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COMMONS AMENDMENTS
152Clause 81, page 52, line 13, leave out from 'requirements' to end of line 24 and insert:
'(4A) The matters shown in the payment schedule for a scheme—
(a) to the extent that the scheme makes provision for their determination, must be so determined, and
(b) otherwise,
(i) must be matters previously agreed between the employer and the trustees or managers of the scheme, or
(ii) if no such agreement has been made as to all matters shown in the schedule (other than those for whose determination the scheme makes provision), must be matters determined by the trustees or managers of the scheme.'.
153Clause 82, page 52, line 30, at beginning insert 'Except in prescribed circumstances'.
154Page 52, line 38, at end insert:
'( ) Where any amounts payable in accordance with the payment schedule by or on behalf of the employer have not been paid on or before the due date, section 10 applies to the employer'.
155After Clause 82, insert the following clause:—

Application of further provisions to money purchase schemes

.—(1) In the case of money purchase schemes falling within a prescribed class or description, regulations may—
(a) provide for any of the provisions of sections 50 to 54 to apply, or apply with prescribed modifications, (in spite of anything in those sections), and
(b) provide for any of the provisions of sections 81 and 82 to apply with prescribed modifications or not to apply,
to such extent as may be prescribed.
(2) Regulations may provide for any of the provisions of section 69 to apply, or apply with prescribed modifications, to money purchase schemes to such extent as may be prescribed (in spite of anything in that section), and the power conferred by this subsection includes power to apply section 69 in circumstances other than those in which the scheme is being wound up or a relevant insolvency event occurs (within the meaning of that section).'.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 152 to 155. I spoke to these amendments in previous debates.

Moved, That the House do agree with the Commons in their Amendments Nos. 152 to 155.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.


COMMONS AMENDMENTS
156Clause 84, page 53, line 10, leave out 'pension' and insert 'entitlement or right'.
157Page 53, line 11, leave out 'pension' and insert 'entitlement or right'.
158Page 53, line 14, leave out from 'unenforceable' to end of line 20 and insert:
'(2A) Where by virtue of this section a person's

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entitlement, or accrued right, to a pension under an occupational pension scheme cannot, apart from subsection (3), be assigned, no order can be made by any court the effect of which would be that he would be restrained from receiving that pension.
(2B) Where a bankruptcy order is made against a person, any entitlement or right of his which by virtue of this section cannot, apart from subsection (3), be assigned is excluded from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986 or the Bankruptcy (Scotland) Act 1985.
(2C) Subsection (2A) does not prevent the making of—
(a) an attachment of earnings order under the Attachment of Earnings Act 1971, or
(b) an income payments order under the Insolvency Act 1986.'.
159Page 53, line 34, leave out 'at or after normal pension age' and insert 'on or after retirement'.
160Page 53, line 42, after 'credits' insert 'other than prescribed transfer credits'.
161Page 53, line 46, at end insert:
'(e) subject to subsection (4), except in prescribed circumstances, a charge or lien on, or set-off against, the person in question's entitlement, or accrued right, to pension, for the purpose of discharging some monetary obligation due from the person in question to the scheme and—
(i) arising out of a criminal, negligent or fraudulent act or omission by him, or
(ii) in the case of a trust scheme of which the person in question is a trustee, arising out of a breach of trust by him.'.
162Page 53, line 48, after '(3) (d)' insert 'or (e)'.
163Page 54, line 12, at end insert:
'( ) This section is subject to section 159 of the Pension Schemes Act 1993 (inalienability of guaranteed minimum pension and protected rights payments).'.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 156 to 163. I wish also to speak to Amendments Nos. 165 to 170, 263, 314, 315, 318, 323 and 375. This group of amendments deals with forfeiture. Most of the amendments clarify the clauses themselves or consequential provisions. Amendment No. 160 is of more significance. Clause 84 generally prohibits the exercise of a charge or lien on pension rights or a set-off against those rights except to enable an employer to recover a debt due to him arising from a criminal, negligent or fraudulent act by the person. This is in line with PLRC recommendation 166. It will be subject to certain restrictions and safeguards.

Amendment No. 160 concerns one of the restrictions. It is that the charge, lien or set-off cannot be applied to any proportion of a person's pension rights which consists of transfer credits. This means that an employer cannot recover from pension rights accrued from a previous employment. There are, though, circumstances where we believe that an employer should be able to have access to such transfer credits. These are where the credits are derived from another scheme of the same or an associated employer. At present the Occupational Pensions Board has discretion to deal with these cases. The board will of course be abolished by the Bill. The amendment provides a power to make regulations which will permit an employer to have access to transfer

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credits in certain circumstances. However, the general rule will remain. We will use this power in a strictly limited way.

Under trust law a scheme is able to recover debts from a beneficiary's interest in the scheme which he has caused by a breach of trust or a criminal, negligent or fraudulent act or omission. Clauses 84 and 86, by preventing charges and forfeiture, could override these trust law provisions and restrict or prevent what is the proper right of a scheme to recover debts in the circumstances I have explained. This is not our intention. Amendment No. 161 will ensure that the present position is maintained in the Bill. Amendments Nos. 165 to 168 are concerned with an employer's right to recover a debt due to him arising from a criminal, negligent or fraudulent act or omission by means of a charge against a person's pension rights. Such a charge would become effective only when the pension becomes due for payment. In a case where a member died before his pension was paid, the employer would recover nothing under the charge because the pension would never come into payment.

We believe it would be right to allow a scheme to pay money out of a person's accrued rights to the employer to satisfy a debt due to the employer. We also believe it right to allow the scheme to reduce or extinguish pension rights by an amount which is equal to that which has been paid out. That is what these amendments will achieve. They are useful amendments and I commend them to the House.

Moved, That the House do agree with the Commons in their Amendments Nos. 156 to 163.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.


COMMONS AMENDMENT
164Leave out Clause 85.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 164. I wish also to speak to Amendments Nos. 255 to 262, 264 and 265. We had lively and interesting debates on divorce when we considered the Bill earlier, both in Committee and on Report. There was also considerable debate in the other place. Your Lordships' House adopted amendments introduced by my noble friend Lady Young and by the noble Baroness, Lady Hollis, at Report stage. In the other place my right honourable friend the Secretary of State for Social Security, Mr. Peter Lilley, announced our acceptance of the intentions behind these amendments and gave an assurance that we would revise them to make them workable. The amendments now before your Lordships' House are the result.

We have built on the intentions set out in our debate. Our amendments will emphasise the courts' existing duty to take pension assets into account in divorce settlements. They will also allow a court to direct trustees or managers of an occupational or personal pension scheme to make a maintenance payment to a former spouse from a pension which is due to a scheme member. This could be by way of a lump sum or by periodic payments.

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The courts will have the power to commute benefits to a lump sum. This will mean that a court may well be able to offset this against other assets in the settlement and remove the need for former spouses to maintain contact with their ex-partners.

The courts will be able to vary deferred lump sum orders. The amount of payment which the trustees or managers of the scheme must pay cannot be more than 100 per cent. of the scheme member's pension. The trustees or managers will be protected from claims from the scheme member in respect of the amount the court has asked them to pay. And the scheme member's income tax position will not be affected.

One concern which has arisen in debate has been that an ex-wife could lose access to payments from her ex-husband's scheme should he die. Our amendments give extra powers to the courts so that they will in future be able to order the scheme member to exercise any right of nomination so as to give his ex-wife all or part of any lump sum payment due from a scheme on his death. The court will be able to direct the trustees or managers to pay that sum direct to the ex-wife rather than leave her having to make a claim from the estate or dependants.

We have also addressed concerns about what happens when a scheme member transfers benefit rights from one scheme to another. Where a court order requiring a scheme to pay is enforced, that requirement will transfer automatically to the new scheme if all the pension rights were transferred. If only part of the rights were transferred the court can be asked for further directions.

There are regulation-making powers to deal with who the payments should be made to and who should notify changes of circumstances. Regulations will also deal with valuing pension rights.

We have removed references in the Matrimonial Causes Act to "foreseeable future" so far as they deal with pensions. This term could be construed as putting undue restriction on the courts when considering pensions, which build up over a working life. Therefore, we have removed this restriction.

We have also taken steps to improve the position north of the Border. My right honourable friend the Secretary of State for Scotland has suggested amendments to the Family Law (Scotland) Act 1985 so that we can bring in similar provisions for Scotland so far as it is practicable to do so.

We have, of course, had to have regard to the very different nature of the legislative regimes and procedures in Scotland. But we believe that the measures we are introducing will pave the way for significant improvements in the consistency with which the courts approach the question of pension rights on divorce. They will align the relevant law of Scotland with that of England and Wales to a significant extent.

I hope that the amendments I have outlined will be seen as representing a much improved framework in dealing with pension rights in divorce cases. These amendments build on the existing powers of the courts and improve on the amendments which my noble friend Lady Young and the noble Baroness, Lady Hollis,

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introduced into the Bill. Needless to say, the significant difference between the amendments moved by the noble Baronesses and the ministerial amendments is in the length. My amendments seem to cover a great many more pages than did the original amendments. However, I can assure them, as I am sure they know, that the amendments make certain that the principles behind the amendments accepted by the Government from my noble friend Lady Young and won by the noble Baroness, Lady Hollis, in the Division Lobbies can be enforced.

The effect should be to increase the number of settlements which include pension rights. It would be only right to pay tribute to both my noble friend and the noble Baroness, Lady Hollis, for the tenacity with which they pursued me and this particular objective. I beg to move.

Moved, That the House do agree with the Commons in their Amendment No. 164.—(Lord Mackay of Ardbrecknish.)

5.30 p.m.

Baroness Seear: My Lords, perhaps I may ask one question for clarification. The Minister mentioned the lump sum payment. That can be important. He said that the husband paying for the pension may nominate the person to receive the share. Can he be required by the court to nominate his divorced wife to receive a share? It is very important that she should receive that share. If it is left to him he could decide not to do that. I was not sure from what the Minister said whether the court could say that he had to allocate so much to his previous wife or whether he was at liberty to do so.


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