Amendment made: No. 319, in
clause 181, page 114, line 43, leave out from 'and' to end of line 44 and insert '—
(a) the effective date of the first actuarial valuation must be not more than one year after the establishment of the scheme, and
(b) the effective date of any actuarial report must be not more than one year after the effective date of the last actuarial valuation, or, if more recent, the last actuarial report.'.—[Malcolm Wicks.]
With this we may discuss the following:
Government amendment No. 324.
Amendment No. 265, in
clause 183, page 116, leave out lines 8 and 9 and insert—
'(6) The trustees and managers of the scheme must send a copy of any recovery plan to—
(a) the Regulator, and
(b) organisations representing the pensioner members of the scheme, and
(c) recognised trade unions,
as soon as reasonably practicable.'.
Government amendments Nos. 325, 326, 332, 333, 335 and 340.
Amendment No. 255, in
clause 188, page 119, line 39, at end add—
'(5) In exercising any of the powers conferred by this section the Regulator must inform—
(a) recognised trade unions, and
(b) organisations representing the pensioner members of the scheme
as soon as is reasonably practicable.'.
Amendment No. 260, in
clause 113, page 70, line 8, at end insert
( ) recognised trade unions and organisations representing the pensioner members of the scheme.'.
Amendment No. 261, in
clause 116, page 71, line 40, at end insert
'( ) recognised trades unions and organisations representing the pensioner members of the scheme.'.
Amendment No. 263, in
clause 122, page 77, line 9, after 'Regulator', insert—
'( ) recognised trade unions and organisations representing the pensioner members of the scheme.'.
I am sorely tempted to go through each amendment and to set out the basis for Government amendments Nos. 324, 325 and so forth. However, I do not want to deny the Minister that pleasure, so I will refrain and simply speak to amendment No. 281.
The amendment stands in my name and that of my hon. Friend the Member for Chesterfield (Paul Holmes). However, during this afternoon's sitting I will be elsewhere, responding to the Budget debate, and may not be present at the end of the debate on this group of amendments. If it is in order for him to do so, the hon. Member for East Carmarthen and Dinefwr (Adam Price) will judge whether the Government have responded properly to the amendment and whether to withdraw it. I hope that that is acceptable.
''any actuarial valuation or report obtained by''
the trustees or managers should be
''made available to the employer within seven days of their receiving it.''
The amendment would require the valuation or report to be supplied not only to the employer, but to recognised trade unions and groups representing retired scheme members. We are not asking for what might be a lengthy document to be sent to potentially hundreds of thousands of scheme members; that would clearly be impractical. However, we think that sending a handful of copies of a detailed report to organisations such as trade unions or pensions organisations would be a reasonable obligation.
The benefit of discussing the amendment is that we might also get a clearer sense from the Minister of the enhanced information flow to scheme members that will arise. My understanding is that, under the Bill, scheme members may start to get more information, perhaps about the funding position of schemes. If the Minister gave a reassurance that scheme members would get annual information about not only their individual rights but about the overall funding position of the scheme in a form that was intelligible
to them—I stress those last few words—then the amendment would not be necessary.
Two different things are going on. Under the amendment, a technical actuary's report, as mentioned in the clause, would be sent to organisations that might reasonably be expected to understand it, such as trade unions or pensions organisations. It may well not be appropriate to send such information to individual scheme members, who would probably not be able to understand such a report. If the Minister gave an assurance that scheme members would get a regular and clear picture of whether their fund is well funded, and, if it were not, what would be done about it, then the amendment would become less important.
The requirement under the amendment is unonerous—if there is such a word. Simply sending the report to two or three organisations to complement the information that individual scheme members will receive seems a fairly modest request.
I will not make any comment on the new alliance between the Liberal Democrats and Plaid Cymru—what with the Conservative party trying to move Government amendments formally, a new alignment in British politics seems to have started today.
I will concentrate on the amendments tabled by the hon. Member for Northavon. We agree with the amendments in principle. We know where the hon. Gentleman is coming from and we have the same objectives. As he said, they require certain information about scheme funding to be sent to trade unions and organisations representing pensioner members of schemes. I shall not go through all the different amendments. They have much the same purpose.
The Government wholeheartedly support the view that members of defined benefit pension schemes should receive information about how their pension scheme is funded and its funding position. As I said in my opening remarks on part 3, we shall require much greater transparency about those issues, using existing powers to make regulations concerning information that must be made available to all members and to recognised trade unions. We already require actuarial valuations to be made available on request. The Bill will put actuarial reports and recovery plans on the same footing, so that they, too, will be available to anyone who wants to see them, as will statements of funding principles.
We also intend, by regulations under clause 165, to require trustees or managers to disclose to members and recognised trade unions information relating to the exercise of the functions of the board of the pension protection fund. We shall consider those provisions under part 2. Further provision in that respect, which the amendments would bring about, would be unnecessary duplication.
The amendments would also require disclosure to organisations representing pensioner members. However, in contrast to trade unions, pensioner representative groups have no precise legal definition,
which would make it difficult for scheme trustees to determine their status. As I said, trustees will anyway be required to disclose the information to all scheme members, including pensioner members.
Nevertheless, I accept that where recognised pensioner organisations exist, it is important for schemes to communicate properly with them. As hon. Members will remember, we had a lengthy debate about that last week, with respect to consultation about arrangements for member-nominated trustees. The procedures in the provisions that we are now considering may give us a basis for thinking further about increasing the involvement of pensioner organisations in relation to information on scheme funding and perhaps other things such as member-nominated trustees.
There may be scope for regulator guidance to encourage best practice. In the case of scheme funding, that could be achieved by enabling members or their representatives in trade unions or pensioner organisations to register to receive the documents automatically and regularly. We shall certainly consider what could be achieved for pensioner members in that way.
Additionally, and most importantly, we shall require the trustees of all defined benefit schemes to send all members, including pensioner members, an annual statement on the funding position of their scheme. I think that that directly answers the point made by the hon. Member for Northavon and it will be welcomed in the Welsh valleys. The report will be based on the last full valuation, supplemented by any actuarial reports for intervening years, but it will be an assessment of those reports, rather than the reports themselves. Alan Pickering made the point in his report that
''communication with members should be tested to see whether it is understandable'',
which reinforces the point that has been made about plain English.
While the full actuarial valuations and reports will be available to those members who want to see them, we recognise that in that form they are unlikely to be of much direct use or interest to most scheme members. Our intention is that the amendments to the disclosure regulations will require that the funding statement give members clear information about the funding position, including whether a recovery plan is in place and, if so, what steps are being taken, over what period, to make up the deficit.
The statement will also say whether the regulator has made any directions on the funding of the scheme, using any of its powers under clause 188 or other provisions in the Bill. In addition, we shall require the funding statement to contain information on the likely position of members if the scheme were to wind up with funding at its current level, including the protection offered by the pension protection fund.
I assure hon. Members that we shall consult interested parties as we develop detailed proposals for the disclosure requirements for secondary legislation. In short, I trust that hon. Members will now see that the proposed measures will introduce a
wider and more meaningful process of disclosure than simply copying the scheme actuary's advice to representatives groups. I put a lot of emphasis on the way we as individuals communicate, and I will ensure that the provisions are written in a way that folks can understand. They are, after all, those with the most direct interest in the matter. I ask the Opposition Members to withdraw their amendments.
My amendments Nos. 260, 261 and 263 eerily mirror those in the name of the Liberal Democrats—it must have been a photo finish to get them tabled—and they make the same points. I endorse what the hon. Member for Northavon said in support of them and I am very encouraged by the Minister's comments.
In our discussions on part 1, we attempted to define pensioner representative groups. I appreciate that there must be a legal definition otherwise any self-appointed busybody could claim to represent pensioners. The Minister is welcome to build on our draft definition, if he sees fit, when making his own recommendations.
Amendment No. 265 is not dissimilar to those that I have already discussed. It deals with the fate of the recovery plan. We have said that it must go to the regulator, organisations representing pensioners and trade unions, and it sounds like a means will be devised by the Government to ensure that that happens.
Amendment No. 255 states that the regulator must inform trade unions, pensioners organisations and so on when exercising powers. It is clear that the Government have accepted the spirit of the amendments.
Here we are again. I welcome what the Minister said about scheme members receiving information about the funding position of their fund and not merely about their own individual entitlements. I also welcome the commitment to plain English.
The Minister says that the technical documents are available on request, but I am not sure that the trade unions or the pensioners organisations would
necessarily know that they had been written. There might be a problem when there are bad relations between them and trustees. We are discussing actuarial evaluations or reports obtained by the trustees, which presumably will not be regular. Although the unions and pensioners organisations will be able to ask for them, I am not sure that they will always know that the documents exist.
I will check the details, but in the case of scheme funding, communication might be achieved by enabling scheme, organisation or union members to register to receive documents automatically and regularly. It might solve the problem that the hon. Gentleman identifies.
It might well. The Minister mentioned the concept of registration, and if one had the legal right to register, it would help.
The Minister said that the provisions in our amendment could not be undertaken because the concept of a pensioners organisation does not exist in law. Last night, we tabled amendment No. 404 to clause 241, which tries to define in law a pensioners organisation. We are happy for the Government to propose an alternative, and this might be just the Bill in which to do it. Reassured by the Minister's response, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause, as amended, stand part of the Bill.
I have a couple of points to make on stand part. They are issues requiring clarification which have been put to me by the National Association of Pension Funds, and there was no time to table formal amendments. The Association says that there should be clarity about the transitional provisions between the timing of the first actuarial evaluation following the enactment of the Bill and the end of the old MFR evaluations. How long will they remain valid?
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.