Clause 90

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

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Discharge of liability

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

I beg to move amendment No. 8, in clause 90, page 41, line 39, at end insert ‘and transferor.’.

Photo of Janet Anderson Janet Anderson Labour, Rossendale and Darwen

With this it will be convenient to discuss amendment No. 9, in clause 90, page 42, line 12, leave out subsection (8).

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

This is a small point relating to clause 90(2), which says that a notice must be sent to the transferee. There is nothing wrong with that and we certainly expect that to happen. However, that is also a significant event for the transferor, and it seems entirely reasonable that the person who is having their pension reduced and the person to whom a pension is rightly being paid should be informed in writing about what is happening. The Minister might agree, but we shall see.

I apologise for there not being an explanatory note to amendment No. 9, but we tabled it before the explanatory note system was in place. My concern about subsection (8) is that, albeit in a few circumstances because of biology, as it were, dependent children could lose out on what would have come to them as a result of the death of one of their parents.

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

The clause sets out how the board of the PPF discharges its liability under a compensation-sharing order following a divorce, annulment, dissolution of a civil partnership or a nullity. It is important that the board can be certain that it has discharged its liabilities and that the parties to the divorce or dissolution are properly notified about how that has been done.

The clause makes it clear that liability is discharged when the notification is sent to the transferee that the sharing order has been implemented and that they have compensation rights in the PPF. Clearly, that cannot happen if the transferee has died, for example. Instead, we need to look at the rights of others on the death of a person. When members die, the PPF pays compensation to surviving spouses, civil partners, unmarried partners and dependent children when the scheme’s rules make the appropriate provision. That is why we need to ensure that, when the transferee dies before the transfer is complete, the correct compensation rights are created for their surviving partner or children. That is no different from the way in which the PPF would pay survivors benefits following the death of members after the transfer was completed. However, because the implementation is not complete, that is potentially a complex and somewhat technical matter, which is why the necessary provisions will be set out in regulations. Amendment No. 9 would remove the power to make those regulations.

Amendment No. 8 would mean that the board would have discharged its liability only when it had notified both the transferor and the transferee of the new rights created for the transferee by the compensation share. Clearly, it is right that both parties receive appropriate notification of the outcome, but discharging liability is different from merely providing information. It is right that information should be given to both parties on the outcome of the compensation-sharing order.

Regulations made under clause 93, which covers the supply of information about compensation sharing, can specify the information that the board of the PPF will have to provide to the parties in consequence of the implementation of the sharing order. The regulations will make sure that both parties to the divorce or dissolution receive the appropriate information about how the sharing order has been implemented.

Amendment No. 8 is thus unnecessary and has the potential to create ambiguity. We need a clear determination of when the legal process for the PPF board is completed. The clause sets out that legal process. It does not mean that the other party will not be informed. We intend to ensure under regulations that the other party will be informed, but it will not be a necessary part of the legal process for the board to have ensured that both parties were informed. Someone might have gone abroad or be difficult to contact. I have known of divorce cases in which someone has left the country and does not want to be available.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions) 11:30 am, 19th February 2008

I accept what the Minister is saying, but for the avoidance of doubt—I accept that the discharge of liability is different from the passing on information—but the transferor will receive a letter or something in writing saying what has happened. I would be grateful if the Minister confirmed that.

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

The straight answer is that that is our intention. There would be a requirement; not a legal requirement to complete the process, but that the PPF board should be in a position where it will inform both parties of the outcome of the process that they have undertaken. So information should be given to both parties, yes. However, there are circumstances—I am adding a slight caveat to it—where it is not always possible to get in contact with somebody in a divorce because, basically, they have disappeared. There will not be a requirement that that must be done, but there will be an obligation on the board to seek to inform so that both parties are properly informed.

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

Again, I am reassured by what the Minister has said about the intention of amendment No. 8. I accept that it should not happen by way of my amendment and the arguments that he has given. However, I am reassured because the purpose of the amendment is going to be achieved in terms of what the Minister has said. I am also reassured in terms of what he said about amendment No. 9, because he has reassured me that the regulations in subsection (8)(b) will deal with the issue that I was seeking to address. In that case, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 90 ordered to stand part of the Bill.

Schedule 4 agreed to.