HL Deb 12 July 1995 vol 565 cc1708-9

103 Clause 45, page 28, line 31, at beginning insert 'Subject to subsection (3A)'.

104 Page 28, line 39, leave out from 'scheme' to and' in line 40.

105 Page 28, line 45, leave out from 'it' to second 'is' in line 46.

106 Page 28, line 47, at end insert 'or, in the case of money purchase benefits, to payments in respect of employment carried on on or after the appointed day'.

107 Page 29, line 2, at end insert 'or, as the case may be, to payments in respect of employment carried on'.

108 Page 29, line 5, at end insert:

'(2A) Subsection (2) does not apply to a pension under an occupational pension scheme if the rules of the scheme require—

  1. (a) the annual rate of the pension, or
  2. (b) if only part of the pension is attributable to pensionable service or, as the case may be, to payments in respect of employment carried on on or after the appointed day, so much of the annual rate as is attributable to that part,
to be increased at intervals of not more than twelve months by at least the relevant percentage and the scheme complies with any prescribed requirements.

(2B) For the purposes of subsection (2A) the relevant percentage is—

  1. (a) the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules, or
  2. (b) the percentage for that period which corresponds to 5 per cent per annum, whichever is the lesser'.

109 Page 29, line 6, leave out 'subsection (2)' and insert 'subsections (2) and (2A)'.

110 Page 29, line 8, leave out from 'service' to end of line 12 and insert 'or to payments in respect of employment were attributable to pensionable service or, as the case may be, payments in respect of employment—

  1. (a) before the appointed day,
  2. (b) on or after that day, or
  3. (c) partly before and partly on or after that day'.

111 Page 29, line 12, at end insert:

'(3A) This section does not apply to any pension or part of a pension which, in the opinion of the trustees or managers, is derived from the payment by any member of the scheme of voluntary contributions.'.

112 Page 29, line 13, leave out subsection (4).

113 Clause 48, page 30, line 40, leave out from second 'the' to end of line 43 and insert 'revaluation percentage for the revaluation period the reference period for which ends with the last preceding 30th September before the increase is made (expressions used in this definition having the same meaning as in paragraph 2 of Schedule 3 to the Pension Schemes Act 1993 (methods of revaluing accrued pension benefits)'.

114 Page 30, leave out lines 44 to 50.

115 Page 31, line 2, leave out from 'scheme' to end of line 7 and insert 'and includes an annuity'.

116 Clause 49, page 31, leave out lines 19 to 22 and insert 'the principal appointed day for the purposes of Part III of the Pensions Act 1995'.

Lord Mackay of Ardbrecknish

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 103 to 116 en bloc. I should like to speak at the same time to Amendments Nos. 244 to 247.

This group of amendments change the indexation provisions in the Bill. When we discussed the indexation requirements both in your Lordships' House and the other place, the view was put forward that there should be a statutory requirement to index pensions derived from free-standing additional voluntary contributions. Those of your Lordships who attended the debate will remember that we consistently opposed that view. These arrangements are, by definition, voluntary. Individuals may be deterred from making such arrangements for their retirement if tighter controls are put in place.

We have accepted the point that it would be inconsistent to treat free-standing AVCs differently from AVCs paid to an individual occupational scheme. By definition, all AVCs are voluntary. So we have brought forward amendments to treat all pensions derived from AVCs in the same way. We do that by excluding them from the indexation requirements. Let me make it clear that Amendments Nos. 103, 104, 111 and 114 simply stop indexation being a statutory requirement. Schemes will still be free to index pensions arising from AVCs if they so choose.

We have listened to concerns about the administrative difficulty that some schemes may face by linking the increases required in the Bill to the timing of revaluation orders. The difficulty is that schemes have their own scheme year and may well already have indexation requirements which link with it. The Bill would require schemes to base their increases on the period ending every 30th September. We believe that that is too restrictive. Therefore, we have allowed an appropriate exemption. We have also taken a regulation-making power in Amendments Nos. 108 and 109 so that details of variations in the way that schemes administer increases can in fact be catered for. I should like to make clear that this is not at all a dilution in any way of the indexation requirements. It is simply to deal with the administrative difficulties that I mentioned.

Moved, That the House do agree with the Commons in their Amendments Nos. 103 to 116.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.