Clause 13 - Provision of information,

Pensions Bill – in a Public Bill Committee at 4:30 pm on 9th March 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

This is another short clause. It gives the regulator the power to provide information, education and assistance to those involved in the administration of work-based pension schemes. Those people include trustees, managers and employers, and those who advise the trustees and managers of such schemes. The clause also enables the regulator to help employers understand and comply with any responsibilities that they may have to provide their employees with access to pensions information and advice.

Empowering the regulator to assist trustees, managers and advisers in that way will implement one of the key recommendations of the quinquennial review of OPRA, which is that a proactive regulator should encourage compliance through the provision of educational and guidance material. The new regulator will operate a proactive regulatory approach, and the provision of information, education and assistance is a fundamental constituent of that approach. We believe that providing assistance at an early stage may help to prevent larger, more complex problems from occurring later, and in the long run, that will mean better protection for members.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

It is hard to be against information, education and assistance, but we will have a go. An issue that the hon. Member for Havant (Mr. Willetts) often raises, to give him his due, is that of employers who are nervous about giving advice to their employees on pensions matters. Various rules about the giving of financial advice and about who can and cannot give it have scared them off.

Even if the employer runs a very good scheme and puts a lot of money into it, and even if he does so in a robust industry where everything is rosy, he cannot say to his workers, ''It's a good bet; you'd be well advised to go for it.'' The hon. Member for Cardiff, West is not with us, but if he were, he would already be on his feet to say, ''And look what happens when people do that.'' However, there is clearly a case for enabling employers to give their workers more advice about their occupational pension scheme. We know that even firms that run very good schemes with generous levels of employer contributions do not have 100 per cent. membership of those schemes. Life is never certain in pensions, but there are people working for such

employers in whose best interests it would almost certainly be to join the scheme, particularly in the world of the pension protection fund. At the moment, employers cannot even have a conversation with them about the matter.

How far will the clause enable the regulator—the bit on the open part of the wall—to support employers who want to say to their employees, ''We encourage you to join our occupational pension scheme''? To look back to an earlier discussion about the objectives of the regulator, one of those objectives is to promote schemes and occupational provisions. Surely one of the best ways to do that is to support employers who run good schemes in encouraging and informing their members about joining them. Will the Minister give the Committee a steer as to whether, under the clause, it is envisaged that the regulator will encourage and support employers who are currently frightened to talk to their workers about the company scheme for fear of being seen to give them advice, which they cannot do? Will that taboo be broken by the clause? If possible, we want employers to feel more confident about doing that. It is not clear to me whether that is something that the regulator would do under the clause.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I endorse the hon. Gentleman's important point; he kindly attributed the theme to my hon. Friend the Member for Havant. Certainly, even the best employers are nervous about the fact that they can end up being responsible for mis-selling by giving advice that turns out, through no fault of their own, to be duff. As the hon. Gentleman said, who can be against provision of information, education and assistance?

Apart from strongly endorsing that point, I wish to ask the Minister two or three questions. Subsection (1)(a) covers work-based pension schemes, so I presume that we are talking about the gamut of schemes and not only defined benefit, defined contribution, stakeholder, hybrid and corporate self-invested personal pension schemes. That is a good thing.

I wish to query—unusually from my perspective—subsection (4), which states that

'' 'assistance' does not include financial assistance''.

While I understand why the Treasury wants that provision to be part of the Bill, it seems that circumstances may arise in which it would be beneficial for the regulator to provide funding for training courses and so on. I am not talking about vast sums of money. One of the problems in the Bill that we shall come to later when we deal with trustees is that we are in danger of producing professional trustees. Ordinary folk, including even quite well-experienced and qualified people, may not be able or may not wish to take on the role of trustees with occupational pension schemes because of the onerous and complicated nature of such duties.

Various people in the industry have told me that there is a feeling that whether or not it is the Government's intention—it might be a matter of policy—they may end up with professional trustees being the norm. That is fine if a firm is running a big, corporate pension scheme, but not if it is a small

company with a few members, as paying a professional trustee or trustees to run a small scheme would be an aggravated cost. Is it not worth while to turn back as far as we can the trend that is set out in other parts of the Bill by trying to ensure that, when appropriate, existing trustees are given some financial assistance?

The hon. Member for Cardiff, West picked up on the point about conflicting desires. Many people wish to see more members of schemes acting as trustees. All things being equal, such action is valuable and should be encouraged when appropriate. However, will they feel outgunned and outclassed in a system that is becoming very complicated? Should they not be given the option, perhaps as a priority, of receiving effective training? My hon. Friend the Member for Bournemouth, West (Sir John Butterfill), who looks after our parliamentary pension fund, said that he and his fellow trustees were going on a training course or taking some exams. That is slightly rash, because what happens if they fail? But that is for another day.

On this occasion, however, the Government are being too modest. I do not see, as a matter of principle, why a system should not include financial assistance, particularly for training, and give people the wherewithal to continue undertaking such important tasks in what will become, with the best will in the world, an increasingly complex regulatory landscape.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I wish to disentangle the debate because some strands are running through it and some of the anxieties that have been expressed are not related to the clause. This provision is not about requiring employers to provide information on pensions to their employees or anyone else. We will be dealing with that later in the Bill, when we reach clause 195.

Under clause 13, the role of the regulator should be not only to investigate and to sanction, but to provide education and guidance. As my hon. Friend the Minister for Pensions said earlier, there is a spectrum of powers, from the hard-edge enforcement end to the softer end of education and guidance. That fulfils an important function running alongside the role of the Pensions Advisory Service in providing guidance to individuals on their position in relation to occupational pensions and their individual pensions plan.

The clause says that the regulator has a proper role to play in raising the pensions literacy not only of employers and trustees, but of the company community as a whole, to ensure that we have the sort of transparency and understanding that could provide protection against some of the tragedies of the recent past. I hope that hon. Members can accept that as an important role of the regulator.

Question put and agreed to.

Clause 13 ordered to stand part of the Bill.