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Division No. 1


Addison, V.
Alexander of Tunis, E.
Alexander of Weedon, L.
Anelay of St. Johns, B.
Astor, V.
Astor of Hever, L.
Attlee, E.
Belstead, L.
Berners, B.
Bethell, L.
Biddulph, L.
Birdwood, L.
Blaker, L.
Blatch, B.
Boardman, L.
Bowness, L.
Brabazon of Tara, L.
Brentford, V.
Bridgeman, V.
Brougham and Vaux, L.
Buccleuch and Queensberry, D.
Buckinghamshire, E.
Buscombe, B.
Byford, B.
Cadman, L.
Campbell of Alloway, L.
Carnock, L.
Carr of Hadley, L.
Chadlington, L.
Chesham, L.
Clanwilliam, E.
Clark of Kempston, L.
Coleridge, L.
Colwyn, L.
Cope of Berkeley, L.
Courtown, E. [Teller.]
Cranborne, V.
Cross, V.
De L'Isle, V.
Dean of Harptree, L.
Denbigh, E.
Denman, L.
Derwent, L.
Dixon-Smith, L.
Downshire, M.
Dundonald, E.
Eames, L.
Eccles of Moulton, B.
Eden of Winton, L.
Elibank, L.
Elles, B.
Elton, L.
Fookes, B.
Geddes, L.
Glenarthur, L.
Glentoran, L.
Gray, L.
Greenway, L.
Haddington, E.
Harding of Petherton, L.
Harmsworth, L.
Henley, L. [Teller.]
Higgins, L.
Holderness, L.
HolmPatrick, L.
Hothfield, L.
Ironside, L.
James of Holland Park, B.
Jenkin of Roding, L.
Jopling, L.
Kelvedon, L.
Kenilworth, L.
Kintore, E.
Knight of Collingtree, B.
Laing of Dunphail, L.
Lane of Horsell, L.
Leigh, L.
Liverpool, E.
Lucas, L.
Lucas of Chilworth, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
Mackay of Ardbrecknish, L.
Mancroft, L.
Marsh, L.
Mayhew of Twysden, L.
Merrivale, L.
Mersey, V.
Miller of Hendon, B.
Monk Bretton, L.
Monro of Langholm, L.
Monson, L.
Monteagle of Brandon, L.
Montgomery of Alamein, V.
Morris, L.
Mowbray and Stourton, L.
Moynihan, L.
Munster, E.
Murton of Lindisfarne, L.
Napier and Ettrick, L.
Naseby, L.
Newall, L.
Norfolk, D.
Norrie, L.
Northbrook, L.
Northesk, E.
Norton, L.
Nunburnholme, L.
Onslow, E.
Onslow of Woking, L.
Oppenheim-Barnes, B.
Park of Monmouth, B.
Pender, L.
Perry of Southwark, B.
Pilkington of Oxenford, L.
Radnor, E.
Rawlings, B.
Reay, L.
Renton, L.
Roberts of Conwy, L.
Romney, E.
Rotherwick, L.
Rowallan, L.
Ryder of Wensum, L.
St. Davids, V.
Saltoun of Abernethy, Ly.
Seccombe, B.
Sharples, B.
Shaw of Northstead, L.
Soulsby of Swaffham Prior, L.
Stewartby, L.
Strathcarron, L.
Strathclyde, L.
Swansea, L.
Swinfen, L.
Tebbit, L.
Teviot, L.
Torrington, V.
Trefgarne, L.
Trumpington, B.
Vivian, L.
Windlesham, L.
Wise, L.
Young, B.


Acton, L.
Addington, L.
Ahmed, L.
Alli, L.
Amos, B.
Archer of Sandwell, L.
Bach, L.
Barker, B.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Blackstone, B.
Blease, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Bruce of Donington, L.
Burlison, L.
Carlisle, E.
Carter, L. [Teller.]
Castle of Blackburn, B.
Chandos, V.
Christopher, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Crawley, B.
Currie of Marylebone, L.
David, B.
Davies of Coity, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dholakia, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Dunleath, L.
Elder, L.
Evans of Parkside, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Faulkner of Worcester, L.
Farrington of Ribbleton, B.
Gilbert, L.
Gladwin of Clee, L.
Goodhart, L.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grantchester, L.
Grey, E.
Hacking, L.
Hampton, L.
Harris of Greenwich, L.
Harris of Haringey, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L. (Lord Chancellor.)
Islwyn, L.
Janner of Braunstone, L.
Jay of Paddington, B. (Lord Privy Seal.)
Jenkins of Putney, L.
Kennedy of The Shaws, B.
Kennet, L.
Kilbracken, L.
King of West Bromwich, L.
Kirkhill, L.
Lea of Crondall, L.
Lockwood, B.
Lofthouse of Pontefract, L.
Longford, E.
Lovell-Davis, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller.]
Mackenzie of Framwellgate, L.
McNair, L.
Mallalieu, B.
Mason of Barnsley, L.
Merlyn-Rees, L.
Milner of Leeds, L.
Mishcon, L.
Molloy, L.
Monkswell, L.
Morris of Manchester, L.
Murray of Epping Forest, L.
Palmer, L.
Peston, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Puttnam, L.
Ramsay of Cartvale, B.
Razzall, L.
Rea, L.
Redesdale, L.
Rendell of Babergh, B.
Renwick of Clifton, L.
Rodgers of Quarry Bank, L.
Russell, E.
Sainsbury of Turville, L.
Sawyer, L.
Scotland of Asthal, B.
Serota, B.
Sewel, L.
Shepherd, L.
Shore of Stepney, L.
Simon, V.
Simon of Highbury, L.
Smith of Clifton, L.
Smith of Gilmorehill, B.
Stoddart of Swindon, L.
Strabolgi, L.
Strange, B.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Gryfe, L.
Thomas of Walliswood, B.
Thornton, B.
Turner of Camden, B.
Varley, L.
Walker of Doncaster, L.
Wallace of Saltaire, L.
Warwick of Undercliffe, B.
Weatherill, L.
Wedderburn of Charlton, L.
Whitty, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.

11 Oct 1999 : Column 66

6.41 p.m.

Lord Higgins moved Amendment No. 8:

Page 1, line 22, leave out subsection (5).

The noble Lord said: My Lords, I hope that the Minister will excuse me if I say that this is also a probing amendment. It is related to administrative expenses.

There has been a great deal of discussion about administrative expenses, in particular the 1 per cent limit which the Government suggest should be imposed on those who administer stakeholder pensions. We have been told that some in the industry have been prepared to accept that limit and we can understand that progress has been made. It would be fair to say that the effect of the introduction of the proposals for stakeholder pensions has led to some increase in the competitive pressures in the market. As a result of that, some charges on existing schemes have been reduced.

However, a number of press reports, one as late as 16th September, stated that,

    “Darling may lift the 1 per cent charge cap".

It would be helpful to know whether that is the Government's position. Furthermore, a number of subsequent amendments relate to commission; for example, that tabled by the noble Earl, Lord Russell. The noble Baroness has tabled an amendment relating to the costs of administration being borne by members and another relating to advice. At this first stage of the

11 Oct 1999 : Column 67

discussion on these points, perhaps we may know whether it is the Government's intention to impose the limit and whether they think it is appropriate.

Lord Renton: My Lords, I must confess that I find Clause 1, which defines stakeholder pension schemes, one of the most incomprehensible pieces of legislation I have come across in 54 years in one House or another of Parliament. Within that clause, it is difficult to envisage how subsection (5) will work. The strange thing is that the various issues which must be worked out under paragraphs (a), (b) and (c) will be difficult to calculate. Indeed, it will mean going into people's personal finances in a subtle, perhaps sometimes complex, way. I believe that what my noble friend Lord Higgins said requires careful attention and I hope that the Government will consider simplifying this subsection.

6.45 p.m.

Lord McIntosh of Haringey: My Lords, the pensions Green Paper outlined our proposals for minimum standards for stakeholder pension schemes and, as the noble Lord will recognise, on 2nd June we published detailed proposals for the minimum standards in a consultation document. They include setting restrictions on the way in which charges may be made and an overall limit on the charges.

Amendment No. 8 would mean that schemes could charge their members in any way and at any level they wished. The noble Lord said that this is a probing amendment about the 1 per cent limit on charges. However, I must take the amendment as it stands and it gives complete freedom to schemes to charge as they wish. I shall do my best to respond to the probe, but in the end I shall have to ask the noble Lord to withdraw his amendment on the basis of what it states rather than on the basis of what he states.

I want to explain why we consider that a simple and transparent charging structure should be one of the fundamental features of stakeholder pension schemes. Before leaving that point, perhaps I may say to the noble Lord, Lord Renton, that there is no question of any investigation into anyone's personal finances. We are concerned here only with the charges that may be made; with the level of the charges, which should not be more than 1 per cent; and with the basis on which the charges are made, which is the total value of the fund.

For many people, the only option of saving for retirement is a personal pension, but the charging nature of some personal pensions bears heavily on smaller investors or penalises those who have to stop contributing to their scheme. Many personal pensions charge in a complicated way, making it difficult for scheme members to understand how the overall charge has been worked out. Terms and conditions vary widely making it hard for potential members to compare the products available.

That is why the consultation paper issued in June proposed that stakeholder pension schemes may charge only in a certain way; that is, a single charge on the value of the fund. No additional charges will be allowed for transferring in or out of a stakeholder scheme or for

11 Oct 1999 : Column 68

stopping or changing contributions. We have sought views on these proposals and we are currently evaluating them in the light of the responses we have received, but the majority of those who responded favoured a single charge on the value of the fund.

I understand the concern of the noble Lord, Lord Higgins, in proposing the amendment. We accept that we are setting a challenge for schemes. Of course, it is a challenge that has already been met by some schemes. There is the printing industry scheme, the engineering and electrical workers' scheme and the Virgin scheme. We intend to make it a challenge, but we want to make sure that those who join stakeholder schemes get a good deal.

Some people argue--I did not hear the noble Lord, Lord Higgins, do so--that market forces alone will drive down costs. Some providers have developed plans for lower costs and flexible personal pensions. That is excellent. We are pleased that they have encouraged the development of better value personal pensions for those seeking to make retirement provision, but we do not believe that this should be left to chance.

We have also proposed that there should be a 1 per cent limit on total charges. Every fraction on the charge makes a lower final pension for pension scheme members. The limit on charges provides them with important reassurance. We are determined to strike a hard bargain on behalf of the consumer. It is with that in mind that we propose the challenging but realistic limit of 1 per cent. In proposing that figure, we have taken into account responses to the Green Paper.

We have considered available information on the range of charges in personal pensions. We have already seen schemes being offered at that level and lower. I acknowledge straightaway that most of those responding to the consultation exercise have argued for a higher limit. We are evaluating the responses carefully and we shall announce our decision in due course. The final level will be set out in regulations using the power in subsection (5) which the amendment seeks to remove.

Therefore, I can only say to the noble Lord, Lord Higgins, that he should not believe everything that he reads in the press and that he should not expect me to anticipate the final result of the consultations or to announce from this Dispatch Box what the figure is going to be when the regulations come out. The regulations will be subject to parliamentary scrutiny. I shall not allow the noble Lord to probe me any further. He can probe me as much as he likes, but he will not get any more answers. I hope that on that basis he will see fit to withdraw the amendment.

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