HL Deb 14 September 2004 vol 664 cc345-57GC

(1) In section 125 of the Pensions Act 1995 (c. 26) (supplementary provision relating to interpretation), in subsection (3) (extension of meaning of "employer")—

  1. (a) after "include" insert "—
    1. (a)"
  2. (b) after "scheme" insert ";
  1. (b) such other persons as may be prescribed".

(2) In section 175 of that Act (parliamentary control of orders and regulations), in subsection (2) (instruments subject to affirmative resolution procedure), omit "or" at end of paragraph (c) and after that paragraph insert— (ca) section 125(3)(b), or".

The noble Baroness said: Amendment Nos. 296, 346, 346C, 347 and 348 allow regulations to prescribe by the affirmative procedure that in particular circumstances certain persons shall be treated as employers for the purposes of any provisions of the Bill. The amendments are required because under Clause 39 and Section 75 of the Pensions Act 1995, certain related companies or other bodies or persons will be providing back-up support to pension schemes pursuant to arrangements agreed with the regulator.

Those entities will have responsibilities similar to participating employers in schemes. For that reason, it is necessary to have the power to treat such entities as employers for specific purposes.

In particular, the regulator has a number of powers to seek information in relation to schemes and their employers to enable it to monitor the position of schemes and exercise its functions properly. It is intended that this new power will be used to include these guarantor-type employers in the category of bodies in relation to which the regulator can seek information. For example, under Clause 65, "Reports by skilled persons", if a person is named in a financial support direction under Clause 39, or an appropriate arrangement under Clause 260, they have a choice as to the type of arrangement they put in place, which must be approved by the regulator.

3.45 p.m.

In order for the regulator to have appropriate and sufficient information to approve the arrangement, it may be necessary for the regulator to ask for a skilled person report in relation to the arrangements—for example, a financial expert's report. The regulator can issue a notice only to the trustees, employer or person involved in the administration of the scheme. Without the amendment, those named in the direction or arrangement are unlikely to fall within those categories.

In addition, under Clause 166, "Pension protection levies", the board of the PPF will have power, once the risk-based levy is introduced, to include the financial position of the employer as a factor in setting the levy under Clause 166(3)(a). When a financial support direction has been made or an appropriate arrangement has been agreed, the board would wish to recognise that the weak employer in relation to the multi-employer scheme is being supported by a stronger group member. It is only fair that this support can be recognised in the levy calculation. The amendment makes that possible.

A further example where the power may be used is to determine what share of any debt arising on the winding-up of a multi-employer scheme is to be allocated to entities, potentially more than one, that have guaranteed the obligations of an employer. Regulations made in relation to the amendments will be by affirmative procedure. I hope that the Committee will accept the amendments dealing with the situation of multi-employer schemes.

Lord Higgins

The amendments come under the general heading of, Occupational and personal pension schemes: miscellaneous provisions". I have never heard such a "miscellaneous" amendment, and I do not have any points to raise on it.

On Question, amendment agreed to.

Clause 230 [Requirement for member-nominated trustees]:

Lord Lea of Crondall moved Amendment No. 297:

Page 156, line 20, leave out "one-third" and insert "half"

The noble Lord said: My noble friend Lady Gibson of Market Rasen and I are grateful to my noble friend Lady Dean of Thornton-le-Fylde for taking a brief on this group of amendments because my noble friend Lady Turner of Camden, who is an expert on the subject, is in Brighton with our noble friend Lord Hoyle at the TUC debate on pensions. It is being addressed by the new Secretary of State Alan Johnson.

The issue has moved steadily to the top of the trade union agenda. Trade union experience is that the issue is seen as one of deferred pay. Wearing our trade union hats, we are conscious of the fact that although trustees do not wear a hat on one side or the other, employers, if they have a majority are seen as wearing a particular hat. That is the context of this debate, which I welcome. My noble friend Lady Dean will go into some detail. I beg to move.

Baroness Dean of Thornton-le-Fylde

I would like to speak to the amendment and the others in the group. We feel that it is only fair that we increase the number of member trustees to 50 per cent. That is the case in quite a number of current schemes. We also have to bear it in mind that in most pension funds the trustees do not have the authority either to increase benefits or to reduce contributions without the support of the employer. My noble friend Lord Lea of Crondall mentioned that it was seen as deferred pay; whether that point is accepted or not, the blunt fact is that it is an enormous investment by the individual employees. Therefore, they should have, through their representative group, a fair say.

I move on to the other amendments in this group. The amendments in my name are not my proudest moment of drafting, and I apologise for that. However, I should like to speak to their general principle, as they are probing amendments.

The reference to trade union representation and trade union-nominated trustees does not mean that the trustees nominated by the employees will automatically be employees in the company. The employees may wish to nominate an independent adviser—perhaps a financial adviser. For them to have the right to have their say and to have their trade union involved in the process is very important, and already applies in quite a few cases.

My noble friend the Minister may argue, when she speaks on Amendment No. 297B, in favour of the words that have been put there by the government amendment—"adequately represents". But what does that mean? Who defines that test, and what is the test for adequately representing? The amendment uses the word "eligible", but it does not actually give rights. So it is all being run very much on the basis of very little involvement of the employees themselves—and this at a time when there is particular sensitivity on the subject because of what has happened in pension schemes.

Employees feel that if they are members of a trade union, the union should have a role, because they have chosen freely to be in that union. They want their own nominated trusteeship of 50 per cent, not a third. The TUC over the years has provided some of the best professional courses for training of pension trustees that we have around. That is simply because trade unions have been very involved in pension schemes for employees. I shall be interested to hear what the Minister says in reply to the amendments.

Lord Higgins

The noble Lord and the noble Baroness—and, indeed, the noble Baroness, Lady Turner, who is at the conference in Brighton—have a distinguished and long record in pension and trade union matters, so their views should be taken very seriously. However, truth to tell with regard to the trade union movement as a whole, only comparatively recently has it given the attention to pension matters that perhaps should have been the case before. That is, I suppose, understandable, because the situation with regard to pensions has deteriorated so significantly in recent times.

I do not believe that the noble Lord or the noble Baroness referred to the lead amendment, Amendment No. 297, which suggests that the number of member-nominated trustees should be increased from one third to a half—but I may have missed that point. Obviously, where the balance is struck is important. My own experience is that a significant number of member-nominated trustees is clearly necessary. However, as the noble Baroness pointed out, it requires a great deal of training, if they are members of the scheme themselves; that is less so if the person nominated happens to be an outsider rather than a member of the scheme.

I am not quite clear about the exact import of the amendment over the question about the provisions with regard to being appointed by a recognised trade union or trade union committee. I am not sure what the situation is if there is no trade union representation for the company or the scheme itself. I presume that it is not intended, if there is no trade union representation, that the trade unions should somehow come along and suddenly start appointing trustees. But I believe that that is the implication of the amendments.

Baroness Dean of Thornton-le-Fylde

It is not my intention to prolong the debate, but I must say, with great respect, that it is not just a five-minute wonder that the trade unions have discovered pensions. When I was a young officer of 28, I negotiated pensions. My first pension course was 20-odd years ago. Over the years, the TUC has placed great importance on the matter—rightly so—even before the Maxwell days.

The amendments are not intended to place impositions on any company scheme that does not have trade union recognition and trade union members. We are talking about employee representatives and member representatives on a scheme.

Lord Higgins

I am grateful to the noble Baroness for clarifying that, although I am not sure that that is what the amendments actually do. No doubt, the Minister can confirm that the reference to being appointed by a recognised trade union would not apply in cases in which the company or pension fund was not involved.

Lord Lea of Crondall

It is industrial relations jargon. The phrase "recognised trade union" implies a situation in which a trade union is recognised for negotiations on pay and conditions. That is what it means.

Lord Higgins

Fine. If we interpret it as meaning "recognised by the employer", that clarifies the situation.

As I said, I think that it is a question of balance. I would have thought that a third was about right. We need a reasonable number of member-nominated trustees, and that is probably the right proportion, rather than a half. With a half, the number of people who are expert in the field may be reduced. I take the noble Baroness's point: it may be that the people nominated are not members of the scheme, which modifies the balance between expertise, on the one hand, and employer participation, on the other.

That said, there is still a question about whether it is appropriate for a trade union to appoint outsiders, however expert, as trustees, rather than appointing members of the union or members of the scheme. No doubt, the Minister can give us a view on that. My impression, from personal experience, is that the provision for "at least one-third"—it is not "a maximum of one third"—is probably about right.

Lord Oakeshott of Seagrove Bay

We have considerable sympathy with the spirit of the amendments. To the noble Lord, Lord Lea of Crondall, I say in passing that pensions are not just at the top of the trade union agenda; they are at the top of the political agenda for the whole country, as we will see in the forthcoming general election.

It is right to have a minimum of a third, which is what the position is at the moment. In many cases, a half would be appropriate, but, if the Bill said "a minimum of a half", it would be going too far. One might think that, in some situations, it would be right to have 40 per cent members, 40 per cent employers and 20 per cent independent representatives, but there would be no room for manoeuvre if the Bill stipulated a minimum of a half. However, the principle is that the members should have at least equal rights with the employers because it is their money as much as that of the employers. A deficit in the fund is, in effect, an unsecured loan by the company to the pension fund. All those points are right. The principle that the members' representation should be at least equal to that of the employers is fair, so we are sympathetic to the principle behind the amendments.

Baroness Hollis of Heigham

It has been an interesting debate. It was interesting that people emphasised words such as "balance".

We start from a situation in which the larger schemes and, if I may say so, the good schemes have at least a third—often, it is 50 per cent—of such representation. A friend and colleague who is on the board of trustees of one of the largest media companies in the country told me that 50 per cent were member-nominated trustees and that they were worth their weight in gold. When the company thought about altering the revaluation rates for deferred pensioners, those trustees insisted on consultation, as the others would not have done, which was the right thing to do. That is an example of how valuable they are.

Our problem, of course, is that many of the smaller and medium-sized companies do not have a single member-nominated trustee, or barely one. That is our dilemma. We have no doubt at all that 50 per cent, give or take, is good practice and we want to encourage it. I shall come back to that point if I may.

4 p.m.

I shall try to pick up some of the specific points. The first is the point raised by the noble Lord, Lord Higgins. He asked whether it was legitimate that someone who was not a member of the company could be nominated as a trustee because they were a trade union representative. That happens now where there is an experienced and appropriate person—such a person is nominated. However, in such cases the employer can, so to speak, veto it if he thinks there might be a conflict of interest if, for example, the external trustee belongs to a competitive company. However, for the most part, I understand that this is an extremely successful arrangement and gives member-nominated trustees some useful additional quasi-professional spine to their deliberation. Obviously, if no one comes forward, the employer can nominate all the trustees. However, where firms have the relevant third, there is currently no problem.

The noble Lord asked what happens if there is no trade union. If there is no trade union, the members nominate. It may be worth describing the process. We are expecting a two-stage process, first of nomination, then of selection. On nomination, the trustees must invite nominations from all active members or organisations that they regard as adequately representing them. Of course the term "adequate" is a judgment, but they will tend to be bodies such as trade unions or, on the pensioners' side, pension schemes with the British Airways pension association or the BT one or the Post Office one. If those nominations are greater in number than the number of places available, there has to be a pre-described and pre-confirmed selection arrangement. The trustees may interview people or whatever and will produce a final list. If there are any problems about this even though it is not a matter of law there could be reference to the regulator, although his guidance will be essentially guidance rather than upholding the law.

Having said that, I want to take the opportunity to bring to the Committee's attention news that Members may very possibly have picked up today. I refer to the speech made by the Secretary of State, the right honourable Alan Johnson, to the TUC conference. I shall quote his words, so that there can be no error: Everyone agrees"— as everyone has done today— that Member Nominated Trustees are a good idea. They add a different perspective to the trustee board and they allow trustee boards to have a wider range of skills and experiences to draw upon. If members are involved in the running of their scheme it can make them feel that they have a real stake in their pension provision. I can announce today that we have decided to take a power in the Pensions Bill to enable us to move to ensure that 50% of pension scheme trustees are member-nominated". That power will be taken by regulations. Let me make it clear at this stage that there is no question of saying what the timetable will be or how quickly it will operate. It is not an open-ended commitment, but we recognise the point made by the noble Lord, Lord Higgins, that we probably need to move to that position incrementally, especially with schemes which at the moment have no member-nominated trustees at all. What we expect and hope to see in the reasonably foreseeable future is that all schemes will have 50 per cent member-nominated trustees. The power to achieve that will be introduced by regulation. The Secretary of State will bring forward such regulations with an appropriate timetable and with consultation.

We are seeking to enrich the board of trustees while increasing the ownership and feel of responsibility of members towards their schemes, not to put an additional burden on small and medium-sized employers who may at the moment have few, if any, member-nominated trustees. I am sure that my noble friends will welcome this move. It is a balanced approach. We will get there in a reasonable time with consultation and by introducing the power through regulation. Whether that means that we roll out the measure in a particular size of firm or whether it means that we introduce it after certain kinds of consultation will have to be determined. However, there is an intent to introduce the measure. I thought that it would be helpful to tell the Committee that the Secretary of State announced it this morning. I could pick up on individual points about knowledge and information but we shall come to that later. I thought that this might be an appropriate time at which to make that announcement.

Lord Lea of Crondall

All my noble friends are encouraged by what the Minister has said; it is a significant move forward. My noble friends will study Hansard with more than usual interest, and we look forward to the amendment on Report which the Government have signalled in the Secretary of State's speech in Brighton today. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 297A not moved.]

Baroness Hollis of Heigham moved Amendment No. 297B:

Page 156, line 25, leave out from "which" to end of line 26 and insert "at least the following are eligible to participate—

  1. (i) all the active members of the scheme or an organisation which adequately represents the active members, and
  2. (ii) all the pensioner members of the scheme or an organisation which adequately represents the pensioner members, and"

The noble Baroness said: I shall speak also to Amendment Nos. 297C, 299A, 299B and 299C. When our provisions for simplified procedures were debated in the other place, opposition Members were concerned that they might give preference to active members, to the disadvantage of pensioner members. It was a perfectly honourable concern. Of course this was not the intention; we simply aimed to keep the procedures as simple and non-prescriptive as possible. None the less, we agreed to think further about the position of pensioners. My noble friend Lady Dean—and the noble Baroness, Lady Turner, were she here—will remember that we pressed the issue of pensioner representation on scheme trustee boards when we debated the 1995 legislation through those long nights back in 1994.

We seek to introduce as much simplicity and flexibility as possible in individual schemes so that they determine their own procedures. Unfortunately, the amendments will none the less introduce some complexity. We are giving schemes a choice. As I suggested in response to my noble friend's amendments in the previous group, the schemes will be able to invite all the active members and all the pensioner members to make nominations, or they will be able to invite nominations from an organisation that represents the interests of active members—the presumption is that it would be a staff association or trade union—or pensioner members. Some of the bigger companies have very well established pensioner member schemes. There is nothing to stop them doing that. As Members of the Committee will see, exactly the same requirement applies to both active members and pensioner members.

The amendments include the term, an organisation which adequately represents", and I hope that I have addressed that. The regulator will produce a code of practice on member nomination trustees. What counts as an adequately representative organisation will be one of the issues that he will cover in the code of practice so that we do not get a handful of self-nominated people claiming special status.

We have also taken the opportunity to make a minor amendment to subsections dealing with selecting member-nominated trustees and directors—Amendment Nos. 297C and 299C. The amendments provide slightly more flexibility by requiring that the selection process must always involve scheme members but not exclusively so.

I hope that the Committee will recognise that the amendments are an attempt to make clear that pensioner members may be invited to nominate to the trustees, and that they may be included as part of the scheme trustees. The amendments seek to respond to a concern raised nearly a decade ago. The time is now right to honour it. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 297C:

Page 156, line 27, leave out "by" and insert "as a result of a process which involves"

On Question, amendment agreed to.

[Amendment No. 297D not moved.]

[Amendment No. 298 not moved.]

Lord Higgins moved Amendment No. 298A:

age 157, line 3, at end insert ", and (e) may include details of a member-nominated trustee's term of office and that the member-nominated trustee ceases to be a trustee when he ceases to be a member of the scheme.

The noble Lord said: In moving the amendment, I shall also speak to Amendments Nos. 298B, 300A and 300B. The genesis of the amendments is in the representations made by the Scottish Law Society. To some extent, they are drafting amendments, but they also raise some broader issues.

Amendment No. 300B would insert, after "director", other than by reason of the expiry of their period of office or their membership of the scheme". As drafted, the clause suggests that member-nominated directors can be removed from office only with the agreement of the other trustees. The Law Society is concerned that there could be provision for giving a term of office in the arrangements. Therefore, the amendment seeks to clarify the position.

The Law Society also seems to be of the view that a member-nominated trustee would cease to be a trustee when he ceases to be a member of scheme. That raises the point made by the noble Baroness, Lady Dean, as to whether a member-nominated trustee can be other than a member of the scheme. Until the noble Baroness spoke this afternoon, I had normally thought of member-nominated trustees as being people who are members of the scheme and nominated by members of the scheme. If one is going to have members nominating non-members, that raises a series of issues. As the Minister pointed out, there may be objections from the employer in that regard. Will the noble Baroness clarify whether that is the position?

The other issue that is of some concern is to what extent there is provision in these clauses for member-nominated trustees not to be removable. There is danger of a conflict between the other trustees or the employer. Could the noble Baroness clarify to what extent the position of a trustee is protected and whether he is obliged to leave if he leaves the scheme? I beg to move.

Baroness Dean of Thornton-le-Fylde

I hope that what I said earlier does not set any hares running about members of a scheme being able to nominate someone to be a trustee who is not a member of a scheme. I have actually been one—and on the employer side, on a board of directors, when I was not a member of the scheme but was nominated as a management nominee. In another scheme to which I did not belong I was nominated by the employees. So that does happen, and I hope that we are not going to disturb that arrangement, as it is a way of getting people on to schemes who may bring some outside knowledge.

Lord Skelmersdale

Yes, but the point is, how did the noble Baroness withdraw from being a member of either of those schemes?

Baroness Dean of Thornton-le-Fylde

I was not a member of the fund when I was nominated as a trustee, and I never would be. Periods of office are set for a period, such as three or four years.

Lord Skelmersdale

Thank you.

Baroness Dean of Thornton-le-Fylde

I am sorry but I thought that was known, as it is a normal situation.

Baroness Hollis of Heigham

I wonder whether the noble Lord's concerns have not been largely answered by my noble friend. First, the rules of the scheme will normally specify the period of time for the trustees. Four years, for example, might be a typical period. After that, the procedure must be gone through again; it may be that most of the trustees will be expected to stay on, but that would be for the rules of the scheme to decide.

Secondly, to make clear the point about non-members. I understand the noble Lord's concern, but they can represent a real asset and bring experience from other pension schemes on which they serve, particularly for relatively new and inexperienced scheme trustees. We are asking new trustees to offer themselves for training, take on responsibility, make decisions on the advice of the actuary and so on. In particular, it would seem to me that the experience of somebody in a related but not necessarily competitive industry could be extremely valuable to a scheme that has not had the experience of member-nominated trustees. However, I repeat: the employer must give his approval to nominated non-members—in other words, those who are not employed by the employer. The employer may feel that there is a possible issue relating to competition or something of that kind. It must be done with the employer's consent. That seems to get the balance about right.

4.15 p.m.

The noble Lord asked me whether a particular trustee could be removed. I refer him to subsection (6): The arrangements must provide that the removal of a member-nominated trustee requires the agreement of all the other trustees". That is a safeguard. One may wish to remove a trustee who fails to attend or whatever, but, none the less, if someone is seen as being inconvenient, all the other trustees would have to be persuaded before that person could be removed.

The thrust of the amendments is to specify terms of office and to provide that, the member-nominated trustee ceases to be a trustee when he ceases to be a member of the scheme". I have no problem with that, in principle. It would be for the rules of the scheme to specify such matters, and most schemes will do that. However, it is not necessary to make the amendments. Obviously, it is open to the regulator to issue a code of guidance, should that prove necessary, particularly for schemes that have not hitherto had member-nominated trustees. At the moment, we expect that the rules of a scheme will determine such matters.

I hope that, with those reassurances, the noble Lord will withdraw the amendment.

Lord Higgins

I am grateful to the noble Baroness for her reply, but I want to consider one point. The provision that someone can go only with the agreement of all the other trustees seems to imply that, if someone wants to go, all the other trustees must agree. That is what worries the Law Society of Scotland.

Baroness Hollis of Heigham

If I am giving it an incorrect gloss, I apologise, but the arrangements must provide for removal, not voluntary retirement. I understand that to refer to something that may be happening against that individual's wish, and it can happen only with the agreement of all the other trustees. I hope that that answers the noble Lord's point.

Lord Higgins

As I said, I want to think about it. There is a fine line between the case of someone who is being removed and that of someone who, in all the circumstances, feels that he should resign. He might get the other trustees' backs up—that would be an advantage—particularly if he is being removed for some doubtful reason.

I shall think about the drafting. I am not sure that the amendment is drafted as precisely as it ought to be, so I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendment No. 298B not moved.]

On Question, Whether Clause 230, as amended, shall stand part of the Bill?

Lord Higgins

I have one general point to make. It relates to nominated trustees. The question of the payment of trustees is not covered anywhere in the Bill. I am increasingly concerned about that.

The duties that are being imposed on trustees by this Bill and by the mass of legislation on company pensions that already exists represent an enormous burden. That is why training is so important. Indeed, in a company such as British Airways, for example, the assets being dealt with by the trustees are such that the chairman of the trustees carries far more financial responsibility than the chairman of the organisation itself. Yet, the chairman of the trustees and the other trustees may not be paid at all or are certainly paid a fraction of what the chairman and the directors of the employer company are paid. At some stage we need to address the issue of payment of trustees.

There is a particular problem that is relevant to the clause regarding member-nominated trustees, because although outsiders are nominated, as the noble Baroness, Lady Dean, has pointed out, generally nominations are of other employees. Paying someone from the shop floor as a trustee an appropriate amount in relation to the size of the company might provide a useful balance, but it might entail paying him four or five times more than he is earning on the shop floor. That is likely to cause consternation. So it is not a simple issue, but the time has come, given the particular liability of trustees—we will deal with indemnities and so on later—for us to consider carefully some sort of provision in this regard, if only in terms of encouraging more progressive companies.

Baroness Hollis of Heigham

May I just finish this? This was raised at an earlier stage by the noble Lord, Lord MacGregor, and perhaps I may repeat what I said then. There is no requirement that trustees must be paid. Some schemes pay their trustees, but it is voluntary. However, trustees must have paid time off for duties and training under the Employment Rights Act. In that sense, it reflects the situation for councillors, but without the allowances on top. So trustees are allowed paid time off for duties and training; there is no requirement for payment, although that can happen and sometimes does. But I agree with the noble Lord that it is a difficult issue, as with local government, given the other financial circumstances of the employee which may well be disproportionate to the responsibility as a trustee.

Clause 230, as amended, agreed to.

[The Sitting was suspended for a Division in the House from 4.23 to 4.33 p.m.]

Clause 231 [Requirement for member-nominated directors of corporate trustees]:

[Amendment No. 299 not moved.]

Baroness Hollis of Heigham moved Amendments Nos. 299A to 299C:

Page 157, line 28, after second "directors" insert "of the company in question"

page 157, line 29, leave out from "which" to end of line 30 and insert "at least the following are eligible to participate—

  1. (i) all the active members of the occupational trust scheme or an organisation which adequately represents the active members, and
  2. (ii) all the pensioner members of the occupational trust scheme scheme or an organisation which adequately represents the pensioner members."

Page 157, line 32, leave out "by" and insert "as a result of a process which involves"

On Question, amendments agreed to.

[Amendments Nos. 300 to 300B not moved.]

On Question, Whether Clause 231, as amended, shall stand part of the Bill?

Lord Skelmersdale

Clause 231 starts by talking about companies being trustees of an occupational trust scheme. That is perfectly obvious and reasonable; however, I am confused by the phrase, and every trustee of the scheme is a company". This, I am sure, shows my ignorance, but it would be very helpful if the noble Baroness could explain how every trustee of a scheme can be a company.

Baroness Hollis of Heigham

Clause 231 serves the same purpose as Clause 230 but applies where the trustee is a company. It will ensure that in every occupational scheme where the trustee is a company, members have the opportunity to nominate at least one third of the directors. The context is that most companies have corporate trustees in order, I suspect, to protect their liability so that it does not fall on individual members. Therefore, the trustees have behind them member-nominated directors and the procedures for their nomination and selection under Clause 231 are parallel to what we have already described in Clause 230. I shall not describe it as a device, as that would suggest a degree of opprobrium, but it is a way in which many larger companies organise their affairs.

A scheme may have a corporate trustee—for example, a company—and a professional independent trustee that is also a company. Where one reads in Clause 230 the term "member-nominated trustees", Clause 231 refers to member-nominated directors of the trustee company. I do not know the most appropriate term to describe its function: shelter, protection or device? It gives trustees an added degree of protection.

Lord Skelmersdale

I readily understand that. Smaller schemes may well go to an outside company for management, but that would be a single corporation, if you like. The Bill says that every trustee of a scheme is a company, so surely that means that each individual trustee is a free-standing company. I do not see how that can come about.

Baroness Hollis of Heigham

The Bill does not say that all trustees are companies but refers to where there is a match between the two aspects: Where a company is a trustee of an occupational trust scheme and every trustee of the scheme is a company". It does not say that all trustees, independent of this clause, are companies, because clearly under Clause 230 they are not. I am not sure where the gulf is between us. Is it simply the understanding of the opening line and a half of the clause?

Lord Skelmersdale

It is the understanding of the second half. I nearly tabled an amendment to delete, and every trustee of the scheme is a company", in order to have the meaning of those words explained. I am afraid that I still have not understood.

Baroness Hollis of Heigham

I am sorry; I need some more help from the noble Lord. The phrase, where every trustee of the scheme is a company means that there can a single trustee of the company, because it is a corporate trustee and behind that there is the member-nominated directors but there could be two such companies. It simply says that every trustee of the scheme is a company. Is that all right?

Lord Skelmersdale

Yes, that is fine.

Clause 231, as amended, agreed to.

Clause 232 agreed to.

Lord Higgins moved Amendment No. 300BA:

Before Clause 233, insert the following new clause—