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The Earl of Northesk: My Lords, I beg to move that the Bill be now read a third time. I hope that your Lordships will permit the small indulgence of a few words. It would be a discourtesy if I were to let the moment pass without paying due tribute to my noble friend Lord Courtown for the masterful way in which he steered the Bill to this stage. His assiduous and skilful handling of matters has been given its just reward, and I take this opportunity to congratulate him most warmly upon his new position. My noble friend has asked me to step into the breach vacated by his appointment. I am entirely happy so to do, secure in the knowledge that his sterling efforts have ensured that the Bill will be workable and effective, and that the ghost of Amendment No. 61, which caused my noble friend some agonies in Committee, will not haunt me.

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I should also take this opportunity on behalf of my noble friend to reiterate his gratitude to my noble and learned friend the Lord Chancellor and his department, to the Law Commission and to parliamentary counsel for their invaluable assistance. Thanks are also due to the noble Lord, Lord Irvine of Lairg, to the noble Lord, Lord Meston, and to the BRC and the BPF.

Moved, That the Bill be now read a third time.—(The Earl of Northesk.)

On Question, Bill read a third time.

The Earl of Northesk: My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.—(The Earl of Northesk.)

On Question, Bill passed, and returned to the Commons with amendments.

Pensions Bill [H.L.]

3.10 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.


COMMONS AMENDMENTS
[The page and line refer to Bill (87) as first printed by the Commons.]
1Clause 3, page 3, line 4, after 'force' insert 'by order'.
2Clause 4, page 3, line 18, leave out 'or'.
3Page 3, line 22, at end insert 'or
( ) where the trustee is a company or Scottish partnership and, if any director or, as the case may be, partner were a trustee, the Authority would have power to suspend him under paragraph (b), (c) or (e)'.
4Page 3, line 42, after '(1)' insert 'by order'.
5Clause 5, page 4, line 5, leave out 'in the United Kingdom'.
6Page 4, line 14, leave out 'in the United Kingdom'.
7Page 4, line 22, leave out 'in the United Kingdom'.
8Page 4, line 23, leave out from first 'given' to end of line 25 and insert 'to any person under this section may be given by delivering it to him or by leaving it at his proper address or by sending it to him by post; and, for the purposes of this subsection and section 7 of the Interpretation Act 1978 in its application to this subsection, the proper address of any person is his latest address known to the Authority.'.
9Clause 10, page 6, line 1, after 'that' insert 'by reason of any act or omission'.
10Page 6, line 3, leave out 'not exceeding a prescribed amount' and insert 'in respect of that act or omission not exceeding the maximum amount'.
11Page 6, line 3, at end insert:
'(1A) In this section "the maximum amount" means—
(a) £5,000 in the case of an individual and £50,000 in any other case, or
(b) such lower amount as may be prescribed in the case of an individual or in any other case,

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and the Secretary of State may by order amend paragraph (a) by substituting higher amounts for the amounts for the time being specified in that paragraph.'.
12Page 6, line 4, leave out 'require' and insert 'provide for'.
13Page 6, line 6, leave out 'a prescribed amount' and insert 'an amount specified in the regulations; and the regulations must specify different amounts in the case of individuals from those specified in other cases and any amount so specified may not exceed the amount for the time being specified in the case of individuals or, as the case may be, others in subsection (1A) (a).
( ) An order made under subsection (1A) or regulations made by virtue of subsection (2) do not affect the amount of any penalty recoverable under this section by reason of an act or omission occurring before the order or, as the case may be, regulations are made.'.
14Clause 11, page 6, line 35, leave out 'subsection (6)' and insert 'the following provisions of this section'.
15Page 6, line 41, leave out 'in the best' and insert 'necessary in order to protect the'.
16Page 6, line 42, at end insert:
'(1A) The Authority may not make an order under this section on either of the grounds referred to in subsection (1) (a) or (b) unless they are satisfied that the winding up of the scheme—
(a) cannot be achieved otherwise than by means of such an order, or
(b) can only be achieved in accordance with a procedure which—
(i) is liable to be unduly complex or protracted, or
(ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty,
and that it is reasonable in all the circumstances to make the order.'.
17Page 7, line 13, at beginning insert 'except for the purpose of the Authority determining whether or not they are satisfied as mentioned in subsection (1A)'.
18Clause 12, page 7, line 28, at end insert:
'( ) Subsection (1A) of section 11 applies for the purposes of this section as it applies for the purposes of that, but as if references to the Authority were to the appropriate authority.'.


19Clause 14, page 8, line 12, leave out paragraph (b) and insert:
'( ) that any act or omission of the trustees or managers of an occupational pension scheme was in contravention of section 35'.
20Page 8, line 18, leave out 'transaction was entered into' and insert 'payment or distribution was made, or the act or omission occurred'.
21Clause 15, page 8, line 29, leave out 'other'.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 21. I also wish to speak to Amendments Nos. 43 to 45, 64, 99, 102, 129 to 131, 154, 172, 174 to 180, 238, 271, 273, 284 to 292, 294 to 296, 335, 337, 339, 353, 384 and 391. Noble Lords may think that that speech is almost long enough in itself without my going any further.

This is the first group of amendments with which we shall be dealing this afternoon. I know that the large number of amendments we have to deal with will not have escaped your Lordships' notice. Perhaps I can explain briefly why we need so many. We have brought some forward to meet commitments that were given

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both in your Lordships' House and in the other place. Many of the commitments were given by myself and some were given by my noble friend.

I am sure your Lordships do not need me to say what a difficult and complex subject we are dealing with. We have benefited greatly from input from the Occupational Pensions Joint Working Group; the Institute of Actuaries, the Faculty of Actuaries; the Association of Pensions Lawyers; the TUC; and many others. These amendments reflect a great deal of consultation that has been going on to try to make the provisions in the Bill work as well as possible.

Before I go into the detail of this group I should say that my department submitted a memorandum setting out the regulation-making powers in the Bill to the Delegated Powers Scrutiny Committee in January and of course that formed part of our discussion. The committee followed that up on 17th March giving details of changes in the regulation-making powers which had been made during the Bill's passage through your Lordships' House. The Bill finished its passage in the Commons last week and my officials wrote to the scrutiny committee with details of changes in the regulation-making powers on 10th July. This set out the effect of all the amendments that had been made during the Bill's passage through the Commons which affected powers to make delegated legislation.

I shall begin with the first group of amendments. The cement, so to speak, that binds together all the amendments in this group is that they all deal with the Occupational Pensions Regulatory Authority. Amendments Nos. 1, 4, 43 and 99 are intended to make it clear that revocations by the authority in respect of prohibitions, suspensions and disqualifications of trustees are orders and will need to be made in writing.

Amendments Nos. 2 and 3 are needed to ensure that the authority can take action to protect a scheme while proceedings, which could result in a person and in consequence of this his company or Scottish partnership being automatically disqualified from acting as a trustee, make their way through the appropriate court. Amendment No. 44 is designed to ensure that the trustees who have been disqualified by the authority because they were incapable because of a mental disorder, or are a company that is going through liquidation, are included in the registry of disqualified trustees. Amendments Nos. 5 to 8 follow debate in the other place about whether OPRA should be obliged to issue the notice of a prohibition order to the last known address of a trustee resident overseas. These amendments require notice to be sent to the last known address, wherever it is.

Amendments Nos. 9 to 13, 45, 238 and 273 relate to the authority's power to impose civil penalty fines. Amendment No. 9 makes it clear that the authority can impose a civil penalty only for an act or omission which breaches a particular obligation. Amendment No. 45 extends the principle that a trustee will not be permitted to use scheme assets to reimburse himself for fines imposed by the courts or for any civil penalties imposed by the authority under the Pension Schemes Act 1993.

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Amendments Nos. 10 to 13, 238 and 273 deal with matters raised in your Lordships' House about the maximum level of civil penalties which the authority is able to impose. We have considered these matters carefully, including the comments made by the Delegated Powers Scrutiny Committee. We have concluded that it would be appropriate for the maximum amounts of fines to appear on the face of the Bill. These amendments set down the maximum penalties, which can be uprated from time to time by order. Any order will be subject to the affirmative resolution procedures, so the maximum penalties cannot be increased without being debated by Parliament.

Amendments Nos. 14 to 18 have been introduced in response to concerns expressed by your Lordships that the provisions of Clause 11 might allow the authority too much freedom to wind-up a scheme where the action was not essential to protect the scheme members' interests. These amendments ensure that the provisions mirror the existing powers of the Occupational Pensions Board. They allow the authority to entertain an application to wind up a scheme under Clause 11(1) (a) and (b) if the wind-up could not be achieved in any other way; if it can only be achieved by an unduly complex or protracted process; or if it involves obtaining consents that are unavailable. Similar limitations will apply to orders made to wind up public service schemes under Clause 12. Amendment No. 15 ensures that the authority can wind up a scheme under Clause 11(1) (c) where this is the only option available to protect scheme members' interests.

Amendment No. 271 responds to concerns raised by the noble Baroness, Lady Seear. It ensures that all orders made by appropriate authorities in respect of public service schemes under Clauses 12 and 66 will have to be statutory instruments made by the negative resolution procedure. This also meets a point made by the Delegated Powers Scrutiny Committee.

Amendment No. 21 will enable the authority to require the trustees of any trust scheme to send a copy of a statement prepared by the authority to the scheme members. We believe that this is necessary because there are likely to be occasions when it would not be appropriate to hold back a statement for issue with an annual report. This could cause undue delay or the report may not be circulated widely enough.

Amendment No. 64 tightens the criminal offence in Clause 35 so that it is more serious than the breach that carries a civil penalty. It makes it a criminal offence for a trustee or a manager of an occupational pension scheme to agree to a determination to make an investment that breaches the provisions on employer related investments. We believe that those who agree to use scheme assets in breach of these provisions should be liable to prosecution. Such action is, in many ways, equivalent to theft, and there must be a strong deterrent.

Amendment No. 102 will allow the authority to impose a civil penalty under Clause 10 on anyone who fails, in cases where payments of benefit to scheme members are made by an employer, to place any payments not made to members within a prescribed period into a separate bank account. Amendment No. 154 will make a failure by an employer to make

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payments by the date required in the schedule of contributions subject to Clause 10. We believe it is a serious matter if contributions are not paid according to the payment schedule. That is why we believe that an employer in breach of the requirements should be subject to a penalty.

Amendments Nos. 174 to 180 relate to the authority's information gathering and disclosure powers. Clause 93(2) is brought into line with other criminal offences in the Bill. Refusal to comply with the request from the authority to provide information will remain an offence, but a defence will be available if refusal can be justified as being reasonable in the circumstances.

The authority will have a clear right to have access to all documents that may be relevant in investigating a scheme. It can require a document to be produced even though a third party may have legal claim to it. The more flexible use of restricted information provided by the authority by allowing people holding such information to disclose it further is given, but only where the authority consents.

Amendment No. 180 ensures that the Inland Revenue is not prevented from providing relevant information to the authority.

Amendment No. 292 gives the Secretary of State the ability to make staff and other resources available to the authority. That will ensure that it has sufficient flexibility to be able to adjust its staffing levels quickly in response to unexpected workload changes. That could be particularly important in the vital early years of operation.

Amendments Nos. 335, 339 and 384 are consequential upon the dissolution of the Occupational Pensions Board.

That is a brief summary of the main provisions of this group of amendments. Perhaps I may draw your Lordships' attention to the book—which is the only way to describe it—we have produced and made available in the Printed Paper Office which explains each of the amendments in turn. Those notes on the amendments are available to your Lordships. We have tried to make them as user friendly as possible. There is a table of contents at the front and an index of the amendments at the back. Therefore, I hope that between my brief explanation and those more detailed notes provided by my department your Lordships will have a clear idea of what the various amendments add up to. I beg to move.

Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 21.—(Lord Mackay of Ardbrecknish.)


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