HL Deb 12 July 1995 vol 565 cc1732-4

156 Clause 84, page 53, line 10, leave out 'pension' and insert `entitlement or right'.

157 Page 53, line 11, leave out 'pension' and insert 'entitlement or right'.

158 Page 53, line 14, leave out from 'unenforceable' to end of line 20 and insert: `(2A) Where by virtue of this section a person's entitlement, or accrued right, to a pension under an occupational pension scheme cannot, apart from subsection (3), be assigned, no order can be made by any court the effect of which would be that he would be restrained from receiving that pension.

(2B) Where a bankruptcy order is made against a person, any entitlement or right of his which by virtue of this section cannot, apart from subsection (3), be assigned is excluded from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986 or the Bankruptcy (Scotland) Act 1985.

(2C) Subsection (2A) does not prevent the making of—

  1. (a) an attachment of earnings order under the Attachment of Earnings Act 1971, or
  2. (b) an income payments order under the Insolvency Act 1986.'.

159 Page 53, line 34, leave out 'at or after normal pension age' and insert 'on or after retirement'.

160 Page 53, line 42, after 'credits' insert 'other than prescribed transfer credits'.

161 Page 53, line 46, at end insert: '(e) subject to subsection (4), except in prescribed circumstances, a charge or lien on, or set-off against, the person in question's entitlement, or accrued right, to pension, for the purpose of discharging some monetary obligation due from the person in question to the scheme and—

  1. (i) arising out of a criminal, negligent or fraudulent act or omission by him, or
  2. (ii) in the case of a trust scheme of which the person in question is a trustee, arising out of a breach of trust by him.'.

162 Page 53, line 48, after '(3) (d)' insert 'or (e)'.

163 Page 54, line 12, at end insert: '() This section is subject to section 159 of the Pension Schemes Act 1993 (inalienability of guaranteed minimum pension and protected rights payments).'.

Lord Mackay of Ardbrecknish

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 156 to 163. I wish also to speak to Amendments Nos. 165 to 170, 263, 314, 315, 318, 323 and 375. This group of amendments deals with forfeiture. Most of the amendments clarify the clauses themselves or consequential provisions. Amendment No. 160 is of more significance. Clause 84 generally prohibits the exercise of a charge or lien on pension rights or a set-off against those rights except to enable an employer to recover a debt due to him arising from a criminal, negligent or fraudulent act by the person. This is in line with PLRC recommendation 166. It will be subject to certain restrictions and safeguards.

Amendment No. 160 concerns one of the restrictions. It is that the charge, lien or set-off cannot be applied to any proportion of a person's pension rights which consists of transfer credits. This means that an employer cannot recover from pension rights accrued from a previous employment. There are, though, circumstances where we believe that an employer should be able to have access to such transfer credits. These are where the credits are derived from another scheme of the same or an associated employer. At present the Occupational Pensions Board has discretion to deal with these cases. The board will of course be abolished by the Bill. The amendment provides a power to make regulations which will permit an employer to have access to transfer credits in certain circumstances. However, the general rule will remain. We will use this power in a strictly limited way.

Under trust law a scheme is able to recover debts from a beneficiary's interest in the scheme which he has caused by a breach of trust or a criminal, negligent or fraudulent act or omission. Clauses 84 and 86, by preventing charges and forfeiture, could override these trust law provisions and restrict or prevent what is the proper right of a scheme to recover debts in the circumstances I have explained. This is not our intention. Amendment No. 161 will ensure that the present position is maintained in the Bill. Amendments Nos. 165 to 168 are concerned with an employer's right to recover a debt due to him arising from a criminal, negligent or fraudulent act or omission by means of a charge against a person's pension rights. Such a charge would become effective only when the pension becomes due for payment. In a case where a member died before his pension was paid, the employer would recover nothing under the charge because the pension would never come into payment.

We believe it would be right to allow a scheme to pay money out of a person's accrued rights to the employer to satisfy a debt due to the employer. We also believe it right to allow the scheme to reduce or extinguish pension rights by an amount which is equal to that which has been paid out. That is what these amendments will achieve. They are useful amendments and I commend them to the House.

Moved, That the House do agree with the Commons in their Amendments Nos. 156 to 163. —(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.