§ The Secretary of State shall ensure that the pension and compensation schemes for armed and reserve forces comply with the relevant provisions of codes of practice published by the Pensions Regulator."
§ The noble Lord said: My Lords, for those noble Lords who have not attended the Committee on the Pensions Bill or did not attend the Committee on this Bill, I should say that the Pensions Bill is a massive piece of work in two volumes. It establishes a Pensions Regulator who has four clear objectives; namely, to protect the benefits of occupational schemes, to protect the benefits of personal pension schemes, to reduce the risks of situations where payouts might 613 have come from the Pension Protection Fund, and—last but by no means least—to promote an improved understanding of the good administration of work-based pension schemes.
§ Those functions have important relevance so far as the Armed Forces are concerned, although obviously not the third of them—the risk of a payout from the Pension Protection Fund—as the Armed Forces pension scheme is a government-backed scheme. The Pensions Bill is a framework Bill being discussed at length in the Moses Room in Grand Committee, and we await large chunks of guidance notes and regulations to fill in the gaps. They will have an important read-across to this Bill for the Armed Forces.
§ When I introduced a similar amendment in Grand Committee, the Minister rightly chided me by saying that not all the regulations and guidance notes produced by the Pensions Regulator would apply to the Armed Forces. In that sense, the new clause that I had tabled then was deficient. I have now retabled it to insert the words, "the relevant provisions", so that it applies only so far as matters that are of importance and relevance to the Armed Forces.
§ I do not want to weary the House with the very special position of the Armed Forces; we have tramped that ground a good many times. The problem is not simply the danger or the conditions of service, which may require servicemen to be away from their families. It is not simply the very different career structure, whereby people tend to retire much earlier than from civilian roles. It is not even that there are three very different services carrying out three very different roles. It is, as I think that the noble Baroness, Lady Dean, said at one of our meetings, that they are broken up into small groups of people who are spread far and wide—to the four corners of the globe, a phrase which the noble Lord, Lord Morris, used earlier this afternoon. So it is critical, given the nature and structure of the careers of members of the Armed Forces, that we ensure that pension practice for the Armed Forces will be of the highest standard and therefore complies with the standards that the Government think should be applied in the private sector.
§ The importance of the amendment can be tested under three yardsticks. First, we had an important discussion on Amendment No. 2, tabled by my noble friend Lord Astor of Hever, which the Government rejected, about the need for an affirmative resolution for major changes to pension funds. They said that they did not want that written on the face of the Bill but that they would simply consult.
§ The second matter is that there are several important legacy issues in place, particularly regarding the pensions trough. If the consequences of the actions being taken had previously been properly explained, the bitterness and damage might have been avoided or at least minimised. I have received a letter from someone affected by the pensions trough which alleges that there is evidence of a deliberate attempt to keep the consequences hidden. That is somewhat parallel 614 with the current pension mis-selling scandal and the penalties now suffered by Equitable Life policy holders. What legacy issues are we creating today and what requirement is there to spell out the full implications of what is being proposed?
§
The third yardstick is the government Front Bench's repeated assertions that we should have no concerns about those omissions. The noble Baroness, Lady Crawley said:
We shall be obliged to follow his",
—that is, the Pensions Regulator's—
codes of practice".—[Official Report, 28/6/04; col. GC10.]
She repeated that in remarks earlier this afternoon.
§
Along with other noble Lords, I had a most helpful letter from the noble Lord, Lord Bach, dated 4 July in which he said:
I recognise that there will be consultation requirements introduced in the Pensions Bill and these will apply to the Armed Forces Pension Scheme once they are introduced. It is our intention that we will comply with these consultation requirements although as yet they have not, I understand, been specified in detail".
§ I do not doubt the sincerity or integrity of the two Ministers, but Acts of Parliament last a long time and Ministers come and go. Governments also come and go. I see no reason why there should be any risk in making explicit the requirement for compliance in the Pensions Regulator's relevant provisions. The Government simply cannot legally impose a series of regulations on the private sector while not accepting formally and legally a similar provision for public sector pensions. I beg to move.
§ Lord Astor of HeverMy Lords, I support the amendment. My noble friend Lord Hodgson has argued his case comprehensively. Essentially it is an issue of best practice. If we are to have a new Pensions Regulator under the Pensions Bill to ensure minimum standards and requirements for occupational pensions in the private sector, why should we not put a duty on the Secretary of State to ensure that the new Armed Forces Pension Scheme must also comply? The Minister may assure us that there is no need to enforce a read-across from the private sector to the Armed Forces Pension Scheme because both will be working to the same best practice model. But that has not been the case in the past. Indeed, the Armed Forces Pension Scheme has fallen short of best practice elsewhere in the pensions industry. If the Bill were to state explicitly that there will be compliance with the new Pensions Regulator it would set many minds at rest.
§ Lord RedesdaleMy Lords, I support the amendment. It was useful that the noble Lord, Lord Hodgson, was able to sit through the proceedings on both this Bill and the Pensions Bill, with its large amount of paperwork. It is also worth noting that best practice should spread across all sectors, public and private, because we only have to look back a couple of years to realise that Crown immunity—once one of the cornerstones that allowed death in service not to be 615 covered by certain other aspects, which led to abuse—had to be abolished because it was seen as inequitable in today's society. The amendment contains much sense.
§ Baroness CrawleyMy Lords, I thank noble Lords for their interventions, and the noble Lord, Lord Hodgson of Astley Abbotts, has argued a characteristically robust case. He is amazingly cheerful, having sat through this Bill and the Pensions Bill. However, I have to tell him that I shall continue to resist his amendment.
The new Pensions Regulator will not be established until April 2005, subject to the passage of the necessary primary legislation. The regulator will issue codes of practice, some of which will be mandatory, to help pension fund trustees and other professionals understand how to comply with pensions legislation. I have noted and listened carefully to the noble Lord in his experienced observations regarding those who have fallen victim to certain pension regimes over the years and those who are bitter as a result of it. However, where the codes impact on the Armed Forces Pension Scheme, new and current, I can assure the House that the MoD will comply with their requirements. I see, still, no need to write such a requirement into primary legislation.
The various codes will provide pension schemes with the regulator's interpretation of pension law, thus assisting in improving compliance and encouraging best practice, as the noble Lord has said. Codes of practice enable legislation to be less prescriptive, while at the same time providing guidance and certainty for scheme professionals. This means that the regulatory approach is more flexible and scheme professionals will have more room to exercise their professional judgment in some areas of scheme administration. This approach responds directly to recommendations made by Alan Pickering in the Pickering report. I hope that the noble Lord, Lord Hodgson, will feel reassured enough to withdraw the amendment.
§ Lord Hodgson of Astley AbbottsMy Lords, I am grateful to my noble friend Lord Astor and the noble Lord, Lord Redesdale, for their support. I was not clear whether the noble Baroness was trying to use the fact that the Pensions Regulator was not to be established until 5 April next year as a fig leaf for the reason why it could not be included in this Bill. She started down that track and then her speaking notes veered away from it. Instead she followed the line that we had received assurances on the Floor of the House and in Grand Committee. I shall have a look at what Alan Pickering had to say—given that he is clearly a man of importance and relevance to this debate—and of course at what the noble Baroness had to say, and see where that takes us regarding Third Reading next week. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 9 and 10 not moved.]
§ Lord Astor of Hever moved Amendment No. 11:
§ After Clause 5, insert the following new clause—