Clause 17
Pensions Bill
2:00 pm
Nigel Waterson (Shadow Minister, Work & Pensions; Eastbourne, Conservative)
I shall not detain the Committee long, Mr. Gale. Somebody once said of President Calvin Coolidge that he looked at someone as if they had been a side dish that he had not ordered. That thought went through my mind as I saw your face, Mr. Gale, so I shall try to keep my contribution short.
Clause 17 and schedule 5 are designed to remove the requirement that the Secretary of State should approve actuarial guidance in certain cases. The current arrangement, set out neatly on page 82 of the regulatory impact assessment, is that when calculating pensions liabilities all actuaries are supposed to use agreed guidelines, to ensure consistency. For reasons beyond my comprehension, those are called either “guidance notes” or a “technical memorandum”.
Various bits of primary legislation require the Secretary of State to approve three of those guidance notes—although there are seven altogether; I do not know who approves the other four—and the one technical memorandum. I understand that the Institute of Actuaries in England and Wales and the Faculty of Actuaries in Scotland, which combine the roles of regulator and professional body, have always prepared those documents. Owing to their dual role and what might have been described or perceived as a conflict of interest, they were required to obtain the Secretary of State’s approval. That was said to be to maintain the public’s confidence, although I cannot imagine for the life of me that many members of the public are even aware that the things exist, let alone who prepares them.
In its 2005 report, the Morris review concluded that the Financial Reporting Council should establish a new regime to set actuarial standards and oversee the regulation of the profession. The Government have accepted the recommendation, and in turn the FRC has set up the Board for Actuarial Standards—oh to be a fly on the wall at its meetings! That is no doubt a relief to the Faculty of Actuaries and the Institute of Actuaries, which continue to have an important role as the professional bodies for their profession.
I understand that on 6 April this year the board will take over responsibility for the guidance notes and technical memorandums. At that stage, the FRC and the BAS become the UK’s independent regulator for corporate reporting and governance, and there is no longer a need for the Secretary of State to have a role. I am sure that that will come as a great relief to him, as he already has quite enough on his plate—the pensions crisis, the failure to tackle reform, the failing Child Support Agency. I could go on.
In a nutshell, the proposal seems to be uncontroversial and therefore we support it. Indeed, I am emboldened in that view by a Library note which tells me that the equivalent provisions in the Companies (Audit, Investigations and Community Enterprise) Act 2004 did not even merit discussion during its Committee stage.