Lords Amendment: No. 36, in page 64, line 22, leave out"in accordance with" and insert:
so as to comply with the requirements of
§ Mr. Deputy Speaker (Miss Harvie Anderson)
We are to take at the same time the following Lords amendments:
No, 37, in page 64, line 24, after "requirements" insert:
as to form and content
No. 38, in page 65, line 11, leave out from "provision" to "so" in line 12 and insert:
subject to any requirements of regulations, or of the Board, under subsection (4)(d) above
§ Mr. O'Malley
We have no objection to the Occupational Pensions Board having power to impose requirements as to the form and content of occupational pension schemes. However, Governments of all parties must be careful as to the powers which they give to boards outside the House. If the pensions structure set out in the Bill ever does come into operation, it may well prove necessary to review this part of it if it becomes clear to the House of Commons that the balance of power between the board and the Department in this respect is not satisfactory.
§ Question put and agreed to.
Lords Amendment: No. 39, in line 14, at end insert:
(6A) The Secretary of State may make such regulations as he thinks appropriate for securing that earners, notwithstanding their terms of employment, are freed from any liability to be or become members of, or to contribute to, an occupational pension scheme—
- (a) which is not for the time being recognised in relation to any employment; and
- (b) in whose case the Board are satisfied that the benefits of the scheme are not adequately secured, or that it is otherwise unsound in respect of its management or financing."
§ Mr. Deputy Speaker
We are to take at the same time the following Lords amendments:
No. 47, in Clause 62, page 84, line 19. at end insert:(f) to qualify under section (Rule against perpetuities) of this Act or to have included in, or removed from, it provisions designed to avoid the effect of the rules of law relating to perpetuities.No. 54, after Clause 66, in page 90, line 34, at end insert new Clause:Rule against perpetuities"C.—(1) At any time when an occupational pension scheme qualifies under this section it shall be exempt from the operation of any rules of law relating to perpetuities which would otherwise invalidate, or might be taken 199 to invalidate, any of the trusts of the scheme or any disposition made under it or for its purposes (whether trusts created, or dispositions made, before or after the scheme first qualified under this section).(2) A public service pension scheme qualifies under this section at all times; and otherwise a scheme qualifies at any time when—
- (a) it is recognised under this Part of this Act in relation to any employment; or
- (b) it satisfies the requirements of regulations under this subsection.(3) Regulations under subsection (2) above may require a scheme—
- (a) to contain provisions in any prescribed form, or to any prescribed effect; or
- (b) to have, or to be such that it may be expected to qualify for, tax-exemption or tax-approval;and the regulations may be so framed that, in prescribed circumstances, the requirements can be treated as satisfied if application has been duly made to the Inland Revenue with a view to obtaining tax-approval for the scheme.(4) In subsection(3)above,"tax-exemption" and "tax-approval" mean respectively exemption from tax and approval of the Inland Revenue in either case under any such provision of the Income Tax Acts as may be prescribed by regulations.(5) Regulations may include provision whereby a scheme which ceases to be recognised, or ceases to satisfy the requirements of regulations under subsection (2) above, may nevertheless be treated as continuing to qualify under this section for a further period of 2 years from the cesser, or for such longer period as the Occupational Pensions Board consider to be reasonable in the case of a particular scheme.(6) As respects the operation of the rules of law referred to in subsection (1) above—
- (a) this section does not validate with retrospective effect any trusts created or dispositions made under or for the purpose of a scheme if (taking into account, where applicable, section 3(1) of the Perpetuities and Accumulations Act 1964 ("wait and see") or the corresponding Northern Ireland enactment) those trusts or dispositions were already required to be treated as void under the rules before the scheme qualified under this section; and
- (b) if a scheme ceases to qualify, trusts so created and dispositions so made shall then again be subject to the rules as if the scheme had never qualified (but without prejudice to any rights which vested during the period of qualification).(7) There shall cease to have effect—
- (a) the Superannuation and other Trust Funds (Validation) Act 1927 (power to register superannuation schemes, with consequent exemption from the rule against perpetuities), except section 9 and section 11 so far as it provides for citation and extends section 9 to Northern Ireland; and
- (b) the corresponding Northern Ireland enactment, that is to say the Superannuation and other Trust Funds (Validation) Act (Northern Ireland) 1928;but regulations may provide, in relation to a scheme whose fund was registered tinder either Act immediately before its repeal took effect, for the scheme to retain the benefit of the Act, subject to prescribed conditions and either indefinitely or for a prescribed period.(8) The said Acts of 1927 and 1928 shall each, until its repeal by subsection (7) above, have effect with the following modifications—
No. 55, in page 90, line 34, at end insert new Clause D:
- (a) no new application shall be made under section 3 of the Act for the registration of any fund (without prejudice to the effectiveness of any application previously made or pending); and
- (b) the registration of a fund may be cancelled notwithstanding that the fund has not been wound up, if the trustees apply in writing to the registrar stating that they desire its cancellation."D.—(1) This section has effect for the removal of doubt as to the application, or possible application, of certain enactments in relation to occupational pension schemes.(2) Nothing in the Truck Acts 1831 to 1940, or the Truck Acts (Northern Ireland) 1831 to 1940, the Hosiery Manufacture (Wages) Act 1874 or the Stannaries Act 1887 has, or ever has had, effect so as to prevent the deduction from a person's earnings, on their payment to him, of his contributions to an occupational pension scheme, or of sums to be applied for the purpose of acquiring rights under such a scheme, whether for himself or for his widow or dependants.(3) An occupational pension scheme is not, nor ever has been, a shop club or thrift fund for the purposes of the Shop Clubs Act 1902.
§ Mr. Dean
These amendments arise out of commitments given at earlier stages, and they deal also with certain legal and technical aspects regarding the Truck Acts and the law against perpetuities which were foreshadowed in the original White Paper, which have now been worked out in consultation with those primarily concerned.
Lords Amendment No. 39 fulfils an undertaking which I gave on Report, when hon. Members expressed their concern that employees might be compelied against their will to join unrecognised schemes whose finances were unsound and in which their contributions would, therefore, be at risk. While there: s no evidence that employees are at present being forced to contribute to unsatisfactory schemes, I accepted that this would be undesirable if it occurred.
201 The new clause in Lords Amendments No. 54 implements the undertaking in paragraph 65 of the Explanatory Memorandum on the Bill to remove from pension schemes the effect of the rules of law on perpetuities. Those rules were never intended to apply to pension schemes, but their effect has been to make such schemes either register under the Superannuation and other Trust Funds (Validation) Act 1927, or the corresponding Northern Ireland enactment, or to incorporate provisions limiting the life of their trusts to a specified period or one related to the lives of specified persons. Most schemes have chosen the second alternative and, therefore, contain provisions inherently inappropriate to a pension scheme.
The new clause in Lords Amendment No. 55 puts beyond doubt that the Truck Acts and certain associated legislation do not apply to contributions to an occupational pension scheme. In doing so, it implements an undertaking given on Report, and in paragraph 65 of the Explanatory Memorandum on the Bill. These Acts were intended to prevent abuse in connection with deductions from the wages of certain categories of manual worker but were not aimed at pension schemes. Moreover, the precise application of these Acts to pension schemes has been a matter of doubt—for example, whether an employee's consent automatically made deductions legal, and in what circumstances such consent could be deemed to have been properly given.
§ 11.30 p.m.
§ Mr. Michael Meacher (Oldham, West)
I have a few questions about Amendment No. 54. I appreciate that it is a technical change, but where a scheme is designed to evade the rule against perpetuities not by the Trust Funds (Validation) Act or its Northern Ireland counterpart, but by incorporating provisions limiting the life of trusts to a specified period or relating it to the lives of specified persons, and where, therefore, the scheme contains provisions which are inherently inappropriate to that scheme, does it mean that such restrictive clauses are beginning to cease to have effect? Does it mean that the scheme's managers are required to regard such provisions as null and void or only that they may do so, but that it is not automatic?
202 If a Scheme ceases to qualify under subsection (2) of the amendment, does it mean that restrictive clauses limiting the life of trusts must be reinserted? Under subsection (7) the Trust Funds (Validation) Act ceases to have effect on pensions at least. Is that how claims will be protected if they cease to qualify under subsection (2)?
Is it right that even unqualified schemes should be regarded as subject to the "trip-wire" rule against perpetuities, because as the amendment stands that will continue to be the case?
§ Mr. Dell
In Committee I attempted to introduce a new clause which would have had the effect of protecting employees against being compelled to be members of unrecognised occupational schemes. That new clause was diligently resisted. I tried again on Report to provide that the Occupational Pensions Board should be a sieve for these pension schemes in order to exclude schemes where it would have been unreasonable for people to be compelled to be members. At that stage the Minister said that he would introduce an amendment roughly having that effect at a later stage. We now have the resulting amendment. It is an interesting one. It introduces new questions.
Paragraph (b) provides that the board may apparently be satisfied that the benefits of a scheme are not adequately secured and in such a case it may indicate that persons should not be compelled to be members of that scheme. That is interesting because in some way such schemes will have to be drawn to the attention of the board. There are two conceivable ways in which that might happen. One is by the employee appealing to the board in respect of what he believes to be such a scheme. The other is if the board were to maintain a survey of all occupation pension schemes which it thought were not adequately secured or were unsound in respect of management or financing.
That would appear to put upon the board certain responsibilities which I had thought up to this moment the Government were busily resisting. Perhaps the Minister will explain therefore in what way such schemes will come to the notice of the board if they are not adequately 203 secured. Recognised schemes will come before it anyway. Does that extend the responsibility of the board beyond the Bill's original provisions?
My second point relates to paragraph (a). When I introduced my new clause on report I proposed to give responsibilities to the Occupational Pensions Board to review schemes against which appeals might be made and to relieve employees in certain cases of the requirement to subscribe to them. In subsequent discussion with the Under-Secretary on Report I indicated that there might be cases in which a system other than the Occupational Pensions Board might be necessary because that board might be overloaded, at least in the early stages of its existence.
We find from the new subsection that the Secretary of State may make regulations to deal with this point which, apparently, may in no way affect or involve the Occupational Pensions Board. That may be the right way to do it, but we should have clarity about what is intended. Is it intended that these regulations that the Secretary of State may make shall involve the Occupational Pensions Board, or does he have in mind an alternative system to deal with the problem which I raised in Committee or on Report? We need further guidance on the significance of paragraphs (a) and (b) of the amendment and I hope that the hon. Gentleman will give it to us.
§ Mr. Dean
In reply first to the points put to me by the hon. Member for Oldham, West (Mr. Meacher) about perpetuities, the restrictive clauses can be removed but they will not automatically be removed. As to the hon. Member's other point, the restrictive clauses can be reinserted if the scheme authorities so desire once a scheme has ceased to have the protection of this clause.
With regard to the points raised by the right hon. Member for Birkenhead (Mr. Dell), and particularly whether this regulation-making power substantially alters the power of the board, the answer is "No". Basically, as I mentioned earlier, it fulfils the commitment I gave on Report.
The right hon. Gentleman will recollect that I said that in the early stages the Occupational Pensions Board would 204 have a major task in the initial work of recognition of schemes, preparing for the new arrangements. I undertook, however, to bring forward an amendment to the Bill to provide a regulation-making power so that any advice the board gave on these matters could be implemented. This regulation-making power has been deliberately drawn fairly widely to cover any advice which the board might give, but it would obviously be wrong—indeed, impossible—for me at this stage to anticipate precisely what advice might eventually be forthcoming.
§ Mr. Meacher
May I briefly comment on the Under-Secretary's reply to me? He did not answer my third question: is it right that even unqualified schemes should be—
§ Question put and agreed to.
§ Subsequent Lords amendments agreed to.