Clause 89

Pensions Bill – in a Public Bill Committee at 11:15 am on 19th February 2008.

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“Implementation period”

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

I beg to move amendment No. 7, in clause 89, page 41, line 17, leave out ‘4 months’ and insert ‘2 months.’.

Photo of Janet Anderson Janet Anderson Labour, Rossendale and Darwen

With this it will be convenient to discuss amendment No. 10, in clause 91, page 42, line 24, leave out paragraph (a).

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

On the same theme that I raised on clause 88, I am curious about where the figure of four months for the implementation period has come from, given that four months is quite a long time for someone on a low income to be without money that they should regard as rightfully theirs. This is a probing amendment—we have not alighted on a specific period of two months. I will be grateful if the Minister will comment on whether that period of four months could be reduced.

Amendment No. 10 is another probing amendment to find out why the implementation period can be postponed in prescribed circumstances and why that is necessary. Again, we are looking at the matter from the point of view of people who are in straitened financial circumstances and hardship and do not have the share of a pension that is rightfully theirs.

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

I echo the hon. Gentleman’s point and query why four months is deemed to be a reasonable time period in such cases. The Minister might have a good reason for alighting on the particular period of four months, but it seems appropriate that in such cases—particularly for those on low incomes who might need that money more  quickly, such as people who are already in receipt of pensions—four months, if that is to be the period, should be the longest period and there should be an aspiration to get these things done more quickly. Perhaps the Minister has picked up on the four-month period due to the way in which arrangements work in other cases. For some people, four months could be a significant period of time and a cause of hardship, so I hope that the Minister will at least take that point on board when he responds.

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

The four-month time limit in the Bill is the same as that for implementing a normal pension share, so the hon. Member for Inverness, Nairn, Badenoch and Strathspey is quite right that we have looked at arrangements that apply in other areas and taken that as the standard. That same time limit was arrived at following consultation involving the judiciary, family lawyers and trustees of pension funds. It is important that compensation sharing does not depart unnecessarily from established principles for pension sharing. Inappropriate changes would lead to additional complexity and create confusion and uncertainty, and having different time limits would seem to run counter to our aim. We take the view that this is what would normally be the case, and therefore we would apply those criteria.

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

I understand that we might need to have the period of four months. However, could it be possible—or would the Minister like it to be best practice—to try to make the implementation period shorter? I am wary of setting down four months in legislation so that the solicitors and the PPF think, “We have four months, so we do not need to worry,” or, “We have three months, three weeks and three days, and that is our statutory duty,” when if things could be done quicker, no hardship would have been caused. That would be a good thing to try and achieve.

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

Normally the process would be done more quickly. Four months is a maximum, and the aim would be to get things done within that time. However, to implement a compensation share, the PPF must calculate how the order will reduce the transferor’s compensation, and calculate the level of compensation due to the transferee. That will take time and must be done accurately. Once that is done, the PPF must ensure that correct arrangements are in place so that the two parties receive the correct payments and are informed of their new entitlements. They should also have the opportunity to respond to the figures that they have been given, and to raise any queries about the accuracy of those figures. In divorce cases, lawyers want to query just about everything, especially if there is a level of conflict.

Where the transferor is already receiving monthly payments when the order, or qualifying agreement in Scotland, is made, it would be necessary for the PPF to give the person notice of the date that their payments will be adjusted and, if appropriate, put in place immediate payments for the transferee. The PPF makes payments monthly, in advance, on the first of every month. Therefore it must have enough time to put those arrangements for payment in place.

In that sense, the period is a maximum. As part of best practice we would want the process to be done more quickly than the maximum time, and I understand that in most cases, for pension sharing, it is possible to do so. However, two months would clearly be too short a period if, for example, a calculation was made and the amount of that calculation and the way in which it was arrived at led to a dispute between lawyers. That dispute has to be resolved, and in the meantime there are lawyers who, with their usual speed, exchange letters and do the work when something arrives on their desk.

Such processes always take time, and it is unlikely that two months would be sufficient, although I accept that the amendment is probing. I wish that we could change the culture of lawyers, but that is, I think, a bit beyond our ken. We should stick with the current basis upon which changes are made. In answer to the hon. Gentleman, best practice would be a shorter period. This is the maximum, and we want to stick with the rules as they more generally apply to pension sharing.

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

I am reassured by what the Minister has said about best practice, and that he has noted the importance of trying to get things done right and as quickly as possible. He said that four months is a maximum, not a target to be aimed for. Having heard that reassurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 172, in clause 89, page 41, line 24, after ‘order’ insert ‘or provision’.—[Mr. Mike O'Brien.]

Clause 89, as amended, ordered to stand part of the Bill.