Clause 91

Pensions Bill – in a Public Bill Committee at 11:30 am on 19th February 2008.

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Charges in respect of pension compensation sharing costs

Amendments made: No. 173, in clause 91, page 42, line 32, after ‘order’ insert ‘or provision’.

No. 174, in clause 91, page 42, line 32, after ‘provision’ insert ‘(“provision for apportionment”)’.

No. 175, in clause 91, page 42, line 34, at end insert ‘for apportionment’.

No. 176, in clause 91, page 42, line 35, after ‘order’ insert ‘or provision’.

No. 177, in clause 91, page 42, line 35, leave out ‘such provision’ and insert ‘provision for apportionment’.

No. 178, in clause 91, page 42, line 39, at end insert ‘or provision’.—[Mr. O'Brien.]

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

Photo of Danny Alexander Danny Alexander Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey

I am sorry to slow progress for just a second, but I have a couple of questions relating to this clause, about child use and pension compensation-sharing costs. The clause gives, again, very broad powers for the Secretary of State to make regulations to allow the PPF to recover charges, and I guess that that is quite usual in the cases of pension compensation sharing on divorce. None the less, it would be useful if the Minister could give at least some reassurance that these charges will not be excessive, and that they will be in line with charges in normal such cases, so that anyone reading our proceedings can be clear that the intention of the clause is not in anyway to have punitive or excessive charges, and that whether he  intends through regulations to put any constraints on the PPF in terms of the range of charges that it may or may not be allowed to levy in such cases.

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

The board of the PPF intends to charge costs based upon the National Association of Pension Funds’ recommended scale of charges. It is broadly accepted that that is best, so that is the basis upon which it will act. That means that divorcing couples will be charged roughly as the pensions share compensation as they would be charged to share aid pensions. The sharing order will normally apportion costs, but the clause provides for the payment by the transfer, or where that is not the case.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

For clarification, is that in terms of an hourly rate, or is it a percentage of the funds?

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

I can give some information about the way in which these rates are charged. The PPF intends, as I say to follow the NAPF charging rates. I have here some quite detailed charging rates about pension-sharing costs for active and deferred members, which I can pass onto the hon. Gentleman. I am looking at a table, which talks about cash equivalent transfer values. Where the cash equivalent cash transfer value is between £150 and £200—[ Interruption. ] It would probably be easiest if I passed the document around the Room. The figures are somewhat complex but, essentially, not unreasonable. As I have already indicated, the maximum is £3,000, but the figures charged depend on the cash equivalent transfer values at various different stages.

Photo of John Greenway John Greenway Conservative, Ryedale

I sympathise with the Minister’s difficulty in understanding those figures. In my experience, the biggest problem is not the fees, which seem to be wholly reasonable, but the calculation of the cash equivalent transfer value. That is not mentioned in the clause and is an entirely separate matter.

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

The hon. Gentleman is quite right. The cash equivalent transfer value might well be an issue, and we must ensure that we have sufficient time to consider that. We have already discussed that matter. However, the fees set down on the right hand side of the document that I am handing round the Committee range from £150 up to £2,550 through a range of different figures. Those are the figures that run down the right hand side of the column. I thank the hon. Gentleman for the question, and I hope that with that reassurance we can move on.

Clause 91, as amended, ordered to stand part of the Bill.