National Insurance Contributions Bill; Pensions Bill (HL); Postal Services Bill - Delegated Powers and Regulatory Reform Committee Contents

Pensions Bill [HL]

2.  This Bill's main provisions are in four parts. Part 1 is concerned with the state retirement pension and includes in particular provision for increasing state pension age to 66. Part 2 makes changes to the arrangements under the Pensions Act 2008 (which are not yet in force) for the automatic enrolment of jobholders into pension schemes. Part 3 makes a variety of amendments to legislation about occupational pension schemes, and Part 4 introduces provision to require contributions to be made towards judicial pensions. The Department for Work and Pensions has prepared a memorandum explaining the delegated powers in the Bill: extracts relating to the matters covered in this report are printed in Appendix 2.[2]

Clause 10 - Alternative to Quality Requirement

3.  Clause 10(5) of the Bill amends an existing power in section 28 of the Pensions Act 2008, which enables regulations to make provision about certification of quality requirements for automatic enrolment schemes. Those requirements are set out in that Act, though susceptible to some amplification or modification by negative regulations. Paragraph 39 of the memorandum explains why greater flexibility is now thought necessary in relation to the requirements that are to be certifiable as satisfied, and clause 10(5)(c) amends section 28(2) to enable a certificate to be given where the scheme is found to satisfy an alternative requirement prescribed in regulations. This is a significant power, because its exercise will enable a pension scheme to be regarded as acceptable as an 'automatic enrolment scheme' if it satisfies conditions other than those set out in the 2008 Act. But the delegation of provision of this kind to regulations is by no means unprecedented in pensions legislation and, in view of the limitations (inserted by clause 10(6)) on the exercise of the new power and the affirmative procedure that is to apply, we do not find the delegation inappropriate. Paragraph 42 of the Government's memorandum states that regulations under the amended section 28 could include provision requiring relevant persons "to comply with guidance" which would be issued by the Secretary of State and subject to no parliamentary control. If that were right, the Committee would be concerned at the sub-delegation of a power to impose obligations without any parliamentary scrutiny. However, the Committee is reassured to find that, in fact, section 28(6)(d) enables the regulations to impose only a requirement to have regard to guidance.

Schedule 4, paragraph 17 - Relaxation of Parliamentary Control

4.  Part 2 of the Pensions Act 2004 established the Board of the Pension Protection Fund ("PPF") to assume responsibility for certain pension schemes, to manage their assets and to pay compensation to their members. Part 2 of the 2004 Act contains a large number of delegated powers. Schedule 4 to this Bill makes amendments to various provisions relating to the PPF, and paragraph 17 of the Schedule provides for three existing powers, which are currently subject to the affirmative procedure, to be subject instead to the negative procedure. In two of these cases the Secretary of State is required to exercise the power to increase two maximum amounts - the "ceiling" for pension protection levies, and the compensation cap - to reflect increases in the level of earnings, and in these respects the change to the negative procedure seems entirely appropriate.

5.  In the other case, section 117 of the 2004 Act enables the Secretary of State to provide for an administration levy to be payable by pension schemes towards the running costs of the Board of the PPF. The Department explains in paragraph 61 of its memorandum why it is thought that the negative procedure might now be more appropriate for the exercise of those powers. The Committee observes that these powers are not (unlike the two considered in the previous paragraphs) restricted to specifying an amount in compliance with a set formula. However it notes that provision for a similar levy towards the running costs of the Pensions Regulator is made in negative procedure regulations, and it does not therefore regard a change to the negative procedure as necessarily inappropriate. The Committee accordingly invites the House to seek from the Minister an explanation of the relative financial significance for pension schemes of the administration levy in comparison with the pension protection levies and the Pensions Regulator levy, so that it may determine whether the negative procedure affords an adequate level of scrutiny in this case.

2   The full memorandum is available via the Committee's web pages: Back

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