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Lord Astor of Hever: The House will be grateful to the Minister for explaining the Government's thinking behind the amendments. We shall not oppose them because we see merit in protecting creditors from gratuitous alienations and unfair preferences that may be made through the pension-sharing provisions.

However, we have concerns about potential devolution issues and the drafting of a number of terms in the amendments. Part II of Schedule 5 to the Scotland Act 1998 stipulates in Sections C2 and F3 that insolvency and occupational and personal pension matters are reserved to the Westminster Parliament. However, the amendments relate directly to the Family Law (Scotland) Act 1985. Family law is a devolved competence.

The First Minister made a statement to the Scottish Parliament on the subject on 9 June, but he will not give the Scottish Parliament the opportunity to debate the issues, which are fully within its competence. Is it not ironic that the Government, who introduced devolution with such great enthusiasm, are failing to allow the Scottish Parliament to exercise its full powers for fear that they will not have a majority? Do the Government accept that they should proceed with great caution until interested parties in Scotland have had an opportunity to debate the issue? Surely the views of the Scottish Parliament should be sought before action is taken.

There may be a good reason in this case, but what about the future, when the Government want to make legislative changes for Scotland in which devolved and reserved matters are inextricably linked? How will that be done? Will the Scottish Parliament always be consulted, and if so, how? What if the Parliament refuses to make the change? Will Westminster overrule it, as the Scotland Act permits? Those are important questions, but I do not expect an answer from the Minister tonight. However, I should be grateful if he would write to me.

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The phrase "fruits of contributions" is used in Section 36D(5) and (6) in Amendment No. 152A in conjunction with the words "directly" or "indirectly". I should be grateful if the Minister could clarify those terms.

It is not apparent at what stage the Government envisage that contributions will be so far removed from the original excessive contribution as to be exempt from the terms of this provision. Could the Government clarify whether, for example, interest paid on the fund and accruals to the capital will come within the ambit of this clause.

This problem is also apparent in new Section 36E(2)(a) which refers to rights which a transferee can acquire directly or indirectly from the pension sharing transaction. New Section 36D(5) also makes reference to contributions which have at any time been made on the transferor's behalf. Could the Minister confirm if the Government are referring in this clause to contributions made by an employer on an employee's behalf and whether this would also cover a windfall situation?

Reference is made in new Sections 36F(4) and 342F(7) to a prescribed person. New Sections 36F(6) and 342F(9) both state that prescribed means "prescribed by regulations". The prescribed person will have an important role in the calculation or verification of the amount to be paid under a recovery order. It is imperative therefore that the qualifications of such a person are stipulated in statute and not left to secondary legislation to be further described. We believe that a precise definition of who the Government envisage fulfilling the task of the prescribed person should be set out in the Bill. I would be grateful if the Minister could comment on this point.

Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Astor, for the consideration he has given to these amendments. He certainly raises some important points. I may be able to respond to some of them but, as he so kindly offered, I will certainly write to him about those which I am not able to cover.

On the first question about devolution, he suggested that, since it amends Scottish law--the Family Law Act--it should be for the Scottish Parliament to legislate. We have considered the matter very carefully with the Scottish Office and have concluded that because these clauses are about insolvency and occupational and personal pensions rather than about family law, although they go into the Family Law Act, they are reserved matters under Section 29(4) of the Scotland Act, and therefore they would not be for the Scottish Parliament. It is important, if we are providing a level playing field in the treatment of pensions north and south of the Border, to make the provisions in this Bill.

The noble Lord asked about what was meant by the fruits of contributions, both directly or indirectly. Direct or indirect contributions mean contributions made by the individual or on his behalf out of moneys due to him. The fruits of these contributions are the benefits which accrue--for example, the investment growth or the returns. It is right that there should be no benefit to the

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bankrupt from attempting to keep assets out of the hands of creditors, so it is made by the individual on his behalf. I shall have to write to him about employer's contributions.

He asked me about prescribed persons and ensuring that the prescribed person had a suitable qualification. The valuation of pension rights is usually undertaken by an actuary using guidance provided by the Faculty and Institute of Actuaries and approved by the Secretary of State. This is the approach which we have taken in these provisions. As with previous legislation, it would not be appropriate to set this out on the face of the Bill. However, the noble Lord can be assured that the appropriate qualifications will be available to prescribed persons and the regulations will be written in that sense.

I appreciate that there are other points, but I will write to the noble Lord about them. I beg to move.

Earl Russell: I am most grateful to the Minister for the care with which he gave that answer which is extremely reassuring. Anomalies do not worry me; lack of consultation would do so. I am extremely glad that the Government have taken care to satisfy themselves that these are not in fact devolved matters. What I would be glad to hear, and what I will assume to be the case unless I am told that it is not, is that that view is shared by Scottish Ministers and officers of the Scottish Parliament. The key maxim in this situation must continue to be "only connect." So long as these matters are discussed privately before they reach this Chamber, I think that we will get on all right.

Lord McIntosh of Haringey: I have to remind the noble Earl that E. M. Forster was English, not Scots. The noble Lord, Lord Astor, quoted the First Minister as saying that these matters would not be considered by the Scottish Parliament. If that is not satisfactory for the noble Earl, I shall consider writing to him about it.

On Question, amendment agreed to.

11.30 p.m.

Lord McIntosh of Haringey moved Amendments Nos. 152B to 152D:


Page 152, line 24, leave out ("the matters specified in paragraphs (a) and (b) of section 342A(6)") and insert--
("(a) whether any of the personal contributions were made for the purpose of putting assets beyond the reach of the transferor's creditors or any of them, and
(b) whether the total amount of any personal contributions represented, at the time the pension-sharing transaction was made, by rights under pension arrangements is an amount which is excessive in view of the transferor's circumstances when those contributions were made.")
Page 152, line 26, at end insert ("and sections 342E and 342F")
Page 152, line 44, at end insert--
("Orders under section 339 or 340 in respect of pension-sharing transactions.
342E.--(1) This section and section 342F apply if the court is making an order under section 339 or 340 in a case where--
(a) the transaction or preference is, or is any part of, a pension-sharing transaction, and
(b) the transferee has rights under a pension arrangement ("the destination arrangement", which may be the

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shared arrangement or any other pension arrangement) that are derived, directly or indirectly, from the pension-sharing transaction.
(2) Without prejudice to the generality of section 339(2) or 340(2), or of section 342, the order may include provision--
(a) requiring the person responsible for the destination arrangement to pay an amount to the transferor's trustee in bankruptcy,
(b) adjusting the liabilities of the destination arrangement in respect of the transferee,
(c) adjusting any liabilities of the destination arrangement in respect of any other person that derive, directly or indirectly, from rights of the transferee under the destination arrangement,
(d) for the recovery by the person responsible for the destination arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the transferor's case with any requirement under section 342F(1) or in giving effect to the order,
(e) for the recovery, from the transferor's trustee in bankruptcy, by the person responsible for a pension arrangement, of costs incurred by that person in complying in the transferor's case with any requirement under section 342F(2) or (3).
(3) In subsection (2), references to adjusting the liabilities of the destination arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.
(4) The maximum amount which the person responsible for the destination arrangement may be required to pay by the order is the lesser of--
(a) so much of the appropriate amount as, in accordance with section 342D, represents excessive contributions, and
(b) the value of the transferee's rights under the destination arrangement so far as they are derived, directly or indirectly, from the pension-sharing transaction.
(5) If the order requires the person responsible for the destination arrangement to pay an amount ("the restoration amount") to the transferor's trustee in bankruptcy it must provide for the liabilities of the arrangement to be correspondingly reduced.
(6) For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between--
(a) the amount of the liabilities immediately before the reduction, and
(b) the amount of the liabilities immediately after the reduction,
is equal to the restoration amount.
(7) The order--
(a) shall be binding on the person responsible for the destination arrangement, and
(b) overrides provisions of the destination arrangement to the extent that they conflict with the provisions of the order.

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Orders under section 339 or 340 in pension-sharing cases: supplementary.
342F.--(1) On the transferor's trustee in bankruptcy making a written request to the person responsible for the destination arrangement, that person shall provide the trustee with such information about--
(a) the arrangement,
(b) the transferee's rights under it, and
(c) where the destination arrangement is the shared arrangement, the transferor's rights under it,
as the trustee may reasonably require for, or in connection with, the making of applications under sections 339 and 340.
(2) Where the shared arrangement is not the destination arrangement, the person responsible for the shared arrangement shall, on the transferor's trustee in bankruptcy making a written request to that person, provide the trustee with such information about--
(a) the arrangement, and
(b) the transferor's rights under it,
as the trustee may reasonably require for, or in connection with, the making of applications under sections 339 and 340.
(3) On the transferor's trustee in bankruptcy making a written request to the person responsible for any intermediate arrangement, that person shall provide the trustee with such information about--
(a) the arrangement, and
(b) the transferee's rights under it,
as the trustee may reasonably require for, or in connection with, the making of applications under sections 339 and 340.
(4) In subsection (3) "intermediate arrangement" means a pension arrangement, other than the shared arrangement or the destination arrangement, in relation to which the following conditions are fulfilled--
(a) there was a time when the transferee had rights under the arrangement that were derived (directly or indirectly) from the pension-sharing transaction, and
(b) the transferee's rights under the destination arrangement (so far as derived from the pension-sharing transaction) are to any extent derived (directly or indirectly) from the rights mentioned in paragraph (a).
(5) Nothing in--
(a) any provision of section 159 of the Pension Schemes Act 1993 or section 91 of the Pensions Act 1995 (which prevent assignment and the making of orders which restrain a person from receiving anything which he is prevented from assigning),
(b) any provision of any enactment (whether passed or made before or after the passing of the Welfare Reform and Pensions Act 1999) corresponding to any of the provisions mentioned in paragraph (a), or
(c) any provision of the destination arrangement corresponding to any of those provisions,
applies to a court exercising its powers under section 339 or 340.

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(6) Regulations may, for the purposes of sections 339 to 342, sections 342D and 342E and this section, make provision about the calculation and verification of--
(a) any such value as is mentioned in section 342E(4)(b);
(b) any such amounts as are mentioned in section 342E(6)(a) and (b).
(7) The power conferred by subsection (6) includes power to provide for calculation or verification--
(a) in such manner as may, in the particular case, be approved by a prescribed person; or
(b) in accordance with guidance--
(i) from time to time prepared by a prescribed person, and
(ii) approved by the Secretary of State.
(8) In section 342E and this section, references to the person responsible for a pension arrangement are to--
(a) the trustees, managers or provider of the arrangement, or
(b) the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.
(9) In this section--
"prescribed" means prescribed by regulations;
"regulations" means regulations made by the Secretary of State.
(10) Regulations under this section may--
(a) make different provision for different cases;
(b) contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient.
(11) Regulations under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament." ").

On Question, amendments agreed to.

Schedule 12, as amended, agreed to.

Clause 80 [Transitional provisions]:


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