Clause 55

Pensions Bill – in a Public Bill Committee at 3:15 pm on 31st January 2008.

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Procedure for rules

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Work & Pensions

I beg to move amendment No. 31, in clause 55, page 26, line 19, leave out ‘have regard to’ and insert ‘take account of’.

This is a cheeky little amendment but it deserves an outing. It is the procedure for rules that are made under clause 50 in setting up the scheme. The clause starts well by saying that anyone who is proposing these rules

“must publish a draft of the rules and invite comments.”

So far, so good. It then goes on to say:

“They must have regard to any comments made in accordance with the invitation.”

Having checked the Oxford Dictionary, it seems to me that to “have regard” is a pretty weak injunction on people; it might just invite the odd glance and will then be ignored completely. We are proposing to toughen that up and say, “take account of”, which is a rather sterner injunction and one which we think perfectly appropriate in these circumstances.

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

Appointing a trustee body to run an occupational pension scheme, which is part of wider Government reforms, presents a challenge in balancing independence with accountability. This is exemplified in the arrangements for the scheme rules. The scheme rules will include much of the day-to-day detail of how the personal accounts scheme will be run—hence the trustee body needs to have a high degree of independence in making the rules. However, the scope of the rules will be limited by the parameters set in the scheme order, which we have previously been discussing and will be subject to parliamentary scrutiny. That approach to the rule gives Parliament control of the scope of personal accounts but allows the trustee independence in the day-to-day administration and operation of the scheme.

The amendment concerns how comments about rule changes would be considered by whoever was making the rules, whether a trustee or the Secretary of State. It may be helpful to explain what we anticipate the rules covering. The rules will include the set-up and operation of any committees that the trustee chooses to create, the establishment of an internal complaints procedure and any information about investment, such as how many changes to funds a trustee can make each year. That is far from being set in stone; it is a broad assumption based on practice in existing large schemes. We expect that the trustee generally will be responsible for making and amending the rules after the initial set-up.

The duty to consult placed on both the Secretary of State and the trustee will ensure that the views of all interested parties such as members, employers and the wider group of stakeholders are considered in the design of the scheme rules. That requirement to consult ensures engagement and involvement without fettering the independence of the trustee. The Bill already requires the rule-maker to have regard to any comments that they receive and to publish a general response. The hon. Gentleman’s amendment appears to seek greater assurance that the rule-maker will consider any comments received.

The current drafting is sufficient. The phrase that the hon. Gentleman uses—“take account of”—does not take us an awful lot further but it does appear to fetter a trustee’s freedom and independence in a way that “have regard to” does not. I appreciate that he takes us a bit further but there is both a price and a balance here, and the price in terms of fettering the independence of the trustee is one that we need to approach with caution.

I do not have enormously strong views here but I think that we are attempting to strike a balance by requiring the trustee to “have regard to”, whereas, by saying that they have to “take account of”, the hon. Gentleman raises questions such as, “How do they take account of it”? How do they prove that they have taken account of it? Do they have to do something in response?

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

I think that I have convinced the hon. Gentleman. There are signs of submission and on that basis I will sit down.

Sitting suspended for a Division in the House.

On resuming—

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Work & Pensions

I heard what the Minister had to say—he is obviously so pleased with himself that he has gone off for a mini-break or something. There is a real difference in the wording here, but I do not want us to descend into a dispute about pure semantics. In the interests of sanity, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 55 ordered to stand part of the Bill.

Clause 56 ordered to stand part of the Bill.