REQUIREMENT FOR MEMBER-NOMINATED TRUSTEES (Hansard, 18 May 2004)

§ Mr. George Osborne
I beg to move amendment No. 15, in page 145, line 31, after second 'trustees', insert 'and that not less than one third of this number shall be nominated by a recognised pensioners' association and in the case of a closed fund, the majority shall be member nominated trustees'.

§ Madam Deputy Speaker (Sylvia Heal)
With this it will be convenient to discuss the following amendments:
No. 19, in page 145, line 31, leave out 'and' and insert— '() that those arrangements are fair and open, and'.
No. 16, in page 145, line 33, leave out subsection (2) and insert— '() "Member-nominated trustees" are trustees of a pension scheme who—

(a) are nominated as a result of a process in which at least all active and pensioner members of the scheme are eligible to participate, and

(b) are selected by a process including at least all active and pensioner members.'.

No. 17, in page 145, line 37, at end insert— '(2A) A "recognised pensioners' association" shall be an organisation that represents at least 25 per cent. of pensioners from a particular occupational pension scheme and is duly constituted for the purpose of representing its members.'.
No. 21, in clause 221, page 146, line 39, leave out 'and' and insert— '() that those arrangements are fair and open, and'.
No. 18, in clause 221, page 146, line 41, leave out subsection (2) and insert— '(2) "Member-nominated directors" are directors of a pension scheme who—

(a) are nominated as a result of a process in which at least all active and pensioner members of the same scheme are eligible to participate and
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(b) are selected by a process including at least all active and pensioner members.'.

§ Mr. Osborne
I am conscious of the fact that two Labour Members want to get on to TUPE and consultation by employers, so I will not detain the House for too long with these amendments—[Interruption.] That is provided that they do not heckle me. The amendments—[Interruption.] I am being heckled from all around now, and I have pages of notes here. The amendments are inspired by the Occupational Pensioners Alliance, which represents more than I million occupational pensioners, and concern points that were brought to our attention by Mr. Roger Turner of that alliance. They are designed to ensure that member-nominated trustees reflect the interests of pensioner members as well as active members.
The Minister scored a cheap point on my previous new clause because I had left out pensioner members from my proposal to hold an annual meeting, although I hope that the record will show that I said that they could be invited to that meeting. Perhaps, given that my new clause was defeated, I shall go back and look at that. However, I am more optimistic about these amendments.
Amendment No. 15 would require that of the one third of trustees required to be member-nominated, one third of those should be nominated by a recognised pensioner association. Amendment No. 17 seeks to define that as an organisation that represents at least 25 per cent. of pensioners from a particular occupational pension scheme". That would provide a threshold so that it was clear that the pensioner association genuinely reflected the interests of a number of pensioner members, rather than being a group that had been put together to speak for only one or two members.
It is worth repeating what the Occupational Pensioners Alliance has said on that: We are particularly unhappy about the proposals…on Member Trustees because the role of pensioners in the running of their schemes would be even more marginalised than it is now. The practical upshot of the Bill will be that pensioners can be ignored in the nomination and election processes. There is only a duty for 'active members' to be consulted. The OPA believes strongly that representation via the Trustees is essential for good and fair scheme management and we call, in the strongest possible terms, for the Government to reexamine its position on this issue. The amendment therefore attempts to get the Government to re-examine their position and deal with the under-representation of pensioner members.
As the legislation currently stands, a very mature scheme might have one third of its trustees—the third that were member-nominated—elected by a minority who were the active members. Or there could be a scheme whose trustees were able to choose the member-nominated trustees themselves. The inclusion of pensioner members would help to prevent that abuse, and would also, we hope, lead to a more open, transparent process.
946 Under amendment No. 16, member-nominated trustees would have to be nominated and selected by a process in which at least all active and pensioner members took part; at the moment, the requirement is only that active members are involved in the nomination. Amendment No. 18 would extend that to the process for member-nominated directors. Amendment No. 19, on governance, is not only about pensioner members, but is a broader point. It would require the whole process of choosing member-nominated trustees to be fair and open. It would simply insert three words into the Bill, but would give the courts some leverage when dealing with unfair and closed processes. Amendment No. 21 would extend that requirement to member-nominated directors.
Trustees are ultimately the best defence against the mismanagement of pensions, and we believe that member-nominated trustees are the best defence of the interests of members. We think that those members should include pensioner members who, in many schemes, make up a significant number of the scheme's members, and that the process of choosing the member-nominated trustees should be fair and open. It is vital that pension schemes are accountable to all their members, and that all members are treated fairly.

§ Malcolm Wicks
As the hon. Gentleman said, there are colleagues who are hoping to introduce their amendments in due course. If the only heckle that I ever received in my career was to be a called a gentleman, I would rest content. I expect that a certain colleague of the hon. Gentleman, if facing the National Pensioners Convention in Blackpool, would not be heckled quite so politely.
I hope that the hon. Gentleman will forgive me if, in view of the time, I do not consider all his amendments; rather, I shall cut to the quick and concentrate on where I can be helpful. Amendments Nos. 16 to 18 are not ideal. It is far from clear that establishing such a demanding minimum as the involvement of all active and pensioner members in these processes is sustainable. However, the amendments may well be a starting point in ensuring basic equality between active and pensioner members. We want to explore whether that can be done, while keeping the essence of the new legislation in its current form. Of course, we had a useful debate on this issue in Committee.
If the hon. Gentleman is prepared to withdraw the amendment, we will certainly think further about the need to involve pensioners, as well as active members, in the processes for member-nominated trustees, with a view to tabling our own amendments on this issue in another place. I hope that those helpful remarks might encourage the hon. Gentleman to withdraw the amendment.

§ Mr. Osborne
[Interruption.] Yes, as I am advised to say by the Government Whip, that is very helpful. I am glad that the Minister is prepared to consider the case 947 for pensioner members.[Interruption] The Under-Secretary of State for Work and Pensions says that I should say "Thanks." I shall do so once I have seen the Government amendments in the other place, but I am sure that the Occupational Pensioners Alliance will be extremely grateful. I look forward to the telephone call from the Minister, and with that, I beg to ask leave to withdraw the amendment.