Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Higgins: The noble Baroness is right in saying that this is a technical amendment. However, on hearing her comments on the amendment, my initial feeling is that it is an appropriate amendment for the Committee to accept. It appears that a stakeholder scheme may inadvertently become an occupational pension scheme. An example could be where a group of employees in a particular profession all have a similar stakeholder scheme. That would be regarded, in some sense, as an occupational scheme, with the consequences outlined by the noble Baroness.

24 Jun 1999 : Column 1173

Obviously very different considerations need to be taken into account so far as concerns occupational schemes as against stakeholder schemes. The provisions of the previous pension Act, which were introduced post-Maxwell, were extremely stringent. OPRA also imposes very important restrictions and regulations on those operating in occupational schemes. It would not seem appropriate, in general, for those to apply to a stakeholder scheme. On the other hand, as the noble Baroness pointed out, trustee stakeholder schemes will require regulation which is not appropriate to a stakeholder scheme run, for example, by an insurance company.

Following the debates today, we still have a certain lack of clarity between schemes which are trustee schemes and ones which are not. Can the Minister say what provisions she has in mind for trustee schemes? Clearly, the full range of requirements imposed on occupational schemes would not be appropriate. For example, as she has rightly pointed out, they will not be required to produce a provision for investment principles. With occupational schemes, it takes a long while to work out what the investment principle should be and to submit it to the appropriate authority, and so on. At least the Minister has suggested that that is the position.

Presumably, a stakeholder scheme which has trustees will require some regulation as far as concerns its investment principles. Can the Minister say to what extent the trustee stakeholder schemes will have the same regulations as occupational schemes, and to what extent they will not?

10.30 p.m.

Baroness Hollis of Heigham: I shall have to write to the noble Lord on the detail. I think perhaps he may be missing the purpose of the amendment; that is not what the amendment does. He has raised perfectly legitimate questions, but not ones generated by the amendment. If he will allow me, I shall write to him on the particular points about trustee responsibility.

Perhaps I may expand and make this clear. The proposed amendment will ensure that the occupational pension scheme regulation will apply to stakeholder pension schemes only where appropriate. Perhaps I may give an example, which I possibly should have done in my speech. A stakeholder pension scheme might be set up for persons in a particular form of employment--a scheme for plumbers, a scheme for hairdressers or whatever. That scheme may not be set up or funded by any employer as an occupational scheme would be. We do not want that occupational pension scheme regulation with respect to employers' duties to apply in these cases. It would not be appropriate in these circumstances, for example, for employers to have to be consulted about the investment principles or to have any role where trustees modify the scheme rules. I do not know whether that helps the noble Lord, but that is what we are doing with the amendment.

Lord Higgins: I think I have understood it correctly. The Minister gave an example of hairdressers or whatever. Clearly, a stakeholder scheme covering,

24 Jun 1999 : Column 1174

generically, hairdressers does not have an employer; the hairdressers are either self-employed or employed by some boutique or whatever.

Baroness Hollis of Heigham: It could be a network of small businesses.

Lord Higgins: It could be a network of small businesses, as the noble Baroness rightly said from a sedentary position. None the less, presumably the trustees will have some responsibilities. It would seem appropriate for those to be well defined. If I understand correctly, the Government are not yet clear about what regulations will be imposed on trustee schemes which were not imposed on schemes operated by, say, an insurance company. Can the Minister give some indication of when such regulations are likely to arrive? They will be quite important to the operation of a trustee-based scheme because the whole structure of that part of the scheme will depend on what framework the Government establish.

Baroness Hollis of Heigham: The noble Lord asked what will be the governance requirements of trust-based schemes. Trust-based stakeholder schemes will be regulated under the 1995 Act by virtue of Schedule 1 to the Bill, where the detail is laid out.

On Question, amendment agreed to.

Clause 8, as amended, agreed to.

Clause 9 [Monitoring of employers' payments to personal pension schemes]:

Lord Higgins moved Amendment No. 36:


Page 7, leave out lines 13 and 14

The noble Lord said: The purpose of Clause 9 is to establish general rules with regard to payments by employers to pension schemes. If I understand it correctly, that is outwith the whole of the stakeholder pension scheme structure. We are seeking to establish rules for monitoring employers' payments to personal pension schemes. I am not an expert in personal pension schemes as against occupational pension schemes. But this would appear to be a new set of provisions which the Government feel are now necessary despite the fact that an extensive pensions Act was passed only a comparatively short time ago.

In this clause the Government are saying that employers,


    "must secure that there is prepared, maintained and from time to time revised a record of the direct payment arrangements which complies with subsection (4)", and that the record must, on the one hand, show the rates and due dates of contributions payable under the arrangements and, on the other, "satisfy prescribed requirements". The purpose of the amendment is to delete paragraph (b) and the words "satisfy prescribed requirements".

One becomes increasingly worried about the tendency for "prescribed requirements". They seem to turn up on every conceivable occasion and in every conceivable clause. As this is a new proposal, can the noble Baroness

24 Jun 1999 : Column 1175

indicate what "prescribed requirements" the Government have in mind for which they wish to take powers to make secondary legislation?

Lord McIntosh of Haringey: Clause 9 covers direct payment arrangements, where an employer pays a deduction from an employee's salary, or sometimes an extra contribution, direct to the personal pension. We strongly support such arrangements because they provide for certainty of payment and a steady build up of pension. They are particularly welcome, of course, where the employer is also making a contribution. However, we recognise that there need to be safeguards to protect the employee's interests.

There is already a body of rules which governs the timely payment of contributions to occupational pension schemes, with which the noble Lord, Lord Higgins, as he acknowledges, is more familiar. Clause 9 seeks to put employer payments to personal pensions on broadly the same footing.

Amendment No. 36 would modify subsection (4) of Clause 9, which deals with the record that employers must set up showing details of their direct payment arrangements. The record is the agreement between employer and employee about what is to be paid to the personal pension provider and when it is to be paid. It will also be the means by which the personal pension provider will monitor the payments to ensure that they are made on time. Subsection (4) provides that the record must show the rates of payment and the due dates by which payments are to be made and contains a regulation-making power which will allow for additional features of the record to be prescribed. The amendment would strike that out.

The Government share the concern about burdens on employers. We intend to make the requirements on employers in this area as simple and as straightforward as possible. But in drawing up requirements in this area we must keep in sight the primary purpose of the arrangement that personal pension providers must be able to monitor in a straightforward way that payments have been received on time. We have to take account of providers' views on this issue. We shall be talking to them about it. The regulation-making power will allow for flexibility to take account of the different ways in which employers and providers do business.

24 Jun 1999 : Column 1176

We have already recognised one requirement as relevant to regulations. That arises where both the employer and the employee are contributing to the personal pension. The requirement will be that the record shall show separately the employer and employee rates of contribution. We have to distinguish, because it will be possible to have different due dates for employee and employer contributions. Separating the employer and employee contributions in that way is not new. Employers already do it for the purposes of tax relief. Tax relief on the employees' contributions is claimed directly from the Inland Revenue by the provider, so the provider needs to know the amount that represents employee contributions.

The additional requirements will not be onerous. That would not be in anyone's interests. We shall be consulting on the regulations and will listen carefully to the responses. But in order to protect the members of personal pension schemes and offer them the same safeguards--I emphasise that point--as already apply for occupational schemes, we need to set up workable monitoring arrangements. The amendment would damage that. I urge the noble Lord to withdraw it.


Next Section Back to Table of Contents Lords Hansard Home Page