Some concern has been expressed that the test of actuarial equivalence is not sufficiently defined. An overall test of value will seemingly have to make assumptions about members' circumstances, to assess the actuarial value of their past-service benefits. At an aggregate level an actuary could calculate the equivalent value, but that might not be wholly relevant
4 Nov 2004 : Column 531
to the circumstances of particular members, who may or may not have dependants defined under current rules.
The amendment requires the actuary to take account of the interests of dependants in assessing equivalence. That is what it is really about. It suggests that account must be taken of the rights of,
the member. I hope that it will be sympathetically received by the Minister. I did not have the opportunity to make those points on the amendment in Committee. I beg to move.
Lord Higgins: My Lords, the noble Baroness is correct is saying that some concern has been expressed about the provisions. In simple terms, if I understand correctly, the concern is that the actuarial equivalence will be for the average and there may be dispersal around it. Some people will gain and others will lose, even though the situation is said overall to be equivalent. What is important is what happens to the individual, not what happens on average.
Baroness Hollis of Heigham: My Lords, the amendment concerns contingent benefits payable to survivors. It seeks specifically to include rights of contingent beneficiaries in the calculation of an actuarial value as if they were rights actually belonging to the contingent beneficiary. However, contingent beneficiaries do not accrue pension rights of their own. It is the scheme member who accrues those rights on behalf of the contingent beneficiary. Clause 260 has been drafted to that effect.
The provision in new Section 67C(8), which the amendment seeks to change, provides that the actuarial value of a member's subsisting rights after a scheme modification has been made must be at least equal to the value of the member's rights immediately before the modification. The definition of "subsisting rights" in new Section 67A(6) says that subsisting rights in relation to a member include any right that has accrued to or in respect of him. The words "in respect of him" capture any rights the member may have in respect of contingency benefits, such as survivors' benefits.
My noble friend's amendment is, therefore, unnecessary and I hope that she feels able to withdraw it.
Baroness Turner of Camden: My Lords, I thank the Minister for that response. This is a complex issue. I will study her comments carefully in Hansard. Meanwhile, I have no intention of pressing the matter tonight and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 266 [Payments made by employers to personal pension schemes]:
Lord Skelmersdale moved Amendment No. 252:
The noble Lord said: My Lords, I shall talk extremely briefly to what I believe is an old chestnut that ran through discussions on both the 1993 and 1995 Bills. My excuse for doing so is that I was not involved in them at the timeI was doing a few other things.
The issue is that of regulations in respect of occupational pension schemes. I believe that the obligations in respect of personal pension schemes and occupational pension schemes in this instance should be the same. The amendment seeks to ensure such conformity. It is intended to allow the issue of regulations to prescribe circumstances where a notice is not required. That explanation may be somewhat confusing to the noble Baroness, because I have a nasty suspicion, now that I look at the matter again, that the amendment is not actually in the right place. But I have no doubt that she will tell me if that is correct and, indeed, whether it is an old chestnut. On that basis, I beg to move.
Baroness Hollis of Heigham: My Lords, I accept that the noble Lord, Lord Skelmersdale, was not around in 1993 and 1995, when these issues were discussed, however he was around when he moved the same amendment on 13 October in Grand Committee. So I had hoped that he might have thought that my answers to that identical amendment were satisfactory. Clearly, they were not. All I can do is recycle them, because the same objections to his amendment remain now, as they did thenso I am slightly puzzled.
However, I can understand the argument for a consistent approach to be taken between the provisions relating to personal pension schemes in what is now Clause 266, and to occupational pension schemes in Clause 267. Indeed, we are taking the same the approach. Trustees should inform the regulator within a "reasonable period" about late payments which are of "material significance", and the regulator will issue a code of practice on the meaning of those terms to help trustees interpret these legal requirements. However, taking a power to prescribe the circumstances when the trustees of a personal pension scheme do not have to report a late payment to the regulator is unnecessary and will not provide any additional clarity.
The current Section 111A of the Pension Schemes Act 1993 contains such a power. And regulation 4(2) of the Personal Pension Schemes (Payments by Employers) Regulations 2000 provides that a late payment need not be reported if the regulatory authority has informed the scheme that such a notification need not be made.
Under our new provisions, the Pensions Regulator will have that power in any caseeither by a notification to an individual scheme or, in a more general way, by guidance in a code of practice. Given that the outcome is already achieved, we do not believe that it is necessary also to take a power to prescribe.
I could continue, but I will stop there and I hope that I have given the noble Lord the reassurance that he sought.
Next Section | Back to Table of Contents | Lords Hansard Home Page |