Mike O'Brien (Minister of State (Pension Reform), Department for Work and Pensions; North Warwickshire, Labour)

Appointing a trustee body to run an occupational pension scheme, which is part of wider Government reforms, presents a challenge in balancing independence with accountability. This is exemplified in the arrangements for the scheme rules. The scheme rules will include much of the day-to-day detail of how the personal accounts scheme will be run—hence the trustee body needs to have a high degree of independence in making the rules. However, the scope of the rules will be limited by the parameters set in the scheme order, which we have previously been discussing and will be subject to parliamentary scrutiny. That approach to the rule gives Parliament control of the scope of personal accounts but allows the trustee independence in the day-to-day administration and operation of the scheme.

The amendment concerns how comments about rule changes would be considered by whoever was making the rules, whether a trustee or the Secretary of State. It may be helpful to explain what we anticipate the rules covering. The rules will include the set-up and operation of any committees that the trustee chooses to create, the establishment of an internal complaints procedure and any information about investment, such as how many changes to funds a trustee can make each year. That is far from being set in stone; it is a broad assumption based on practice in existing large schemes. We expect that the trustee generally will be responsible for making and amending the rules after the initial set-up.

The duty to consult placed on both the Secretary of State and the trustee will ensure that the views of all interested parties such as members, employers and the wider group of stakeholders are considered in the design of the scheme rules. That requirement to consult ensures engagement and involvement without fettering the independence of the trustee. The Bill already requires the rule-maker to have regard to any comments that they receive and to publish a general response. The hon. Gentleman’s amendment appears to seek greater assurance that the rule-maker will consider any comments received.

The current drafting is sufficient. The phrase that the hon. Gentleman uses—“take account of”—does not take us an awful lot further but it does appear to fetter a trustee’s freedom and independence in a way that “have regard to” does not. I appreciate that he takes us a bit further but there is both a price and a balance here, and the price in terms of fettering the independence of the trustee is one that we need to approach with caution.

I do not have enormously strong views here but I think that we are attempting to strike a balance by requiring the trustee to “have regard to”, whereas, by saying that they have to “take account of”, the hon. Gentleman raises questions such as, “How do they take account of it”? How do they prove that they have taken account of it? Do they have to do something in response?

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