Clause 34 - Register of occupational and personal

Pensions Bill – in a Public Bill Committee at 2:00 pm on 11th March 2004.

Alert me about debates like this

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

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

With your great help, Mr. Griffiths, my colleague and other hon. Friends steered us through this morning's discussions. I feel like one of those Arsenal substitutes running off the bench late in the game, although I may not look like one. I will not go any further or I will upset Manchester United supporters. The shadow spokesman, the hon. Member for Eastbourne (Mr. Waterson), who cannot be with us today, is probably a Manchester United supporter.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

I am the Member who represents virtually all the Manchester United players. Although I am not a Manchester United supporter, I do take an interest.

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

Most of its supporters are in the home counties, so the hon. Gentleman does not represent them. However, that is enough about football, Mr. Griffiths, as I suspect that yours is another game.

Let me deal with the first of the provisions that will be at the heart of the regulator's new proportionate and targeted approach to pensions regulation—its power to collect and analyse information about schemes. We touched on that this morning. The clause provides that the regulator must set up and maintain a register of pension schemes. The Occupational Pensions Regulatory Authority is currently under a similar duty to hold such a register in its capacity as registrar of occupational and personal pension schemes under the Pension Schemes Act 1993. To prevent there being any extra burden on schemes that are currently registered, their registrations will simply be transferred to the new register. There is unlikely to be any change in the type of schemes that are required to register and schemes with only one member will continue to be exempt from registration.

As well as fulfilling the requirement that the regulator must hold a register of pension schemes to comply with article 9 of the occupational pensions

directive, the register will be used to assist members of the public to trace their pensions. That is an existing service, which last year provided contact names and addresses for more than 25,000 requests. Lost pensions are a significant issue which we will address later.

Clauses 35, 36, 37 and 55 set out additional details on the information to be provided by schemes for the purposes of the register, the regulator's powers to make use of the information including the provision of reports to the Secretary of State, and the duties of trustees and managers in respect of the register. The Committee may wish to discuss those powers and functions when we deal with those clauses, but it might also be helpful to do so now.

We addressed important concerns this morning. Many issues have been raised about accurate data, to which the hon. Member for Northavon (Mr. Webb) and Labour Members referred. We want to turn the position around. The information and register powers that we will discuss when we deal with these clauses will address that. At the heart will be the scheme return, which has been trialled with the industry in draft form, and which it welcomes. The scheme return will allow us to start to compile the accurate data that we need for the future. The regulator will be able to require the information covered in the scheme return, as the usual section 10 penalties referred to earlier will apply in the event of any default.

It will not be for the regulator as an institution to keep a record of every last member of every last pension scheme. That would not be sensible; there are many hundreds of schemes and at least 10 million scheme members. However, it is for the regulator to find out if a scheme's records are bad. For example, it can issue an improvement notice if a scheme cannot provide members with information. Whistleblowers will often be important in that. The regulator also has an objective to promote good administration.

Photo of Adam Price Adam Price Spokesperson (Economy and Taxation; Education & Skills; Miner's Compensation; Regeneration; Trade & Industry)

Will the Financial Services Authority have to provide details of its pension scheme in the register? Will it come under the ambit of the regulator?

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

It is a public body. My understanding is that the provision will apply to private sector schemes and I suspect that the FSA does not come under that banner. However, it might be best if I deal with that by correspondence.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I am sorry to tax my hon. Friend's knees, which have obviously seized up on the substitutes' bench this morning. Does he anticipate that the regulator will instantly be able to say how many members of occupational pension schemes are in wind-up, for example, if it is asked that question?

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

Yes, we need to move towards that. It will be one of the purposes of the regulator, which will, with the PPF, sometimes be actively involved in that process.

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

As the Committee will have gathered, I welcome the provision of better information about schemes for the purpose of policy making and of better information to individual scheme members. As such, I welcome the group of clauses.

Information received from OPRA on the previous register always felt like a little slice of history because it was about schemes that had come to the end of the winding-up process. OPRA would not be the place to go if one were trying to work out what was happening and what would be likely to happen next year. Am I right in thinking that this register will not just be about what has happened to dying schemes, but will have a lot of information about current schemes, funding levels, and so on, thereby enabling us to get a better snapshot of what is happening now for the purposes of policy making?

Can the Minister reassure us that if we were to table questions in Parliament about the current state of occupational schemes, he would have access to such information? Clause 55 suggests that the regulator can make available information that is tangential to what the schemes are principally about. Will the register enable us to find out more about what is happening in occupational pensions and tell us more about now and the future, not just about the past?

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

While that is in my head, let me say that the brief answer to both questions is yes. We need more up-to-date information. That is one of the purposes of the regulator. Ministers will be able to answer those questions. I often sit at my desk hoping that the hon. Member for Northavon will ask me a few more questions so that I can justify my existence. I look forward to the questions that I am sure he is drafting even as he thinks.

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

I am slightly disappointed that my words stay for so short a time in the Minister's mind that he has to answer them the second he hears them. I shall persevere anyway.

The schemes must provide the regulator with information. Will the Minister say a bit more about where the Bill states that the regulator can require the scheme to keep better records? As he said, the regulator will not know the nitty-gritty about individual scheme members. However, those members need to know that there is good record keeping. Is that power explicit, clear and strong enough? I want to be clear about that. Perhaps the power is included in the Bill, but we have not got to it yet.

We welcome the collection of additional information. The only real concern, however, is how that feeds through to the individual scheme member. It was quite shocking to hear some of the information the Minister provided about schemes not knowing for how long people had been members. That is basic information. It is rather surprising that the previous regulator did not have that power. Perhaps the

Minister could assure us that the Bill explicitly says that the new regulator will actively pursue that kind of thing.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

I, too, have a few questions that the Minister could answer in a bunch with those asked by the hon. Member for Northavon.

We welcome this improvement of the pension scheme registry, which was designed to help people trace pension schemes and help collect the levy. It was not supposed to support the supervision or regulatory functions that we all agree are necessary. I refer hon. Members to the Public Accounts Committee's report on the matter. In many ways, the former system restricted OPRA's ability to cross-reference schemes and consider them if a trustee in one was found to be doing something improper. It could not cross-reference and see what other schemes that same trustee was involved in. The PAC goes so far as to say that in practice the pension scheme registry gave little assistance to OPRA.

We welcome the change. I suppose that both the Conservatives, who introduced the 1995 Act, and the Government, who have been sitting on that Act for six years, have to take some responsibility for not improving things a bit earlier. That was a finding of the all-party PAC. It felt that the gap in knowledge should have been addressed earlier, but we are where we are.

I have some specific questions. Under subsection (1), the regulator must compile and maintain a register. I suppose that the straightforward question is: where will the register be compiled? At the moment, the registry is in Newcastle, which is a fine place for it. We should put on record the fact that the Davis report—the quinquennial report commissioned by the Government—said that the pensions scheme registry was

''well run and efficient, with a motivated team of staff providing excellent customer service.''{**W4**}

That is very good news, and the registry should be given proper credit.

Davis goes on to say:

''However, their location in Newcastle, when the rest of the organisation is based in Brighton, means that they sometimes feel isolated from their colleagues and are seen as an 'outpost of empire'.''{**W4**}

That is a problem that Davis identified. I would be interested to know whether the Minister agrees with the quinquennial review. Are there any plans to move one operation from Brighton to Newcastle, or to move the operation in Newcastle down to Brighton? There are lots of marginal seats in Brighton, so perhaps the organisation will be staying there.

It would be interesting to know whether there will be any relocation, and if so, what will be done to help the staff relocate. If the register is to be much more actively used by the regulator, it might be difficult having registry staff at different ends of the country, even with today's modern technology. That point occurred not to me, but to the Government's own

quinquennial review of OPRA, so it might be worth the Minister's while to clarify the issue.

May I also ask about the cost of compiling and maintaining the register? When I looked through the regulatory impact assessment, there was very little detail. In fact, I could hardly find any reference to the register at all, although there is, of course, reference to the regulator. The regulatory impact assessment tells us that there will be a 25 per cent. increase in the cost of running the regulator. That means that the cost will go up by £6 million to £23 million. According to the assessment, that increase is due to increased staff numbers and accommodation costs, codes of practice, printing and IT.

There will also be one-off start-up costs of about £6 million, and a further £20 million will be needed for IT development. Those are considerable sums. I am assuming, and am asking the Minister to confirm, that the costs of compiling the register come within those costs. Perhaps he could give us an idea of what proportion of the extra costs the setting up and maintaining of the register account for. We would all be interested to know that.

It is worth asking the Minister whether he is satisfied with the IT that will be used. I am asking him that because one of my other functions is shadowing one of his Treasury Minister colleagues, and we regularly ask Treasury Ministers about their IT projects, because they are all hopeless—not the Ministers, I hasten to add, but the IT projects that the Inland Revenue commissions. The Department for Work and Pensions will, of course, be familiar with projects such as the NIRS2 project. I would be interested to know whether the Minister is satisfied that the IT scheme, which is not nearly as large as NIRS2, but is nevertheless a fairly extensive project, will be delivered on time and on budget. Does he, unlike his colleague the Paymaster General, regularly meet the people who provide IT for his Department?

Finally, subsection (4) requires the regulator to maintain a list of schemes that have ceased to be registrable or have been wound up. Will the Minister confirm that they will be recorded in perpetuity? A list of schemes that had been wound up would make great reading in a couple of hundred years' time. Subsection (6) says that

''the register may consist of more than one part.''{**W4**}

What does that mean?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions 2:15 pm, 11th March 2004

It would help me if I dealt with the questions in reverse order. I hope that the Committee will not be too confused by that approach. I am still thinking through the last question. I may not have fully grasped it, although if I can grasp the answer to it, that will be good enough. Yes, records will be kept in perpetuity. Whether I can talk with any weight about the intergalactic authority of the fifth millennium, I am not certain, but I am sure that in some way they will imbibe Hansard, and these proceedings, and understand the meaning of my pledge. I must add that that was not a pledge to expand the European Union—I accept that such matters are controversial to some people.

At present, there are six members of staff at the registry in Newcastle, but in future the registry will be based in Brighton, despite the fact that, notwithstanding what the hon. Gentleman said, Newcastle thinks of itself as the centre of the empire. However, we will not dwell on that. It is a minor slur—if that is not an unparliamentary term—to suggest that we are basing the registry in Brighton because of the marginal seats. That is not the reason. [Interruption.] We thought about Tatton, but because electoral considerations are not a criterion, we are not basing it there.

The Committee knows about the increasing costs of the regulator vis-à-vis OPRA. That is the best cost figure we have. When I recently visited OPRA—not that it can take parliamentary judgments about the Bill for granted—it was beginning seriously to think through the IT implications of the move. I understand the hon. Gentleman's caution about IT. Some projects are not as good as others, although that is not always true of my Department. We have many success stories.

To make sure that I get things absolutely correct, I shall write to the hon. Member for East Carmarthen and Dinefwr (Adam Price) about the Financial Services Authority. My understanding is that, as it is a public body, the FSA's pension scheme would not come under the ambit of the regulator. I shall clarify that, however, although I think that the answer will be no. We certainly want the regulator to work closely with the FSA on a range of issues in the future. Although it would be mildly amusing for it to be regulating the FSA's pension scheme, that will not be the case. If I have got that wrong, I shall clarify matters later.

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

I am grateful to the Minister. The FSA was a specific example, but there is a wider issue about the security of pension rights of public sector workers in general. I am sure that there is a cross-reference—although I cannot find one—about the register relating to schemes outside the public sector. Surely members of public sector schemes might want to track down what happened to their pensions and want reassurance about whether their schemes are adequately funded. Such considerations stray into the public sector, and I hope that the hon. Gentleman can enlighten us about them.

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

May I do that in writing? I take the point that people might be members of different public sector schemes and that tracing is of some importance. As I said in my opening remarks, the regulator will identify bad records via whistleblowing reports and scheme returns. It can then issue improvement notices.

I will be able to say more about where information issues are in the Bill, and how we will gather information, soon, when we get to clause 35. If the hon. Member for Tatton (Mr. Osborne) or any Committee member would like to visit the Occupational Pensions Regulatory Authority, that could be arranged. I hope that I have covered most of the questions to the satisfaction of Committee members, and I ask them to support the clause.

Question put and agreed to.

Clause 34 ordered to stand part of the Bill.