HC Deb 18 May 2004 vol 421 cc938-40

'(1) In the case of every occupational pension scheme within the terms of this Act, the trustees of the scheme shall be required to hold a meeting each year which shall be open to all members of such scheme, whether active or deferred.

(2) Regulations may make provision as to the matters to be included in the agenda for such a meeting.'. —[Mr. George Osborne.]

Brought up, and read the First time.

Mr. George Osborne

I beg to move, That the clause be read a Second time.

To echo the hon. Member for Northavon (Mr. Webb), I too congratulate the hon. and learned Member for Redcar (Vera Baird), who has pressed this issue hard in Committee and in Westminster Hall debates. In Committee, she was very effective in wringing a concession from the Government on the publication of a report, not least because she managed to persuade some of her fellow Back-Bench Committee members to support her, although I am not sure that they would have had sufficient numbers to win a vote.

New clause 33 is short and straightforward and would help to enhance the transparency and accountability of pension schemes and give their members a chance to find out about any problems before it was too late. It would require an annual meeting to be held at which trustees could answer questions put to them by members. One of the frustrations that Members of Parliament come across on behalf of our constituents is that people are often not kept informed about decisions that can have a profound impact on their pension and retirement. They often find it difficult to get any information out of the scheme when things are going wrong—their telephone calls are unanswered and their letters are not replied to.

The new clause would require trustees of occupational pension schemes to hold an annual meeting that is open to all active or deferred members, although they could include pensioner members if they so wished. That would create a forum that could prove pretty lively if things were going wrong, as sometimes happens in the annual general meetings of big companies when, for example, the remuneration of the chief executive has been placed under scrutiny.

If it is believed that the trustees of a scheme are paying their professional advisers or professional trustees too much, making poor investment decisions, taking risks with the funding and so on, there would at least be an annual occasion when members could turn up and put the trustees on the spot—after all, they are supposed to act on their behalf. We believe that that would help to enhance the transparency and accountability of schemes.

Mr. Pond

New clause 33 would not only require trustees automatically to hold an open meeting with members every year but it contains a power under which matters to be discussed at the meeting could be prescribed by the Government in regulations. Curiously, the new clause refers to all members…whether active or deferred". What happened to pensioner members? I shall leave that question to the hon. Member for Tatton (Mr. Osborne).

Let me say straight away that good communication between schemes and members is vital. None of us would argue otherwise. However, it is overkill for the Government not only to demand that schemes have an annual open meeting, regardless of their size or maturity or the geographical location of the members, but to write the agenda for them. Can the hon. Member tell the House what such a Government sponsored meeting would discuss and in what order?

Members of occupational schemes are free to communicate with and question scheme trustees, managers and administrators and can communicate with the regulator and the pensions ombudsman if they have a complaint. The communication of information is already required under extensive statutory powers, and notification requirements on the trustees and managers already exist.

The Government believe that those requirements are sufficient and balanced. Moreover, the trustees have an overarching duty to look after the best interests of the members, including pensioners. Obligatory meetings between trustees and members would not necessarily be practicable or produce improved communication. Some members would be unable to attend, in which case the information would still need to be communicated. A meeting might not necessarily be the best way of communicating the information that the statute required to he supplied, while some information is personal to the individual or sensitive. A meeting could not be used for members to witness trustee deliberations on, for example, an ill-health early retirement case.

When trustees' decisions are applicable to the membership generally, such as the annual funding statement or the statement of it vestment principles, they are required to be sent to all members or at least made available to any member who asks to see them. We have nothing against schemes choosing to hold annual meetings, but whether they should be held and what should be discussed is a matter of choice and judgment for the relevant trustees, not the Government. That is not to say that we cannot give them some encouragement. As hon. Members know, the new pensions regulator will focus more on promoting good practice and raising standards and he will have a range of tools available, including the power to issue codes of practice.

I am sure that the hon. Gentleman agrees that there are many better ways to promote what is obviously good practice than introducing such a blunt mandatory legislative requirement to hold annual meetings. I hope that, on that basis, he will feel able to withdraw the amendment.

Mr. Osborne

The Under-Secretary warmed to my proposal as his response progressed. He started by being dismissive and ended by saying that it could be included in a code of practice. There is a big difference between being sent a letter and having an opportunity to attend a meeting and put questions to trustees on the basis of received information.

Companies have annual general meetings and most pass quickly, without controversy, but when a business such as Marks and Spencer is in trouble, everyone turns up and the meeting provides a focus that enables people to question the directors. We envisaged a similar procedure, whereby most pension scheme meetings would be over quickly and would not cause a great deal of fuss or be difficult to organise. Indeed, we would not expect all members to turn up. However, when problems exist and some of the matters that the Bill tackles—such as freezing orders or schemes being put into the PPF—arise, the trustees should be required to explain themselves in public to scheme members. We think that that would be a good thing, but this is not quite the kind of issue to press to a vote. We also hope that the regulator will bear in mind these discussions when drawing up the codes of practice, and perhaps include similar provisions in them.

I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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