§ 7.37 p.m.
§ Lord Skelmersdale rose to move, That the draft regulations laid before the House on 7th March be approved [20th Report from the Joint Committee.]
§ The noble Lord said: My Lords, occupational pension schemes and personal pension schemes can transfer some of their liabilities back to the National Insurance Fund. This procedure is commonly known as "buying back". The 1987 state scheme premiums regulations already provide the actuarial basis for calculating the amount needed to recompense the fund when a buy-back occurs. However, under the provisions of the Social Security Act 1986—I am grateful to those noble Lords who said earlier that this was not an appropriate moment to have a Second Reading speech yet again on that subject—contracted-out pension schemes are now required to provide widowers' benefits as well as the usual benefits for members and for widows. The regulations which determine the circumstances in which a widower's rights can be bought back into the state earnings related pension scheme have now been made. Parliament can therefore approve the actuarial terms which specify the buy-back terms in respect of a widower's benefits. The detailed table follows the recommendations of the government actuary, whose report, and that of my right honourable friend the Secretary of State, have been laid with the draft regulations.
§ On the previous order the noble Baroness, Lady Jeger, asked a question on this subject. I would advise her that provision has been made for buying back into the state scheme from 6th April 1989 benefit for those widowers for whom the state scheme provides benefit in the circumstances where both husband and wife were over state pension age when she died. I hope that this answers the noble Baroness's point. If it does not, she will have another opportunity to get back at me. For the moment, I beg to move.
§ Moved, That the draft regulations laid before the House on 7th March be approved [20th Report from the Joint Committee].—(Lord Skelmersdale.)
§ Baroness JegerMy Lords, I apologise if I was somewhat previous when I referred to this matter earlier. However, I confirm that this is the one point which we agree about and which we welcome.
§ Lord BanksMy Lords, we must again thank the noble Lord for his explanation of the regulations. I should perhaps declare an interest in the matter as I 513 am an insurance broker specialising in life assurance and pensions. The new regime for pensions, part of which comes into operation next month, includes, as the noble Lord made clear, a provision for an inherited pension, an inherited widower's entitlement. That is the better part of the two provisions relating to widows and widowers. As it provides the inherited entitlement for widowers, it has to provide that schemes which are contracted out have a similar provision within them. However, I am not sure whether the Minsiter clarified the part as regards the halving of the inherited state earnings related pension entitlement for widows as regards deaths after the year 2000.
The actuarial table, as the noble Lord explained, is necessary to take account of the position of widowers when their equivalent rights in an occupational scheme or a personal pension plan have to be bought back into the state scheme. The actuarial table is non-controversial. If we were all actuaries we might have different opinions upon the matter but, as we are not, I do not imagine that we have. Those on these Benches have no complaint about the table. It would therefore be wrong to embark upon a general discussion on the new pensions regime itself. But perhaps I should emphasise the need for the widest possible publicity giving an impartial explanation of the new arrangements. Such arrangements should certainly be approached with caution as so many people in the pension field will inevitably have a slanted, if sincere, view of the particular pension arrangements most suitable for an individual. Indeed, there is a bewildering array of possible situations. I shall give the House some examples.
A person may be a member of a defined benefit occupational scheme which may be contracted-in or contracted-out; he may be a member of a money-purchase occupational scheme which also may be contracted-out or contracted-in. His pension may be boosted by additional voluntary contributions in a scheme run by his employer; or his pension may be boosted by free-standing additional voluntary contributions which he has arranged separately. He may be in the state earnings related scheme with no occupational pension. He may be in the state earnings related pension scheme with an occupational pension. He may be in the state earnings related pension scheme with a personal pension or he may be contracted out of the state earnings related pension scheme through a personal pension. Furthermore, if he is self-employed he could be in a personal pension scheme and in those circumstances not in a state earnings related pension scheme.
Naturally, all the aforementioned options are not open to everyone. But the variety is wide enough to cause considerable confusion. That is why I think it extremely important to have the widest impartial explanation as to what all the new possibilities really mean and whom they affect. As regards the regulations, we have no objection to their being approved by the House.
§ Lord KilmarnockMy Lords, it has indeed been a privilege to listen to the noble Lord, Lord Banks, piloting us, as he always does, like a master mariner between the reefs, shoals and intricacies of pensions policy. I cannot possibly emulate him. However, in 514 principle, the regulations cause us no difficulty. It seems to be absolutely right that widowers should be put in the same position as widows in relation to inherited pensions. Therefore, as I have already said, the regulations cause us no problems.
§ Lord SkelmersdaleMy Lords, I am again most grateful to all noble Lords who have spoken on these not unimportant regulations. The House as a whole has been riveted by the speechof the noble Lord, Lord Banks, regarding the complexities surrounding the options open to people deciding upon a personal pension scheme. The noble Lord compared a more private scheme with one that would be available perhaps from employers and the decision to be made between the two.
I believe we discussed this subject on a previous occasion. I see the noble Lord, Lord Winstanley, nods his head; perhaps it was on a Question that he asked me some time ago. On that occasion I advised people to go first to the social security office for general advice. I stressed however that it would be made clear to the inquirer that the only person who could realistically give unbiased advice was an adviser, such as an accountant or a solicitor. I can confirm that the Government's publicity will emphasise that very point. I hope that what I have said assists the noble Lord, Lord Banks. I beg to move.
§ On Question, Motion agreed to.
§ Moved, accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 7.46 to 8 p.m.]