Pension Schemes Bill — Committee (1st Day)

Part of the debate – in the House of Lords at 7:00 pm on 7th January 2015.

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Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Lord in Waiting (HM Household) (Whip) 7:00 pm, 7th January 2015

My Lords, the package of amendments in this group falls neatly—I hope—into the category of minor and technical. Inevitably we discover bits of drafting that can be improved or things that need to be clarified, and these amendments do just that. They cover a number of specific issues that relate to clauses in Parts 1 and 2, and with noble Lords’ permission I will explain a little more about what each of them does.

The first group of amendments is about consistent drafting. Clause 27 makes provision for regulations to require a scheme or part of a scheme providing collective benefits to wind up. Separately, Clause 37 makes provision for regulations to impose duties on managers of non-trust-based schemes to act in the best interests of the members when taking certain decisions. Both provisions make reference to different types of requirement that may apply in relation to the scheme, including scheme rules, and any relevant legislation that applies to the scheme. The amendments do nothing more than ensure that the same things are described in the same way in both clauses.

Moving on, the amendment to Clause 32 puts beyond doubt that any requirement to publish documents may also apply to policies required by regulations under Part 2 of the Bill. Regulations made under powers in Part 2 can require trustees or managers of schemes that provide collective benefits to have policies regarding a number of matters, including the factors used to calculate members’ benefits, the calculation of transfer values and the steps that may be taken to deal with a deficit or surplus.

Clause 32 makes provision for regulations in Part 2 which require trustees or managers to prepare or obtain any document, to include requirements about publication of those documents and about sending copies to a specified person. It was always the intention that any requirement imposed by regulations under Clause 32 could apply to policies about the operation of collective benefits, and these amendments put that beyond doubt.

The amendment to Clause 45 is about making the drafting clearer. The changes to Section 67A of the Pensions Act 1995 made by Clause 45 make any modification to an occupational pensions scheme that would replace a member’s accrued rights with a right to a collective benefit a protected modification, which can be made only if the member consents. This amendment makes clear that this provision applies only where the existing accrued right is not a right to a collective benefit.

I turn to a few minor amendments to Schedule 2, which amends existing legislation as a result of the changes in Parts 1 and 2. Paragraph 47 makes changes to Section 30 of the Pensions Act 2008. Section 30 deals with automatic enrolment and the transitional period that employers have to meet their automatic enrolment duties for defined benefits and hybrid schemes. The changes in paragraph 47 reflect the changes to scheme categories in Part 1 and replace references to “hybrid schemes” with “shared risk schemes”.

Amendment 49 simply replaces a stray reference to hybrid schemes that was missed when the Bill was introduced. Amendments to paragraph 50 of Schedule 2 remove an ambiguity in the drafting. Paragraph 50 makes changes to Section 99 of the Pensions Act 2008. Section 99 lists definitions used for the purposes of that Act. There are currently two separate provisions in paragraph 50 of Schedule 2 which relate to the definition of “defined benefit scheme”. One adds a new definition drawn from Part 1; the other is intended to remove the existing definition. The existing drafting is ambiguous and needs to be corrected. These amendments remove the ambiguity by replacing the two provisions with a single provision that simply substitutes the old definition with the new one. As collective benefits are now mentioned in the Pensions Act 2008, the definition needs to be added to Section 99, so Amendment 51 also adds a definition of collective benefit to that section.

I hope that noble Lords will agree that this package of amendments represents a necessary improvement to the clarity and accuracy of the Bill, and on that basis I beg to move.