Clause 38 - Duty of the Regulator to issue scheme return notices

Pensions Bill – in a Public Bill Committee at 2:45 pm on 11th March 2004.

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

Photo of George Osborne George Osborne Shadow Minister (Treasury)

I have a couple of minor queries about the issuing of scheme returns. I wanted to question the need for the long period mentioned in subsection (3)(a), which says that the regulator only has to issue the demand for information within three years of the regulator being informed that there is a new scheme. Three years strikes me as quite a long time; I should be interested to know why the Government chose that period.

There was some confusion in my mind when I was reading the Bill about the following: under clause 37(2), once the scheme is set up, the trustees and managers have to send in certain registrable information within three months. However, clause 38 seems to imply that the decision to comply with clause 37 is voluntary; clause 38(3)(b) says that

''if the trustees or managers have complied with paragraph (b) of section 37(2)''

they only have to provide information a year later. That seemed to imply that there was a voluntary element to complying with the previous clause and the request for information. I may have misunderstood, but that is how the matter seemed to me.

To reiterate my first point, why such a long period? Why three years? Why not one year, as might seem more reasonable?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

On the first point, the regulator will issue scheme return notices—that is, the requests for information—to each scheme. On the frequency of scheme returns, they will be not more than annual and not less than triennial. The frequency is to be determined by the regulator, but will be based on risk factors. Those schemes that are well run and well administered may be required to complete returns less

frequently than those schemes where risk factors are present, so the approach that we are suggesting is proportionate.

A scheme return notice will require provision of all registrable information in relation to the scheme, and any other information in relation to the scheme that is requested by the regulator to enable it to exercise its functions. The emphasis is, therefore, on proportionality. As in all things, we want to get the balance right between proper scrutiny of all schemes and more scrutiny of those schemes that might be at risk. That is our approach.

On the second question, which was the suggestion that the provisions could be voluntary, the hon. Gentleman has misunderstood. Would it be helpful if I wrote to him on the textual points? My understanding is that we are not talking about a voluntary provision, because that would undermine the whole purpose of the Bill.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

Well, it certainly would. I should be grateful if the Minister would write to me and explain it. I hear what he says about wanting some flexibility. Presumably, that means that well run schemes do not have to provide the same amount of returns.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I apologise if I am not intervening at the appropriate time, but I want to give the hon. Gentleman more information on his substantive point. Scheme returns will also be issued. We often forget about the personal pension providers but, as a generality, they are likely to be issued every three years. However, defined benefit schemes—the core of the Bill—will have a scheme return each year. I am generalising, but they have a higher risk for members.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

The flexibility concerning annual returns has now evaporated. It was important for the Minister to clarify the position.

Question put and agreed to.

Clause 38 ordered to stand part of the Bill.