Clause 16
Pensions Bill
2:00 pm

Nigel Waterson (Shadow Minister, Work & Pensions; Eastbourne, Conservative)

I beg to move amendment No. 89, in clause 16, page 19, line 36, at end insert—

‘(4B) Upon becoming aware of a matter of dispute, the specified person, or trustees or managers if appropriate, should acknowledge receipt and advise the person or persons with an interest in the scheme, in writing, of the existence of the Pensions Advisory Service and the assistance it can provide in relation to the dispute resolution.’.

Before dealing with the meat of the amendment, perhaps I may make a general point. Although the basic provisions in clause 16 for dispute resolution arrangements make for fascinating reading, as far as I can determine they are pretty uncontroversial. Outside bodies seem perfectly happy with them, so who am I to say any different?

The only amendment that we have tabled is at the behest of the Pensions Advisory Service, which erupted on to the scene at the end of last week with this wording. The Minister may be able to tell me something different, but it seems to me that PAS is making an eminently sensible, workmanlike and practicable suggestion. For those members of the Committee who are not aware of PAS, it is an independent organisation, but it is funded by grant in aid from the Department for Work and Pensions. Speaking as a constituency MP, I believe that it does excellent work in trying to resolve a lot of complaints, problems and concerns that individuals have about pensions issues. Indeed, in its briefing note PAS says:

“In the period April 2005 to March 2006...88% of the complaints”—

that is 88% of the complaints referred to them—“were resolved” and no further action was required by any other body. That is extremely impressive; it presumably makes matters much less stressful for the individuals involved, and presumably also saves a great deal of money.

According to PAS, the proposed amendment would allow pension schemes to adopt a one-stage IDRP—for the uninitiated, that is an internal dispute resolution procedure—and if schemes take that route, members may not become aware of the existence of PAS until after the completion of the IDRP. PAS says:

“It is our experience that the resolution of disputes is more effectively done before completion of the IDRP, and often before the procedure has been invoked. We are therefore concerned that the unintended consequence of the amendment as it currently reads would be an increase in unresolved disputes which in turn would increase the level of submissions to the relevant ombudsman services.”

It goes on to discuss its independence and its standing within the industry, in terms of its contribution to dispute resolution.

PAS goes on to say that the management of complaints

“would be made more efficient if a requirement were introduced that all written complaints had to be acknowledged.”

That sounds axiomatic, but perhaps it is not. The PAS also said:

“We would suggest the earlier involvement of TPAS in situations of disputes would have the effect of reducing the number of cases which require the formal deliberations of the IDRP and reduce the number of applications to the Pensions Ombudsman.”

That seemed perfectly sensible, so I tabled the amendment with alacrity. On every Bill Committee that I have ever served on, one Opposition amendment has always been accepted and this amendment, like the golden rivet in a ship, might be it.

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I promised brevity on the previous clause and that is what I shall deliver now. We also support the amendment, but the hon. Gentleman got in there first—he obviously reads his e-mails more rapidly than I do. He put the case extremely well. We support the amendment, and hope that he is right that the Under-Secretary will accept it and that it will be one of those home runs that we have on every Bill.

James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)

I thank the hon. Member for Eastbourne for the amendment and for speaking with such alacrity in support of it.

Before I deal with the amendment it might help to say a few words about the purpose of the clause. The clause amends the provisions relating to the resolution of disputes. Occupational pension schemes are currently required to operate a formal two-stage process for dealing with disputes between individuals and trustees. However, the process is rather prescriptive and is bound by rigid time limits. Although the process works well in many larger schemes, we wanted to give schemes the opportunity to adopt something simpler and more flexible. The change that we propose also follows recommendations that came from the Pickering report.

We legislated in the Pensions Act 2004 to enable schemes to simplify their dispute resolution arrangements, by allowing them to adopt either a one or a two stage-procedure. However, the measure was not commenced, because doubts were raised by pension schemes and their advisers about the extent to which the provisions would allow trustees to delegate decisions on disputes. It is common practice for trustee boards to delegate such decisions, often to a dedicated sub-committee, and that is perfectly reasonable and sensible. We therefore decided that it would be sensible to put the matter beyond doubt at the earliest opportunity. That is the main purpose of the clause. The clause makes it clear that a decision on a dispute does not need to be made by the full trustee board. The decision must, however, be made by one or more of the trustees and cannot be delegated outside the trustee  body. That is a small but sensible provision that will enable schemes to adopt simpler and cheaper dispute resolution arrangements, if they prefer to do so.

I agree that the Pensions Advisory Service does valuable work. I also know that the assistance and support that it provides is greatly appreciated. The hon. Gentleman is quite right to refer to the 88 per cent. success rate in resolutions and the 68,000 referrals that were made to the service last year. Under the current two-stage arrangements, the scheme member will be told about the Pensions Advisory Service with the decision on the first stage. The member will then have the opportunity to talk to the service before the matter is reconsidered by the trustees.

The current requirement is based in secondary legislation. It is neither necessary nor appropriate to deal with the issue in such detail in the Bill. As I have said, the main purpose of the changes set out in the clause is to make things simpler and easier for schemes to implement, and to make the legislation less prescriptive. Requiring every scheme to acknowledge every application in writing, as the amendment proposes, might be counter to that aim. It may be that a dispute arising from a misunderstanding or miscommunication can be resolved quickly and easily and that an acknowledgment would serve no useful purpose. I am also conscious that in December we published a simplification plan in which we committed to reducing the burden proposed by existing regulations as well as to minimising burdens flowing from any new regulations. In considering any new regulatory requirement, we have to measure it against the aims and targets set out in the Department’s simplification plan and consider it in the light of our current deregulatory review.

We will consider the issue carefully; I assure the Committee that we will give serious thought to how best to ensure that people are made aware of the services offered by the Pensions Advisory Service without imposing an unnecessary regulatory or administrative burden on schemes. I should add that if the clause comes into law, the secondary legislation will need to be amended. We shall consult at that point, which would be the more appropriate time to consider any basis of referral to the Pensions Advisory Service.

With those assurances, I have to tell the hon. Gentleman that this amendment is not his golden rivet. I ask him to withdraw it.

Nigel Waterson (Shadow Minister, Work & Pensions; Eastbourne, Conservative)

Perhaps I shall get lucky later. I am grateful to the Minister for that patient—indeed, painstaking—explanation of the provisions. I was not wholly wedded to putting the issue into the Bill, although I had a hankering to point out to my grandchildren that I had been the architect of section 16(4)(b) of the Pensions Act 2007. However, I am afraid that that is not to be. The Minister has assured us that the issue will be considered and consulted on in secondary legislation, and I am more than happy that that should be the case. I am delighted that the Minister is also impressed by the effectiveness and efficiency of the Pensions Advisory Service. I beg to ask leave to withdraw the amendment.