Clause 51
Pensions Bill
1:45 pm
Mike O'Brien (Minister of State (Pension Reform), Department for Work and Pensions; North Warwickshire, Labour)
I agree with the hon. Member for Inverness, Nairn, Badenoch and Strathspey that there has been concern that trustees should not be the subject of undue liability in respect of their actions. They will retain an obligation to fulfil their fiduciary duties. However, it is anticipated that there will be an indemnity to cover them in respect of any decisions that they make that are other than flagrant and deliberate breaches. They will be fully liable for any flagrant or deliberate breach of their duty, but they should not be liable for having made decisions with which others merely do not agree. There could be all sorts of legal challenges to such decisions, and the trustees might end up having to defend themselves individually.
It is right that indemnities should cover the trustees for the costs of any such actions. PADA or, in due course, the Personal Accounts Board, should be able to pay any legal costs that the trustees incur, should they be challenged on the basis of any decisions that they have made after due consideration. As the hon. Gentleman says, the board will have a high profile and a lot of people will be interested in its decisions on investment and other matters. We do not want trustees dragged into court unnecessarily, and if there are court cases, it is right that an indemnity should cover them. Trustees are indemnified in many existing private pension schemes. There are exclusions to their liabilities. We will be broadly following such a precedent, which does not apply to all schemes, but does to a lot of them.
It is fairly straightforward and standard for trustees to have indemnities. We want to ensure that we attract high-quality trustees who are not going to feel that they will end up having to pay a lot of money in court fees because someone has challenged a decision that they made properly. That is the basis for the provision. I appreciate that the amendment is probing and I hope that I have addressed the concerns of the hon. Gentlemen.