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Lord Higgins: My Lords, we on these Benches agree with the noble Baroness, Lady Turner, that all trustees and not just member-nominated trustees should receive training as regards their role and responsibilities. However, we do acknowledge that inevitably there are some practical difficulties with introducing legislation to make trustee training compulsory and in ensuring that it is enforced.
Like the noble Baroness, Lady Turner, we have been contacted by a number of bodies since these amendments were tabled. We have taken their observations on board and accept that making trustee training compulsory at this stage is not appropriate. We are aware of the administrative and financial burdens that a statutory training regime would entail. The cost of policing a statutory requirement and of accrediting training would be very high and the costs could well outweigh the benefits.
As the noble Baroness has just said, at Committee stage the noble Baroness the Minister promised that she would take this issue away and consult further with the pensions industry. I therefore look forward to hearing what suggestions the Minister has for promoting and encouraging trustee training as right and normal, without direct government intervention.
It is clearly good practice that the trustees who need it--not all of them do--should receive training, but I hope that will be dealt with as a matter of good practice and perhaps as a matter to be shown in the annual report of the pension fund rather than as a matter of compulsion.
Baroness Hollis of Heigham: My Lords, Amendment No. 83 would require that all trustees are required to undertake an approved training course explaining the role and responsibilities of trustees, and that regulations would prescribe the content of the training. Anyone not receiving such training within six months of becoming a trustee would have their appointment revoked.
We debated the subject of trustee training in Committee. It was clear to me then that there is a great deal of support in the House for the principle of compulsory trustee training. Trustees have overall responsibility for the proper running of a pension scheme under the rules of the scheme and in accordance with the Pensions Act. It is vital, therefore, that they have a full knowledge and understanding of their role and responsibilities.
I said in Committee, as your Lordships have acknowledged, that I would like to go away and talk to the pensions industry to see how they felt about the idea of compulsion. My officials have been talking to representatives of various organisations, including the Occupational Pension Schemes Joint Working Group, the TUC, OPRA, the CBI, the Pensions Management Institute and the Association of Corporate Trustees. I should say that the Occupational Pension Schemes Joint Working Group comprises representatives of the National Association of Pension Funds, the Association of Pension Lawyers, the Association of British Insurers, the Society of Pensions Consultants and the Association of Consulting Actuaries. In effect I believe that the officials have spoken to all the major organisations in the pensions industry. I think they have done a very thorough job since the Committee stage and I am grateful to all of them for taking the time to consider and respond at such short notice. I am also grateful to the organisations involved.
All the groups we consulted recognise the importance of trustee training and I am pleased that the Government, the Opposition and the pensions industry can all speak from a common position on this. However, of all the people we spoke to, only the TUC actively supports the idea of making training for trustees compulsory. Given that we all agree that trustee training is a good thing, perhaps it would be helpful to set out the reasons why the Government are not in favour of making it compulsory.
First, there was a general concern that it would add to the regulatory pressures on occupational pension schemes. I believe that the noble Lord, Lord Goodhart, touched on this: as ever, we have to find the right balance between placing regulatory burdens on business and protecting the interests of scheme members. We cannot justify imposing extra costs and burdens without firm evidence that there is a problem which needs fixing.
There are also genuine concerns about practicality and cost. What seems like a simple idea could be difficult to implement. For example, many trustees come with very different backgrounds and experiences and the schemes themselves are also varied. There are obvious differences between defined benefit schemes and defined contribution schemes. Back in the winter of 1994-95, when I knew nothing about pensions, my noble friend Lady Turner patiently and painstakingly took me through the elementary building blocks of pension provision, explaining the differences between various schemes and the issues of employer holidays. There are also much more detailed differences in the roles that trustees are required to play in individual schemes.
There is not a one-size-fits-all solution. The amendment would require only that trustees were trained in the role and responsibilities of trustees. Oddly, that might not go far enough, resulting in a levelling down of standards.
There is also the question of policing and enforcing any new requirements. We would have to create obligations on the trustees to provide the prescribed training and on the individual trustee to attend. OPRA has already said that investigating complaints and enforcing such a provision would be difficult.
Another strong argument is that we would have to think about issues such as whether trustees should be required to show that they had reached a certain level of knowledge or competency at the end of the training, how such knowledge could be kept up to date and how one would offset the training and experience that individual trustees could bring to the job. Then, of course, there is the issue of who would pay for the cost of the training and of setting up an approval system.
I could go on. The concept of compulsory trustee training sounds simple, but its execution is anything but. We agree with the majority view of the pensions industry that it would be premature to take such a major step. The joint working group has said:
However, that does not mean we should do nothing. The joint working group has suggested that trustees should be required to disclose information about trustee training in their scheme's annual report. That might involve a statement of the trustees' policy on training or details of any training that had taken place in the period covered by the report. That idea has great merit, because it would ensure trustee boards addressed the matter of training by putting the
My noble friend has secured a scheme that, although admittedly voluntary, will go a long way towards securing her objective of ensuring that all concerned--employers and newly nominated trustees--recognise the need for training and that a section of the annual report should address issues such as the extent to which trustees have been trained and the need for such training. It will also allow the Government, OPRA and the National Association of Pension Funds to highlight best practice and use it to encourage other schemes.
I congratulate my noble friend on causing the House to put pressure on the Government to conduct further consultation and to show that we have listened and moved. We have come forward with a useful and positive suggestion that will highlight the importance of training and encourage those who have not already addressed the matter to do so. The proposals have wide support in the House and outside. My noble friend has done jolly well and I hope that she will feel able to withdraw the amendment.
Baroness Turner of Camden: I thank my noble friend for that comprehensive response. I am glad that there was such a broad consultation process. I take it that the Government favour the joint working group's recommendation. Of course the group is in favour of training as well, but its suggestion is that the annual report should say which trustees have had training and specify how much training has been done. That is a good idea and moves strongly in the direction that I have argued for.
The CBI suggested that training should be available to trustees at employers' expense. That could be looked at for the future, but in the meantime I thank the Minister for her response. This has been a satisfactory exercise, even though it has not achieved exactly what some of us wanted. The TUC still stands for compulsory training and I think that my union does, too. Nevertheless, this is a sizeable step in the right direction, so I beg leave to withdraw the amendment.