Grand Committee Report of 18 October 2004

Official Report of the Grand Committee on the Pensions Bill
(Eleventh Day)
Monday, 18 October 2004.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): If the Committee will indulge me briefly, I would like to record how much we will miss Earl Russell. I am sure that the Committee will support me on that. Had we been debating this Bill a few years back, Earl Russell would have been sitting here and, quite rightly, ensuring that every statement I offered was evidence-based and on the side of the individual against the state, on the grounds that all individuals are moral adults and know much better than the state what they should do.
I will miss very much his wonderful, humorous, elegant, witty way of ransacking the 17th century for instances of real rights and poor law overseers in which the state required people to do X, they refused, and of course the state was wrong on every count, which was clear evidence of why the state continues to be wrong on every count. I did not want the opportunity to go by without saying how much those of us who worked with him loved him and will miss him. I shall pause for a second in case anyone wishes to join me in paying tribute to Earl Russell.
Lord Higgins: I most certainly wish to do so. When I first entered this House, within a day or so I had to make my maiden speech from the Front Bench. My speech was followed by that of Earl Russell, who was extremely kind in the way in which he welcomed me. I learnt to expect from him the kind of performance—I think that would be a fair description—which was typical of him. He showed an immense grasp of subjects, about which the noble Baroness, I and others had been concerned, regarding what was then called social security and is now, regrettably, called work and pensions, invariably with good humour. He had a quite extraordinary wit and, at the same time, a breadth of technical knowledge. In recent times we had not seen much of him, and it was with great sadness that we learnt of his death.
Although it is a platitude to say it, he will be greatly missed. He was a unique personality—I suppose that we are all unique personalities but his was more unique than many. Therefore, it is with great sadness that we should find that he no longer takes part in proceedings
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on issues of the kind which we are debating today. I am pleased to join with the noble Baroness in paying tribute to a remarkable person who was a hereditary Peer in the best possible sense of the word. He devoted a huge amount of time to the place and worked incredibly hard for the good of the people of this country as a whole.
Baroness Barker: On behalf of noble Lords on these Benches I thank Members of the Committee for their comments about our colleague Earl Russell. Everything that they have said is right, but it is perhaps fitting that among all the tributes—there have been many, and they have all been deserved—those of us who had the privilege of working with him on the intricacies of these matters, and therefore perhaps saw him at his absolute best, have the chance to say something.
Being one of Conrad's colleagues was always interesting. My noble friend Lord Addington once said: "The great thing about sitting beside Conrad is that it is a bit like being next to the best bowler of his generation. You never know whether he will take the wickets out of the ground or whether he will get hit for six, but either way it will be spectacular"—and it was. Over the few years in which I had the immense privilege to work with Conrad, I learnt that two things above all else fired him: his passion for justice and liberty. The extent to which poverty compromised those two things, and inflicted indignity on those who suffered it, was the fire that made everything that was good about Conrad come alive.
Had he been so good and unremittingly good on all of that he would have been insufferable. But he was not. He was blessed with a wicked—I repeat, wicked—sense of humour, which was great to be a part of. Last week, I recalled the night when, I think, there were only the noble Baroness, Lady Hollis, the noble Lord, Lord Higgins, our respective Whips, a Bishop and myself in the Chamber. We were in the depths of the pension credit Bill. The noble Lord, Lord Higgins, had proposed an amendment to delete the word "etcetera" on the perfectly reasonable grounds that none of us on the opposition Benches had a clue what it meant. Conrad sidled in beside me and said, "Do you mind if I take this?". I said, "Feel free". He stood up, proceeded to talk about 17th century history and an ecclesiastical court case that had rendered the definition of "etcetera" as the Antichrist.
We all sat back: it was vintage Conrad and we had had enough of what we were doing. The noble Baroness, in customary fashion, stood up like an indulgent schoolmistress and firmly told him and us why we did not want to delete all that because it meant serried ranks of social security legislation that was terribly important.
People outside this place see it as a place of privilege, but they often mistake the privileges that it gives. The great privilege is to have worked with someone like Conrad Russell. I thank all noble Lords for their sympathies.
Clause 275 [Occupational pension scheme receiving contributions from European employer]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 322:
Page 209, line 26, leave out from "have" to end of line 28 and insert "received information forwarded to them by the Regulator in accordance with section 278(1)."
The noble Baroness said: The amendments on cross-boundary schemes relating to Part 7 are probably one area of the Pensions Bill that has almost no mapping on of Conrad's particular interest. In moving Amendment No. 322, I shall speak also to the rest in the group. I could introduce each amendment separately, but there are rather a lot of them. I have a copy of the speech here, which indicates the purpose of each amendment. If Members of the Committee allow, I shall give each of them a copy of the speech. I shall just make some brief points and then respond to any queries.
Members of the Committee will have also had the background briefing paper that we circulated some time ago, which I hope will have set out the intentions of this section. But, briefly, we are seeking to comply with the European directive, especially Articles 19 and 20, by September 2005. In the briefing and the directive, the proposed structure is, first, to organise itself on a distinction between the home country where the pension scheme is registered and the host country, which is normally where the employer would be. It is a bilateral assumption. Of course, part of the difficulty is that the employees may not always be where the employer is. Sometimes the employer may be where the scheme or corporation is. We may therefore have to seek to produce triangular relationships within a home/host framework. That needs to be worked on.
Secondly, behind the amendments is the fact that the home state where the scheme is incorporated will do the bulk of the regulation, but the host state—that is, where the employer and usually the employees are—will be responsible for ensuring that it is responsive to and subordinate to the social and labour law relevant to occupational pensions within that host country.
My third broad blue-sky statement is that these schemes have higher levels of stringency in their funding requirements and in their need to make good any funding deficits than we are proposing for our schemes, and to give assurances too that the PPF would come into play only where a levy had been raised, which would normally be on a scheme registered in the home country.
We do not expect there to be rapid movement on this; we think that it will be slow for various reasons. The first reason is a very practical one. Most of the details have not yet been worked out. Although three countries—Britain, the Netherlands and Ireland—have well developed occupational schemes and Germany has some schemes, other countries like France and Greece have very little in the way of occupational regimes. This means that the regulatory regimes of all EC countries will get together and work through the working group on harmonising structures
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and developing the detail. The DWP is to play an active part in that and will be represented at meetings from late October onwards.
However, this will go slowly. For example, what is to happen with a scheme where there are employees in several different quasi host countries? The structure required has to be both rational and sensitive.
Secondly, this will progress slowly because multinationals are only going to go for cross-national, pan-European schemes where they are comfortable about doing that, where they have a substantial number of employees, and where the trustees in either the home or the host country are comfortable. It is also worth saying that most trans-national schemes are quite likely to be defined contribution schemes and therefore only to some degree will come within this regulatory regime. But we want to encourage this development, in part because we think that as a result multinational companies may be able to offer more effective management of their schemes and administration on their assets, thus producing better value for their employees. Moreover, we believe that British pension companies will be able to offer services to a market which is open for development and which may very well play to Britain's financial market strengths. We certainly want to encourage that.
Finally, in the speediest of terms, I shall set out what the amendments will do. Government Amendments Nos. 322, 326 and 327 will ensure that we comply with Article 20 of the directive. Government Amendment No. 323 modifies the existing definition of "European employer" because it is problematic where the employer is not the same as the host state, and it is necessary for the regulator to have the power to enshrine the discussion as it proceeds.
Government Amendments Nos. 324 and 325 clarify the two-step process of authorisation and approval. Government Amendment No. 328 permits the regulator to ring-fence assets. However, again the forthcoming meetings of the EC working group will refine this further. Government Amendment No. 329 describes the situation of a non-UK cross-border scheme. Government Amendment No. 330 returns to a degree to the ring-fencing issue by referring back to and implementing the provisions of Article 19 and the protection of assets. Finally, government Amendments Nos. 329A and 330A are minor and technical.
So, I have gone through this group of amendments briefly, having also circulated a speech and a briefing paper and I hope, with those, that the Committee will find our approach—which is to work together with our colleagues in other countries to develop a coherent response to Articles 19 and 20—is the right way forward. I beg to move.
Lord Higgins: It may be helpful if I first make some general remarks about the way in which the Government propose to take action with regard to the European pensions directive, covered by Clauses 275 to 281. As the noble Baroness has pointed out, we start with a series of government amendments.
At the very beginning of our discussions in this House, the noble Baroness kindly provided a comprehensive statement about the problems associated with this area, and has again provided us with more extended speaking notes than she used today. That being so, I do not propose to go into it in enormous detail at this moment, but to ask whether arrangements could be made for those particularly involved with these matters, either those with multinational schemes or companies providing such services across European borders, could be issued with something approximating to the extremely helpful notes distributed to us, and perhaps also drawing on the remarks made by the noble Baroness today.
Back in the 1970s, I well remember that those in the pension and insurance industries would remark on what a fantastic opportunity the EC was because we were so competitive. Alas, I am afraid that it was noted in the information that the noble Baroness provided to us that the measure is really the first step in going ahead in this direction, so far as occupational schemes are concerned. In the mean time, the UK insurance industry has shrunk very considerably. At all events, we must certainly do everything that we can to take the opportunities presented to us. As I understand it, that is effectively what the clauses seek to do.
3.45 p.m.
It is also clear, however, that agreement has still not been reached with regard to a number of definitional problems. Consequently, the Government have to resort to leaving scope to agree to whatever definitions are eventually agreed by statutory instrument. It is very sad that, in the course of the lengthy negotiations, so many issues are not covered. Even the definition of what is meant by a European employer is outstanding. One would have thought by now at least that that could have been agreed. It is very important that we get universal definitions so far as possible if confusion and perhaps subsequent litigation are not to take place.
Generally, the clauses distinguish between the regulator giving authorisation in a general sense and approval of a particular arrangement. However, Clause 276, I think, suggests that in between that there will be a process of accreditation. I am not clear how that takes place. Perhaps we could be told something more about that, at whatever the noble Baroness regards as the appropriate moment.
I mentioned earlier that the provisions are concerned with multinational companies and those providing services across borders. As a Unilever pensioner, I suppose that I ought to declare an interest—although not in a very large pension, I regret to say. None the less, it is one that is of some relevance to me. I imagine that there have been great consultations with all the major multinational companies on the matters.
There also seems to be some confusion about the definition of a home member state and a host member state. Although the clauses seek to give definitions of them, the actual terms seem wholly interchangeable. That is not very satisfactory but, given that
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negotiations have been going on, I imagine that they have at least been agreed as terms of art, so will provide a reasonable basis for discussing the matter.
Overall, we welcome the clauses. We hope that rapid progress can be made and that, as a result, as the noble Baroness said, there will be opportunities for those in this country who operate in the particular markets. It is not quite true to say that there is a European market; we are talking about something rather different from that, with individual companies or sponsors dealing with particular cases. None the less, the clauses are helpful and we do not have any particular points on them, given the extremely helpful notes and explanations that the noble Baroness has given us, to pursue. However, we will look carefully at the more elaborate notes that she has given us and, if necessary, return to matters on Report. My initial impression is that, so far as things go—they have still not gone as far as one would like—the arrangement is reasonable.
Lord Oakeshott of Seagrove Bay: We also have no argument with the broad thrust of the amendments and the clauses, which seem sensible. Will the noble Baroness simply reassure us that the Government have consulted widely the relevant organisations and pension funds in the area and share with us concerns that have been raised, if there are any? We are happy to work on the principle of reading the speaking notes. However, having flicked through them quickly, I am disappointed that we have not had the opportunity to hear her telling us, from page 27, about the "cantonnement" and what my excellent German research assistant, Oliver Hartwich, who although having two degrees has never heard the word, assures me should be called ein separater Abrechnungsverband. Apart from that, we have no comments.
Baroness Hollis of Heigham: Perhaps I should say to Hansard, "Good luck".
I am grateful to the Committee for its welcome for these clauses. I am grateful also that it understands why we cannot yet go into any further detail. We are dependent on bringing other countries into a common understanding and a common vocabulary in regard to what we are doing.
I shall be very happy, again, to ensure that these notes are circulated to all companies and organisations which have an interest. Our officials are working with them all the time. That is why we are getting the steer that we are. If any noble Lords have any concerns that any company or possible player is being overlooked, please let me know and I shall ensure that they are included. But certainly all the major companies of which I am aware—both companies which may have schemes, such as the oil companies, and possible players in the market place who are pension providers—have been actively involved, and we are grateful for that.
Finally, the noble Lord, Lord Higgins, asked what "accreditation" might mean. This is one of our words rather than a European word. It simply refers to the total process within which there are two steps:

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authorisation and approval. Accreditation simply encompasses the whole regime. With that, I hope very much that the Committee will accept the amendment.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 323:
Page 209, line 33, leave out from "employer"" to end of line 36 and insert "has the prescribed meaning;"
On Question, amendment agreed to.
Clause 275, as amended, agreed to.
Clause 276 [General authorisation to accept contributions from European employers]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 324 and 325:
Page 210, line 4, at end insert—
"(1A) On receipt of the application, the Regulator must—

(a) where the Regulator is satisfied that the applicant meets prescribed conditions, grant the authorisation, and

(b) in any other case, refuse the authorisation."

Page 210, line 8, leave out "grant or"
On Question, amendments agreed to.
Clause 276, as amended, agreed to.
Clause 277 agreed to.
Clause 278 [Notification of legal requirements of host member State outside United Kingdom]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 326 and 327:
Page 211, line 3, at end insert "and as to the other matters referred to in Article 20(5)"
Page 211, line 5, at end insert—
"( ) Where—

(a) the trustees or managers of an occupational pension scheme are approved under section 277 in relation to a European employer, and

(b) in pursuance of Article 20(8) of the Directive the Regulator receives information ("the new information") from the competent authority of the host member State as to changes affecting any information previously forwarded under subsection (1),

the Regulator must as soon as reasonably practicable forward the new information to the trustees or managers."
On Question, amendments agreed to.
Clause 278, as amended, agreed to.
Clause 279 agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 328:
After Clause 279, insert the following new clause—

Official Report of the Grand Committee on the Pensions Bill

  POWER OF REGULATOR TO REQUIRE RING-FENCING OF ASSETS
  (1) Where the trustees or managers of an occupational pension scheme receive contributions to the scheme from a European employer, the Regulator may in prescribed circumstances issue a notice ("a ring-fencing notice") to the trustees or managers of the scheme directing them to take, or refrain from taking, such steps of a prescribed description as are specified in the notice for the purpose of ring-fencing some or all of the assets or liabilities (or both) of the scheme.
  (2) In subsection (1), "ring-fencing" has the same meaning as in the Directive.
  (3) If the trustees or managers of an occupational pension scheme fail to comply with a ring-fencing notice given to them, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance."
  On Question, amendment agreed to.
  Clause 280 [Functions of Regulator in relation to institutions administered in other member States]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 329 and 329A:
  Page 212, line 5, leave out "that member State" and insert "the member State in which the institution has its main administration"
  Page 212, line 24, leave out "pensions" and insert "pension schemes"
  On Question, amendments agreed to.
  Clause 280, as amended, agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 330:
  After Clause 280, insert the following new clause—

  STOPPING DISPOSAL OF ASSETS OF INSTITUTIONS ADMINISTERED IN OTHER MEMBER STATES
  (1) This section applies if the Regulator receives a request from the competent authority of a member State for assistance in prohibiting the free disposal of UK-held assets of a European pensions institution that has its main administration in that member State.
  (2) The court may—

  (a) on a claim made by the Regulator with respect to UK-held assets of the institution, grant an injunction restraining a defendant, or

  (b) in Scotland, on an application so made, grant an interdict prohibiting a defender (or, in proceedings by petition, a respondent),

  from disposing of, or otherwise dealing with, assets to which the claim or application relates.
  (3) If the court grants an injunction or interdict under subsection (2), it may by subsequent orders make provision for such incidental, consequential and supplementary matters as it considers necessary to enable the competent authority that sent the request to perform any of its functions in relation to assets subject to the injunction or interdict.
  (4) If the institution is not a party to proceedings under subsection (2) or (3), the institution—

  (a) has the same rights to notice of the proceedings as a defendant (or, in Scotland, as a defender or, as the case may be, as a respondent), and

  (b) may take part as a party in the proceedings.

  (5) In deciding any question as to costs or expenses, a court before which any proceedings take place—

  (a) may take account of any additional expense which it considers that any party to the proceedings has incurred as a result of the participation of the institution in pursuance of subsection (4)(b), and

  (b) may award the whole or part of the additional expense as costs or (as the case may be) expenses to the party who incurred it (whatever the outcome of the Regulator's claim or application).

  (6) For the purposes of this section—
  "European pensions institution" has the meaning given by section 280;
  "UK-held assets" of a European pensions institution are assets of the institution held by a depositary or custodian located in the United Kingdom, and here "assets", "depositary", "custodian" and "located" have the same meaning as in Article 19(3) of the Directive.
  (7) The jurisdiction conferred by subsections (2) and (3) is exercisable by the High Court or the Court of Session."
  On Question, amendment agreed to.
  Clause 281 [Interpretation of Part]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 330A:
  Page 212, line 46, leave out "pensions" and insert "pension schemes (within the meaning of that Article)"
  On Question, amendment agreed to.
  Clause 281, as amended, agreed to.
  Clause 282 [Persons entitled to more than one Category B retirement pension]:
  On Question, Whether Clause 282 shall stand part of the Bill:
  Lord Higgins: Clause 282 is concerned with persons entitled to more than one Category B retirement pension. In terms of drafting it would be difficult to envisage a more unintelligible clause than this one. Perhaps the noble Baroness will give a brief description, on the record, of what it does, because it is not at all clear on the face of the Bill. I am not asking for a lengthy explanation, but some explanation might be helpful.
  Baroness Hollis of Heigham: The clause restores the choice that existed in legislation before April 1992. We want to put payments back on a statutory footing. The clause is straightforward: it ensures that where a person, normally a woman who marries after state pension age, is entitled to more than one category B pension, based on her spouse's national insurance contributions, usually because she is a widow, she should be able to choose which one she wants to receive. So that is a best-buy option which, at the moment, we are covering by extra-statutory provision.
  It was available until April 1992, but provision to allow people to make that choice was inadvertently omitted when contributory benefits legislation was consolidated into the Social Security Contributions and Benefits Act 1992. We discovered the omission in 2001 and, as I said, have been allowing the more beneficial category B pension to be paid on an extra-statutory basis. We seek to regularise that situation. In practice, no one has lost out or will lose out, but it is sensible to bring it within the framework of the law.
  Lord Higgins: I am all for including extra-statutory concessions in legislation. They used to bedevil me when I was at the Treasury. That is helpful, but it is a shame that it could not have been done in a more intelligible way. However, no doubt it will ensure that the matter is dealt with properly rather than by making a concession. I am grateful to the noble Baroness.
  Clause 282 agreed to.
  Lord Higgins Lord Higgins moved Amendment No. 331:
  After Clause 282, insert the following new clause—

  REDUCED CONTRIBUTIONS PENSIONS
  (1) The Social Security (Widow's Benefit and Retirement Pensions) Regulations 1979 (S.I.1979/642) is amended as follows.
  (2) In Regulation 6(1), for "25" substitute "0".
  In Regulation 6(2), for "25" substitute "0"."
  The noble Lord said: After that brief skirmish, perhaps I may make a few other points about state pensions more generally, before turning to the amendment.
  It is clear that general debate on state pensions would not be appropriate in Committee; it is more appropriate on the Floor of the House. As I said the other day, apart from what may be said on Report, it is important that we should have a general debate in the light of the Turner report at an early date. There has been a general appeal in the Turner report and from the Association of British Insurers and others for consensus. My impression is that there is now an almost total consensus among all interested parties with the exception of the Treasury: namely, that there should be an increase in the basic state pension, on the one hand, and a reduction as far as possible in the use of means testing, on the other. Even the Prime Minister, we are told in the press, has come round to the view that means testing on the scale that we now have as a result of the obsessive introduction of every conceivable kind of tax credit is having a serious effect on saving. That was confirmed by the Turner report.
  Therefore, I do not want to make a general speech on pensions, but turn to Amendment No. 331, which concerns the reduced rate of pensions to be paid. The principle behind the new clause, which was proposed to us by Age Concern and several other outside interest groups, is that it would be desirable to end the unfair 25 per cent rule, which means that people with fewer than 10 years of full national insurance contributions receive no pension at all in their own name.
  It is almost exactly 40 years since I made my maiden speech in another place, which specifically concerned giving pensions to the over-80s, who had been totally excluded from the National Insurance scheme when it was introduced by Beveridge. I made my maiden speech on that subject. I was incredibly fortunate in the ballot shortly afterwards to secure a Private Member's Bill to do justice. It was opposed by the Labour government Front Bench and they filibustered it all through the night until close of play, which cut it off just after midday the following day. But I am happy to say that, when we came to office in 1970, that was the first thing that we did.
  So I have some background in this area. In some ways, it is analogous to this situation. Women's pension provision is very inadequate. It has been said that for every £1 a male pensioner in a couple receives from a pension, a woman receives 32p. That is extraordinary. In a similar way to the over-80s, women simply have not been allowed to make up the contributions.
  The main argument is costs, and one can understand that. However, some commitment to say that the Government would like to move towards rectifying the rule, with particular reference to not only those who get nothing at all, but part-pensioners generally, would be appropriate. For that reason, I beg to move.
  4 p.m.
  Lord Oakeshott of Seagrove Bay: Unlike the noble Lord, I do not propose to try to work in any general comments on the state pension. However, while he talked about the consensus from everyone apart from the Treasury, I particularly enjoyed watching the Minister's face. I used to play a lot of poker in my misspent youth, and I congratulate her on giving even less away than usual. We support Amendment No. 331.
  Baroness Hollis of Heigham: The regulations that the amendment seeks to adjust prevent any basic state pension being paid where a woman has fewer than 10 qualifying years and a man fewer than 11 qualifying years—fewer, of course, if they have HRP. It is basically a 25 per cent de minimis rule, as the noble Lord clearly explained.
  The provision obviously has its roots in the 1948 Beveridge settlement, under which a married woman is essentially expected to become entitled to a basic state pension on her husband's national insurance contributions once he has reached state pension age. In fact, the majority of people that the amendment is intended to help will get a state pension of 60 per cent—well above the 25 per cent de minimis—based on their husbands' national insurance contributions once the husbands reach state pension age.
  The first concern is that, in practice, the amendment would help "wives in waiting"—those who are younger and will not yet draw down the 60 per cent because their husbands have not met state retirement age. That issue will itself reduce from 2010 on, as pension ages equalise for men and women. The second concern—it is serious—is administrative.
  Lord Higgins: I did not quite understand the noble Baroness's point. Why does the equalisation of pensions solve the problem?
  Baroness Hollis of Heigham: We presume—it is increasingly not the case—that most women affected are married. Most married women would currently retire from work at 60. Their basic state pension in their own right, including any category A pension—that is what we are talking about—would be available to them at 60, but they would not be able to draw a husband's basic state pension of 60 per cent until he was entitled himself to draw his own BSP, which is when he is 65. If she were two or three years younger than him, she would have to wait until he was 65 before she was entitled to 60 per cent.
  There is therefore a period in which the noble Lord's amendment on the category A pension would cover the gap between a woman's leaving the labour market and her drawing a basic state pension by virtue of her husband's contributions. I used the phrase "wives in waiting" as a colloquialism. When that age begins to equalise from 2010, the issue will be lessened because she would not be entitled to draw the pension either until she was 65—the same age as him. At that point, even if she had 25 per cent, she would not stand to gain
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  unless her own category A pension was more generous than the category B pension that she would get from him.
  Lord Higgins: One could not say that she waits just as long but does not know it?
  Baroness Hollis of Heigham: It depends on when she leaves the labour market. She would not be entitled to a category A pension until she herself was of retirement age, which, by 2020, would be 65.
  The second consideration is the administrative one, a point that goes to many of the amendments, from LEL to carer's leave. I have done a lot of work on this issue as I was interested to see how far we could take it and how far we could bring women into the framework of an adequate basic state pension. In this case the Government would be paying very small amounts of basic state pension—perhaps one or two years' worth—which might generate £2, so that one was paying out £2 or £4 a week because someone had two years' worth of entitlement. It is possible that people would not actually benefit from that because any extra gained in the state pension could reduce the amount of pension credit paid, which is the guarantee element. So we have no plans to abolish the rule. However, I recognise the problems that the issue generates and some of the thinking behind it.
  Society is changing. All of us have engaged in that debate. However—to use a phrase to which we often have recourse, but it is more relevant here than on most occasions—I do not think the time is right for this amendment. During the Bill's Committee stage in another place, my right honourable friend the Minister for Pensions, Malcolm Wicks, committed the department to publishing a report in 2005 on the pension position of women. I do not doubt that that will take further some of the issues raised by the Turner report. Before that, we will be looking at a number of areas relating to the pensions position of women and what we can do to improve it. I do not want to preempt that at this stage.
  The interlocking of issues such as addressing the 25 per cent rule and some of those raised by the EOC and Fawcett, such as whether the LEL and the carers' trigger for those looking after older people on DLA should be reduced, add ever more complexity to the basic state pension without ensuring that everyone receives an adequate pension in retirement in that format.
  I absolutely accept the intellectual argument behind the amendment—that women will have earned this and the de minimis is too high, particularly as more women will not be protected by the 60 per cent pension rule. And although there is a cost element, I am not using that as a basis for urging that the amendment not be pressed. I am urging it on the basis of complexity and the fact that this should be one of a number of issues—as I suspect I will be saying in response to quite a number of these amendments—that should be taken on board coherently together. I expect that we will do that as we respond to the commitment made by my

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  right honourable friend in another place. With that explanation, I hope the noble Lord will feel able to withdraw the amendment.
  Baroness Barker: The noble Baroness cited administrative complexity in her argument. No doubt like other Members of the Committee, I listened yesterday to her talking on Radio 4 about the report on computer systems at the Department for Work and Pensions. Can she say whether administrative complexity will form part of that report? It seems to me that women who—as she has lectured us often enough—worked for fewer years, for lesser sums and for a number of different employers will always be most at risk of having a number of different, small pension entitlements from different places. As we know, women constitute by far the largest number of potential beneficiaries of the pension credit. I think they also constitute the greatest number of those who do not take up the pension credit, as many of them have only smaller sums to gain.
  What the noble Baroness says is perhaps right. However, I think the key issue is not complexity for the Government but complexity for pensioners, particularly women pensioners. It is not normal for reports from the noble Baroness's department to talk much about administrative complexity, but I hope that this one will.
  Baroness Hollis of Heigham: I take that point. Consideration of what that report may cover is at a very early stage. It has been very much influenced by the Adair Turner debate and the response it is generating. But I shall certainly take the point away; it is well made.
  Lord Higgins: I am grateful to the noble Baroness for that reply. So far as concerns administrative complexity, it is a strange argument coming from a government that have introduced as much means testing and so on as they have.
  As to costs, presumably a number of people who might benefit from the amendment are anyway on means-tested benefit and it would not involve any extra costs as far as that group is concerned.
  Baroness Hollis of Heigham: If the noble Lord will allow me to intervene, I can put the costs on to the record, although it is not really where I was coming from. With wives-in-waiting, female partners, some people abroad and so on, the annual cost could be, I say advisedly, up to £100 million a year. We do not have records on a number of people because of their contributions and so on. If one was to make it retrospective, one could be talking about £400 million.
  Lord Higgins: Yes. And that is taking into account the fact that many of them will be on means-tested benefits?
  Baroness Hollis of Heigham: My understanding is that these figures are gross.
  Lord Higgins: Gross? So the net figure could be substantially less. That is the answer as I understand it.
  Baroness Hollis of Heigham: Yes.
  Lord Higgins: Yes?
  Baroness Hollis of Heigham: I was just confirming that my understanding is that these figures have to be gross. The noble Lord is exactly right.
  Lord Higgins: The other matter concerns a point we were making in a slightly different context the other day. The Government have gone a long way towards conceding the argument but have not made a decision, although they say they are thinking about it. Again, I would have thought that the need to take a long while making this decision is somewhat doubtful. I hope that by Report or Third Reading we will receive a rather more definitive answer than we have had so far. The arguments are known; the costs are known; everything about it is known. It is just a question of taking the plunge, if I may put it that way.
  I shall not press the matter now but I hope the noble Baroness will think about it. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 283 [Deferral of retirement pensions and shared additional pensions]:
  On Question, Whether Clause 283 shall stand part of the Bill?
  Lord Higgins: I make only one point. The Government have given a great deal of publicity to this issue, arguing that people can get more if they defer their pensions and so on. However, I am slightly concerned about the administrative side, the extent to which the pension will he increased and what will be the basis of increasing the pension. Presumably it will be on the argument, "You have deferred your pension. As a result of that we will not have been paying you for one, two or three years", or whatever. "Therefore, because you would otherwise have been getting interest on it, we will pay you rather more". There is an implicit rate of interest involved and I am not sure what that will be. Perhaps the noble Baroness will tell us.
  I can speak personally about another matter which really worries me. A member of my own family decided to defer their pension—despite my suggesting that it was not worthwhile—and they did so for a year. They then said that they would like it paid, but it took them another year to get it paid. The problems with the computers and so on in the department are well known, but that does seem quite strange. One would hope that whatever interest or increase is allowed, it will be up to the date when it is actually paid and not the date when the person asks to have it deferred.
  Baroness Hollis of Heigham: In response to the first point of the noble Lord, Clause 283 does two things.

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  First, it continues the existing policy of increments—that is, if you defer drawing the state pension you obviously get a higher state pension as a result.
  As to the noble Lord's point about the rates of interest, the changes will increase the accrual rate for increments from 7.5 per cent a year to 10.4 per cent a year and remove the current limit from the length of time in which a person may enhance their pension by deferring. That means that the cross-over period, if you like, at which point it becomes actuarially advantaged reduces from about, on average, 13 years to about, on average, 10. So it becomes a better buy, particularly for women, who are likely to live longer.
  The second thing provided by this clause is that of giving people the option, the default option, of turning the money into a lump sum paid up front. That is new. For many people, if they have concerns about their longevity and they do not want to take the inevitable small gamble associated with that, or would welcome for perhaps the first time in their lives a substantial lump sum, they will have the possibility of taking this option.
  I take the point made about potential complexity, but the complications will lie mainly in the increments, which are already well established even though we may be slow. We are seeking to make the increments more generous, as well as to introduce the option of a lump sum. Thus it is entirely benign on both fronts and will, I hope, be welcomed by noble Lords.
  Lord Higgins: When the noble Baroness says "substantial", what kind of figure are we talking about?
  Baroness Hollis of Heigham: It could be £30,000 to £40,000.
  Lord Higgins: I am grateful for that surprising reply, and I would not wish to pursue the matter further—
  Baroness Hollis of Heigham: I assume that the noble Lord is referring to the potential size of the lump sum. If that is the case, the figures I cited could well be achieved if someone defers their pension for four or five years.
  Lord Higgins: I am grateful to the noble Baroness for her response.
  Clause 283 agreed to.
  4.15 p.m.
  Schedule 11 [Deferral of retirement pensions and shared additional pensions]:
  Baroness Barker Baroness Barker moved Amendment No. 332:
  Page 296, line 5, leave out paragraphs 9 to 11 and insert—
  "9 After paragraph 3B (inserted by paragraph 8 of this Schedule) insert—

  Treatment of lump sum of deceased pensioners
  3C Where a person has accrued a right to a lump sum payment under paragraph 3A of this Schedule the value of the lump sum accrued by the time of death shall be payable to the estate of the deceased.""
  The noble Baroness said: Following on from our previous discussion, I want to rehearse and advance an argument put forcefully in another place by my colleague and honourable friend, Steve Webb. It turns on the issue of the deferment of state pensions and deals specifically with the case where a pensioner has decided to defer his retirement pension in order to be able to draw a lump sum at a later date, but who dies before that date is reached. In such a case, the pensioner's spouse will have a claim on the lump sum; that is, he or she should be able to choose to "inherit" either the lump sum or the increments based on the deceased's deferral entitlement. However, in order to be able to inherit the lump sum, the survivor must have been married to the deceased at the time of death, have reached pensionable age and have claimed his or her own pension.
  Page 179 of the Explanatory Notes puts the word "inherit" in inverted commas, because apparently the Government believe that the accrued lump sum does not in itself constitute a property of the deceased person and therefore cannot be bequeathed to anyone. Therefore the possibility of inheriting any such lump sum seems to depend entirely on the generosity of the Government and is not something on which the deceased's heirs would have an independent claim.
  My colleague in another place argued the point about equality, saying that allowing only married partners to inherit lump sums was likely to represent discrimination. It would also make it less attractive for unmarried pensioners, of whom there are many, to defer their retirement pensions for a lump sum. We think that that may be a reason for someone in the future to invoke Article 14 of the European Convention on Human Rights on the grounds of discrimination.
  However, the more substantive case which I want to make today concerns whether such an accrued pension is in fact a possession. As I have said, the Government seem to be treating this as a kind of ex gratia payment which is not a possession. We would argue that because it is the result of the accrual of a contributory pension—the person has paid their contributions into it—the fact that it is deferred means that it is a possession. For example, if a person chooses not to defer their pension but to take it immediately, and to put any resulting savings week by week into a savings account, they would accrue a sum of money which would form part of their estate. There is no difference whether the money is in a bank account or is with the Government; it should be treated in the same way. In failing to recognise this money as a possession, we think that the Government are opening themselves up potentially to actions under not Article 14, but Article 1 of the ECHR, covering every person's entitlement to the peaceful enjoyment of their possessions.
  As it stands at the moment, given the risk—the noble Baroness talked a moment ago about the slight risk that people were running in deferring pensions; that to me seems to add a significant risk—what possible advantage could there be for someone to defer? Why should they not just take the pension early and put it away in a savings vehicle? That does not

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  make sense. So, on those two bases, we think that it is a possession and an entitlement and something against which a survivor could make a claim. I therefore beg to move.
  Lord Skelmersdale: It is no secret—indeed, I said so at Second Reading—that I disapprove of the lump sum option, but I make clear that that is a personal view; it is not yet the view of my party although it may become so. Taking the situation in the Bill as read, and as the noble Baroness, Lady Barker, has done in moving the amendment, the question surely arises of when the election to take a lump sum is made. If you elect to take a lump sum at the very beginning when you are 65 and you work for X years—it does not really matter for how long—the lump sum will be identifiable when you die. If you die at any time after the first year after you are 65, as a man, clearly you will have accrued a putative lump sum.
  The noble Baroness then asked what happens to that lump sum. In those circumstances, I can understand that the lump sum should be paid to the deceased person's estate or on the transmission, however that may be—often, to the wife, but through the will there may well be a division in some other way. That is fine. But as I understand the position in the Bill, which is the Government's position, you will not make an election until after you have retired finally at age 67, 70 or whenever. Therefore, until that point, there is no accrued sum in prospect. Indeed, you then have to make a decision yourself whether, as I should prefer, to take the extra weekly or monthly pension or to take the lump sum. So, much as I regret to say so, I do not think that the amendment would work.
  Baroness Hollis of Heigham: The amendment may well be technically defective, but that is not where I want to go. The problem is that in all of this, we are dealing with a structure set up that most of us now realise is increasingly less relevant, under which the married woman's pension, the 60 per cent pension, is derived from the husband and the assumption is that his waged work provides for her. There is a world of work that is waged and a world of domestic care that is not and because her domestic work supports his waged work, she is a co-owner of or is entitled to his pension and protection.
  Of course there are all sorts of unfairnesses about that that have not even been mentioned today, such as that a single person will pay the same NI rate as a married person but will never be able to draw a 60 per cent dependant's payment from it. Most of the problems that we face today arise because we are dealing with that structure. Given that, the situation has always been that his increments, when he draws them, will benefit her and, if he dies and she goes on to his category A pension, she inherits his increments. Therefore, if his lump sum has already been paid, it is part of his estate and, in the normal course of events, she would inherit that, if that is what he chose. The question is what happens when someone has deferred drawing his basic state pension—he may be 67 or 68—and dies. A potential right has not yet materialised about the woman's position on that. The same
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  framework should cover that situation. In the same way as she would inherit increments—it would be her choice—she would inherit the lump sum. However, in the same way as the increments would not be a property available to a dependent child or some other person, or would be turned into a lump sum to go into a will, the lump sum would not be either.
  In other words, within the framework of the contributory benefits as it is now, it is a long established principle that provision is made for a surviving spouse. While both members of a married couple are still alive, the contributions of one member may entitle the other to a pension if their own contributions are deficient.
  The inheritance arrangements that we have produced in the Bill for lump sums are an extension of the current rules governing the provision of survivors' benefits, which explicitly recognises that marriage implies enduring mutual financial support and obligations. The amendment would undo that principle, by requiring a lump sum to be paid to the estate of a deceased deferrer in any case where the conditions of entitlement to it would have been met by the deferrer, regardless of whether they were married or not. As matters and the framework stand, we do not think that the right approach. Obviously, it would treat unmarried couples and single people differently from what is currently the law. It would allow children or any other beneficiary of the deceased, including a neighbour or friend if they saw fit, to benefit.
  We do not believe that to be right. It is an extension of our current increment rule. All the provisions may need looking at in a wider context; no doubt we will have the discussion in the next year. However, the noble Lord, Lord Skelmersdale, is right. At the moment, we are trying to treat the lump sum in exactly the same way as we are treating increments—no more, no less. A woman would inherit the increments and the lump sum, but no one else would. We do not have sufficient basis to go beyond that. If we did so, it would open up the whole issue of whether we turned increments into a lump sum to be inheritable, whether there was a dependant's pension for unmarried partners, and so on. One could not draw the line anywhere, except with the existing framework.
  In terms of its value, the lump sum set out is not less than 2 per cent above bank base rate, which we think fair. At the moment, the best current rate would be 6.75 per cent. Today at Abbey, one can get about 7 per cent. Our rate would ensure a return—as and when the changes come through, if noble Lords agree to them—of 10.4 per cent. People would do much better under this arrangement, provided that they took the gamble on their own life expectancy. That is the risk. I am sorry that I shall not be able to be more helpful to the noble Baroness but, while the current structure of category A and B pensions remains and increments follow those rules, we will treat lump sums in the same way.
  Lord Skelmersdale: Before the noble Baroness, Lady Barker, responds, will the Minister be good enough to answer my question? When does one elect for the lump

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  sum? Presumably it is when one finally retires, as I suggested earlier. A second point occurred to me. The weekly accruals will be paid to the widow at 60 per cent, presumably, in the same way as the original pension. Am I right in both cases?
  Baroness Hollis of Heigham: On the first point, yes. The choice of whether to go for lump sum or increments would he made by the individual at the point of retirement. However, there is a cooling-off point—I do not know whether we will get to it—so that if someone feels that they have made the wrong choice within three months, they can revisit it. That is meant to be a decent way for people who have taken increments and change their mind and want a lump sum, or vice versa, to do so. On the second point, once someone becomes a widow they go on to the husband's category A pension—a 100 per cent basic state pension, in other words, rather than her 60 per cent. At that point, she would also enjoy his increments.
  4.30 p.m.
  Lord Oakeshott of Seagrove Bay: Am I right in thinking that, if a single pensioner decides to defer a pension for several years, continues working and then dies, his children—or whoever he wants to leave his money to—lose out completely, and that the benefit of the deferral accrues to the Government? That may help to clarify the issue.
  Baroness Hollis of Heigham: The position is exactly the same as the current situation when a single person, such as a widower with children, who had earned increments dies. Those increments do not go to the children either. The lump sum, although there are different financial assumptions attached, is meant to be a decent alternative option which so far has not existed for people who would like access to the lump-sum provision. At the moment such a widower would not be able to bequeath his increments, in the same way as he would not be able to bequeath the lump sum if he died before he had joined it. If, for example, he retired at 67 and had two years of enhancement, the lump sum of, say, £15,000 would go into his building society account. meaning that, if he died three years later, the money would become part of his estate. Similarly, if he had saved up his increments and put them into a building society, they would go into his estate. There is no right of inheritance, except to the spouse, if the person entitled to the rolling up, either in the lump sum or in increments, dies before it has been drawn down.
  Lord Oakeshott of Seagrove Bay: I understand that. But to me, without such a long background of being stuck within the current framework, that identifies the unfairness of the provision. If you do not take your pension at 65, you are gambling that you will live longer. Would it not in practice be fairer to provide that if someone dies, it should be a sort of deemed election, if I can follow the analysis put by the noble Lord, Lord Skelmersdale? Perhaps the fact that the proposed system might work differently from
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  increments tells us that the approach for increments is unfair. It seems that, in practice, it is a gamble that the state wins and the individual's estate loses.
  Baroness Hollis of Heigham: One cannot take the issue in isolation from the whole situation of the dependency pension and the like. If we were going down that route, we could not draw the line there rather than anywhere else, in terms of the discrepancy in having the category B provision for married women and nobody else. This is just one way of getting into that issue. It is perfectly proper to raise it, but if we did that, frankly we would create probably twice as many anomalies as we would solve.
  Baroness Barker: That was a very helpful debate. I simply cannot see how most people would conclude that it would be right to defer in those circumstances and to leave open the risk that benefits that could have accrued to their estate would not come under their control. Like the noble Lord, Lord Skelmersdale, I think that that calls into question the issue of the lump sum and how it will work. With those clarifications, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Schedule 11 agreed to.
  Lord Higgins Lord Higgins moved Amendment No. 333:
  Before Clause 284, insert the following new clause—

  REMOVAL OF RESTRICTION ON PENSION ANNUITIES
  There shall be no requirement for a holder of a stakeholder, personal, occupational or other defined contributory pension to take the pension in the form of an annuity by a specified age."
  The noble Lord said: This amendment is, in effect, a peg on which to hang a trailer, in the sense that it seemed worthwhile to have a preliminary debate on the issue but we will no doubt wish to return to it on Report. I suspect that the amendment is defective, but the noble Baroness may be assured that I shall seek to deal with that problem by Report. The position of the Conservative Party is clear: we are committed to abolishing the obligation to take an annuity at the age of 75 and wish instead to require people only to ensure that they have sufficient income to avoid relying on means-tested benefits.
  The noble Baroness will know that we have debated the issue on several occasions. On at least two occasions your Lordships' House has decided that in essence it is in favour of the position that I have just described, but that decision has then been reversed in another place. We remain strongly of the view that it is right to make such a change, not least because people are forced to take an annuity at a moment when it may be that, if they were to defer taking it, they could gain a better rate of interest. I referred earlier to the immense amount of borrowing that the Chancellor is carrying out at present. He is likely to have to increase interest rates and, in the longer run, annuity rates, as a result of having to fund that requirement. Therefore, those who must take out an annuity today will find that they would have been better off if they had not taken it

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  immediately. There are wider issues regarding inheritance and so on, which we can no doubt pursue again on Report.
  Although the matter had been debated for a very long time, suddenly in the Finance Act the Chancellor, who hitherto had been remarkably obstinate on the issue—I could express it in more forthright terms but "obstinate" will do for the moment—came up with an extraordinarily complex scheme. His passion for means-testing and complexity is one thing, but this was a strange scheme—I must confess that I am not sure whether I fully understand it. The reason why he came up with the scheme seems even more bizarre than its complexity. The Chancellor came up with what was known as an alternative secured pension—I will not bore Members of the Committee by explaining exactly what it involves—apparently as a result of representations from the Plymouth Brethren, who felt that, if he did not do something about it, people would be taking a bet or gambling on someone's life. It seems that, if he accepts that argument, he will come out against life insurance altogether. Is that the case? If so, we should all get a little worried, as it would have radical effects on the entire pensions industry, apart from those taking out such insurance.
  In any event, the previous Finance Act does not abolish compulsory annuitisation; it merely provides for this very strange animal, the alternative secured pension. It is argued by some that that will enable people to get round the requirement to take an annuity at age 75. I take no view on that at present. Perhaps the noble Baroness can tell us how many people the Treasury expects will take out this form of secured pension. It is not the same as a nice straightforward, very clean break. The only thing is that there is no reason why you should suddenly find that individuals spend all the money and end up on social security benefits.
  This is a very important issue, to which we will certainly return on Report. I wanted to give the noble Baroness and the Government notice of our intention. This has been going on far too long. The bizarre solution provided by the Chancellor is absurd. We should make a clean break and take a clear-cut decision on the issue as soon as possible. I beg to move.
  Lord Oakeshott of Seagrove Bay: We are very sorry that the Government seem to be in favour of simplicity on almost every issue of principle apart from this one. We are in favour of simplicity and the removal of the rule requiring people to buy an annuity.
  Baroness Dean of Thornton-le-Fylde: At Second Reading I expressed the view that government policy on annuities is completely out of date and unfair to many people. But I am not in favour of people being able to use the money that they receive tax-free and then fall on the state for support in old age. Having made contributions throughout one's life and built up a pension, you should be required to protect the part of that pension that would ensure you do not fall back on the state for welfare benefits. It would be helpful if the noble Lord. Lord Higgins, could confirm whether
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  that is the view put in the amendment. The requirement to take a pension at an age beyond which the average person lives longer is out of touch.
  Lord Higgins: I am grateful for the noble Baroness's support. I assure her that the amendment is simply a peg on which to hang the debate and to act as a trailer for what we propose to do on Report. We thought that that was the appropriate approach. As I said, the amendment is defective in this respect, and possibly in others. We hope to return to the House with an amendment that covers exactly the point that the noble Baroness made. As she rightly points out, the thrust of Turner and others, as regards the obligation at 75, is that everything is getting later and later. I hope very much that the Government can stop waffling around on frankly silly alternatives and give a clear-cut answer to our position. We want to ensure that there is no obligation at 75, but at the same time that individuals have sufficient income not to rely on state benefits and the taxpayer.
  Baroness Hollis of Heigham: Will the noble Lord confirm whether, when he refers to "taxpayer", he just means state benefits?
  Lord Higgins: Yes, I was referring to state benefits. Individuals who have not taken the annuity should not end up spending money and relying on state benefits instead. That is a well established position and without undue complexity. Unlike the government scheme, it is very straightforward.
  Baroness Hollis of Heigham: The reason that I intervened on the noble Lord, who was gracious enough to allow me to do so, is the distinction between IRBs and tax relief. That is why I asked what weight the word "taxpayer" would carry in the debate.
  Lord Higgins: The moment I said that last word I thought, "Plonker!".
  Baroness Hollis of Heigham: That is all right; I agree.
  Lord Higgins: We are talking about not relying on state benefits.
  Baroness Hollis of Heigham: This amendment would remove the requirement on members of money purchase schemes to secure an income, usually through an annuity, by 75. I fully understand why people would like their money-purchase pension pots to do three things at once: to provide an income flow, a savings pot and a potential legacy. The reason is that the money-purchase pot has benefited from, and been inflated by, a uniquely generous tax regime, so that a product designed for one purpose—securing an assured retirement income—becomes available for other purposes as well. The arguments need to be looked at carefully and we must ask ourselves whether that would wise.
  There is academic evidence that the requirement to secure an income produces a welfare gain, as people are poor judges of their own life expectancy and would therefore tend to consume capital at the "wrong rate".

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  For example, although average life expectancy of men at age 65 is 81.7 years, men now have a 25 per cent chance of living until 90. None of us knows when we will die, but an annuity provider can pool this mortality risk—my note says "morality risk"; one should be so lucky at the age of 85 or 90—and therefore get better value overall.
  4.45 p.m.
  So let me indicate three of the possibly unintended consequences that would follow from such an amendment. First, unrestricted removal of the need to annuitise could have a huge destabilising effect across the whole pension structure. For example, an employer's DB pension promise will not for many seem as attractive as taking 100 per cent of entitlement as a single lump sum on retirement and on very favourable tax terms. So it would be quite possible for large numbers of DB schemes and scheme members to switch across to personal pensions in order to take advantage of these new regimes. Do we want that?
  If we do not—and I believe the noble Lord would not want that because I know he is a strong advocate of DB schemes—mechanisms would have to be devised which would prevent switching. These restrictions would, in turn, lessen the attractiveness of being a member of a DB scheme and possibly worsen the situation.
  In the same way—this is my second point—it would be necessary to ensure that individuals who cashed in their money-purchase pension pots did not gain from exceptional tax privilege or, as all noble Lords have so far agreed, become reliant upon the state. For these individuals it would be necessary to ensure that they had an income stream which meant that they did not have to rely on income-related benefits.
  I want to put a health warning on this example because it depends considerably on what assumptions we are making, as I will go on to show. Let us assume for illustrative purposes that the sum required to do this safely and over an extended period—to float off IRBs, accrued pension credit and so on—is between £120,000 and £250,000, depending on whether the individual had a full BSP, and therefore whether the moneys had to make good that, had a single or joint life annuity, had a level or rising annuity, or had any other retirement income, and depending also on what assumptions one makes for income-related benefits in regard to inflation and earnings. For the purposes of today's discussion I shall take the middle figure in that range as a sum with which to do this safely, and knowing that it would be required for a possible 20–year life after 65. So, from between £120,000 and £250,000, which is the kind of range we could be talking about, let us take an amount of £180,000, which is near enough mid-point.
  Legislation would be needed to ensure a minimum annuity purchase for this purpose. In addition, however, to remove the exceptional tax privilege that this amendment would create, an appropriate rate of recovery for previous tax relief would have to be
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  applied. So if someone had a pension pot of £500,000—that would not be inconceivable if there were a big movement away from DB to DC schemes, although they are still at the moment very much a minority—by the time we had taken off the first £180,000, the £500,000 would have decreased to £320,000 remaining after the purchase of a minimum annuity.
  It would then be subject to, on average, a 55 per cent recovery charge. In other words, it is precisely because the tax benefits make the pot so generous, so attractive and so large, that stripping those out would reduce the pot significantly. This would be an appropriate rate of recovery, I am assured, from the better off in order to create a level playing field with other forms of saving.
  It would need to take account of an individual's tax relief, the national insurance relief on the employer's contribution and tax-free returns on contributions during the accumulation period. I have worked through how the 55p in the pound figure builds up. Given the size of the pot, it would be reasonable to assume that the people concerned are higher-rate taxpayers.
  Following recovery, a balance of £144,000 out of that original £500,000 is available to the individual. Of course, that £144,000 will have to work harder and harder to ensure that the saver does not lose out substantially as a result of not having the annuity which the £320,000 could have purchased.
  So I do not think that this would be an attractive option. Indeed, as the requirements around our alternatively secured pension make clear, any alternative approach to annuity purchase is likely to be profoundly unattractive—except to those who have very strong religious beliefs—in financial terms, if we are not to create highly tax-privileged savings vehicles for inheritance purposes. We do not expect very many people to take this up. So even for the well-off—the beneficiaries of the amendment the—outcome might not be as desirable or attractive as first thoughts might suggest.
  We must ask ourselves how many of those who have money-purchase pension pots would benefit from the amendment. I fully accept that it will change over time, given what we know will happen, but it may be worth sharing the figures. More than 80 per cent of pension pots are valued at less than £30,000, which is why the bonus of rolled-up increments in terms of a lump sum could prove so attractive. I am slightly taken aback that adding to choice in that way was not necessarily thought desirable.
  Only 3 per cent are valued at between £100,000 and £250,000. Only 1 per cent are worth more than £250,000, at which point the advantages of floating off IRBs and having some left over after the extraction of tax privileges come out. Those seeking to gain from the amendment would be few in number. We should be pretty careful not to allow wholesale disruption to an industry that provides annuity income to more than 250,000 people and contributes more than £7 billion a year to the savings market, for the sake of people who, if they chose the option, would be far less than 1 per cent of those who had pots, I suspect.
  The Government are already making savings simpler by enabling people to save in more liquid assets earlier on, and in pension savings vehicles as they near retirement. The open-market option allows people to shop around for the best annuity. The FSA is bringing new transparency to the market. We are making annuities more flexible through limited-period annuities, value-protected annuities and the alternatively secured pension. We have made it easier for pension savers to commute small entitlements—up to £15,000, which we expect again to help women.
  The Government's approach of enabling consumers to make choices and encouraging motivation in the market is the right one. There is a wealth of savings vehicles available to people, from ISAs and unit trusts to more complicated financial products. Some people push us on the matter, as Members of the Committee have done today, precisely because pensions are so tax-privileged that the pot rose far faster courtesy of the taxpayer, whom the noble Lord invoked, than any other savings vehicle. Because the pot therefore looks so substantial, not surprisingly, people eye it and would like more of the same, for other purposes such as personal savings and inheritance. They are not wrong to want that, but it might be wrong of the Government to respond to that pressure.
  The relatively rich can already leave, in their inheritance pot, their home free of capital gains, their other financial assets—bonds, equities and the like—and other non-financial goods, from fine art to fine wine. They can consider trusts. Is it reasonable that they should leave part of their pension as well? With the pot reduced by the need to float off benefit and by the requirement to extract tax gains, would they still want to? The Government cannot accept the amendment.
  Lord Oakeshott of Seagrove Bay: I congratulate the noble Baroness on that excellent exposition of why means-tested benefits produce ever more of a problem for middle-income savers and people. She is able to come to those figures because of floating off income-related benefits. Perhaps she can hear the tectonic plates shifting in attitude towards the state pension, with even the new Secretary of State thinking seriously about the citizens' pension proposals of the Liberal Democrats. That is not a joke; it is very serious. Once we move to a flat-rate, non-means-tested citizens' pension or basic state pension paid at a higher level, all her arguments about the cost of having to keep back and floating off income-related benefits go away, and one then sees that the amendment would be very useful to many millions of people. That is why we support it.
  Lord Higgins: I am grateful for the noble Baroness's reply. It is helpful for her to rehearse her arguments in advance of Report stage, but I am not persuaded by them. I found some of them slightly strange. She invoked the attraction of ISAs as an alternative form of saving income, but she has seen the figures for what
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  has happened to ISAs in the past few years. They have plummeted as a result of the Chancellor's handling of dividends.
  Baroness Hollis of Heigham: The other explanation might be that people are now aware, for the first time, that the stock market does not endlessly ascend.
  Lord Higgins: That is part of the consideration, but certainly the far more definite feeling is that one invests in ISAs for the long term. The stock market may well recover over the next 20 years or so—I should certainly hope so; if only in terms of money as against real values—but the Chancellor has clobbered ISAs. At a time when Turner is saying that we must save more, and when ISAs were specifically designed to attract savers, it is absurd to make a change that seriously undermines ISAs. However, I leave the ISAs point on one side. The noble Baroness should not have thrown in that argument. It is a very dull argument.
  The noble Baroness then went on to deal with homes. She believes that the strength of her argument about annuities is that people will inherit some of the proceeds, but, my goodness, many people also inherit homes. For many people, the extent to which inheritance tax levels have not kept in line with house prices far outweighs any kind of benefit they may gain on annuities. We are therefore not persuaded.
  Perhaps I may raise a third point now on an impromptu basis. The Government argue that people have received tax relief to provide for their retirement. People certainly need to have enough to keep off means-tested benefits, subject to a point made just a moment ago by those on the Liberal Democrat Benches. However, people are receiving far less income from annuities than they were expecting because annuity rates have plummeted under this Government. People thought, "I ought to save for my retirement. I will get tax relief. I am likely to get such and such an income", but then found that their income was far less than expected because annuity rates have plummeted. They may well have been persuaded by the tax relief, but, on the noble Baroness's assumption, they lose both ways.
  Baroness Hollis of Heigham: Does the noble Lord accept that, were the Government and society to move in the direction of his amendment, one would in equity have to strip out the tax relief? Does he accept that the combination of an annuity to float up IRBs and tax relief would reduce the amount available to quite modest sums for a very few people?
  Lord Higgins: I think that that is a point to which we should return on Report. I myself do not accept the argument and I want to give a detailed reply. We are having a preliminary run round the track. One is to some extent doing it off the top of one's head, though the arguments are pretty well ingrained in one's soul. A couple of the noble Baroness's arguments had not previously been extensively adduced. The Government are obviously trying very hard to find additional arguments.
  Overall—in marketing terms—I believe that this is a product whose time has come. It is in fact long overdue. We will return to it on Report. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Skelmersdale Lord Skelmersdale moved Amendment No. 334:
  Before Clause 284, insert the following new clause—

  THE STATE SECOND PENSION AND SELF-EMPLOYED PEOPLE
  The Secretary of State shall require the Government Actuary—

  (a) to report to him, within six months of the coming into force of this Act, on the operation of the National Insurance system for self-employed people, and

  (b) to recommend a rate of National Insurance Contributions which would enable self-employed people to qualify for additional pension."

  The noble Lord said: By way of background, in April 2004, in the Standing Committee on this Bill, Ministers committed the Government to publishing a report on the pensions entitlement of women by the end of 2005. The objective of this amendment on self-employed people is aimed at securing a similar commitment for another very large group of under-pensioned people. It is a large group. Something like two-fifths of all workers are either self-employed or in part-time or temporary jobs. Self-employed people are less likely to be saving for retirement than people in employment, less confident about their retirement income prospects than other people, and are unlikely to be making other provision through business or home equity.
  5 p.m.
  We have an anomaly here. In certain circumstances, self-employed people could have an entitlement to SERPS. However, no self-employed earnings are taken into account under the second state pension, which is generally referred to as S2P. The estimated number of people affected by the change would range from 68,000 to 150,000—again, from the Standing Committee on the Child Support, Pensions and Social Security Bill on 8 February 2000. Bringing self-employed people within S2P would reflect the reality of the modern labour market, in which many people move between employment and self-employment during their working life, as I have done.
  The situation is even more muddled because in December 2001 a government-commissioned report from the Pension Provision Group recommended,
  "that periods of self-employment should be brought into the State Second Pension when it has become flat rate, on a compulsory basis but with the option to contract out. Compulsory pension cover for self-employment will then be on the same basis as for employees".
  The same paper also noted that,
  "Voluntary participation would be unduly complex and represent a one-way bet against the taxpayer, attracting only those with low, or under-declared incomes with no direct cross-subsidy from the better off self-employed. It would also go against the
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  redistributive nature of the Second State Pension and contrast with the position of employees where membership, or contracting out, will be compulsory".
  Despite the Pension Provision Group's advice, the 2002 pensions Green Paper suggested allowing self-employed people to opt into the state second pension on a voluntary basis.
  I have to say that the policy disappeared from view quite shortly afterwards. What has happened to the policy? Why has the department gone quiet on this? Is the time now right to investigate the situation properly? I beg to move.
  Baroness Hollis of Heigham: I could give a long reply or a short one. Basically, I accept the strictures given by the noble Lord, Lord Skelmersdale, that the Government, so to speak, have gone quiet on this—because we did. The noble Lord set out the situation for the self-employed. It is the case that half of them earn less than £11,000 a year and 70 per cent do not contribute to a private pension. In the Green Paper, we asked for views about whether the self-employed should be brought on a voluntary basis within the state second pension, which would be particularly beneficial to those who are below the £11,600 figure of the lower earnings threshold. We proposed various options.
  Responses to the Green Paper were not significant in number. Various organisations questioned whether extending S2P on a voluntary basis provided the best way forward. We have been working with colleagues at the Treasury and with the Government Actuary's Department to establish options to bring the self-employed into S2P.
  However, there have been difficulties in trying to get schemes that are transparent, fair and affordable for the self-employed which do not require a cross-subsidy. Already the self-employed get the equivalent of something like £1.7 billion of cross-subsidy from national insurance now and, in addition to that, at a relatively tax-advantageous rate compared to employees. Would we be willing to continue that regime if it were cost neutral? Could the people we are talking about and whom we most want to help afford it and benefit from it?
  An age-related voluntary scheme would be complicated to understand, but it might be the right way forward. A more transparent non-age-related voluntary scheme would not remove the possibility of financial advice being necessary and would start to move away from the underlying objections of S2P.
  There are real problems, but we are working on this. It has not gone to sleep; it is on the back-burner in the sense that it is being quietly worked on. This issue will not go away. We are working on further policy options. The problem is that, if a scheme is compulsory, it will hit people who cannot afford to save; if it is voluntary, there is a risk of either exploitation or mis-selling. We have got those issues to reconcile. We are not yet sure of the right way forward. These issues are being considered but we do not yet

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  have answers. The noble Lord is right to suspect that work is continuing but that it is not in the public domain.
  Lord Skelmersdale: I am delighted to hear it. The fact that this matter is still being worked on is very good news for a whole lot of people. As far as "compulsion" goes—I was seeking the right noun—the ABI and I have suggested semi-compulsion. In other words, an opt-out should be allowed for those people who feel that that would be the right course for them—as, indeed, one could do with other sorts of pensions. Currently, that is very much under discussion across the board. I hope that that will continue. With that continuingly thoughtful answer from the noble Baroness, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Skelmersdale Lord Skelmersdale moved Amendment No. 335:
  Before Clause 284, insert the following new clause—

  THE STATE SECOND PENSION AND PARENTS
  In section 44A(2)(c)(i) of the Social Security Contributions and Benefits Act 1992 (c.4) (deemed earnings factor), for "six" substitute "twelve"."
  The noble Lord said: Still on the subject of S2P, clearly home responsibilities protection (HRP) helps people who are not in paid work and who receive child benefit on behalf of one or more children aged 16 or below by reducing the number of qualifying years needed for the maximum basic state pension.
  When I was in the predecessor department to that of the noble Baroness, I discovered that there were an enormous amount of women who did not know anything about home responsibilities protection.
  Baroness Hollis of Heigham: They get it.
  Lord Skelmersdale: The question arises as to how many women actually get it compared with those who ought to be entitled to it. From what the noble Baroness indicated from the Dispatch Box, it is automatically credited to their pension.
  Baroness Hollis of Heigham: I am happy to confirm that.
  Lord Skelmersdale: I am delighted to hear it. Under the proposed new clause, many women who would earn a new entitlement to S2P would have been entitled to additional means-tested benefits in place of the higher S2P. Therefore, I am not sure that much cost is involved to the public purse in achieving that.
  In addition, there is a distinct logic to having a cutoff date for HRP in relation to S2P, which reflects the point at which someone's youngest child starts secondary school. School hours tend to increase then and it is easier for the caring parent to seek paid employment. Indeed, the Government and the official and unofficial Opposition all encourage that. So this makes sense on a whole range of bases. I beg to move.
  Baroness Hollis of Heigham: The amendment is generous in spirit, but it is also generous in cost. On
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  today's prices, we estimate that it would rise to an estimated £1.3 billion in expenditure by 2050—roughly 3 per cent of the total spend on S2P. Again. I do not want particularly to put my argument on the grounds of cost. The basic state pension HRP provision recognises women's caring responsibility until their youngest child is 16 years-old. Then the proportions of entitlement are accordingly determined.
  The state second pension was designed for something else; namely, to give those who were in the labour market an alternative pension that was more generous than SERPS because it produced the same, whether a person had an income of £5,000 or £11,000 a year, unlike SERPS which was an integration all the way up, for people who could not or did not have access to a private occupational pension. It was therefore deliberately linked to being in the labour market.
  In my view, we rightly made appropriate concessions—perhaps that is the wrong word. But we shaped it so that those who were caring and, therefore, those for whom they were caring were protected by S2P because they did not have access to waged work that would have generated an alternative pension.
  As regards women with young children, we have accepted that where the youngest child was under the age of six, a woman, unless she has access to childcare that she is able to afford and trusts, cannot reasonably be expected to enter the labour market. But once a child is six years old, it is reasonable to expect that a woman can and could work if she wishes to enjoy this pension. The lower earnings limit at which one would trigger one's entitlement to S2P is 16 hours a week or just over three hours a day and earnings of about £79 a week. Obviously, national insurance is not paid until a person earns the lower earnings threshold, which is some £10 or £15 higher.
  We do not think that this is an unreasonable requirement for S2P, which is meant to be a pension for those in the labour market, except where a person cannot be by virtue of caring responsibilities or being disabled. That pension should be attached to women in the labour market once the youngest child is six years old. From the experience of my friends and colleagues, but also people in my local ward in my city, when children were six years old most women I knew were choosing and wanting to go into part-time jobs. Three or four hours working a day would cover it. Therefore, it is not unreasonable that the break should be at six rather than at 12 years old. As a result of that, I hope that the noble Lord will withdraw his amendment.
  Lord Skelmersdale: Surely, at the minimum wage or even at the average wage, three to four hours work a day would not entitle a person to a pension at all. That would be my first quibble with the noble Baroness. My second quibble is about the cost of £1.3 billion a year. On 8 February 2000, it was stated in the Standing Committee that the cost would be £1.3 billion a year in 2050. Since then we have had the introduction of the pension credit, we have had higher employment rates

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  and we have had an increase in other means-tested benefits. Therefore, £1.3 billion is looking increasingly unlikely. I suspect that by now the department might well have been able to reconfigure its addition and come out with a considerably smaller sum. That said, I am not at all clear that three to four hours employment a day would produce enough money to make the entitlement.
  Baroness Hollis of Heigham: On a point of information, basically people would come into S2P and would build for it if they were over the lower earnings limit. The LEL is just over 16 hours a week at the national minimum wage, which represents an income of £4,108 a year, at which point national insurance contributions are paid and people would come into S2P. I was dividing 16 by five, which comes to about three to three-and-a-hours a day at the national minimum wage, which would give people their entitlement into S2P. Whether a person was earning £4,000 or £10,000 a year, he or she would get the same pension as a result. The noble Lord may or may not agree with whether those hours can be fitted in, but the sums work.
  As regards the sum of £1.3 billion, that is the latest figure and not an early run at it.
  Lord Skelmersdale: I am interested to hear that latter answer. However, 16 hours a week takes no account of children's illness, half terms, school holidays and so forth. I still think that it is mean, but clearly at this point I cannot go any further. So I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Skelmersdale Lord Skelmersdale moved Amendment No. 336:
  Before Clause 284, insert the following new clause—

  CLASS 3 NATIONAL INSURANCE CONTRIBUTIONS
  In section 13 of the Social Security Contributions and Benefits Act 1992 (c. 4) (class 3 contributions), after subsection (1) insert—
  "(1A) The prescribed conditions referred to in subsection (1) above shall not include any limits on the period between the payment year and the contribution year.""
  The noble Lord said: We turn to the thorny subject of national insurance contributions, which are divided into four. Class 3 national insurance contributions are voluntary contributions that boost entitlement to the basic state pension and also affect bereavement benefits, but do nothing else for the social security fund or the social security benefits of this country.
  5.15 p.m.
  Generally, class 3 NICs must be paid within six years of the end of the tax year to which they relate. They are especially helpful for people who have not reached the minimum number of contributory years. For someone who is just beneath the threshold for receiving any state pension, it is likely to be worthwhile paying sufficient class 3 NICs to gain an entitlement.
  The trouble is that one must have a pension forecast in order to make that calculation. Again, in the multi-question mode that I seem to be in today, I ask: how
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  many people ask for state pension forecasts in advance of being likely to retire? The time limit for the payment of class 3 NICs for 1996–97 to 2001–02 is 5 April 2008. Moreover, any contributions for that period can be made at their original rates rather than, as is usually the case, the rate at the time of making the payment. Indeed, I suggest that should this extension be given, the rate of payment should be the rate pertaining at the date to which the NICs are paid rather than the rate of payment at the date when they should have been due: perhaps that explains matters clearly.
  The extension to the period during which contributions for past years can be made is a result of the decision taken in 1998 by the Contributions Agency to stop issuing automatic NICs deficiency notices. These had previously been sent to people who had paid insufficient contributions, but were stopped because of the serious problems experienced by the National Insurance Recording System 2 (NIRS2) computer system. The decision was supposed to be temporary, but was not rescinded even after NIRS2 had stabilised, which I am pleased to say it now has. Therefore, I ask: will it be reinstated? If so, when? Clearly, that would save an awful lot of hassle for an awful lot of people. I cannot imagine that it is vastly expensive from the point of view of the pensions agency.
  Effectively, the proposed new clause would extend those temporary arrangements by extending the six-year time limit for paying class 3 NICs and, as a result, would provide greater flexibility for people to fill in any gaps in their contributory records, which must, by definition, be desirable. I beg to move.
  Baroness Hollis of Heigham: I think that this is a much bigger amendment than perhaps the noble Lord indicated. On the basis of what he said, given that class 3 NICs are voluntary payments paid by those not in work—such as students, people living abroad and so on or those who are employed but are unable to pay class 1 NICs—it is normally paid at a flat rate per week, currently £7.15, to the Inland Revenue.
  If the amendment proposed by the noble Lord was to win favour, it would mean that most people would wait until the last moment before paying contributions. Class 3 NICs would be an infinitely better buy. They would then be able to make a judgment based on the actual status of their contribution record rather than assumptions about earnings and employment over their working life. Most people would pay the minimum amount needed to complete their record.
  That has a number of implications. First, the contributory principle that people contribute through their life for out-of-work benefits would be seriously undermined. The employed and self-employed who are required to pay regular contributions while they are working might justifiably be aggrieved if others were able to wait until just before they retired before paying contributions and were then able to judge the minimum amount needed to receive the level of state pension that they wanted.
  It matters because the subsidy to those paying class 3 NICs compared to those paying contributions to other classes would increase. The class 3 contribution rate is low. In 2004–05, it is £7.15. If class 3 contributions were to be actuarially mutual so that they actually paid for the benefits that they bought—in other words, not just for six years, which is, so to speak, a concession—but extended to those, such as married women, who had ultimately decided that it was worth the difference between 60 per cent and 100 per cent pension to pay in, the sum would have to be £20.50 as opposed to the current £7.15. Given that the person who might benefit from this, as cited by the noble Lord, would be a woman perhaps earning a minimum wage but working below the LEL—and therefore earning at best, say, £75 a week—would she be willing to come forward with a contribution of £20 a week in order to gain coverage through class 3? That is what the noble Lord's amendment suggests.
  Lord Skelmersdale: No.
  Baroness Hollis of Heigham: I shall be very brief.
  The amendment would also have significant costs. There would be an initial impact on the NI fund as class 3 payments would disappear as people wait to pay until they are near retirement age. Over time, payments of state pensions would increase as people are able to top up their contributions to ensure that they receive a full—or at least a bigger—pension which would be heavily subsidised unless one lifted up the actuarial rates. If one did not, it is estimated that the cost would in time reach £5 billion a year.
  In summary, as I said, the noble Lord's amendment is much bigger in its consequences than perhaps he envisaged. In the light of that, I hope he will withdraw the amendment.
  Lord Skelmersdale: It need not be. I accept that the current rate is £7.15 a week. I also accept the noble Baroness's figures—I am not an actuary—that it would need to rise to £20.75 a week, on the basis on which she has had the calculations done. But of course it is not necessary to do it like that. It depends at what point the gap is and at what point it is paid. It is not beyond the wit of man to adjust these things to make it workable. For example, if you discover at age 24 that you are likely to have three years missing, that would not cost £20.75 by any stretch of the imagination. It might not even cost £7.15; I do not know. On the other hand, if you discovered at age 60 that you had three or five years missing, then it almost certainly would cost you £20.75, as the actuarial rate suggests.
  Perhaps the serious question behind this is whether the pensions agency will ever again send out forecasts to people who have a deficiency in their payments, as it used to some time ago.
  Baroness Hollis of Heigham: The answer is yes. It has sent them to both of my sons. They rang up to ask about their forecasts. They were students who had done further degrees, higher degrees, postgraduate degrees and all the rest of it, and they wanted to see their shortfalls. They received an impeccable
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  document that showed them exactly where they stood. They will have to make a decision before 2009 about whether to reinstate their missing years, as they are entitled to do.
  Lord Skelmersdale: But it was not automatic. The forecasts were sent because the noble Baroness's sons requested them. That is very different. In the old days, forecasts were sent automatically. If one did not receive such a notice, one could assume that there were no deficiencies in one's account.
  Baroness Hollis of Heigham: We have started the cycle again. One of the reasons for the extension to 2009 was the failure to do these annually. They have now restarted. Therefore, people should automatically be told.
  Lord Skelmersdale: I am delighted to hear it. I must confess that that comes as news to me, but then, for the past 15 years or so, I have not been following work and pensions issues perhaps as closely as I did in the past. That said, when I get Hansard tomorrow, I will look very carefully at what the noble Baroness has said. I am as yet unconvinced, for the reasons that I have partially given. Meanwhile, I have no alternative but to withdraw the amendment.
  Amendment, by leave, withdrawn.
  On Question, Whether Clause 284 shall stand part of the Bill?
  Lord Higgins: The noble Baroness and I spent many hours on the Child Support, Pensions and Social Security Act 2000, which this clause seeks to amend. Evidently, we either overlooked a matter or something has changed since then. Perhaps the noble Baroness can tell us which it is.
  Baroness Hollis of Heigham: The clause makes a number of technical amendments to Section 42 of the Child Support, Pensions and Social Security Act. It amends it to make clear that third-party administrators can use the so-called opt-out procedure to obtain individuals' consent for the exchange of information necessary for producing a combined pension forecast. Third-party administered schemes cover almost half of those who have a private or occupational pension, so the matter needs addressing. The clause also makes a few other technical amendments, including allowing information about the proposed lump-sum option for the deferral of one's state pension to be included on state pension forecasts. I hope that the noble Lord will be content with that explanation.
  Lord Higgins: It was a point that we did not notice, so I am glad that we have put it right.
  Clause 284 agreed to.
  On Question, Whether Clause 285 shall stand part of the Bill?
  Lord Higgins: This important clause deals with a matter that has long been a cause for concern. The noble Baroness, Lady Fookes, in particular has

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  pursued the issue over a very long time. It arises from the question whether people living overseas who are entitled to a national insurance pension should also get the pensions up-rating that those in the UK have. The trouble has been that the distinction between who gets the up-rating and who does not is extremely arbitrary. Members of the European Union get the up-rating, so the expansion of the EU means that pensioners—there cannot be very many but there may be more in the future—who are entitled to a British state pension but live in Poland, for example, will get the up-rating whereas others, particularly in Commonwealth countries, do not.
  The issue came to a head in relation to Australia because a longstanding, rather odd reciprocal arrangement whereby we paid their up-rating and the authorities there paid ours, was discontinued by Australia because they regarded it as wrong. As a result, British citizens entitled to a UK pension in Australia got the basic state pension but not the up-rating. That caused considerable concern. When I spoke on the matter previously in the House I was perhaps misinformed on some aspects. The individuals concerned receive a contributory pension. They feel that, although they retired and went abroad, their contribution record is exactly the same as that of someone living in the UK, yet they do not get the up-rating.
  Having said that, I am not clear exactly what the clause does. We are clear what some of the provisions do. It does not affect the Social Security (Australia) Order 2000. The system is strange; it ought almost to be an international treaty rather than a clause in the Social Security Bill. Given the background that I have outlined and the feeling by pensioners in some countries that they have been treated unfairly, does this clause do anything to put the matter right? The Social Security Committee in another place looked at the matter some time ago and decided that whether one put it right was all a question of priorities. But that does not take into account the fact that it is a contributory pension rather than a pay-as-you-go pension. Perhaps the noble Baroness will enlighten us.
  5.30 p.m.
  Baroness Barker: Perhaps I may remind the noble Baroness, Lady Hollis, that on my first day in this House I was in the company of Lord Russell and we bumped into her in the Prince's Chamber. Curiously enough, we talked about this very subject. She gave me a brief answer on her thoughts. After that, I went away to read up about it and it is something that I have followed closely over the years, in particular relating to the recent court case involving pensioners in South Africa.
  From my casual observation—which is rather different, given that I work with an organisation that looks after the interests of older people—it is clear that patterns of domicile among older people are changing quite radically. Some of those changes relate to historical patterns of migration to this country. The noble Lord, Lord Higgins, mentioned Poland. We
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  know that there are large populations of Polish people who came to this country a long time ago, and who are now returning to their home country as pensioners. Therefore, we seem to have come to a point where it is accepted that there should be a thoroughgoing review of pensions.
  That review ought to look not only at changes in the domicile of pensioners, which are far greater than was the case when the basic state pension was introduced, but also at the services people need in older age, wherever they are, and what their pensions may have to support in different places.
  While I make no statement about that, like the noble Lord, Lord Higgins, I am intrigued about the technicalities of the Bill in this context. However, at a time when we are considering changing patterns of retirement, the Government would perhaps be missing a trick if they left those out of their review.
  Baroness Hollis of Heigham: Before I turn to the substantive argument, I acknowledge that the noble Baroness has made an interesting point about the changing patterns of domicile in retirement. I shall make only one blue-sky remark, because this clause does not deal with frozen pensions. We are dealing with the consequences of Australia's declaration that, because we will not unfreeze pensions, they have ended the reciprocal agreement. The noble Lord pressed me about contributory pensions. Of course the national insurance pension is contributory, but it is one in which the indexation is designed to meet increases in the British cost of living. Indeed, for many years during the 1950s and 1960s, there was no such indexation. That is my one aside on the point and I shall not go into the bigger debate about priorities, the £400 million and so forth. No doubt those arguments will be rehearsed on Report.
  Clause 285 is needed for a much smaller purpose and does not relate to the bigger issue of frozen pensions. It is needed to regularise the extra-statutory payments we are making to people now living permanently in the UK, but who have had previous periods of residence in Australia. When Australia ended the reciprocal Social Security Agreement in March 2001, we had to take steps to protect the national insurance contribution records of those people who were affected so as to ensure that they did not lose their benefits. We currently do this by making extra-statutory payments which take account of the period of residence in Australia, thereby protecting those who are entitled to payments of state pension, widow's benefits and bereavement benefits. This is not about increments paid after people have retired, it is about their working period contributions contributing towards pensions.
  Lord Higgins: When you are living where?
  Baroness Hollis of Heigham: When you are living and working in another country. The position is that contributions towards the Australian basic state pension, which I think I am right in saying is income related while the UK pension is not, results in a disparity in the interest of Australians living in the UK, which would otherwise have been ended.

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  As I have said, we currently make extra-statutory payments to take account of the period of residence in Australia, thereby protecting those entitled to payments of state pension, widow's benefits and bereavement benefits. This clause will put these payments on a proper legislative footing, and thus is another instance where we are seeking to regularise extra-statutory payments. If Parliament declined to legislate, we would need to consider continuing with extra-statutory payments, which are less certain and could affect around 4,000 people.
  This clause will also enable the provisions of the Australia agreement that are treated as remaining in force to take account of future changes in UK legislation in relation to claims for state pensions, widow's benefits and bereavement benefits through secondary legislation. This means that if changes to Great Britain or Northern Ireland legislation are made that affect the provisions of the agreement that are treated as remaining in force, we can quickly take action to protect any people affected.
  Given that explanation, I hope the noble Lord will accept that this clause should stand part of the Bill.
  Lord Higgins: I am all for putting extra-statutory concessions into legislative form, because we then have the opportunity to discuss them in a way which is not otherwise the case with such arrangements. Having said that, however, I do not understand a word of what the noble Baroness has just said.
  We agree that the Australian Government decided to terminate the reciprocal agreement whereby they would pay the pensions of our people in Australia, and the other way about. But if I understand the noble Baroness correctly, this appears to be related to the contributions made. Is she saying that the Government of the UK, by extra-statutory concession, have been paying the contributions of UK people resident in Australia who did or did not—or do or do not—pay Australian contributions? Is it the case that someone living in Australia who otherwise would be contributing here has their contribution record maintained?
  Baroness Hollis of Heigham: No. I sought to make the distinction between the issue of frozen pensions, which is a debate about what happens to the raising of the basic state pension after retirement once it is in payment. What this provision does is ensure that, for anyone who has worked in Australia and has returned to the UK, their period of contributions made in Australia—the Australian equivalent of NICS—will count towards their British contributions record. I sought to make the distinction between what happens while you are in work and what happens afterwards. We have been making those payments on an extra-statutory basis, and I am sure that our move to regularise it will be welcome.
  Lord Higgins: When the noble Baroness says, "making those payments", it means that those people were credited with national insurance contributions in the UK while they were working in Australia.
  Baroness Hollis of Heigham: When they returned to the UK, their period of work in Australia was credited towards their UK record, but we did not have a statutory basis on which to do that. We are now seeking to put in place that statutory basis.
  Lord Higgins: To get that concession, do they have to have made contributions to the Australian system?
  Baroness Hollis of Heigham: Yes, they are credited with what they would have built up in Australia.
  Lord Higgins: The Australian Government come into the contributions and the person returning to the UK gets nothing for them. However, we make up the contribution record in the UK. Is that right?
  Baroness Hollis of Heigham: Let us take someone who works in Britain for 20 years, then works in Australia for 10 years and returns to Britain for their last 10 years in work. We would take into account the 10 years spent working in Australia, where they were contributing. We would count that in the contributions record, even though the Australians have broken the reciprocal arrangement.
  Lord Higgins: And even though they have come into the proceeds derived from people making their contributions in Australia. Again, is that right?
  Baroness Hollis of Heigham: That was part of the original knock-for-knock arrangement, which has now been ended by the Australians. However, we are continuing to protect the position of people in the UK. It is not precisely reciprocal because the Australian pension is income-related while ours is not; it is based on the contribution record. We are making good the period when someone works in Australia.
  Lord Higgins: Regardless of that point, is it the case that for someone who works here for 20 years, works in Australia for 10 years and comes back to retire here, the British taxpayer must make up the contribution while that person was away, while the Australian Government benefits from the contributions paid by that person during the period they were working in Australia? Does the person get nothing while the Australian Government keep the money? Does the noble Baroness think that that is right?
  Baroness Hollis of Heigham: I am very sorry indeed that the Australians felt it necessary to end the reciprocal arrangement, which was to our mutual advantage. However, given that they have ended it—very unwisely, in my view—as a response to the frozen pensions issue, we have nonetheless decided to do the decent thing, which is to safeguard benefits on an extra-statutory basis, now to be regularised by way of this clause.
  Lord Higgins: Why should the Government make up contributions of this kind when they resolutely refuse to make them up for people with insufficient contributions who have always lived in the UK?
  Baroness Hollis of Heigham: That is not the point. Anyone seeking to retire in Australia will take with

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  them their basic state pension at the point at which they leave. It is a different argument, both from a moral and an emotional point of view. A person, post-retirement, may take with them to Australia or Canada their basic statement pension at the point at which they leave, having been fully informed about what will happen. Should they then go on to enjoy increments which have been awarded to pensioners resident in Britain to address the British standard of living? Whether someone still of working age should have their contributions record in Australia counted towards their UK contributions record is a different issue.
  Lord Higgins: I understand that this is not concerned with the basic uprating issue, rather it is a procedure by which the contributions of someone in the circumstances described are made up. However, what I am asking is this: why should their contributions be made up? Whether or not they make payments to the Australian Government is irrelevant. Why are we making up their contributions when the Government are taking such a tough line on the contributions records of other people who were suddenly told, "Unless you contribute for 10 years, you will not get anything."?
  This arrangement is jolly nice for the group we are talking about, but it is inconsistent with the policy adopted by the Government with regard to the deficient contributions records of people who have remained in the UK throughout their lives.
  Baroness Hollis of Heigham: No, the point is that someone with a deficient contributions record here—someone who has never gone to Australia—is that that person has not been in the labour market and therefore will not have earned above the lower earnings limit, and thus in the normal course of events will not have acquired a full national insurance record. They then seek, on a best-buy basis, to buy back additional years. I am sorry, the noble Lord was talking about the 10–year amendment.
  I accept the point, but the policy was designed during a period when those who would be most affected by it—around 150,000 women—were protected by the 60 per cent married woman's pension dependency payment. That relates to our discussion earlier today, and triggers further arguments about whether inheritance should he recognised and so forth. However, the argument I seek to address is that, for the most part, those women would receive a 60 per cent married woman's pension.
  We inherited a situation in which, as a result, there was a de minimis before they were entitled to enjoy any category A pension that they had accumulated in their own right. We could argue about whether the harrier of 25 per cent—10 years for women and 11 years for men—was set too high, but I would also argue that as one year was something of the order of £2, to go back to any year that could be taken into account meant that the Government would have become involved in paying out small sums, in some cases virtually nil payments, to a large number of people. That would
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  have been a complicated and expensive piece of administration. If we were to go down the path of looking again at the 25 per cent rule, I suggest that we should not consider it in isolation from all the other changes being pressed on us by the EOC, the Fawcett Society and the like. This needs to be looked at as part of the wider context of considering pension entitlement, particularly for women, who certainly are disadvantaged in the labour market.
  Lord Higgins: First, the Government are looking at this particular issue in isolation. Secondly, the noble Baroness has said that this relates to those working in Australia and no one else.
  Baroness Hollis of Heigham: I sought to explain the example cited by the noble Lord of the 10 years for women.
  Lord Higgins: The Government are taking action on this matter in isolation, although they are thinking about the other issues. They do not intend to deal with both groups together.
  The noble Baroness has said that the people with deficient contributions who require 10 years to be made up were not in the labour market. However, the people working in Australia were not in the UK labour market. I find this a slightly strange solution. I understand that it is not to do with the broad issue of uprating. As regards the rest of it, we will need to read carefully what the noble Baroness says, because I must confess that I am confused.
  5.45 p.m.
  Baroness Hollis of Heigham: I should clarify that I made a mistake. I thought that the noble Lord was referring to a different amendment. I was referring to people not in the labour market in the class 3 debate that we had, rather than the 10–years rule and the 25 per cent to which the noble Lord referred. I thought that he was referring to frozen pensions, so to some degree we are at cross-purposes.
  Basically, we are making extra statutory credits, which we seek to regularise, so that people who have come back and have paid their way in Australia, get the benefit of that in their national insurance record. If we did not do that, not only would it be injurious to them, but, given the implications for pension credit and so on. I am not even sure how much we would save.
  Baroness Barker: I am reluctant to intrude upon this exchange, but I have been following the issue extremely closely. I have a question that I do not want the noble Baroness to answer just now; perhaps she will write to me and the noble Lord, Lord Higgins, as that might well help us to understand the matter further. With which, if any, other countries are there similar arrangements? The point that I take from the comments of the noble Lord, Lord Higgins, is not that he takes exception to the payments per se, but that he is puzzled about why they seem to relate only to

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  Australia. I ask the noble Baroness not to reply to me other than in writing, but that may help us on this side of the Committee to understand the logic behind this.
  Lord Higgins: I promise not to say one more word, except that, when I was at the Treasury, I always said that, if you put a non-statutory concession into legislation, the danger is that people will find out what you have been doing. That is exactly what has happened in this case.
  Baroness Hollis of Heigham: The arrangement was devised between the governments of the UK and Australia. This particular aspect, in which you count the years of residency, does not apply to any other country, but that is very different from the wider debate about frozen pensions.
  Clause 285 agreed to.
  Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 336A:
  After Clause 285, insert the following new clause—

  SPECIFIED PERSONS ENTITLED TO CATEGORY A RETIREMENT PENSION
  (1) A person shall be entitled to a Category A retirement pension as defined by the Social Security Contributions and Benefits Act 1992 (c. 4) ("the 1992 Act") whether or not in any particular week he paid national insurance contributions on earnings above the lower earnings limit, provided that any one of the conditions in subsection (2) is met.
  (2) The conditions are—

  (a) that he was caring (as the child's parent) for a child for whom child benefit is being paid;

  (b) that he was caring for a child as an approved foster parent or foster carer; or

  (c) that he was engaged for at least 20 hours in that week in caring for a person in respect of whom there were payable any of the benefits specified in subsection (3) below.

  (3) The benefits referred to in subsection (2) above are—

  (a) an attendance allowance under section 64 of the 1992 Act;

  (b) the care component of disability living allowance at the highest or middle rate prescribed in accordance with section 72 of the 1992 Act;

  (c) a constant attendance allowance under any service pensions instrument, personal injuries scheme or 1914–1918 war injuries scheme; and

  (d) an increase of disablement pension under section 104 of the 1992 Act in respect of constant attendance, and any benefit corresponding to such an increase under a pneumoconiosis and byssinosis benefit scheme or under regulations under paragraph 7(2) of Schedule 8 to the 1992 Act.

  (4) Paragraph 5(7) of Schedule 3 to the 1992 Act is repealed."
  The noble Baroness said: I wish to move this amendment and to speak to Amendment No. 336B. I do so with a little trepidation because this whole area of pensions is increasingly complex. There are very serious questions about whether the current structure will serve us in the future. Certainly last week's Pensions Commission report made clear that the whole area is very complex. Support for a universal state pension is growing; I am drawn to it. We will have
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  to look at the whole area of pension provision in the UK, which has grown like Topsy over the years—for all the right intentions.
  My two amendments do not help with the simplicity argument; I accept that immediately. They are probing amendments, however, so the Minister can take comfort from that. The amendments do not deal solely with the position of women, but, because of the position of women on pensions, the majority of beneficiaries under them would be women.
  It is interesting that in all the coverage that the Pensions Commission report rightly drew last week, I saw none that drew out the position of women in receipt of pensions in the UK—I guess there must have been some. Sixty-four per cent of retired people are women, and yet on retirement they receive on average 50 per cent of the income that men receive. It is a big area of concern.
  Amendment No. 336A is about persons entitled to a category A retirement pension, which is paid throughout life. I have two areas of concern. First, although credits are given to those who are paid carer's allowance, to qualify one must be a carer for at least 35 hours a week. My amendment would change that to 20 hours. The figure of 35 hours a week is arbitrary. We should remember that many carers also work part-time and do not meet the 35-hour requirement.
  The Minister rightly referred earlier today to the home responsibility protection payments. Those are certainly a great help, reducing the number of years in which one must contribute in order to qualify for the basic state pension. Over the years, a number of Members of the Committee have argued for that very positive move. However, the payments will apply only in relation to children under 16. As for the second state pension, it will apply only to care for children up to the age of six. I listened with great interest to the compelling points that the Minister made earlier. The flaw in the arrangements is that they apply only to total years. If someone works for only one week in a tax year, she will not qualify. It is very arbitrary. Receipt of any other benefit also will exclude her from entitlement to the benefit.
  I do not wish to take up too much of the Committee's time. However, these two amendments are a manifestation of the great unfairness to women in our present pensions system.
  I turn to Amendment No. 336B. Some 41 per cent of women in work are working part-time. It is an enormous percentage. In Britain, about two-thirds of married women with families are working. Thirty years ago, the figure was about 50 per cent. Outside Scandinavia, Britain has the highest number of working married women in Europe, I think; I am not sure whether that is still true.
  I believe that the Minister's heart is with me on Amendment No. 336B, even if her head or logic may not allow her to be because of the complexity in a number of other issues. The whole nature of work is changing. The idea of a job for life is gone. Many people, men included, now have to work for up to four employers. All of that employment may be low-paid.

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  Cumulatively, that employment may pay them a higher wage than the lower earnings level for a pension. Individually, it may not, and that is where the system falls down. Anyone earning from a single employment will not qualify. On recent figures, 1.4 million women earn less than the lower earnings level of £70-odd a week, so they do not start to qualify, even if they want to pay into a state pension. We are perpetuating in a way the anomaly whereby although a majority of retirees are women, a substantial minority are on an unfeasibly low income and have to rely on state support.
  I fully accept the complexity of the issue. These are probing amendments. As for reviewing pension schemes, I believe that the universal state pension would deal with many of the anomalies we have talked about today and in earlier amendments. However, these amendments do not deal with that. I beg to move.
  Baroness Turner of Camden: I rise to support the amendment moved by my noble friend. As all those who have been discussing the Adair Turner report and pensions issues in general know, those most at risk when it comes to low pay and so forth are women. Those suffering poverty in retirement are in the main women, for the obvious reason that many of them have an interrupted work pattern. They care for children and, later on, may care for elderly relatives. The Government often pay tribute to how much we all owe to carers, so I hope that my noble friend at the Dispatch Box will look at what has been said with a great deal of sympathy.
  The same arguments apply to those in part-time employment, who again are mostly women. When they come to retire, if they have a pension at all, it is related to very low pay and they mostly depend almost entirely on state benefits.
  I apologise for not being here earlier. I was at a meeting of OPAS, and it so happens that the service has just produced a very good report about women and pensions.
  Lord Higgins: Both noble Baronesses who have just spoken have distinguished records in the field of pensions and trade union action in that regard. One must acknowledge that. It is right that they should stress the continuing unfair position of women. Having said that, and in the light of Turner, there is no doubt that we have to look to the future. Both parties, whichever may be in power, will have to make significant changes in this direction.
  There is only anomaly about Beveridge which has always worried me over the years; that is, married women receive a married woman's pension towards which they and their spouse have contributed no more than a single, unmarried person. That was understandable at the time of Beveridge, but is not really sustainable any longer. For many years we have been seriously disadvantaging the position of unmarried women. In looking forward on these issues, we shall need to take that point into account. It is a strange situation, given present-day circumstances,
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  although as I say it was entirely understandable at the time of Beveridge. However, as both noble Baronesses have remarked, we need to look carefully at the Turner report and decide which are the fair ways we can adjust the position so far as concerns women pensioners.
  Baroness Hollis of Heigham: I was expecting a more extended debate. I note that my noble friend has grouped her two amendments together. She has rightly anticipated to some extent where I may be seeking to go.
  Noble Lords will know that home responsibilities protection was introduced by Barbara Castle to protect the basic state pension by reducing the number of qualifying years needed for a full pension to a minimum of 20 years. HRP is simple, broad based and cost effective. Just in case there is any misunderstanding, I should explain that one week's work would not remove HRP. Any year where a person is caring and earns under 52 times the lower earnings limit—around £4,000—will be covered. It may be that my noble friend's worries on this point are not entirely well founded. There is often a misunderstanding about exactly how HRP works.
  However, this amendment would go further than perhaps my noble friend appreciates, because many of my concerns about it are related to issues that she did not raise. Removing the 20-year requirement in the HRP provision would allow a person who has spent most of his or her working life outside the labour market to get a full state pension. The costs of that would have to be met by those in work, including other parents.
  Earlier we discussed an amendment moved by the noble Lord, Lord Skelmersdale, which sought to extend the cut-off point for help through the S2P for people caring for children by raising it from the age of six to the age of 12. The new clause proposed by my noble friend would remove the age restriction completely so that, provided child benefit is payable, a person could receive help through the S2P on the basis that they are caring for a 19 year-old, who if they are not in full-time education could have been in waged work. Indeed, they could have been married. So I am not sure whether my noble friend intended the consequence of her amendment, but I am sure of the effect. Moreover, the costs would be very significant, running at over £3 billion by 2050.
  6 p.m.
  The amendment would also extend help to carers looking after disabled people for 20 hours a week or more. The current limit is 35 hours a week. This limit is used not only for HRP and S2P, but also and importantly—for the carer's allowance, which my noble friend will know is triggered by the disabled person being cared for qualifying for the middle or higher rate of disability living allowance.
  I have worried about this issue because I think that there is a problem regarding those who are caring sometimes for two people for 20 hours each a week. However, the difficulty here—I have been trying to

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  find a way through—is that it is easy to cover in law responsibilities for looking after children by relating those duties to their age. They are born and reach a certain age, so there is an easy audit trail. However, with caring it is not easy once you move away from clear passport entitlements such as middle-rate DLA, 35 hours of caring duties and the carer's allowance. Below that, should we allow for someone who generously helps to keep afloat five different people, each for a package of between three and five hours? How would we put together a paper trail for that?
  From my experience, it would not be customary for someone who receives DLA at the middle rate to require care for as few as 20 hours a week. Normally the requirement is much higher than that. Furthermore, how can we achieve recognition in the national insurance system for caring responsibilities where there is no easy audit trail for care of the elderly as there is for children? The carer's hours may fluctuate. One week may include laundry and shopping duties so that 25 hours is spent on care, while during another week the carer may just be popping in for an hour a day, amounting to only five hours. I find it difficult to envisage exactly how it could be calculated. For these various reasons, therefore, I do not think that I can help my noble friend.
  I turn to Amendment No. 336B. This new clause seeks to allow for the aggregation of earnings below the lower earnings limit for people with a number of paid jobs, thus providing a qualifying earnings factor for both basic and additional state retirement pension.
  Again, we recognise the issue here. Around 60,000 people have total earnings above the LEL for these purposes. most of them women. The crux of the issue which this amendment seeks to address is that liability for national insurance is determined by the level of a person's earnings in an individual employment, as opposed to being able to calculate two jobs together. As a result, a person could he earning well above the LEL and not qualify.
  However, again there would be a number of practical difficulties, such as the need for employers to record more information. Let us take someone who has five different part-time jobs. Would we ask one of those employers to be the nominal employer for these purposes and the other four employers not? In a sense this is a version of the carer's dilemma: at the moment we have an easy option whereby we can follow a paper trail for audit purposes.
  When significant benefits hinge on the robustness of the paper trail, does my noble friend suggest that we should stipulate two employments but not three, or three but not five? Alternatively, would my noble friend pursue an income-related test? That might be sturdier, but even in that case you would still need one of the employers to be responsible for the employer's side of the national insurance contribution. How would that responsibility be spread?
  I suspect that all noble Lords, including myself, are sympathetic to the entire bundle of issues raised here, so many of which are related to women's access to the basic state pension by virtue of some of the anomalies
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  that we have inherited from Beveridge. However, I repeat that I do not think that we can address them on a piecemeal basis because each would have knock-on effects. Not only would those be costly and complex, they would often subvert other things that we are seeking to do on the pensions front. Again, as I asked noble Lords earlier today, I would ask my noble friend to await our report on women's pensions due in the forthcoming year.
  Baroness Dean of Thornton-le-Fylde: I thank my noble friend for her detailed explanation in response to my amendments, which was not at all unexpected. I take the point about carers and making piecemeal changes. In the field of pensions and public policy associated with that, answering one question creates a whole range of others.
  In response to the point about aggregation of earnings, on paper her answer is logical and I accept it, but I am still troubled by the fact that if that fictitious woman had three jobs, it would not stop the Inland Revenue deducting income tax from her for each of those jobs. If she was on some kind of family support, it would not stop the welfare system taking into account all the earnings from her three jobs. I accept that it is difficult, but the point is: do people have to fit the system or do we have systems to fit people? We must debate that in considering the whole of the pension system. With that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 336B not moved.]
  Clause 286 [Dissolution of OPRA]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 336C:
  Page 218, line 8, leave out subsection (3) and insert—
  "(3) Subject to subsection (4), information obtained by the Regulator by virtue of subsection (2) is to be treated for the purposes of sections 76 to 81 (disclosure of information) as having been obtained by the Regulator in the exercise of its functions from the person from whom OPRA obtained it.
  (4) Information obtained by the Regulator by virtue of subsection (2) which was supplied to OPRA for the purposes of its functions by an authority exercising functions corresponding to the functions of OPRA in a country or territory outside the United Kingdom (the "overseas authority") is to be treated for the purposes mentioned in subsection (3) as having been supplied to the Regulator for the purposes of its functions by the overseas authority."
  The noble Baroness said: This is a vast raft of amendments and perhaps I could speak very briefly to them. They are minor, technical amendments. For example, Amendment No. 340AA is a consequential amendment on pensions liberation, which we discussed much earlier. However, I draw the Committee's attention to Amendment No. 344A, in which we agree that there should be parliamentary scrutiny of orders relating to amounts to be raised by pension protection levies. That amendment, partly in response to the Committee's concerns, makes them subject to the affirmative procedure. I am happy to give further examples if the Committee wishes, but, as I said, the amendments are minor, technical and drafting in nature. The only one of substantive

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  significance is that to which the Government propose that orders affecting pension protection levies should be passed by affirmative resolution. I hope that noble Lords will agree to the amendments. I beg to move.
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 337:
  Page 218, line 10, at end insert—
  "( ) Where tax information disclosed to OPRA is obtained by the Regulator by virtue of subsection (2), subsection (3) does not apply and subsections (3) and (4) of section 82 apply as if that information had been disclosed to the Regulator by virtue of subsection (2) of that section.
  For this purpose "tax information" has the same meaning as in that section."
  On Question, amendment agreed to.
  Clause 286, as amended, agreed to.
  Clause 287 [Transfer of employees from OPRA to the Regulator]:
  On Question, Whether Clause 287 shall stand part of the Bill?
  Lord Higgins: Why are we including subsection (2), which states:
  "The provisions of Regulation 7 of TUPE…shall not apply to the transfer"?
  Baroness Hollis of Heigham: Clause 287 makes specific provision in relation to staff who transfer from OPRA to the Pensions Regulator. It ensures that the terms and conditions of employment of staff who transfer will be protected, with the transfer expressly being made subject to the provisions of TUPE. However, those TUPE regulations do not protect occupational pension rights. Subsection (2) makes express provision for such rights to be protected. I commend the clause.
  Lord Higgins: If they are not normally protected. why are they being protected here?
  Baroness Hollis of Heigham: We think it right to protect the occupational pension rights of staff who transfer from OPRA to the Pensions Regulator. TUPE does not provide for that, so we have to do it this way.
  Lord Higgins: Yes, but what are the reasons why TUPE does not apply here?
  Baroness Hollis of Heigham: Because TUPE does not cover pension regimes when moving in such circumstances; and because one is moving from one non-departmental public body to another. TUPE currently applies in public sector to private sector transfers.
  Lord Higgins: I am grateful.
  Clause 287 agreed to.
  Clause 288 [Dissolution of the Pensions Compensation Board]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 337A:
  Page 218, line 28, leave out subsection (3) and insert—
  "(3) Information obtained by the Board by virtue of subsection (2) is to be treated for the purposes of sections 188 to 192 and 194 (disclosure of information) as having been obtained by the Board in the exercise of its functions from the person from whom the Pensions Compensation Board obtained it."
  On Question, amendment agreed to.
  [Amendment No. 338 had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 339 and 340:
  Page 218, line 30, at end insert—
  "( ) Where tax information disclosed to the Pensions Compensation Board is obtained by the Board by virtue of subsection (2), subsection (3) does not apply, and subsections (3) and (4) of section 193 apply as if that information had been disclosed to the Board by virtue of subsection (2) of that section.
  For this purpose "tax information" has the same meaning as in that section."
  Page 218, line 34, after first "to" insert "192 and"
  On Question, Whether Clause 288, as amended, shall stand part of the Bill?
  Lord Skelmersdale: Clause 288 contains—or contained—a government amendment that has been withdrawn. Indeed, that is the first of seven such amendments today; I shall not ask the noble Baroness to explain all of them. However, am I right that Amendment No. 338, which has been withdrawn, has been superseded by Amendment No. 340, which is in a more felicitous place? If I am right, I shall be satisfied. If I am wrong, I will be more than a little surprised.
  Baroness Hollis of Heigham: The noble Lord is entirely right; it has been superseded.
  Clause 288, as amended, agreed to.
  Clauses 289 to 291 agreed to.
  Clause 292 [Overriding requirements]:
  [Amendment No. 340A had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 340AA and 340B:
  Page 221, line 30, at end insert—
  "( ) any regulations made under section (Pensions liberation: court's power to order restitution)(7);
  ( ) any regulations made under section (Pensions liberation: repatriation orders)(4);"
  Page 221, line 36, leave out from "any" to end of line and insert "subordinate legislation made under that Part;"
  On Question, amendments agreed to.
  [Amendment No. 340C had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 340CA to 340D:
  Page 221, line 41, at end insert—
  "( ) any ring-fencing notice issued by the Regulator under section (Power of Regulator to require ring-fencing of assets);"
  Page 221, line 42, after "section" insert "274,".
  Page 221. line 42, after "293," insert "(Modification of pensions legislation that refers to employers),"
  Page 221, line 42, after "303(2)" insert "or (3)".
  On Question, amendments agreed to.
  On Question, Whether Clause 292, as amended, shall stand part of the Bill?
  Lord Skelmersdale: I said that I would not comment on each of the withdrawn amendments, but I must comment on Amendment No. 340C. It was a paving amendment to introduce a new clause, covering the powers of the regulator to require the ring-fencing of assets. That has disappeared as well. One rather wonders what has been going on in the preparation of the Bill. There have been a substantive number of government amendments so far and we have been promised a whole string more on Report, many of which are in response to queries and suggestions made in Committee and earlier. However, to withdraw an entire new clause is more than a little odd. I would like to know the reason for it.
  Baroness Hollis of Heigham: We are talking about Clause 292, which—
  Lord Skelmersdale: No, we are not. We are talking about Amendment No. 340C to Clause 292, which was a paving amendment for another new clause.
  Baroness Hollis of Heigham: I am sorry; the debate is about whether Clause 292 shall stand part of the Bill.
  Lord Skelmersdale: It is. I am asking a question on Clause 292. I am asking why the Government decided to withdraw Amendment No. 340C, which was in turn a paving amendment for another amendment.
  Baroness Hollis of Heigham: It is basically because the amendments that we originally envisaged were about the ring-fencing provisions, which have been superseded by the directive. The clause is about scheme rules. It is a little odd to be fished on amendments that are not on the Marshalled List; that is why I pushed the noble Lord on it.
  Lord Skelmersdale: They were on the Marshalled List.
  Baroness Hollis of Heigham: But they have been withdrawn from it. I would not normally expect the noble Lord to move amendments that he had withdrawn from the Marshalled List, either.
  Lord Skelmersdale: I am not moving an amendment. I am asking a question on clause stand part. Let us forget it.
  Clause 292, as amended, agreed to.
  6.15 p.m.
  Clause 293 [Modification of this Act in relation to certain categories of scheme]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 341 to 342A:
  Page 222, line 20, at end insert—
  "( ) any case where a partnership is the employer, or one of the employers, in relation to an occupational pension scheme."
  Page 222, line 24, leave out paragraph (c).
  Page 222, line 26, leave out "and"
  Page 222, line 28, at end insert ", and
  ( ) Part 7 (cross-border activities within European Union)."
  Page 222, line 33, after first "scheme" insert "rules"
  On Question, amendments agreed to.
  Clause 293, as amended, agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 342B:
  After Clause 293, insert the following new clause—

  MODIFICATION OF PENSIONS LEGISLATION THAT REFERS TO EMPLOYERS
  (1) Regulations may modify any provision of pensions legislation for the purpose of ensuring that it, or another provision of pensions legislation, does not purport to refer to the employer of a self-employed person.
  (2) Where a provision of pensions legislation contains a reference to an employer in connection with an occupational pension scheme, regulations may modify the provision, or another provision of pensions legislation, for the purpose of excluding from the reference an employer who is a person—

  (a) who does not participate in the scheme as regards people employed by him, or

  (b) who, as regards people employed by him, participates in the scheme only to a limited extent.

  (3) For the purposes of this section—

  (a) "pensions legislation" means any enactment contained in or made by virtue of—

  (i) the Pension Schemes Act 1993 (c. 48),

  (ii) Part 1 of the Pensions Act 1995 (c. 26), other than sections 62 to 66A of that Act (equal treatment),

  (iii) Part 1 of the Welfare Reform and Pensions Act 1999 (c. 30), or

  (iv) this Act;

  (b) a person is "self-employed" if he is in an employment but is not employed in it by someone else;

  (c) a person who holds an office (including an elective office), and is entitled to remuneration for holding it, shall be taken to be employed by the person responsible for paying the remuneration.

  (4) In subsection (3)(b) "employment" includes any trade, business, profession, office or vocation."
  The noble Baroness said: The new clause introduces regulation-making powers to modify provisions in pensions legislation referring to employers. The clause is consequential to the new definition of occupational pension schemes in Clause 229. In accordance with the European directive on the activities and supervision of institutions for occupational retirement provision, that definition includes provision for the self-employed to join an occupational pension scheme and, for consistency with Inland Revenue provisions in the

  GC 187
  Finance Act, it provides that a non-employed person may be a member of an occupational scheme, subject of course to the rules of the scheme.
  The effect is that where a scheme member is self-employed or non-employed, certain references to "employer" in pensions legislation may not be appropriate.
  Lord Higgins: Which amendment are we on?
  Baroness Hollis of Heigham: It is a new clause after Clause 293, set out in Amendment No. 342B. It provides the necessary power to modify the provisions in such circumstances, and so avoid placing legislative obligations on an employer, on whom such obligations are clearly inappropriate. In other words, it covers where someone is self-employed or non-employed. We are trying to fit that into the new European directive rules. I beg to move.
  The Deputy Chairman of Committees (Lord Tordoff): Before the noble Lord replies, can the Minister assist us? The learned Clerk has pointed out that the amendment to Clause 293 which reads:
  "Page 222, line 28, at end insert and
  () Part 7 (cross-border activities within European Union).—"",
  does not have an amendment number on the Marshalled List. I have already called it and it has been agreed to.
  Baroness Hollis of Heigham: I apologise for the inconvenience. I now understand the sotto voce comment of the noble Lord asking which amendment we were on. The amendment is Amendment No. 342B, and I am speaking also to Amendments Nos. 346ZA, 348EZA and 348EA. Amendment No. 342B is very clearly on my groupings list.
  The Deputy Chairman of Committees: I understand that. I want to make sure that, having called an amendment that was agreed between Amendments Nos. 342ZA and 342A, I have not made a mistake.
  Baroness Hollis of Heigham: May I seek help on that? I did not know how the numbering would go. I apologise to the Committee profoundly. The unnumbered amendment should be Amendment No. 342ZB. It is an error on the Marshalled List. We apparently informed the usual channels about it on Friday and corrected it, but it has not been reflected in the printed paper. None the less, I apologise, in so far as our department was at all responsible.
  Lord Higgins: On a related point, at the beginning of our proceedings, we were rather unhappy about how the actual Bill was printed. That was accepted by the Government and the point was taken for the future. When one has five or more lines on the groupings list, each with eight or so government amendments, it is difficult to keep track of what is happening. It is particularly unfortunate in that one is rather inclined to assume that they are all amendments to specific existing clauses. If some of those amendments were
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  new clauses, it would be extremely helpful if, instead of merely stating that the amendment was a government amendment and numbering it, the Marshalled List called it a new clause. That would draw one's attention to the fact. I think that it is the Government Whips Office that is involved. If that is not pointed out, one is rather inclined to assume that the whole group of amendments applies to later clauses and does not include completely new clauses that have suddenly been shuffled in in the middle.
  The Deputy Chairman of Committees: I am grateful to the noble Lord. It is true that Amendment No. 342ZB is on the groupings list, but its number is not on the Marshalled List, although the substance of the amendment is. What he asks for would help the Chairman as well as other Members of the Committee.
  On Question, amendment agreed to.
  Clause 294 [Offences by bodies corporate and partnerships]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 343:
  Page 223, line 19, at end insert—
  "( ) In this section "Scottish partnership" means a partnership constituted under the law of Scotland."
  On Question, amendment agreed to.
  Clause 294, as amended, agreed to.
  Clause 295 agreed to.
  Clause 296 [Protected items]:
  On Question, Whether Clause 296 shall stand part of the Bill?
  Lord Higgins: Protected items are a matter of some controversy at the moment. I would be inclined to use "privileged items" rather than "protected items". The clause seems to relate only to communications between professional legal advisers. We live in an age of terrorism and so on in which one is obviously concerned about money laundering. It seems pretty difficult in that context for any great money laundering to be going on. I am not sure why communications between advisers other than purely legal advisers—for example, accountants, subject always to subsection (4), which states that the protected item must not further a criminal purpose—are not in a protected or privileged position. The definition seems very narrow, and I would have thought that the safeguard in subsection (4) would have required it not to be as narrow as it is.
  Baroness Hollis of Heigham: Clause 295 deals with self-incrimination—
  Lord Higgins: Clause 296.
  Baroness Hollis of Heigham: I am sorry; I thought that the noble Lord said that he was talking about Clause 295. Clause 296 provides that a person is not required to produce, disclose or permit the inspection of information covered by legal professional privilege, which obviously covers lawyers. Such communications made in contemplation of legal proceedings, or in connection with them, are also

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  protected. That is not covered if there is intent to further a criminal purpose. The clause replicates provision in the Financial Services and Markets Act 2000.
  The noble Lord went on to ask why other professional bodies were not covered in the same way as lawyers. As I understand it, there is a longstanding rule on protection of legal advice that could inhibit frank assessment of a person's culpability, legal position and the like. No such protection exists in other legislation for other professionals, such as accountants and actuaries, in the same way, because there is a confidential basis between lawyers and the individual. If I am wrong, I shall write to the noble Lord. If he asked why others should not have it, that would open a much bigger debate, not only for the Bill but for a series of analogous pieces of legislation, including the Financial Services and Markets Act.
  Lord Higgins: Is there a distinction between protected items and privileged items'? I was under the impression that communications between my accountant and me were protected or privileged, whichever expression one likes to use. There has been some change in that in relation to money laundering and so on, but I would not have thought that there was any easy way of getting involved in money laundering so far as the Bill was concerned. Anyway, if there were money laundering, it would be covered by subsection (4) on criminal activity. Am I wrong in thinking that communications between one's accountant and oneself are not privileged in that sense'?
  Baroness Hollis of Heigham: The noble Lord's original suspicion was right—"protected items" is a term in the Bill for describing privileged items in the context of production of certain information to the register and so on. I am advised that, in effect, there is no difference between the use of those two terms in the context of the Bill. However, I really do not want to be pressed on the wider issue of other professionals. Let me take advice on it. Its implications would be extremely wide. We actually require most of the professionals about which we are talking to whistle-blow. so to allow them to protect or privilege information that they have acquired would not seem appropriate. That seems different from a lawyer's privilege, which is normally invoked when he seeks to protect a client against various charges, civil or criminal.
  Lord Oakeshott of Seagrove Bay: I encourage the noble Baroness to take advice and, if necessary, to write to us on the matter. There is quite an argument going on at the moment between the accountancy and legal professions on whether they are treated on all fours in certain sorts of tax advice schemes, so the issue is topical.
  Lord Higgins: I would have thought that that also applied so far as pensions were concerned. Perhaps the noble Baroness will look at the matter carefully before Report.
  Baroness Hollis of Heigham: I am grateful for the noble Lords' contributions. I am happy to follow the
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  matter through. However, as someone who is neither a lawyer nor an accountant, if the accountant comes into information by virtue of his role vis-a-vis a scheme, we are imposing certain duties on him, given the production of information to the regulator and so on, that seem rather different from those in which a lawyer would be invoked, in terms of protected or privileged information vis-a-vis a client. I would need to be aware of the extent to which the provisions would undercut the whistleblowing responsibilities; in some cases, I was being pressed to extend those. I shall seek advice on the matter and write.
  In court, legal advice on the balance of a case is privileged to prevent self-incrimination. I think that the accountant's position is different, but I am happy to follow up on the matter and see whether I can enlarge on my comments.
  Clause 296 agreed to.
  Clause 297 agreed to.
  Clause 298 [Crown application]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 343A and 343B:
  Page 225, line 20, after "303(2)" insert "and (3)".
  Page 225, line 28, leave out "Parts" and insert "provisions".
  On Question, amendments agreed to.
  Clause 298, as amended, agreed to.
  Clause 299 agreed to.
  Clause 300 [Subordinate legislation (general provisions)]:
  On Question, Whether Clause 300 shall stand part of the Bill?
  Lord Higgins: It is a little late in the day to say more on the discussion that we had earlier, but I have suddenly realised that we have gone all the way through with these enormous groupings of government amendments and they then turn up later on different clauses. We should consider for the future whether or not government amendments should be grouped in this way.
  It is of course at the discretion of the Opposition, the Liberal Democrats or whoever to express a view on how their amendments should be grouped but, on looking at the grouping sheet in front of me on which Clause 300 appears, if the amendments in that whole wodge at the top are going to turn up in later clauses, it might perhaps be as well to consider whether or not the principal one should be put at the head of the relevant clause rather than suddenly having them all up front. This, again, is a matter for the Government Whips Office.
  Baroness Hollis of Heigham: I accept that the way in which the groupings list has been laid out has not been helpful to the proceedings. I absolutely accept that. I think that we have all felt some degree of confusion as to which amendment we were talking about and where. This has not been helped by the acoustics in the room.

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  The problem, of course, is that there may very well be, for example, a paving amendment in Clause 120 and the substantive debate in Clause 130, but the two have to be grouped in order to make any sense at all. Whether there could be some way of indicating rather more logically the sequential flow while indicating where the substantive debate occurs, I do not know. I shall have to consider the issue. It is difficult to handle the proceedings in this way, but I am quite sure that we have to group across clauses. Otherwise we could never have cross-referential amendments—for example, if a new definition cropped up in 17 clauses, we would have to take them all separately. So there are good reasons for grouping across clauses, but I accept that it does not help our onward discussions.
  Lord Higgins: It may be that the crib which the Chair has could be made more generally available. However, I wish to say something a little more substantial on Clause 300 which is headed,
  "Subordinate legislation (general provisions)"
  During the passage of this legislation, as with all previous legislation that we have dealt with together, the noble Baroness has been always immensely helpful in doing everything that she can to get the statutory instruments to us in draft form before the later stages of a Bill. There is an enormous amount of delegated legislation in this Bill and I very much hope that she will let us have the drafts of the statutory instruments—at any rate, the main ones with which we are concerned—as soon as she reasonably can.
  Baroness Hollis of Heigham: I agree with the noble Lord. I am advised that we are dealing with more than 100 different sets of regulations. Given that we are in the last day in Committee, I wonder whether it would be helpful if I were to circulate two pieces of paper. The first would set out broadly what government amendments we expect to bring back on report as far as we can so far tell. We may not specify the words but we will outline the content—for instance, about moral hazard and so on.
  I will also be very happy to prepare, as far as we can, a memorandum setting out the packages of regulations that we expect to introduce and a broad idea of when we may be bringing them to your Lordships' House. Most of them are the subject of consultation with the industry at the moment. I shall be very happy to ask my officials to undertake that work in the gap between Committee and Report stages so that people will know what the rolling timetable will look like, if the Committee would find that helpful.
  Lord Higgins: That would be very helpful.
  Clause 300 agreed to.
  Clause 301 [Parliamentary control of subordinate legislation]:
  [Amendment No. 344 not moved.]
  Lord Skelmersdale Lord Skelmersdale moved Amendment No. 344ZA:
  Page 226, line 44, at end insert—
  "( ) regulations under section 145(10) (winding up of public sector schemes)"
  The noble Lord said: As the noble Baroness said, there will be something like 100 different sets of regulations following on from the Bill, 17 of which, at the moment, will be affirmative regulations. My intention is to persuade the noble Baroness that there should be 18.
  Why? My 18th affirmative regulation concerns the changes to or the abandonment of public sector pension schemes. There is an enormous interest in this issue at the moment as virtually any newspaper article which has reported on the effects of the Turner report—and, indeed, outside of it—has mentioned over the past six weeks or so.
  I cannot imagine that the concerns about this perceived unfairness will go away. Therefore there will be enormous interest immediately any public sector scheme is changed. On that basis, it is only reasonable that there should be a debate in both Houses of Parliament about the issue. Of course, the only way one can guarantee a debate in the Houses of Parliament about a particular subject is for the issue to be enacted by affirmative resolution. I beg to move.
  Baroness Hollis of Heigham: I do not agree with the noble Lord, Lord Skelmersdale, that in some situations we could be dealing with substantial pension schemes affecting many members.
  Let me make two points. First, the Delegated Powers and Regulatory Reform Committee did not consider that the regulations associated with this clause should be introduced under the affirmative procedure. We have tried impeccably to follow its recommendations, as we normally do.
  Secondly, there is a practical problem. The reason we are concerned about making these regulations affirmative is that it is likely to slow down the process by which public pension schemes can be wound up. That would have the potential to impact adversely on the financial stability of the scheme. In the worst scenario, this could delay the payment of individual pensions. Given that and the occasional urgency of a situation, we believe that they should remain negative.
  However, as with other issues on which I have given an undertaking, I am happy to make sure that the Opposition Benches know when we are laying those negative regulations so that if they feel unhappy about it they will be able to pray against them. We can then have a debate and the regulations will not go through without the opportunity for public scrutiny.
  Obviously, some of the bigger ones will be debated, but there could be many small changes or modifications with which I would not dream of troubling your Lordships' House—for example, in regard to some minor changes to survivor's benefit in a small scheme. It would be absurd to be tied in that way.

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  If the Committee is happy to leave it to the department's judgment about which are the major issues, I shall be happy to notify noble Lords. But we shall still keep them within the negative framework.
  Lord Skelmersdale: I find that a rather strange argument. It would be opportunistic, to say the least, if a scheme by negative instrument was laid and the Government did not carry it out until after the praying time. How much would the delay involve?
  Secondly, I totally accept that there will be occasions when one public body supersedes another public body for the same purposes—for example, as is about to happen where some of the public bodies attached to the Department of Health are to be amalgamated. In such situations it may well be necessary to change pension schemes and I accept the noble Baroness's argument that there is no great need for an affirmative resolution procedure.
  But, having said that, I have taken careful note of what the noble Baroness said about giving the Opposition Front Benches notice of when large schemes are likely to be changed, and I am grateful for that.
  Baroness Hollis of Heigham: If the noble Lord is seriously concerned about this issue and the praying times, I shall be happy to take it away, have a look at it and consider whether we can move on it. I am not yet persuaded, but I shall be happy to take the matter away. There have been so few requests from the Opposition to turn a negative into an affirmative that when points are seriously made I am happy to have another look at the issue.
  Lord Skelmersdale: I am very grateful. The only other point I wish to make is that the Delegated Powers and Regulatory Reform Committee of your Lordships' House, the recommendations of which are slavishly followed by Her Majesty's Government, is not the fount of all wisdom in this area. I am not suggesting that I am a fount of any wisdom in this area. Nevertheless, I do not think that it is a condemnation of a suggestion on statutory instruments that it has not come from the Delegated Powers and Regulatory Reform Committee.
  Having said that, I am grateful that the noble Baroness will look at the matter again. In those circumstances, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 344A to 346:
  Page 227, line 4, at end insert—
  "( ) an order under section 168(7) (orders relating to amounts to be raised by pension protection levies);"
  Page 227, line 6, after "order" insert "or regulations"
  Page 227, line 18, at end insert—
  "( ) regulations under section 303(2)(b) (power to extend meaning of employer);"
  On Question, amendments agreed to.
  Clause 301, as amended, agreed to.
  Clause 302 agreed to.
  Clause 303 [General interpretation]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 346ZA to 348:
  Page 228, line 21, leave out from first "of' to "to" in line 22 and insert "persons in the description of employment"
  Page 228, line 48. at end insert—
  ""the PPF Ombudsman" has the meaning given by section 200(1);"
  Page 229, line 3, leave out "47(1)" and insert "47"
  Page 229, line 3, at end insert—
  ""the register" has the meaning given by section 53(1);"
  Page 229, line 5, at end insert—
  ""the Tribunal" has the meaning given by section 96(1);"
  Page 229, line 5, at end insert—
  "(1A) In this Act, unless the context otherwise requires, references to the scheme rules, in relation to an occupational pension scheme, are references to—

  (a) the rules of the scheme, except so far as overridden by a relevant legislative provision,

  (b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and

  (c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993 (c. 48) (preservation of benefit under occupational pension schemes).

  (1B) For the purposes of subsection (1A)—

  (a) "relevant legislative provision" means any provision contained in any of the following provisions—

  (i) Schedule 5 to the Social Security Act 1989 (c. 24) (equal treatment for men and women):

  (ii) Chapters 2 to 5 of Part 4 of the Pension Schemes Act 1993 (c. 48) (certain protection for early leavers) or regulations made under any of those Chapters;

  (iii) Part 4A of that Act (requirements relating to pension credit benefit) or regulations made under that Part;

  (iv) section 110(1) of that Act (requirement as to resources for annual increase of guaranteed minimum pensions);

  (v) Part 1 of the Pensions Act 1995 (c. 26) (occupational pensions) or subordinate legislation made or having effect as if made under that Part;

  (vi) section 31 of the Welfare Reform and Pensions Act 1999 (c. 30) (pension debits: reduction of benefit);

  (vii) any provision mentioned in section 292(2) of this Act;

  (b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—

  (i) paragraph 3 of Schedule 5 to the Social Security Act 1989 (c. 24);

  (ii) section 129(1) of the Pension Schemes Act 1993 (c. 48);

  (iii) section 117(1) of the Pensions Act 1995 (c. 26);

  (iv) section 31(4) of the Welfare Reform and Pensions Act 1999 (c. 30);

  (v) section 292(1) of this Act."

  Page 229, line 7, leave out "and 5" and insert "to 7"
  Page 229, line 8, after "include" insert"—
  "(a)"
  Page 229, line 8, at end insert ";
  (b) such other persons as may be prescribed"
  On Question, amendments agreed to.
  Clause 303, as amended, agreed to.
  Clauses 304 to 306 agreed to.
  Clause 307 [Commencement]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 348A:
  Page 230, line 39, leave out "to 5" and insert "to 7"
  On Question, amendment agreed to.
  On Question, Whether Clause 307, as amended, shall stand part of the Bill?
  Lord Higgins: As this clause is about commencement, I cannot resist the temptation to say a word about it as we are about to stop. This has been a very long and prolonged Committee stage, which has been carried out with a determination to improve the Bill as far as possible. We shall certainly try to do so at the Report stage and Third Reading.
  It would be ungracious to conclude the proceedings without expressing our thanks to the noble Baroness, who has flown solo, so to speak, throughout the proceedings. She has done everything possible to provide satisfactory answers to the various points that we have raised. I thank the Government Whip who has assisted in our proceedings. But it has been a virtuoso performance and we look forward to massive concessions at later stages of the Bill.
  Clause 307, as amended, agreed to.
  Clause 308 [Extent]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 348AA to 348G:
  Page 231, line 14, leave out ", (5) and (6)" and insert "and (5) to (8)"
  Page 231, line 14, after "200" insert "(other than paragraphs (b) to (d), (f) and (g) of subsection (4), subsection (6) so far as relating to any of those paragraphs and subsections (7) and (8))"
  Page 231, line 14, after "201" insert ", 202(2A) and (2B)"
  Page 231, line 14, leave out "and 203" and insert ", 203 and (Pension sharing)"
  Page 231, line 23, at end insert—
  "( ) Part 6 (financial assistance scheme for members of certain pension schemes),"
  Page 231, line 26, leave out from "sections" to "and" and insert "286(1) and (2), 287, 288(1) and (2)"
  Page 231, line 26, after "288" insert ", 293"
  Page 231. line 26, after "288" insert ", (Modification of pensions legislation that refers to employers)"
  Page 231, line 27, leave out "291" and insert "292.
  Page 231, line 30, after "sections" insert "304(2),"
  Page 231, line 34, after "304" insert "(1)"
  On Question, amendments agreed to.
  On Question, Whether Clause 308, as amended, shall stand part of the Bill?
  Lord Oakeshott of Seagrove Bay: I associate these Benches with the remarks of the noble Lord, Lord Higgins. I feel rather like a schoolboy breaking up for
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  half-term. We shall be back again shortly. I thank not only the Minister and my noble friend Lady Barker, but the Back-Benchers from other parties—some of whom are not in their places—who have played a vigorous part in our proceedings, particularly those who are still in their places. It has been a good spirit so far. I am sure that we will return refreshed after a brief holiday.
  Lord Higgins: I am happy to agree with that, and to thank my noble friend Lord Skelmersdale. I am also inclined, rather like the "Last Night of the Proms", to thank the gallery. It is somewhat depleted this evening, but we have had a massive attendance during the course of our proceedings. The lack of press coverage is something about which I will say nothing.
  Clause 308, as amended, agreed to.
  Clause 309 [Northern Ireland]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 348GA and 348GB:
  Page 232, line 1, after "liabilities" insert ", or modification of a term of a contract of insurance,"
  Page 232, line 4, leave out ", (5) and (6)" and insert "and (5) to (8)"
  On Question, amendments agreed to.
  Clause 309, as amended, agreed to.
  Clause 310 agreed to.
  Schedule 12 [Minor and consequential amendments]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 348H to 348N:
  Page 304, line 2, at end insert—

  Public Records Act 1958 (c. 51)
  In Schedule 1 to the Public Records Act 1958 (definition of public records), in Part 2 of the Table in paragraph 3 insert at the appropriate place—
  "The Pensions Regulator."
  "The Board of the Pension Protection Fund."
  "The Ombudsman for the Board of the Pension Protection Fund.""
  Page 304, line 7, leave out "and" and insert—
  ""Employment by the Ombudsman for the Board of the Pension Protection Fund.", and"
  Page 304, line 11. leave out "and"
  Page 304, line 12, at end insert—
  ""A deputy to the Ombudsman for the Board of the Pension Protection Fund.",
  "A deputy to the Pensions Ombudsman.", and
  "The Ombudsman for the Board of the Pension Protection Fund.""
  Page 304, line 12, at end insert—

  Matrimonial Causes Act 1973 (c. 18)
  After section 25D of the Matrimonial Causes Act 1973 (pensions: supplementary) insert—

  25E THE PENSION PROTECTION FUND
  (1) The matters to which the court is to have regard under section 25(2) include—

  (a) in the case of paragraph (a), any PPF compensation to which a party to the marriage is or is likely to be entitled, and

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  (b) in the case of paragraph (h), any PPF compensation which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring entitlement to.

  and, accordingly, in relation to PPF compensation, section 25(2)(a) shall have effect as if "in the foreseeable future" were omitted.
  (2) Subsection (3) applies in relation to an order under section 23 so far as it includes provision made by virtue of section 25B(4) which—

  (a) imposed requirements on the trustees or managers of an occupational pension scheme for which the Board has assumed responsibility in accordance with Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) or any provision in force in Northern Ireland corresponding to that Chapter, and

  (b) was made before the trustees or managers of the scheme received the transfer notice in relation to the scheme.

  (3) The order is to have effect from the time when the trustees or managers of the scheme receive the transfer notice—

  (a) as if, except in prescribed descriptions of case—

  (i) references in the order to the trustees or managers of the scheme were references to the Board, and

  (ii) references in the order to any pension or lump sum to which the party with pension rights is or may become entitled under the scheme were references to any PPF compensation to which that person is or may become entitled in respect of the pension or lump sum, and

  (b) subject to such other modifications as may he prescribed.

  (4) Subsection (5) applies to an order under section 23 if—

  (a) it includes provision made by virtue of section 25B(7) which requires the party with pension rights to exercise his right of commutation under an occupational pension scheme to any extent, and

  (b) before the requirement is complied with the Board has assumed responsibility for the scheme as mentioned in subsection (2)(a).

  (5) From the time the trustees or managers of the scheme receive the transfer notice, the order is to have effect with such modifications as may be prescribed.
  (6) Regulations may modify section 25C as it applies in relation to an occupational pension scheme at any time when there is an assessment period in relation to the scheme.
  (7) Where the court makes a pension sharing order in respect of a person's shareable rights under an occupational pension scheme, or an order which includes provision made by virtue of section 25B(4) or (7) in relation to such a scheme, the Board subsequently assuming responsibility for the scheme as mentioned in subsection (2)(a) does not affect—

  (a) the powers of the court under section 31 to vary or discharge the order or to suspend or revive any provision of it, or

  (b) on an appeal, the powers of the appeal court to affirm, reinstate, set aside or vary the order.

  (8) Regulations may make such consequential modifications of any provision of, or made by virtue of, this Part as appear to the Lord Chancellor necessary or expedient to give effect to the provisions of this section.
  (9) In this section—
  "assessment period" means an assessment period within the meaning of Part 2 of the Pensions Act 2004 (pension protection) (see sections 124 and 150 of that Act) or an equivalent period under any provision in force in Northern Ireland corresponding to that Part;
  "the Board" means the Board of the Pension Protection Fund;
  "occupational pension scheme" has the same meaning as in the Pension Schemes Act 1993;
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  "prescribed" means prescribed by regulations;
  "PPF compensation" means compensation payable under Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) or any provision in force in Northern Ireland corresponding to that Chapter;
  "regulations" means regulations made by the Lord Chancellor;
  "shareable rights" are rights in relation to which pension sharing is available under Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 or any provision in force in Northern Ireland corresponding to that Chapter:
  "transfer notice" has the same meaning as in section 151 of the Pensions Act 2004 or any corresponding provision in force in Northern Ireland.
  (10) Any power to make regulations under this section is exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.""
  Page 304, line 12, at end insert—

  Matrimonial and Family Proceedings Act 1984 (c. 42)
  (1) The Matrimonial and Family Proceedings Act 1984 is amended as follows.
  (2) In section 18 (matters to which the court is to have regard in exercising its powers under section 17)—

  (a) in subsection (3A)—

  (i) in paragraph (a) after "have" insert "and any PPF compensation to which a party to the marriage is or is likely to be entitled,",

  (ii) in paragraph (b) after "include" insert "—

  (i) ", and

  (iii) at the end of that paragraph insert ", and

  (ii) any PPF compensation which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring entitlement to".

  (b) in subsection (7), after paragraph (b) insert ", and

  (c) "PPF compensation" means compensation payable under Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) or any provision in force in Northern Ireland corresponding to that Chapter."

  (3) In section 21 (application to orders under sections 14 and 17 of certain provisions of Part 2 of the Matrimonial Causes Act 1973), after subsection (1)(be) insert—
  "(bf) section 25E(2) to (10) (the Pension Protection Fund);"."
  On Question, amendments agreed to.
  [Amendment No. 348P had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 348PA:
  Page 304, line 12, at end insert—

  Companies Act 1985 (c. 6)
  (1) The Companies Act 1985 is amended as follows.
  (2) In section 449 (provision for security of information obtained by the Secretary of State under section 447). for subsection (1)(dg) substitute—
  "(dg) for the purpose of enabling or assisting the Pensions Regulator to exercise the functions conferred on it by or by virtue of the Pension Schemes Act 1993, the Pensions Act 1995, the Welfare Reform and Pensions Act 1999 or the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to any of those enactments;

  GC 199
  (dh) for the purpose of enabling or assisting the Board of the Pension Protection Fund to exercise the functions conferred on it by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part;".
  (3) In Schedule 15D (permitted disclosures of information) (as inserted by Schedule 2 to the Companies (Audit, Investigations and Community Enterprise) Act 2004)—
  (a) for paragraph 13 substitute—
  "13 A disclosure for the purpose of enabling or assisting the Pensions Regulator to exercise the functions conferred on it by or by virtue of any of the following—

  (a) the Pension Schemes Act 1993;

  (b) the Pensions Act 1995;

  (c) the Welfare Reform and Pensions Act 1999;

  (d) the Pensions Act 2004;

  (e) any enactment in force in Northern Ireland corresponding to any of those enactments.", and

  (b) after that paragraph insert—
  "13A A disclosure for the purpose of enabling or assisting the Board of the Pension Protection Fund to exercise the functions conferred on it by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part.""
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 348Q:
  Page 304, line 12, at end insert—

  Companies Act 1989 (c. 40)
  In section 87 of the Companies Act 1989 (exception from restriction on disclosure of information obtained from overseas regulatory authorities etc), in the table in subsection (4) for the entry relating to the Occupational Pensions Regulatory Authority substitute—

  Judicial Committee Act 1915 (c. 92)

  In section 1, "and the Lord President of the Council"." "The Pensions Regulator Functions conferred by or by virtue of—(a) the Pension Schemes Act 1993, (b) the Pensions Act 1995, (c) the Welfare Reform and Pensions Act 1999, (d) the Pensions Act 2004, or any enactment in force in Northern Ireland corresponding to an enactment mentioned in paragraphs (a) to (d) above.

  The Board of the Pension Protection Fund

  Functions conferred by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part.""

  The noble Baroness said: These amendments to Schedule 12 amend the Tribunals and Inquiries Act 1992, Companies Act 1989, Pension Schemes Act 1993 and Pension Act 1995 to bring them up to date with the provisions of this Pensions Bill. They are all technical or consequential amendments. I beg to move.
  Lord Skelmersdale: I suspect that I will get a non-answer to this question. However, the pensions legislation starting in 1992, I think, in the modern era, is now completed, for the time being anyway, by about eight further Acts. When on earth are they going to be consolidated so that we can actually understand what they say?
  Baroness Hollis of Heigham: I do not know whether the noble Lord wishes to consolidate ahead of any possibilities flowing from the Adair Turner commission. On a more serious point, however, that is certainly on the Government's agenda. I absolutely recognise the need to consolidate. As for repealing schedules and all the rest of it, in practice we do not get the chorus of complaint about the opaqueness of our legislation that might otherwise be expected because the professionals are well used to cross-referring. As the noble Lord suspected, I am not in a position to give him any arguments beyond that.
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 348R to 348T:
  Page 304, line 19, leave out from beginning to first "in" in line 20 and insert—
  "3 (1) The Tribunals and Inquiries Act 1992 is amended as follows.
  (2) In section 7 (concurrence required for removal of members of certain tribunals), in subsection (2) for "(g) or (h)" substitute "(i), (j),(k) or (1)".
  (3) In section 14 (restricted application of Act in relation to certain tribunals), for subsection (1A) substitute—
  "(1A) In this Act—

  (a) references to the working of the Pensions Regulator referred to in paragraph 35(i) of Schedule 1 are references to its working so far as relating to the exercise of its regulatory functions (within the meaning of section 87(2) of the Pensions Act 2004) or any corresponding function conferred by a provision in force in Northern Ireland, and

  (b) references to procedural rules for the Pensions Regulator are references to regulations under paragraph 19 of Schedule 1 to that Act (Secretary of State's powers to make regulations in respect of Regulator's procedure) so far as they relate to the procedure to be followed when exercising those functions."

  (4) In Schedule 1,"
  Page 304, line 28, after "(k)" insert—

  "the Board of the Pension Protection Fund established by section 101 of the Pensions Act 2004 in respect of its functions under or by virtue of section 198 of that Act or any enactment in force in Northern Ireland corresponding to that section; (1)"

  Page 304, line 30, at end insert "or by virtue of"
  Page 304, line 31, after "Act" insert "or any enactment in force in Northern Ireland corresponding to that section"
  On Question, amendments agreed to.
  [Amendment No. 348U had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 348V to 348ZA:
  Page 305, line 5, leave out from beginning to "subsection" in line 6 and insert—
  "6 (1) Section 56 (provision supplementary to provision relating to payment of state scheme premiums) is amended as follows.
  (2) In"
  Page 305, line 14, at end insert—
  "(3) After subsection (6) insert—
  "(7) Where a premium under section 55 is payable by the Board of the Pension Protection Fund by virtue of a transfer under section 152 of the Pensions Act 2004 (effect of the Board assuming responsibility for an occupational pension scheme), then, subject to subsection (8), sections 55 to 68 apply with such modifications as may be prescribed in relation to that premium.
  (8) A premium under section 55 in respect of an earner ceases to be payable if—

  (a) the liability to pay the premium is transferred to the Board of the Pension Protection Fund by virtue of section 152 of the Pensions Act 2004, and

  (b) prescribed requirements are met.""

  Page 305, line 21, leave out from beginning to "for" and insert—"
  "(1) Section 94 (right to cash equivalent) is amended as follows.
  (2) In subsection (2),"
  Page 305, line 24, leave out from "as" to end of line 36 and insert "overridden by a relevant legislative provision;

  (b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme; and"

  Page 305, line 39, at end insert—
  "(3) After that subsection insert—
  "(2A) For the purposes of subsection (2)—

  (a) "relevant legislative provision" means any provision contained in any of the following provisions—

  (i) Schedule 5 to the Social Security Act 1989 (equal treatment for men and women);

  (ii) this Chapter or Chapters 2, 3 or 5 of this Part of this Act or regulations made under this Chapter or any of those Chapters;

  (iii) Part 4A of this Act or regulations made under that Part;

  (iv) section 110(1) of this Act;

  (v) Part 1 of the Pensions Act 1995 (occupational pensions) or subordinate legislation made or having effect as if made under that Part;

  (vi) section 31 of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit);

  (vii) any provision mentioned in section 292(2) of the Pensions Act 2004;

  (b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—

  (i) paragraph 3 of Schedule 5 to the Social Security Act 1989;

  (ii) section 129(1) of this Act;

  (iii) section 117(1) of the Pensions Act 1995;

  (iv) section 31(4) of the Welfare Reform and Pensions Act 1999;

  (v) section 292(1) of the Pensions Act 2004.""

  Page 306, line 1, leave out "for extensions"
  On Question, amendments agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 348ZB:
  Page 306, line 6, leave out "After section 113" and insert—
  "In section 113 (disclosure of information about schemes to members etc), after subsection (2)(d) insert—
  "(e) persons of prescribed descriptions."
  After that section"
  The noble Baroness said: The amendment is consequential to Amendment Nos. 297B and 298B, which provide for groups adequately representing active members and pensioner members to be included in the nomination process for member-nominated trustees. The amendment ensures that we have the power to require schemes to disclose information to such groups. It is therefore consequential. I beg to move.
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 349 to 349B:
  Page 306, line 17, at end insert—
  "In section 123 (interpretation of Chapter 2 of Part 7) omit—

  (a) the definition of "occupational pension scheme" in subsection (3), and

  (b) subsection (4).

  In section 124 (duty of Secretary of State to pay unpaid contributions), after subsection (5) insert—
  "(6) In this section "on his own account", in relation to an employer, means on his own account but to fund benefits for, or in respect of, one or more employees.""
  Page 306, line 18, after "requirements)," insert "—

  (a)"

  Page 306, line 19, at end insert ", and

  (b) after "under" insert "any of those Chapters or"."

  On Question, amendments agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 349BA:
  Page 306, line 20, at end insert—
  "In section 145 (the Pensions Ombudsman), after subsection (1) insert—
  "(1A) Provisions conferring power on the Pensions Ombudsman to conduct investigations as mentioned in subsection (1) are to be read as conferring power that—

  (a) in a case of a prescribed description, or

  (b) in a case involving a scheme that is prescribed or is of a prescribed description,

  may be exercised whatever the extent of any connections with places outside the United Kingdom.
  (1B) In subsection (1A) "scheme" means occupational pension scheme or personal pension scheme.
  (1C) Subsection (1A) shall not be taken to prejudice any power of the Pensions Ombudsman apart from that subsection to conduct investigations in a case having connections with places outside the United Kingdom.""
  The noble Baroness said: In moving Amendment No. 349BA, I shall speak to the other amendments in the group. These minor and consequential amendments relate to the jurisdiction of the pensions ombudsman. It is likely that with the implementation of the occupational pensions directive in September 2005 cross-border schemes will become more viable for employers. These amendments allow regulations to clarify whether complaints from members in a scheme based in another member state fall within the jurisdiction of the pensions ombudsman and other minor consequential matters. Clearly it will await further discussion by the EC group of regulators as to how this will advance. However, we need to take these powers now if the Committee so agrees. I beg to move.
  On Question, amendment agreed to.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment Nos. 349BB and 349C:
  Page 306, line 33, at end insert—
  "( ) after subsection (6) insert—
  "(6A) For the purposes of subsection (6)(c)—

  (a) a description of complaint may be framed (in particular) by reference to the person making the complaint or to the scheme concerned (or to both), and

  (b) a description of dispute may be framed (in particular) by reference to the person referring the dispute or to the scheme concerned (or to both).", and"

  Page 306, line 37, at end insert—
  "In section 149 (procedure on investigation by Pensions Ombudsman), for subsection (6)(b) substitute—

  "(b) the Board of the Pension Protection Fund,

  (ba) the Ombudsman for the Board of the Pension Protection Fund,"."

  On Question, amendments agreed to.
  [Amendment No. 349D had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 349DA to 349J:
  Page 306, line 37, at end insert—
  "In section 149 (procedure on investigation by Pensions Ombudsman), in subsection (6) (persons to whom Ombudsman may disclose information), at the end insert—
  "(n) a person who, in a member State other than the United Kingdom, has functions corresponding to functions of the Pensions Ombudsman.""
  Page 306, line 37, at end insert—
  "(1) Section 158A (other disclosures by the Secretary of State) is amended as follows.
  (2) In subsection (1), for the words from "any information" to "Pensions Act 1995" substitute "any regulated information".
  (3) In the Table in that subsection—

  (a) in the entry for the Regulatory Authority in the second column of the Table for the words from "or the" to the end substitute ", the Pensions Act 1995, the Welfare Reform and Pensions Act 1999 or the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to any of those enactments.", and

  (b) for the entry for the Pensions Compensation Board substitute—

  "The Pensions Ombudsman.

  Functions conferred by or by virtue of this Act or any enactment in force in Northern Ireland corresponding to it.

  The Board of the Pension Protection Fund.

  Functions conferred by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part.

  The Ombudsman for the Board of the Pension Protection Fund.

  Functions conferred by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part."

  (4) After that subsection insert—
  "(1AA) In subsection (1), "regulated information" means information received by the Secretary of State in connection with his functions under—

  (a) this Act,

  (b) the Pensions Act 1995, or

  (c) the Pensions Act 2004,

  other than information supplied to him under section 225(2) of, or paragraph 2 of Schedule 10 to, the Pensions Act 2004 (supply of information for retirement planning purposes etc).""
  Page 307, line 11, leave out "which may include conditional rights or" and insert "including"
  Page 307, line 32, leave out "which may include conditional rights and" and insert "including"
  Page 307, line 33, leave out "scheme" and insert "occupational pension scheme or a personal pension scheme"
  Page 309, line 7, leave out from beginning to "subsection" and insert—
  "39 (1) Section 38 (power to defer winding up) is amended as follows.
  (2) In"
  Page 309, line 10, at end insert—
  "( ) After subsection (3) insert—
  "(4) This section also does not apply in relation to a trust scheme where the trustees are required to wind up, or continue the winding up, of the scheme under section 145(1) of the Pensions Act 2004 (requirement to wind up certain schemes with sufficient assets to meet protected liabilities).""
  On Question, amendments agreed to.
  [Amendment No.349K had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 349KA to 349UA:
  Page 310, leave out lines 19 to 25.
  Page 310, leave out lines 27 and 28.
  Page 310, line 29, leave out paragraph 51.
  Page 311, line 20, at end insert—
  "In section 119 (calculations etc under regulations: sub-delegation), for "73(3)" substitute "73B(4)(a)"."
  Page 311, line 22, leave out from "(1)," to "in" in line 25.
  Page 311, line 29, leave out "which may include conditional rights and" and insert "including"
  Page 311, line 30, leave out "scheme" and insert "occupational pension scheme or a personal pension scheme"
  Page 311, line 36, leave out "127 and 145" and insert "145 and 210"
  Page 311, line 37, at end insert—
  "( ) In subsection (3B), after "(3E)" insert "and to sections 145 and 210 of the Pensions Act 2004"."
  Page 311, line 37, at end insert—

  Bank of England Act 1998 (c. 11)
  In Schedule 7 to the Bank of England Act 1998 (restriction on disclosure of information), in the table in paragraph 3(1), for the entry relating to the Occupational Pensions Regulatory Authority substitute—

  "The Pensions Regulator

  Functions conferred by or by virtue of— (a) the Pension Schemes Act 1993, (b) the Pensions Act 1995, (c) the Welfare Reform and Pensions Act 1999, (d) the Pensions Act 2004, or (e) any enactment in force in Northern Ireland corresponding to an enactment mentioned in paragraphs (a) to (d) above.""

  Page 312, line 5, at end insert—
  "In section 8(2)(a) (providing for stakeholder pension schemes to be treated as personal pension schemes), after "is" insert "prescribed or is"."
  Page 312, line 18, at end insert—
  "( ) in sub-paragraph (i) for the words from "except" to the end substitute "except sections 7(5A)(b), 8(1)(a) and (c) and (2), 11(3A) and (3B) and 15(1);"
  Page 312, line 20, leave out from "(iii)" to end of line 21 and insert "omit the words from "except" to the end,"
  Page 312, leave out lines 26 and 27 and insert—
  "(c) the following provisions of the Pensions Act 2004—

  (i) section 61 (accessibility of register of prohibited trustees);

  (ii) Chapters 4 and 5 of Part 2 (fraud compensation and information gathering);

  (iii) sections 236 to 238 (requirements for knowledge and understanding); and

  (iv) section 303 (interpretation).""

  Page 312, line 27, at end insert—
  "( ) In sub-paragraph (5), after "1995 Act" insert", and section 303(1) of the Pensions Act 2004,"."
  Page 312, line 32, leave out "In Schedule 5, in" and insert—
  "(1) Schedule 5 (pension credits: mode of discharge) is amended as follows.
  (2) In"
  Page 312, line 34, at end insert—
  "( ) After paragraph 13 insert—
  "13A The provisions of this Schedule are subject to—

  (a) section 73A(3) and (6) of the Pensions Act 1995 (prohibition on new members during winding up of scheme: exception for discharge of pension credit derived from the scheme), and

  (b) section 125(2) and (7A) of the Pensions Act 2004 (prohibition on new members during an assessment period in relation to a scheme: exception for discharge of pension credit derived from the scheme).""

  Page 312, line 34, at end insert—

  Terrorism Act 2000 (c. 11)
  "In Schedule 3A to the Terrorism Act 2000 (regulated sector and supervisory authorities), for paragraph 4(1)(f) substitute—
  "(f) the Pensions Regulator;"."
  Page 312, line 34, at end insert—

  Freedom of Information Act 2000 (c. 36)
  In Schedule 1 to the Freedom of Information Act 2000 (public authorities), in Part 6 insert at the appropriate place—
  "The Pensions Regulator."
  "The Board of the Pension Protection Fund."
  "The Ombudsman for the Board of the Pension Protection Fund.""
  Page 312, line 34, at end insert—

  Proceeds of Crime Act 2002 (c. 29)
  "In Schedule 9 to the Proceeds of Crime Act 2002 (regulated sector and supervisory authorities), for paragraph 4(1)(f) substitute—
  "(f) the Pensions Regulator;"."
  On Question, amendments agreed to.
  Schedule 12, as amended, agreed to.
  Schedule 13 [Repeals and revocations]:
  [Amendment No. 349V had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 349W:
  Page 313, line 18, second column, at beginning insert—

  "Section 10(5)(ba) and the word "or" immediately preceding it."

  The noble Baroness said: In moving Amendment No. 349W, I shall speak to the other amendments in the group. Again, these are minor technical amendments. I shall give one example of how minor and technical they are. Amendment No. 355D repeals paragraph 53 of Schedule 12 to the Welfare Reform and Pensions Act 1999, which in turn amends Section 67 of the Pensions Act 1995. As we are now replacing the existing Section 67, paragraph 53 is no longer required. I could entertain the Committee with other such examples, but I hope it will accept this amendment and the others in the group.
  As this is the last group of government amendments, perhaps I may respond to the kind and generous remarks made earlier by the noble Lords, Lord Higgins and Lord Oakeshott. This is recognised as possibly the most complex Bill brought forward from my department since the last Pensions Bill. It is certainly one of the longest and most technical. We have all at various stages been pressing at the edges of our knowledge.
  I very much appreciate the constructive way in which the Committee has engaged in the Bill. It is partly as a result of pressure from the Committee that I have been able to get extra information and movement, such that many of the amendments we will be bring back on Report are in response to concerns and propositions raised from the Opposition Benches which were not perhaps necessarily at the forefront of the Government's mind when we started this process.
  So, even before we have got to Third Reading, we have made very useful progress in Committee. It has been vigorous and rigorous and exhausting. Nevertheless we will go into Report—particularly when we see some of the government amendments in response—in much better shape.
  Perhaps I may make a further offer. I know that I keep showering the Committee with paper but if, on reflection—apart from the memorandum on regulations, the memorandum on amendments, the memorandum on moral hazards and those issues I have agreed to follow up in writing—there are any other matters on which noble Lords would like more information, or, indeed, a meeting with officials before we come to Report, to test any of these issues, please let me know and I shall be delighted to arrange it. We have to get this Bill to have staying power, and staying power rests on prompt consent. Anything that I can do to expedite that or to enable it to happen, I shall be delighted to do it.
  I thank the Committee again. I am delighted that we are finally moving to the last group of amendments.
  Lord Skelmersdale: Apart from the noble Baroness, Lady Barker, I am the only person who has not spoken in this congratulatory mode. I thank the noble Baroness on behalf of the Official Opposition for what she has just said. I think I am right that she has repeated at various moments during the course of our several months long Committee stage that she and I share one thing in common—that is, that we tend on occasion to leap in with both feet. She usually knows where she is going to land; I often do not, as has been shown during the Committee.
  But when she introduces a block of government amendments by referring to one in the middle of it, I think that even for both of us that is going a little too far. Do not her words prove the need for consolidation at some stage? I noted very carefully what she said earlier about that.
  Baroness Barker: We on these Benches would very much like to take up the offer of the noble Baroness. We would be delighted to have a meeting about the financial assistance scheme before we get to the next stage.
  On Question, amendment agreed to.
  7 p.m.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 349X to 350ZA:
  Page 313, line 30, at end insert—

  "In section 34(1)(a)(ii), the words "or category"."

  Page 313, line 35, at end insert—

  "In section 123, the definition of "occupational pension scheme" in subsection (3), and subsection (4)."

  Page 313, line 35, at end insert—

  "In section 129— (a) in subsection (2) the words from "and Chapter IV" to the end, and (b) subsection (3)(b)."

  On Question, amendments agreed to.
  [Amendment No. 350ZAA had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 350ZAAA to 350AA:
  Page 313, line 45, at end insert—

  "In section 149(6)— (a) paragraph (c). and (b) the word "and" at the end of paragraph (k)."

  Page 314, line 7, at end insert—

  "In section 158— (a) in subsection (6), the words "Subject to subsection (7)", and (b) subsection (7)."

  Page 314, line 9, leave out from "175" to "subsections" in line 10 and insert "—

  (a) in subsection (1), paragraph (a) and the word "or" at the end of paragraph (b), and (b)"

  Page 314, line 10, at end insert—

  "In section 177(5)— (a) the word "and" at the end of paragraph (a), and (b) paragraph (b)."

  Page 314, leave out lines 11 and 12 and insert—

  "In section 18— (a) in subsection (1), the definitions of "the register", "the Registrar", and "voluntary contributions requirements", (b) in subsection (3), the words "section 6,", and (c) in subsection (4), the word "6,"."

  Page 314, line 12, at end insert—

  "In section 192(2), the words "section 6(1)and (2) (except paragraph (a)(ii)), (3), (4), and (8),"."

  Page 314, line 26, leave out ""but"" and insert ""but if""
  Page 314, line 41, at end insert—

  "Section 41(2)(c)."

  Page 314, line 46, at end insert "sub-paragraph (i) of"
  Page 314, line 50, at end insert—

  "In section 63(4)(c), the words "or category"."

  Page 315, line 14, at end insert—

  "In section 74– (a) in subsection (2) the words "(including increases in pensions)", (b) in subsection (4) the words "(including increases in pensions)", and (c) subsection (5)(b) and the word "or" immediately preceding it."

  Page 315, line 34, after "124(1)" insert—

  "—(a) in the definition of "employer", the words "or category", (b)"

  On Question, amendments agreed to.
  [Amendment No. 350B had been retabled as Amendment No. 350ZA.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 350BA to 351:
  Page 315, line 37, at end insert—

  "( ) in the definition of "pensionable service", the words "or category"."

  Page 315, line 38, at end insert—

  "Section 142(5)."

  Page 315, leave out lines 41 and 42
  Page 315, line 42, at end insert—

  "In section 175(2), the word "or" at the end of paragraph (c)."

  On Question, amendments agreed to.
  [Amendment No. 352 had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 352A and 352B:
  Page 315, line 45, at end insert—

  "In Schedule 3, paragraphs 12, 21, 23 and 44(a)(ii)."

  Page 315, line 46, after "21" insert "(13) and"
  On Question, amendments agreed to.
  [Amendment No. 352C had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 352BA to 354C:
  Page 315, line 46, at end insert—

  "In Schedule 5— (a) paragraph 20, and (b) paragraph 77(b) (but not the word "and" immediately following it)."

  Page 315, line 46, at end insert—

  "In Schedule 6, paragraph 6(d)."

  Page 315, line 46, at end insert—

  "Employment Rights Act 1996 (c. 18)

  In section 58)3)(b), the words "or category"."

  Page 315, line 46, at end insert—

  "Criminal Procedure (Consequential Provisions) (Scotland) Act 1995 (c. 40)

  In Schedule 4, paragraph 98."

  Page 316, line 3, at end insert—

  "Section 17."

  Page 316, line 3, at end insert—

  "Section 38(1)."

  Page 316, line 3, at end insert—

  "In section 46(1), in the definition of "pensionable service", the words "or category"."

  Page 316, line 7, leave out "and ", 11(3)(c)""
  Page 316, line 8, at end insert—

  "( ) in paragraph 1(2)(b)(iii), the words from "except" to the end,"

  Page 316, line 9, leave out "(xii)" and insert "(xi) to (xiii)""
  On Question, amendments agreed to.
  [Amendment No. 355 had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 355A to 356A:
  Page 316, line 11, after "paragraphs" insert"3(1)(a),"
  Page 316, line 11, leave out "15" and insert "16"
  Page 316, line 12, after "paragraphs" insert "39(3),"
  Page 316, line 12, after "49" insert ", 53"
  Page 316, line 12, after "49" insert ", 55"
  Page 316, line 19, after "(4)," insert—

  "( ) paragraph 10, ( ) paragraph 11,"

  On Question, amendments agreed to.
  [Amendment No. 357 had been withdrawn from the Marshalled List.]
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 357A and 358:
  Page 316, line 21, at end insert—

  "Freedom of Information Act 2000 (c. 36)

  In Schedule 1, in Part 6 the entries for— (a) the Occupational Pensions Regulatory Authority, (b) the Pensions Compensation Board, and (c) the Registrar of Occupational and Personal Pension Schemes."

  Page 316, line 22, at end insert—

  "Employment Act 2002 (c. 22)

  In Schedule 6, paragraph 1(a) "and (b)."

  On Question, amendments agreed to.
  Schedule 13, as amended, agreed to.
  Bill reported with amendments.
  The Committee adjourned at four minutes past seven o'clock.