Child Support, Pensions and Social Security Bill
Baroness Hollis of Heigham (Parliamentary Under-Secretary, Department of Social Security; Labour)
My Lords, in moving Amendment No. 8, I should like to speak also to Amendments Nos. 9, 10, 11, 38 and 39. These amendments are needed to address concerns expressed by pension industry contacts. The existing practice of some occupational pension schemes is to pay annual increases in pension in payment based on the rate of inflation of the country of residence, not by reference to the rate of inflation in the UK. Our initial legal advice is that this practice would be prohibited under the terms of Clause 55 but the position under the terms of the directive is less clear.
The amendments have two specific purposes. First, they provide that the clause shall come into effect on a date to be appointed in a commencement order instead of on Royal Assent. That will allow time to investigate fully the circumstances which have given rise to the pension industry's concerns. Secondly, they provide that regulations may specify exceptions to the provisions in Clause 55. Clearly, we want to avoid a situation whereby the legislation in the UK could cause UK schemes to be in breach of the terms of UK law even though the directive was not being breached. The regulation-making power may be used at a later date if necessary to make exceptions that would enable the UK to comply with the provisions of the directive without placing unnecessary restrictions on UK schemes. I commend the amendments to the House.