Clause 27 - Notification of trustees, managers,

Pensions Bill – in a Public Bill Committee at 10:15 am on 11th March 2004.

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Amendment made: No. 28, in

clause 27, page 17, line 33, leave out from 'If' to 'who' in line 35 and insert

'the trustees or managers of a scheme fail to comply with a direction to them contained in an order made under subsection (3), section 10 of the Pensions Act 1995 (c.26) (civil penalties) applies to any trustee or manager'.—[Mr. Pond.]

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

Photo of George Osborne George Osborne Shadow Minister (Treasury) 10:30 am, 11th March 2004

The clause requires the regulator to inform

''trustees or managers of the scheme, and . . . the employer in relation to the scheme, of the fact that the''

freezing

''order has been made''.

We debated whether the regulator should do that within 24 hours or as soon as was reasonably practicable. I do not propose to rerun that debate even if you allowed me to, Mr. Griffiths.

However, there is a difference between the treatment of the provision of information to trustees, managers and employers, and the treatment of provision of information to members of a scheme. Under subsection (2), the regulator ''must'' inform the trustees, the manager and the employer. However, under subsection (3),

''The Regulator may . . . direct the trustees or managers . . . to notify''

scheme members. Presumably, he may not. In other words, a regulator might know that there is an immediate risk to a scheme and impose a freezing order, and then tell the managers and employer, but not the scheme members, who would be the only people kept in the dark. Certainly, I would want to know if my scheme—the parliamentary scheme—were subject to a freezing order and would expect someone to tell me that.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

Thankfully, I will be here for a very long time, so I could easily wait six months.

There is a serious point to be made. Surely we want members to know about a freezing order and to be given all the information necessary. If it is in place for only a day, it might be impractical to try to inform all the members, so perhaps there should be a requirement to inform members of the scheme only if the freezing order is for longer than a month or two months. Perhaps the regulator would inform the members in those circumstances anyway, but it would be useful to the Committee if the Under-Secretary gave us an idea as to why the Government felt that it was not necessary to require schemes to inform their members. Perhaps he could also set out how the Government hope the regulator will act in such situations and how he or she will exercise the discretion provided for in subsection (3).

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

I agree wholeheartedly that we want members to know about the circumstances and requirements of freezing orders. Although the regulator will have relatively easy access to trustees, managers and employers, we are talking about a wide variety of schemes. Some are large, some are small, some are spread across different sections of a company and some are spread across borders. Therefore, ensuring the regulator's quick access to members is much more difficult. It is for that reason that the Bill requires the trustees, managers and employers to be informed by the regulator, and the regulator may inform members. Indeed, where there is easy access to the membership, the regulator will probably decide to do that.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I understand the Under-Secretary's explanation, but would it not be possible for the regulator to direct the managers and trustees to inform the members as soon as is practicably possible?

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

I welcome that point and reassure my hon. Friend that the regulator will have the right to instruct the trustees and employers to inform the membership. That recognises that it will be much easier for trustees and employers to inform the membership than it would be for the regulator, as trustees and employers can do so through notice-boards, newsletters and normal correspondence with their employees. That right will exist and the regulator will use it when appropriate.

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

The Under-Secretary touches on the important issue of the quality of information that schemes keep on their members, such as where their members are and their rights. Recently, in one appalling example, the Government wanted to introduce a change of priority and a winding-up order, but could not because the scheme's records were so bad that they did not know how long people had been in it. The clause has been framed in such a way because the data on members can be awful. Do the Government have plans to ensure that the information that schemes keep on members is much better than it has been?

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

The hon. Gentleman raises an important point. I hope that we will deal with the information requirements of the Bill very soon. Those requirements will explicitly address his concerns.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

May I take the Under-Secretary back to his exchange with the hon. Member for Cardiff, West (Kevin Brennan)? Subsection (3) states:

''The Regulator may . . . direct the trustees or managers of the scheme to notify . . . the members''.

I am not sure why that should not be a requirement rather than a right. It should be a requirement of trustees and managers to inform scheme members that their scheme is subject to a freezing order. Why is there not that mandatory requirement? Even where there are poor scheme records, the trustees could place an advert in a newspaper if they had to. That might be a blunt instrument, but at least they could make an attempt to inform scheme members.

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

That goes to the heart of the nature of the regulator. It is a new kind of regulator, which is intended, as I said the other day, to be light on its feet, flexible and responsive, and able to use evidence-based decision making. It is not sensible to include in the Bill how the regulator will ensure that members receive the appropriate information. That would tie the regulator and perhaps impose additional administrative burdens on employers and the regulator itself.

In circumstances in which the regulator has easy access to the membership—perhaps in a small scheme—it is sensible that it informs members. In other circumstances, the regulator may have to require the trustees and employer to inform members. In yet more circumstances, the trustees and the employer may be fully co-operative with the regulator and will automatically inform their members of the new circumstances and the freezing-order requirement. The Bill provides for that flexibility.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I am grateful for the Under-Secretary's explanation. Is he saying that, in practice, members will be informed as soon as practicably possible by one or other of the means that we have debated?

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

That certainly is the intention. We want to ensure that members are fully informed as quickly as possible and with as much accuracy as possible.

Question put and agreed to.

Clause 27, as amended, ordered to stand part of the Bill.