Clause 16
Pensions Bill
2:00 pm
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.