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Lord Boyd-Carpenter: My Lords, I hope that the Government will think again about this amendment. I recall—as I am sure does my noble friend the Minister—the discussion in Committee which I found a rather unhappy one. There is no doubt at all that there is a considerable demand for something of this sort, including—this has relevance to what my noble friend behind me has just been saying—among some very responsible trade unions. Therefore it seems to me that to have at least one pensioner trustee where the majority of people in the scheme are already pensioners is a reasonable reassurance to them, and, so far from introducing any unnecessary rigidity into the scheme, would give a certain element of support to it which I think might well be found helpful by those responsible for running it. In other words, I hope that my noble friend will not persist in the line that he took in Committee. I think he will find that on the whole Members of your Lordships' House are in favour of this, or something of this sort. I beg of him to think hard about it.

Lord Ezra: My Lords, like the noble Lord, Lord Pearson, as chairman of a medium-sized company I have experience of a scheme which has a pensioner trustee. In the light of the Maxwell affair —like many other companies, I have no doubt—we reviewed the

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constitution of our pension scheme and its operations. We decided that we would immediately bring on member trustees, and we also decided—this was a specific recommendation which I made—that we would have a pensioner trustee. The reasoning behind that was simple, and indeed the noble Lord, Lord Boyd-Carpenter, has referred to it: it gives a good cross-section of interests in the matter. The parties most involved in pension schemes are the employers, the members—in other words those still in the employment of the company—and those who are past employees who are drawing their pensions. It seems totally logical and rational that those three parties should be able to have representatives on the schemes and to express opinions from their particular point of view.

Lord Desai: My Lords, I, too, wish to add my support to the amendment. Noble Lords will recall that in Committee I moved an amendment to this effect. While we did not like the Minister's answer, this is a good matter to which to return. It is said that trustees should do their job, as it were, freely and fairly and should not represent particular partisan interests. That is quite right. That is the duty of trustees. But at the same time we have to recognise that interests have to be represented broadly on the trust. We have recognised the employers' interest throughout this Bill. We have also recognised the employees' interest. There is a third interest; namely, that of pensioners. I am sure that trustees who represent these different interests will also do their job properly as trustees without any conflict between their role as trustees and their representation of separate interests.

Lord Mackay of Ardbrecknish: My Lords, although this issue was raised in a different form during the Committee stage of this Bill, I regret to have to tell your Lordships, despite the blandishments of the past few minutes, that my argument against it remains the same. The effects of this amendment are no different. It would oblige schemes to allow pensioner members to select trustees and would therefore give them a status and privilege greater than that given to other members. We believe that schemes should be free to determine their own arrangements and we will therefore oppose any amendment which seeks to elevate one section of scheme membership above another.

It seems to us that there is no justification for moving towards a rigid and uniform selection process which would not do justice to the wide variety of schemes which currently operate. It is, as I have said, our intention that schemes should be free to develop their own arrangements for the selection of trustees, subject to the approval of active and pensioner members. It is these arrangements which will determine who is eligible to nominate trustees. Members' interests will be protected by a rigorous statutory consultation procedure.

I would say to my noble friend Lord Dean and to my noble friend Lord Pearson of Rannoch who referred to BT that the matter they raised in your Lordships' House concerns the current position of the BT pension scheme. But under the statutory consultation procedures all active and pensioner members will have the chance to approve the nomination and selection procedure. If

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members want a pensioner trustee or pensioner trustees, they will be able to take steps to do something about that. If they want open nomination and not trade union nomination, as my noble friend drew to our attention, they will be in a position to take steps to bring that about because pensioner members—like active members —will have a right to approve selection rules.

Common sense dictates that if a majority of scheme members are pensioners, they are likely to communicate to their existing trustees that they wish to take part in the selection procedure. However, we do not intend to fetter this freedom by insisting that a certain section of the membership must nominate a trustee. As the Bill stands, it gives equality of opportunity both to active and pensioner members and it is for scheme members to decide together the best way to nominate trustees, bearing in mind the needs of their particular scheme. If it goes to election, it is up to the members to decide who they want to elect. If they want to elect more active members than pensioner members, that surely is up to them. If they want to elect more pensioner members, that is equally up to them. To start dividing up the democratic process and saying, "This little group and that little group will be able to elect somebody", is not the proper way to proceed.

However, the prime argument against requiring any particular interest group—after all, there are not just pensioner members; there are deferred members and there are active members, all of whom have an interest in how the pension scheme is run—to select a trustee representative of that interest is that it would undermine one of the fundamental strengths of trust law which is that each trustee must act impartially in the interests of all the beneficiaries.

I am sorry if the noble Baroness, Lady Seear, does not wish to hear this argument again, but she will hear it again because it happens to be a relevant and good one. While we are talking about Goode, that was the reason why the PLRC opposed the idea of compulsory pensioner trustees. Perhaps we all do a little picking and mixing as regards what we like and what we do not like and as regards what we accept or what we do not accept. However, it is not more than an amendment ago that I was being lambasted because I was not taking the Goode proposals hook, line and sinker, so to speak.

Baroness Hollis of Heigham: My Lords, I was asking for consistency!

Lord Mackay of Ardbrecknish: My Lords, I am not sure whether the noble Baroness is saying that she is being consistent, because if she is being consistent she will agree with me about this particular amendment because the PLRC opposed the idea. I believe its argument continues to be persuasive. I am not arguing that pensioner trustees would be partial but if they had to be appointed—that is the point—there would be a serious risk that members and others would begin to classify all trustees as representative of one interest or another. That would not enhance confidence in trust boards.

We defeated a similar amendment in Committee. I trust that if it comes to it this amendment will also be voted down. As the Bill stands, pensioner members have

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the same rights with regard to member-nominated trustees as active members; that is, to approve any selection rules proposed by their schemes' trustees. If it is the wish of the members, I have no doubt they will indeed elect pensioners as trustees. The chances of that happening will obviously be greater in schemes where pensioner members are in a majority. I would say to my noble friend Lord Pearson that nothing in the Bill prevents pensioner members being elected as trustees. If a scheme consists of a considerable number of pensioner members—a majority of pensioner members for example—and those pensioner members want to elect someone onto the board who is a pensioner, it seems to me that the numbers will stack up and they will find themselves with a pensioner on the board. Equally, there is a good argument for saying that active members may think it sensible to have a pensioner on the board.

I believe that when one begins to compartmentalise democracy those people who are outside the group which has been singled out will stop even considering voting for people in the group singled out because they will feel that they have already been catered for. I do not believe that that would be in the interests of pensioner members or of the members as a whole. After all, all the members of the scheme have an interest. Pensioner members may have a more immediate interest, but active members have a long-term interest which they will wish to feel all the trustees are considering.

I believe that to accept the amendment would fetter the choice of both pensioners and active members by imposing preconceived selection arrangements. It would restrict the freedom of schemes to develop their own selection rules and would increase the risk of trustees being perceived as representatives of whichever group or interest selected them. I hope that the noble Baroness will withdraw her amendment. If she does not, I hope that my noble friends will support me in the Division Lobby.

6.30 p.m.

Baroness Seear: My Lords, I am disappointed but not in the least surprised, because the Minister's mind is not open to new ideas. He indulged in a wide variety of conflicting arguments. We have been told that having one pensioner trustee would create rigidity. We have already created the great rigidity that the majority of trustees have to be employer members. What greater rigidity could there be? Compared with that rigidity one miserable pensioner representative would not make the scheme positively arthritic, as the Minister seems to think. He appears to believe that to introduce such a requirement would introduce rigidity to an intolerable extent.

In view of the votes that we have just had and of the support all round the House, and in view of the fact that a great many people who would vote if we called a Division now would not have heard not only the eloquent arguments from this side of the House but also the very convincing arguments from the other side of the House, I propose not to press the amendment tonight. However, I give the Minister fair warning that I shall reintroduce it at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Clause 15 [Exceptions]:

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