SUPERANNUATION AND OTHER TRUST FUNDS (VALIDATION) BILL. [H.L.] (Hansard, 15 November 1927)

§ THE LORD CHANCELLOR (VISCOUNT CAVE)
My Lords, this Bill has two objects, of which the first is this. Your Lordships know that in connection with many industrial concerns superannuation funds have been set up for the purpose of providing pensions for the employees on their retirement, whether for reasons of ill-health or old age, and sometimes also for providing pensions for their widows and children. Those funds are very valuable as a provision for those who have grown old in the service of a firm or a company and also as an incentive to steady work. But a few years ago the trusts of some of these funds were taken objection to as infringing what is known as the rule against perpetuities. Your Lordships may know that it is part of the policy of our law that property or money shall not be tied up indefinitely and gradually the rule was evolved that it should not be tied up by any trust for more than a life in being and twenty-one years after, except in the case of a charitable trust.
It was held by Mr. Justice Russell that trusts of this kind, or rather a particular trust of this character was invalid as an infringement of that rule. It was thought desirable that these trusts should go on as long as the business itself goes on and therefore a Commission was appointed over which Sir Claud Schuster presided. That Committee recommended the simple 52 step of providing by legislation that the rule in question should not apply to these things. That is one purpose of this Bill. We make certain conditions. We require the fund to be registered with the Registrar of Friendly Societies, who will, of course, see that the fund is a genuine superannuation fund, and we propose that the accounts shall be made up annually and be audited by an auditor and that there shall be a quinquennial valuation of the fund to make sure that it is adequate for the demands that may be made upon it by the members of the fund. Subject to these and similar conditions set out in the provisions of the Bill it is proposed to exempt these funds from the technical rule of law.
That is one purpose of the Bill. The other may be more shortly stated. Certain public-spirited persons have expressed a desire to give considerable sums to be held in trust to accumulate the income during a long period after which the fund and the accumulations are to be applied to the reduction of the National Debt. That, of course, is a very laudable purpose, but unfortunately there again a rule of law steps in and prevents indefinite accumulations of income. We want to facilitate the execution of the purpose of these public-spirited individuals, and therefore by Clause 9 of the Bill we propose to make a trust of that nature valid notwithstanding the rule to which I have referred. Those are the reasons why I ask your Lordships to agree to the Second Reading of this Bill.

§ VISCOUNT HALDANE
My Lords, the difficulty out of which the necessity for this Bill arises is the difficulty of defining what is a charity. Mr. Thellusson by his famous will tried to tie up his property for the benefit of his family. That was thought to be wrong, the Thellusson Act was passed, and now it is found that while it is quite right that there should be restriction on the time of tieing up so far as a man's family or private persons are concerned, it is otherwise when you come to charitable objects, and as my noble and learned friend on the Woolsack knows well, there has been a series of decisions in the Courts in which it is has been held that trusts for very laudable purposes—the 53 upkeep of libraries and other provisions for the public—are invalid because they do not come within the technical definition of charity. "Charity" is a very technical word in law. It extends to much less than is popularly supposed, and because of the technical meaning attached to it various trusts for public purposes have been set aside as infringing this rule restricting the right to tie up.
This Bill deals with two specific classes of case—one which I may call the industrial class, and the other the case of money to be accumulated to go in discharge of the National Debt. I should have thought that really the better way was to say that for the purposes at any rate of a measure, like this "charity" should have a meaning more in accordance with what the public understand by the word. That has not been done, and my fear is lest it be found when this Bill becomes an Act and is in operation that there are a number of other laudable things in the public interest which are still struck at by the old and technical rule restricting the meaning of the word "charity." However, no doubt the Bill as it is will do good. The Government have taken advice on the subject, and if the Bill goes forward in this form it will do good. My complaint, is that it will not do all the good it might have done. In the circumstances I raise no objection to the passing of this Bill.

§ LORD DANESFORT
My Lords, I should like to ask the noble and learned Viscount on the Woolsack if he could explain a little more in detail the nature of Clause 9. As I read Clause 9 it makes it possible for a person by his will to set aside a fund which might be accumulated for some hundreds of years—because the time is not limited—with a view to reducing or wiping off a great portion of the National Debt. That in itself is a most laudable purpose, but if the time within which this accumulation could take place is left absolutely unlimited, as I think it is by Clause 9, it is possible that it might have a serious disturbing effect upon the market. I think a calculation has been made—I forget the exact amount—that if a sum of £100, or perhaps it was £l,000, had been left in trust two hundred or three hundred years ago to be accumulated at 54 compound interest, that fund now would absorb the whole wealth of the country. Perhaps I am not quoting the figures accurately, but I would suggest that it might be desirable to insert in Clause 9 some restriction on the number of years during which money might accumulate, however desirable the ultimate purpose might be.

§ THE LORD CHANCELLOR
My Lords, if any Amendment is brought forward in the Committee stage we will consider it, but I would remind the noble Lord that the clause does give power to the Treasury to disclaim the interest of the National Debt Commissioners. If the deplorable consequences which my noble friend anticipates seemed likely to occur that power would no doubt be exercised.