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Baroness Hollis of Heigham: My Lords, Amendment No. 86 would do two things. First, it would remove fund managers from those excluded from the requirement in Clause 47 to notify OPRA on the insolvency of the sponsoring employer where the scheme has no independent trustee (in cases where it is meant to have one), and where there is no other trustee. It would also remove fund managers from those excluded from the requirement to tell OPRA where there is no requirement for an independent trustee, the insolvent employer is the sole trustee and he has not confirmed to the authority that he is still able to act as trustee. Secondly, it would exclude those providing insurance or investment services from the same requirements. While at first glance it might appear that there is very little difference between the two, in reality the difference is significant.

Clause 47 is part of a package of measures aimed at speeding up the time taken for schemes to wind up. That time can vary enormously from a relatively short period of time to 20 years in an extreme case. Scheme rules will generally set out the circumstances that trigger the winding up of an occupational pension scheme. Under some scheme rules, the insolvency of the sponsoring employer will trigger the winding up of the pension scheme, in others it will trigger the closure of the scheme and leave the trustees to decide whether the scheme should be wound up. It is important that there is a trustee in place following the employer's insolvency so that decisions can be made about the future of the pension scheme, including whether it should be wound up and whether to make decisions, for example, about investment strategy.

Difficulties may also arise in money purchase schemes, which do not need an independent trustee, where an insolvent employer is the sole trustee. In those cases, the employer may no longer be able to act as a trustee. It is important that OPRA is notified about these cases quickly so that it can use its existing powers to appoint a trustee if necessary.

Clause 47 applies where the sponsoring employer of an occupational pension scheme becomes insolvent and will require trustees, or if there is no trustee, a

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person involved in the administration of the scheme, to notify OPRA that the scheme has no independent trustee, or no trustees at all (in cases where it is meant to have an independent trustee), or that the insolvent employer was the sole trustee and is no longer able to act as trustee.

There is currently no requirement for OPRA to be notified where an employer is insolvent and there is no trustee. Schemes can be left in limbo until either the insolvency practitioner or OPRA becomes aware of the situation and takes action. Therefore, this clause aims to ensure that schemes do have a trustee in place following the insolvency of the employer, so as to make sure that members' interests are protected and that prompt decisions can be made about the future of the scheme. OPRA will be able to make enquiries about the position and, if appropriate, arrange for a trustee to be put in place. Because it is important that OPRA is told quickly, we want the obligation to fall on those who are likely to become aware of the insolvency of the employer fairly soon after that event happens.

Where there is a trustee, the obligation to notify OPRA that the scheme has no independent trustee will fall on that person. But where there is no trustee, those persons involved in the administration of the scheme will have to tell OPRA. We realise that not everyone involved in the administration of the scheme will be aware of what has happened to the employer in sufficient time to allow OPRA to take prompt action. That is why it is right to limit the requirement to those persons involved in the day-to-day administration of the scheme who are best placed to notify OPRA promptly.

A number of people can be involved in what could broadly be considered as administrative functions in relation to a scheme, but on whom it may not be appropriate to impose the requirements introduced by this clause. Fund managers are just one example of those who clearly should be excluded--they are unlikely to be aware of what has happened to the employer, and that there is no trustee, in sufficient time to allow OPRA to take prompt action.

Amendment No. 94 seeks to add persons providing insurance or investment services to the list of persons not included in the definition of persons involved in the administration of the scheme. That would exclude them from OPRA's powers in Clause 50 to issue directions, not only for them to take action and provide information but also for them to be provided with information, which should not be overlooked.

Sometimes the winding-up process can stagnate. It may be because those winding up the scheme are having difficulty in obtaining information or are waiting for action to be taken before they can continue. It may also be that those carrying out the winding-up process are not taking action as quickly as they could. Clause 50 gives OPRA power to direct action during the winding up of the scheme where it feels that the process is unduly protracted. It will introduce accountability into the winding-up process and provide members with reassurance that the scheme is being properly wound up.

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It is important that those winding up the scheme should get support when they are experiencing difficulties during the process. OPRA will be able to direct that action is taken or that information should be provided. That includes the provision of information by and the provision of information to the trustees or managers and those involved in the administration of the scheme.

A number of people can be involved in what could broadly be considered as administrative functions in relation to a scheme but on whom it may not be appropriate to impose the requirements introduced by these provisions. I understand the reasons for the noble Lord's amendments. However, some insurance companies can and do provide day-to-day administrative services to schemes, as well as insurance services. We need to be careful that any exemptions do not go wider than we intend.

Those which provide administrative services for the trustees of the scheme are arguably in the best position to provide OPRA with information following the employer's insolvency. Furthermore, where they are carrying out some of the work needed to wind up the scheme they may need OPRA's help in getting that work done.

These new requirements and regulations will allow us to add to those persons who should not be treated as involved in the administration of the scheme. We shall, of course, take into account any representations we receive and, if appropriate, use the regulation making powers to add further to the list of persons already set out. In that light, I hope that the noble Lord will withdraw the amendment.

Lord Astor of Hever: My Lords, I am grateful to the Minister for that full reply which we shall need to read carefully in Hansard. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48 [Modification of scheme to secure winding-up]:

[Amendment No. 87 not moved.]

Clause 49 [Reports about winding-up]:

[Amendments Nos. 88 to 92 not moved.]

Clause 50 [Directions for facilitating winding-up]:

[Amendments Nos. 93 to 96 not moved.]

Lord Higgins moved Amendment No. 97:


    After Clause 51, insert the following new clause--

REMOVAL OF RESTRICTION ON PENSION ANNUITIES

(" . There shall be no requirement for a holder of a stakeholder, personal, occupational or other defined contributory pension to take the pension in the form of an annuity by a specified age.").

The noble Lord said: My Lords, this amendment concerns the age restriction on taking a pension annuity. This matter will be familiar to your Lordships. Only last year on the welfare legislation a similar amendment, but one that was restricted to

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stakeholder pensions, was accepted by your Lordships' House although it was subsequently rejected in another place.

The House will know, therefore, that there is considerable concern about the imposition of the 75 years of age rule. There are several reasons for this. First, on average, people are living much longer. As I think has already been said on a previous occasion, at the time of the Beveridge report the average life expectancy beyond retirement age was about two years, whereas now it is much longer. Therefore, the age limit of 75 is extremely restrictive.

Secondly, previously annuity rates seemed to be relatively stable but now they fluctuate considerably. Over the past 10 years they have plummeted from a level of some 16 per cent to about 8 per cent. In other words, the pension which is drawn at any given moment is about half previous levels. Therefore, there is a considerable argument for greater flexibility in this matter. In the light of President Clinton's announcement yesterday about the human genome project we may look forward to even more dramatic changes in the future. The situation is changing dramatically and therefore we believe that an adjustment is necessary.

Successive governments have relaxed the rules to some extent; for example, in regard to income drawdown schemes. However, those can be risky unless people have considerable back-up in the form of higher income. For people on lower incomes the income drawdown scheme can be risky. There have also been changes to the rules on additional voluntary contributions. The limit was recently raised to the age of 75 with regard to defined contribution pension schemes. Overall, there are strong arguments in favour of the Government reconsidering the matter.

A press report produced in April stated that the Government proposed to raise the age limit to 80. Mr David Davis said that he thought that raising the limit was a good idea but that the Government would wait until half the relevant people had died before they did anything! I believe that there is some truth in that. We have understood for a considerable period that the Government intended to do something in this regard, but nothing happens. It would be helpful to be given an indication of the Government's thinking on the matter. At all events, it is important that the matter should be considered by noble Lords and that some change should be made. I beg to move.


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