Clause
15
Automatic
enrolment
schemes
Andrew
Selous:
I beg to move amendment No. 3, in
clause 15, page 7, line 22, leave
out ‘or to provide any
information’.
We
are going so fast that maybe the Committee will not have to listen to
me for as long as it thought it would have to at the start of the
proceedings.
The
purpose of the amendment is to check that the wording in subsection
(2)(b) would not prevent an employer or a personal account scheme from
finding out from an employee their date of birth and national insurance
number and any other relevant information that they might need to put
them into the scheme. As subsection (2)(b) is worded, it would seem
that the employee, bizarrely perhaps, might be able to refuse to give
such information. I am sure that I am probably wrong and that the
Minister will leap to show me some other part of the Bill where it
states that employees can be required to give basic information about
who they are, their date of birth and so on. If they could refuse to
give that information it would obviously cause complications and I
therefore seek the Minister’s
reassurance.
Mr.
O'Brien:
An employer would be able to obtain from an
employee by reason of employment the sort of information that the hon.
Gentleman described. The basic information about who the person is,
where they live, and what their national insurance number and date of
birth are is the sort of basic information that in any event ought to
be in the possession of most employers. They would get that information
and they would have that
information.
What we
seek to do, however, is to prevent a situation arising where the
employer would be able to say, “Before I can automatically enrol
you and get you involved in my pension scheme, you have got to give me
a vast array of very detailed information about your
background”. Some employees might not wish to give that
information and it might be utterly irrelevant to the particular
scheme. It is possible that some schemes might be created to help
employers who do not wish to operate in a bona fide way with automatic
enrolment.
Almost all
employers would approach this in a straightforward and bona fide way.
However, if there were any suggestion that employers required from an
employee information that they already had, or would normally have for
the purposes of employment, merely for the purposes of joining a
pension scheme, we would want to ensure that they would not be able to
require that additional information. I hope that with that reassurance,
and the reassurance that the employer would be able to ask reasonable
questions in a normal way but not be able to use requests for
information to frustrate pension membership, the hon. Gentleman will
feel able withdraw his
amendment.
Andrew
Selous:
Yes, I am certainly reassured by what I have heard
from the Minister about what an employer is able to find out from an
employee under normal
employment law. The Minister is right to make sure that an unscrupulous
employer could not ask for excessive information, which would be
difficult or impossible to provide, in order to keep an employee out of
the scheme. I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Clause
15 ordered to stand part of the
Bill.
Clause
16
Occupational
pension
schemes
Andrew
Selous:
I beg to move amendment No. 4, in
clause 16, page 7, line 33, leave
out paragraph
(c).
The
Chairman:
With this it will be convenient to discuss
amendment No. 5, in clause 17, page 7, line 40, at end
add—
‘(c) is prescribed or
is of a prescribed description and that has its main administration
elsewhere than in an EEA
State.
Andrew
Selous:
The purpose of the amendments is to seek
clarification from the Minister about the differences between personal
pension schemes and occupational pension schemes in the three different
jurisdictions mentioned here, namely, the United Kingdom, the European
Economic Area and outside the European Economic
Area.
There is
obviously a difference in categorisation between occupational and
personal pension schemes. For example, what happens about personal
pension schemes that are outside the European Economic Area is not
clear. I am sure that international pension law is probably even more
complicated than United Kingdom pension law but, given that we are
bringing in such a significant Bill, it is important to be clear about
what happens in the different jurisdictions, not least because more and
more people are working internationally. There is a big increase of
workers migrating to and from different countries. I would be grateful
for any further elucidation that the Minister could give about the two
amendments.
Mr.
O'Brien:
I am grateful to the hon. Gentleman for the
constructive way in which he has put the questions. He is right that
more people than ever before are working internationally, travelling
abroad and coming to work in this country. Both clauses 16 and 17 set
out the definition of occupational and personal pension schemes. He has
noted the difference between these two clauses, namely, that we take a
power to specify occupational schemes based outside the EEA, but he
will not that we do not do the same for personal pensions. We believe
that there are sound reasons for the distinction, which I will now
explain.
A key
requirement of all qualifying schemes, occupational and personal, is
that they must be appropriately regulated. Occupational pension schemes
based in the UK are regulated through domestic law, which implements
the European directive on the activities and supervision of
institutions for occupational retirement provision—IORP. Schemes
administered within the European Economic Area, the EEA, are also
regulated under the same directive, providing assurance that scheme
standards and regulation are comparable to those in the UK. However,
for schemes based outside the EEA there is no universal regulation that
we can use as a basis for ensuring that schemes are suitable to be used
for the purposes of the employer duty. Far from international law being
complicated, to some extent it is non-existent or not particularly
existent. There are some provisions and agreements, but of a limited
nature. So, we will
have to consider the circumstances where people sign up to a
foreign-based scheme—perhaps a scheme based in the United States
or elsewhere, for a worker who has come over here or a worker working
for an American company. We will look at those on a more individualised
basis to ensure that any scheme that is used as a pension scheme is
able to be used for the purposes of the employer duty and is therefore
appropriately
regulated.
Andrew
Selous:
Just to put a specific example to the Minister, if
an American came to this country with a 401(k) scheme—a personal
pension scheme in the United States—that was a good scheme with
a high level of contribution, what would be the effect if he were then
working for a UK
employer?
Mr.
O'Brien:
I do not want to give carte blanche to all 401(k)
schemes. We would look at the particular scheme to identify whether it
would comply with the nature of our pension schemes. I know a bit about
those schemes, and I would have thought that, in most cases, they
probably would. Let me not give a ministerial imprimatur to all those
schemes. I will just say, in broader terms, that that is the sort of
scheme we want to be able to allow. Assuming it is properly regulated
by US domestic authorities, it would probably—I use that word
advisedly—comply with the requirements, particularly if the
employee coming here from the US was satisfied that that was the sort
of scheme he wished to use and maintain, and was returning there. That
would probably be fine.
I would advise a little
caution, however, if a UK-based company decided that it was going to
use foreign-based pension products for their domestic employees. We
would want to look at that with some care, and ensure that the specific
pension scheme fully complied. I suspect that operators of 401(k)
schemes would not allow themselves to be put in that position. It may
well be that in other countries there are schemes, probably privately
run, which would be in the market for taking on pension provision here.
If they were in the EEA, we would know how they are regulated. If they
were outside the EEA, we would want to be able to say that certain
schemes are appropriate and others are not. We are proceeding on that
basis. The amendment would interfere with that. However, given the way
the hon. Gentleman put his point across, I do not think I need to spend
time in rebuttal: I needed only to explain the purpose of the way in
which we are addressing the various
schemes.
Andrew
Selous:
I think these exchanges are proving of use to the
many people who will look at them in Hansard tomorrow and in the
weeks to come. We are in
an increasingly global economy. Many workers can expect to spend part of
their careers working elsewhere, and there are many foreign workers
coming in and out of this country. These are the sorts of practical
issues we need to be quite clear about in order to give guidance to
employers and employees alike as to what the new regime is likely to
allow and not allow. Having
heard the Minister’s reasonable explanation, I beg to ask leave
to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Clause
16 ordered to stand part of the
Bill.
Clause 17
ordered to stand part of the
Bill.
Further
consideration adjourned.—[Mr.
David]
Adjourned
accordingly at half-past Two o’clock till Tuesday 29 January at
half-past Ten
o’clock.
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