Amendments made: 14, in clause 34, page 23, line 41, after “scheme” insert
“that is a Master Trust scheme”.
This amendment confines clause 34(2) to receiving schemes that are Master Trust schemes (in consequence of the amendment to the definition of “receiving scheme” made by amendment 16).
Amendment 15, in clause 34, page 24, line 16, at end insert—
“(5A) The Secretary of State may by regulations apply some or all of the provisions of this section to a receiving scheme that has characteristics specified in regulations under section 25(1A)(b).”.
This amendment enables the prohibition on increasing administration charges or imposing new administration charges to be applied where members’ rights or benefits are transferred to a pension scheme that is not a Master Trust scheme.
Amendment 16, in clause 34, page 24, line 20, leave out “Master Trust” and insert “pension”.
This amendment amends the definition of “receiving scheme” so that the clause can be applied to pension schemes that are not Master Trust schemes.
Amendment 17, in clause 34, page 24, line 28, at end insert—
“(7A) Regulations under subsection (5A) are subject to affirmative resolution procedure.”.
This amendment makes regulations that apply the clause to non-Master Trust schemes subject to the affirmative procedure.
Clause 34 provides for a prohibition relating to member charges during a triggering event period. Trustees must not increase charges above the level set out in the implementation strategy, introduce new charges on members or impose charges as a consequence of a member leaving or deciding to leave the scheme during a triggering period.
Regulations under clause 34 will set out how the charge levels in the implementation strategy are to be calculated. The Government intend that those levels will reflect what members paid towards the normal running of the scheme before the event happened. The charge levels will be calculated by looking back at previous charges in the scheme, and controls will be built in to protect against cases in which schemes increase charges shortly before a triggering event, so a scheme would not be able to get away with that one before the extra scrutiny.
The effect of these measures is that members will not pay any more during a triggering event period than when the scheme was operating normally. That will protect the members; even though a scheme itself is likely to incur additional costs, the money to pay them will not come from members’ pension pots. I hope that everyone will agree that that is most important. It will preserve the value of members’ rights during a triggering event.
The clause also restricts the charges that can be imposed by a master trust, proposed by trustees or employers, to receive members under the continuity option 1. Such a receiving scheme—a new scheme—will be prevented from increasing charges above the levels set out in a statement that it will give the regulator before the transfer happens, or from imposing new charges to meet the costs incurred by the transferring scheme. That means that members can join another scheme and continue to save in another pension without their pot being depleted to pay for costs incurred as a result of that happening. The clause keeps normality of charges and prevents schemes from taking advantage of a triggering event, and protect members’ pots and maintains their value.
I wish to ask a couple of question on clause 34 as I again return to the theme of transparency. The Minister outlined the purpose of the clause, and we welcome the protection of members from administration charges beyond those set out in the implementation strategy during a triggering event period. The clause makes clear the responsibilities of both trusts transferring members out and those receiving them.
The Minister listened carefully to my previous contributions on costs. With regard to this clause, I would like a better understanding of what those administration costs actually cover. Do they cover investment transactions, for example? Assuming that they do, will the Minister confirm that subsections (1)(c) and (2)(a) afford members protection from additional transaction costs as a result of the transfer of their funds out of a master trust and into a new one?
I know that the devil will be in the detail, and I look forward to a comprehensive debate about this issue when the Minister produces the regulations, but I am sure that scheme members would welcome any clarification that he can give now. Given that we have discussed transparency at great length and the Minister has nailed his colours to the mast on that issue, I have no doubt that savers would very much welcome his assurance that he will always act in their best interests.
I thank the hon. Gentleman for his constructive comments. I can do no better than remind him of what I have already said: our whole purpose is to ensure that everything remains the same so far as all charges are concerned. He is right about the regulations and the devil being in the detail. That is precisely because we do not want the kinds of loopholes that could exist. If I may mix metaphors briefly, we do not want a chink of light that people can drive a coach and horses through. It is clear that—to be a bit pompous and draw on my O-level Latin from 1973—ceteris paribus, they have to remain as they were.