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Lord Mackay of Ardbrecknish: I am in some difficulty because the noble Baroness's speech did not quite accord with the amendment which she moved. The effect of the amendment would be to take away trustees' discretion to decide who should receive lump sum death benefits. It would require such death benefits to be paid to a person who has been nominated by the scheme member as his chosen beneficiary. Where the member is married, the death benefit would automatically have to be paid to the spouse. On the words in the amendment we do not consider that such a requirement for a binding nomination is necessary.

As the Committee may possibly be aware, trustees are under a duty to act fairly and not to take irrelevant considerations into account in exercising their discretion. Nor do we believe that this change would be welcomed by pension scheme members and their families. Current arrangements provide a flexibility to

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allow for circumstances where the member may have made a nomination which is out of date. Members are usually asked to fill in a formal nomination or expression of wish at the time when they join a pension scheme. They are requested to update that if their circumstances change but they could, of course, forget to do so. Under the binding nomination arrangement as proposed in the amendment, death benefits would always be paid to the nominee, whether or not the member's circumstances had changed.

In addition, payments at the discretion of trustees do not form part of the member's estate and do not therefore depend on the grant of probate of the member's will which can take some time. Trustees can make payments very quickly to cover immediate loss of current income to those financially dependent on the deceased. However, we accept that in some cases the wording of trust deeds, particularly older deeds, can be unnecessarily restrictive. We agree with the PLRC that schemes should consider amending their trust deeds where trustees' decisions on the payment of death benefits are restricted. We have therefore introduced provision in Clause 61(2) (a) that will enable trustees to modify a scheme by resolution in order to extend the class of persons who may receive death benefits. That avoids the need for the intervention of a third party, such as the courts or the authority.

In the light of what I have said about the rather narrow point that we took from the amendment, I hope that the noble Baroness will be able to withdraw it. She widened the discussion away from death benefits to public sector schemes and the question of whether only the legal spouse should be entitled. This is a wider public policy issue. I shall certainly pass on the noble Baroness's comments to my Treasury colleagues but I hope that what I have had to say about paying lump sum death benefits will satisfy her that the provisions in the Bill are perfectly satisfactory.

Lord Ezra: Will the noble Lord clarify a point which he made in his remarks? He started by saying that the noble Baroness's proposition is unnecessary because of the discretion which trustees have in the case of payment of benefits on the demise of the member. To go back to her example of a policeman who was unfortunately killed on duty and had a partner of seven years with small children, were the trustees in that case guilty of not exercising their discretion?

Lord Mackay of Ardbrecknish: That is exactly the point I made at the beginning and at the end of my contribution to this short debate. The police come inside the public sector schemes. We rather assumed that the noble Baroness's amendment was aimed at a different problem. I am afraid that I am not in a position to answer a question about public service schemes. I have only really looked into the question of lump sum death benefits in occupational pension schemes with trusts and the like.

Baroness Dean of Thornton-le-Fylde: In debating the Bill I am becoming used to the words "not necessary". We are all becoming experts on the interpretation of those words. In this case I interpreted the Minister as saying, "We do not accept the argument

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and we are not prepared even to look at the point which has been put forward". However, it is a genuine point and what we have proposed is necessary.

In private pension schemes trustees have discretion, although they do not always exercise it. Many large multinational company schemes provide for benefits to be paid to the non-married partner where the individual member has so designated. The Minister said that many people in pension schemes are opposed to our proposal. We have been lobbied very hard on this point by a large number of pension schemes and we have been told that what we have proposed is necessary. In the public sector, there are no trustees and there is no discretion. There is no moving from that. That is the reality of the position.

On the basis of what the Minister said, I feel that I should not withdraw the amendment. It is an important point. I should like to take the opportunity to test the opinion of the Committee.

4.59 p.m.

On Question, Whether the said amendment (No. 116B) shall be agreed to?

Their Lordships divided: Contents, 79; Not-Contents, 116.

Division No. 1

CONTENTS

Acton, L.
Addington, L.
Allen of Abbeydale, L.
Avebury, L.
Barnett, L.
Beaumont of Whitley, L.
Blackstone, B.
Bottomley, L.
Bridges, L.
Broadbridge, L.
Bruce of Donington, L.
Carmichael of Kelvingrove, L.
Castle of Blackburn, B.
Chapple, L.
Clinton-Davis, L.
Dahrendorf, L.
David, B.
Dean of Thornton-le-Fylde, B.
Donaldson of Kingsbridge, L.
Dormand of Easington, L.
Dubs, L.
Ezra, L.
Falkland, V.
Farrington of Ribbleton, B.
Fisher of Rednal, B.
Freyberg, L.
Gallacher, L.
Geraint, L.
Gladwin of Clee, L.
Gould of Potternewton, B. [Teller.]
Graham of Edmonton, L.
Greene of Harrow Weald, L.
Gregson, L.
Grey, E.
Halsbury, E.
Harris of Greenwich, L.
Haskel, L. [Teller.]
Hilton of Eggardon, B.
Hollis of Heigham, B.
Holme of Cheltenham, L.
Hutchinson of Lullington, L.
Jacques, L.
Jay of Paddington, B.
Jeger, B.
Jenkins of Putney, L.
Judd, L.
Lester of Herne Hill, L.
Lockwood, B.
Longford, E.
Mallalieu, B.
Mason of Barnsley, L.
McIntosh of Haringey, L.
McNair, L.
Milverton, L.
Monkswell, L.
Morris of Castle Morris, L.
Nicol, B.
Parry, L.
Peterborough, Bp.
Rea, L.
Redesdale, L.
Richard, L.
Rochester, L.
Russell, E.
Ryder of Warsaw, B.
Seear, B.
Serota, B.
Shaughnessy, L.
Stallard, L.
Stoddart of Swindon, L.
Strabolgi, L.
Thomas of Walliswood, B.
Tordoff, L.
Turner of Camden, B.
Weatherill, L.
Wedderburn of Charlton, L.
Wharton, B.
White, B.
Williams of Elvel, L.

NOT-CONTENTS

Addison, V.
Ailsa, M.
Aldington, L.
Ampthill, L.
Archer of Weston-Super-Mare, L.
Ashbourne, L.
Astor of Hever, L.
Astor, V.
Balfour, E.
Belhaven and Stenton, L.
Birdwood, L.
Blaker, L.
Blatch, B.
Boardman, L.
Borthwick, L.
Boyd-Carpenter, L.
Brabazon of Tara, L.
Brigstocke, B.
Brookes, L.
Brougham and Vaux, L.
Bruntisfield, L.
Butterworth, L.
Campbell of Alloway, L.
Campbell of Croy, L.
Carnegy of Lour, B.
Cavendish of Furness, L.
Charteris of Amisfield, L.
Chelmsford, V.
Chesham, L.
Coleraine, L.
Courtown, E.
Craig of Radley, L.
Craigavon, V.
Cranborne, V. [Lord Privy Seal.]
Cumberlege, B.
Davidson, V.
Dean of Harptree, L.
Dixon-Smith, L.
Eden of Winton, L.
Elles, B.
Elliott of Morpeth, L.
Faithfull, B.
Ferrers, E.
Fraser of Carmyllie, L.
Gardner of Parkes, B.
Geddes, L.
Gray of Contin, L.
Harding of Petherton, L.
Harmar-Nicholls, L.
Hayhoe, L.
Henley, L.
Hives, L.
Holderness, L.
Hooper, B.
Hothfield, L.
Howe, E.
Hylton-Foster, B.
Inglewood, L. [Teller.]
Killearn, L.
Kimball, L.
Lauderdale, E.
Lindsay, E.
Lindsey and Abingdon, E.
Liverpool, E.
Long, V.
Lucas of Chilworth, L.
Lucas, L.
Lyell, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. [Lord Chancellor.]
Manton, L.
Marlesford, L.
McAlpine of West Green, L.
McConnell, L.
Merrivale, L.
Mersey, V.
Miller of Hendon, B.
Montgomery of Alamein, V.
Mountgarret, V.
Mowbray and Stourton, L.
Murton of Lindisfarne, L.
Napier and Ettrick, L.
Noel-Buxton, L.
Norrie, L.
Northesk, E.
Onslow, E.
Orkney, E.
Oxfuird, V.
Park of Monmouth, B.
Pearson of Rannoch, L.
Pender, L.
Perry of Southwark, B.
Rankeillour, L.
Renwick, L.
Rodger of Earlsferry, L.
Romney, E.
Saltoun of Abernethy, Ly.
Seccombe, B.
Skelmersdale, L.
St. Davids, V.
Stewartby, L.
Strathclyde, L. [Teller.]
Sudeley, L.
Swansea, L.
Swinfen, L.
Tebbit, L.
Thomas of Gwydir, L.
Trefgarne, L.
Trumpington, B.
Ullswater, V.
Vivian, L.
Westbury, L.
Wise, L.
Wolfson, L.
Wynford, L.
Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

20 Feb 1995 : Column 946

5.7 p.m.

Clause 85 [Sections 83 and 84: supplementary]:


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