HC Deb 05 July 1995 vol 263 cc441-3
Sir Andrew Bowden

I beg to move amendment No. 7, in page 1, line 10, at end insert— '(1A) It shall be the duty of the Authority, when it is satisfied that there are reasonable grounds for doing so, to cause an investigation to take place into any breach of trust law or any other misconduct alleged to have occurred in relation to an occupational pension scheme.'.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

With this, it will be convenient to discuss also No. 14, in schedule 1, page 131, line 3, after 'expenses', insert 'provided that, taking one year with another, not less than one quarter of those expenses shall be paid by the Secretary of State.'.

Sir Andrew Bowden

Amendment No. 7 is intended to strengthen the powers of the Occupational Pensions Regulatory Authority. At present, OPRA is seen essentially as a fire fighter; I believe that it needs to become more proactive, and to have powers of fire prevention.

OPRA will replace, and expand on the powers of, the Occupational Pensions Board. It will be an independent statutory body. It currently lacks clear powers, however. The Goode report recommended that the new legal framework should depend for its effectiveness on proper supervisory and enforcement machinery. I therefore suggest that the pensions regulator should have wide-ranging functions and powers. I do not think that the Bill deals adequately with OPRA's powers: there are not enough clear definitions relating to monitoring, registration, investigation and codes of good practice—in short, the role of the regulator himself.

The aim of amendment No. 14 is to make OPRA 25 per cent. state funded. The current intention is to finance the authority through a levy on pension funds, but that may lead to its being far from independent of those whom it is meant to regulate. The House should not forget that more than 10 million employees are active members of occupational schemes. If we take account of beneficiaries and other family members, we see that the majority of the population benefits from such schemes. I believe that an element of state funding, via taxation, is justifiable. Furthermore, OPRA replaces the Occupational Pensions Board, which, as the House knows, was state funded. The amendment strikes a compromise between those who want state funding and those who favour an industrial levy.

Mr. Arbuthnot

The amendments address different subjects. I shall deal with the issues raised by each in turn.

First, on amendment No. 7, the powers of the regulator to conduct investigations and take action are directly linked to a wide range of obligations relating to scheme security, which are clearly specified in the Bill and the Pension Schemes Act 1993. In that way, we have sought to ensure that all responsible for running pension schemes are left in no doubt about the obligations placed on them, and the consequences of failing to comply with those obligations.

If we gave the authority the powers set out in the amendment, we would undermine the very clarity that we seek to achieve. There is a danger that the authority could be drawn into investigating matters that were the responsibility of the other regulatory bodies.

In Committee and in the other place, there has been extensive debate about whether the authority should police trust law. Our reasons for resisting that were set out fully in those debates. We do not believe that it would be right to extend the authority's remit to cover the vast and complex body of trust law or that we should attempt to re-create trust law in the Bill. Disputes relating to the particular characteristics of a scheme, as set out in its trust deed or rules, can be settled by the pensions ombudsman or, if necessary, the courts.

The Bill enshrines the principles underlying the most important duty of trust that apply to all schemes. The security of members' rights will be considerably strengthened by it, and the authority's powers of investigation and enforcement will provide a robust and effective regulatory regime. I understand, however, that my hon. Friend is concerned about general misconduct on the part of trustees. We have naturally considered those concerns very carefully, and will continue to do so. To some extent, however, those concerns are already covered by the extensive provisions in the Bill; I am referring in particular to sanctions available to the regulatory authority under clauses 3, 4, 10 and 29.

Amendment No. 14 seeks to alter financial arrangements that we have made for the authority. Paragraph 8(1) of schedule 1 gives the Secretary of State power to decide how much to pay the authority in respect of its expenses. Instead of its running costs being recovered in full from the levy on pension schemes, the amendment would require him to raise from taxation a minimum of one quarter of the amount that he determines is appropriate to meet those costs.

The fundamental issue here has been well rehearsed and debated, not only in this House but in another place. Although, this time, a smaller amount is at stake, the principle of who should pay for regulation remains the same. Recovering the costs of the authority through the levy is merely an extension of the principle on which the pensions ombudsman, the pensions registry and the grant to the occupational pensions advisory service are already funded. It is right that the costs of the regulator should be borne by those regulated. Given that we expect the costs to be in the order of £12 million and the assets of pension funds amount to many hundreds of billions of pounds, that does not seem unreasonable. I hope that my hon. Friend will not pursue the amendments.

Amendment negatived.

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