Clause 25

Pensions Bill – in a Public Bill Committee on 29th January 2008.

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Miscellaneous

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

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions) 4:00 pm, 29th January 2008

Thank you very much, Mrs. Anderson. I have not had the opportunity of welcoming you to the Chair in the amending part of our deliberations. I would like to give my apologies for the morning session. I had a hospital appointment that I have had to cancel on a number of previous occasions.

I just have one brief question for the Minister on clause 25 in relation to subsection (4) and paragraph 71 of the Explanatory Notes. Could he please outline what type of schemes this subsection has in mind when it says that those schemes will not be eligible for auto-enrolment by virtue of the power given to trustees to modify a scheme?

Photo of Mike O'Brien Mike O'Brien Minister of State (Pension Reform), Department for Work and Pensions

The purpose of clause 25 is to enable trustees to modify an occupational pension scheme that otherwise meets the quality criteria but does not allow for automatic enrolment. This power would be used where there are limited powers of amendment within the scheme. It would provide trustees with a power to change the scheme rules to allow automatic enrolment, as some schemes currently just do not allow it. Changes can only be made with the consent of the employer.

It is important that both the trustees and the employer agree on the matter and that the trustees must consider the interests of existing members in this decision. The employer, who meets the administrative costs and balance of any defined benefit funding requirements, must consider any additional costs arising from automatic enrolment. This is a limited power, as it only provides an override for rule changes necessary to facilitate automatic enrolment and can only be made with the employer's agreement, in circumstances where at the moment scheme rules do not allow it.

The regulations will provide that the subsection does not apply to occupational pension schemes within a certain description, so they will identify the nature of the particular schemes this will apply to. All this will be set out in more detail in those regulations. We want to ensure we are able to discuss with various trustees’  organisations and business groups which types of schemes we will need to cover when the regulations are introduced.

Question put and agreed to.

Clause 25 ordered to stand part of the Bill.