HL Deb 21 March 1995 vol 562 cc1131-9

3.10 p.m.

Earl Ferrers

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Pensions Bill has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, I beg to move that the Bill be now read a third time.

Moved, That the Bill be now read a third time.—(Lord Mackay of Ardbrecknish.)

Lord Simon of Glaisdale

My Lords, before my noble and learned friend the Lord Chancellor collects the voices, perhaps I may venture to point out that this Third Reading is taking place the minimum of three working days after the Report stage. That interval is sufficient for a simple and short Bill, and particularly where the Report stage is little more than a mopping up of the Committee stage. However, that is far from the case with the Bill now before the House.

Important amendments were moved and accepted, some on a vote, with cross-voting on Report, many of which needed at any rate some drafting amendment. Therefore, it is the height of inconvenience to have the Third Reading following so closely in time. After a Report stage, or indeed any other stage, it is usual for your Lordships to write to the Minister and to receive a reply before the next stage. That has been impossible in this case.

We are very much in the hands of, and indebted to, the usual channels which arrange business, especially so that important issues upon which there may be a vote are taken at an early hour. However, I venture to suggest that a grave mistake has been made in this case.

Viscount Cranborne

My Lords, I believe that the House is ill advised if it does not listen to the advice that it receives from the noble and learned Lord, Lord Simon of Glaisdale, with even more than its usual attention. However, I venture to suggest to your Lordships that perhaps the noble and learned Lord may like to reconsider what he has just said. It is perfectly true that the minimum interval of three working days has been observed. However, the noble and learned Lord might also like to consider that business managers have tried to give rather more days, albeit not altogether working days, in between the printing of the Bill in its current version on 14th March and today. That gave seven clear days, although they include only three working days.

I hope that the noble and learned Lord is aware that we have a pressing programme of legislation, despite what the Opposition suggested after the Queen's Speech. Indeed, we have much business to get through the House between now and the Summer Recess. Like me, I hope that the noble and learned Lord is looking forward to an early assumption of the bucket and spade and that he will feel that there has been enough time in this instance, especially in view of the considerable detail with which the Bill has been examined, for him at least to look at what the Government propose in terms of timing with some degree of indulgence.

On Question, Bill read a third time.

Baroness Turner of Camden moved Amendment No. 1: Before Clause 37, insert the following new clause:

Training for trustees

(". Regulations shall require trustees of occupational pension schemes to undertake an approved course of training within three months of appointment and where a person fails to comply with this requirement the Authority shall consider his disqualification under section 26.").

The noble Baroness said: My Lords, we are returning yet again to what I regard as an important issue; namely, the training of pension fund trustees. I became even more aware recently of the need to make training mandatory when I was invited to speak last week to a group of union members, most of whom were employee trustees. I spoke about the Bill and was asked to describe what had been happening during its passage through the House.

Those trustees were astonished to find out the very wide range of responsibilities that they would have as a result of the Bill and the penalties involved should they transgress. They clearly had not realised, even though they were individuals who take a keen interest in pension matters, precisely what was involved. They took the view that if they had all that responsibility in law, the least that could be done was to ensure that they were sufficiently trained to be able to deal with it. They did not believe—and neither do I—that it is sufficient to leave that to the voluntary process.

It seems to me that what is required is a provision under which all trustees are required to be trained in their legal duties and responsibilities within a specified time following their appointment. That would ensure that trustees were at least aware of the responsibilities imposed on them by law. Perhaps the new authority could then produce a code of practice in that area in consultation with interested parties. It is essential that that is not left to chance.

The amendment that we are attempting today differs from those previously advanced in that it envisages that regulations will require training to be provided, and it would be up to the authority to determine whether failure to take up such training in individual cases warranted disqualification. It really would not be sensible to insist that a trustee who might be professionally qualified in the pensions area should have to undergo training similar to that to be imposed on trustees with no such training or background.

As we have said on a number of occasions during discussion of the Bill, we are concerned that the penalties on trustees look fairly formidable. We do not want to discourage people from coming forward to do that necessary work. It is appreciated that there have to he obligations and responsibilities. As has been said so often during the passage of the Bill through the House, it is a question of getting the balance right. If people are to assume such responsibilities with confidence, they must have the necessary training to do so. We cannot be happy leaving that simply to a voluntary process. I beg to move.

Baroness Seear

My Lords, I should like briefly to support the amendment. We want trustees; and, indeed, we rely very heavily on them. The Government have resisted attempts to make the regulator powerful. Therefore, we are relying on trustees, members of the trustee boards, to understand fully what they are doing and to take the necessary action. However, they are also exposed to very considerable penalties. It is only right and proper, therefore, that they should be required to undertake training. Otherwise, they will find themselves confronted with responsibilities for which they have been totally and inadequately equipped and we shall find that people will not be prepared to take such responsibilities. As I said, I support the amendment.

Lord Boyd-Carpenter

My Lords, I believe that the amendment goes too far. The noble Baroness, Lady Turner, indicated that some of the people who became trustees were already very experienced in pension matters; indeed, that is the case. But, as I read the amendment—assuming that the regulations are made as the noble Baroness wishes—even experienced people would have to undertake a course. First, that seems to me to be a wasteful proposal; but, secondly, and perhaps more important, if someone experienced in pensions and pensions management is confronted, nonetheless, with the necessity to take a course when he accepts the appointment, he will be discouraged from accepting it. It may well be that the effect of this amendment will be to deprive pension funds of precisely the people who will be the greatest possible use —those already experienced in pensions; by which, of course, I do not always include for this purpose those who have served as Minister of pensions.

Baroness Dean of Thornton-le-Fylde

My Lords, I, too, support this amendment. I agree with some of the points that have just been made by the noble Lord on the Benches opposite. However, the Bill will introduce in pensions legislation punitive offences for which individual trustees may be liable. As I said at an earlier stage of this Bill, there are 12 offences which may render a trustee liable to suspension or removal from office. Seventeen offences carry a penalty of fines, 14 of which may be imposed on trustees. Five offences carry a criminal penalty, or a fine, or imprisonment, three of which may be imposed on trustees.

I have considered these offences and I suggest to your Lordships that without adequate training—I am not talking about long training courses—to enable the trustees to understand their responsibilities, those penalties are extremely unfair, justified as they are with the amount of money for pension beneficiaries which is invested. For example, an offence can be committed, and a fine can be imposed, for failure of a trustee to make proper arrangements for member-nominated trustees. That is in the Bill, but trustees will have to know where to look for that offence, and they will have to understand it fully. It is an offence not to have or to maintain a statement of investment principles. That offence may be imposed on all trustees and a fine can be levied. There is an offence of illegal self-investment. Trustees have to know exactly what constitutes illegal self-investment. They need to be trained to understand that, because if they breach that part of the Bill they will have committed a criminal offence and a fine or imprisonment can be imposed. It is an offence not to keep proper books and records. I do not know how many trustees are responsible for keeping proper books or records themselves. They may have professional advisers who do that, but it is the trustees' responsibility at the end of the day to ensure that it is done. If it is not done, a fine can be imposed.

It is an offence to fail to make arrangements for the resolution of disputes. A fine can be imposed if a trustee does not take that duty on board. One could go on and on. A substantial number of breaches of the law can be committed in the pensions field and they can result in suspension from office, removal from office, the payment of a fine or indeed imprisonment. It is an offence to provide false information or to fail to provide information to the authority, compensation board or registrar. What information is that? How will trustees know what information they must provide if they are not trained in the basic rudiments of this Bill? I support this amendment. It asks for the training requirement to be set out in regulations. At Report stage I believe that the Minister touched upon that matter and he may accept this amendment. I hope that he does.

Lord Mackay of Ardbrecknish

My Lords, as I said previously when we discussed this issue, we have no quarrel at all with the principle that trustees should undergo training as soon as possible following their appointment. I made it clear that noble Lords on all sides of the House are at one on this issue. However, we do differ in that we do not see any need or justification for setting up the sort of register of approved training courses that would be necessary under this amendment, nor for requiring the authority to consider whether a trustee should be disqualified if he fails to undergo training within the specified three month period.

I made our position on trustee training very clear when I addressed similar amendments at the Committee and Report stages of this Bill. I said then that we were fully in support of trustees being properly trained. In fact, I believe I went so far as to say that training is essential. This is, then, something on which, as I said, we are all in agreement. However, as I have said before, I do not agree that training should he made compulsory.

This has nothing to do with the importance we place on training. It is simply a realistic and practical view based on the difficulties and costs that would be involved in trying to set up, control and regulate any system of compulsory training.

We have, we believe, gone as far as it is sensible to go by requiring employers to give trustees paid time off for training. In this way we have clearly signalled the importance we attach to training and, at the same time, we have lifted a major obstacle to trustee training by requiring employers to allow paid time off for the purpose. I believe that about 27 providers of trustee training exist at the moment, offering training at basic levels and at more advanced levels. There is an examination: the PMI's Trustee Certificate of Basic Pensions Knowledge, which trustees may take if they wish.

I believe that to go any further and to require someone—in this case OPRA—to specify what courses were and were not appropriate is to go too far. That might in turn require a constant monitoring of the wide range of courses. I referred to 27 courses. If it were required to consider the disqualification of anyone who had not undertaken approved training, OPRA would presumably need to assess individuals' training needs, which would vary widely, and the appropriateness of any non-approved training they had undertaken. Flow could OPRA justify pursuing untrained trustees who might nevertheless be well-qualified, while ignoring those who had been on an approved course but failed to benefit from it? The only logical course open to OPRA would be to establish an examination system to check levels of trustee proficiency. That would be both expensive and intrusive. It would be quite incompatible with the role we envisage for the regulatory authority and would cloud its main purpose which is to enforce compliance with the statutory requirements. All this reinforces the points I made in Committee and on Report. This is a matter for the trustees themselves to sort out and not something which should be made a statutory requirement or brought within a regulatory framework. The Bill gives trustees the key thing they need in order to undertake appropriate training—that is, reasonable time off with pay. It is unnecessary to go further. I believe that to do so would risk us establishing a bureaucracy inside OPRA which would have to monitor and decide which courses were or were not appropriate. I can almost foresee it having to create a consultative curriculum on trustee training.

The next step would be to insist that we made sure the trustees learnt from the courses they attended. That would undoubtedly lead us to create an examinations board for trustees. I believe that sort of road is not worth going down. Where we are is a much better place to stop; that is, ensuring that trustees can have paid time off and ensuring that the courses are available. We should underline—I do so once again—the importance of training and leave it to the trustees to take the reasonable and sensible decisions which I am sure they will take. I see the noble Lord, Lord Eatwell, wishes to intervene.

Lord Eatwell

My Lords, before the noble Lord sits down, as someone who is professionally involved in education I was struck by the rather cavalier attitude that he took to the quality of courses which people might have to take. Certainly the courses at my university are inspected regularly both by our peers, and now by the Higher Education Funding Council. The noble Lord said earlier that there were 27 providers of training. Does he know that their training is adequate? If so, how does he know? Whose responsibility would it be if a training course were misleading or inadequate?

Lord Mackay of Ardbrecknish

My Lords, I think the noble Lord has made my point for me in his intervention. He has introduced the whole idea of some kind of review of the courses and of some over-arching body which would decide which courses were or were not appropriate. I have the names of some providers of training in front of me, many of whom are serious players in the pensions business. It is for them and for the trustees to make a decision. Frankly, I should have thought that if the trustees are considered able enough to be trustees of a pension fund, they are able enough to judge what is a good course and what is not. Dare I say to the noble Lord that many university students recognise a good course from a bad course in universities around the country?

Baroness Turner of Camden

My Lords, I find that response very unsatisfactory and so, I think, do a number of my colleagues on this side of the House. I thought we had drafted this amendment in order to meet some of the objections which have been raised on previous occasions during discussion on this issue. We specify that: Regulations shall require trustees of occupational pension schemes to undertake an approved course of training". We do not specify what would be contained in the regulations. Nor do we say what the approved course of training would be.

We also specify that: the Authority shall consider … disqualification". That was written into the amendment specifically in order to meet the point made by the noble Lord, Lord Boyd-Carpenter. It does not mean that a trustee should be disqualified automatically if he or she does not take a training course. It is for the authority to decide. Clearly, the authority would not disqualify someone already appropriately qualified. So there is little more to say about that particular intervention.

As regards the comments made by the Minister, does he suggest that we set up some form of elaborate system involving examinations? That is not what is proposed in the amendment. We propose short courses of training. On the other hand, there is no reason why there should not be some means of approving courses. It does not seem to me to be very difficult to do that. If one does not have approved courses, provided independently, one comes up against the argument that it would be entirely inappropriate if the courses could be provided by the people running the scheme because they would not have the necessary independence.

We suggest that approved courses of training should be available which trustees should be compelled to undergo if they are to remain trustees. If, by any chance, somebody is well qualified, obviously he or she would not be disqualified for not taking a separate training course.

I do not find the arguments advanced by the Minister at all acceptable. Training is a key issue in relation to the appointment of trustees and the role of trustees under this extremely important Bill. The response is so unsatisfactory that I should like to take this last opportunity to test the opinion of the House on the matter.

3.31 p.m.

On Question, Whether the said amendment (No. I) shall be agreed to?

Their Lordships divided: Contents, 77; Not-Contents, 158.

Division No. 1
CONTENTS
Airedale, L. Jenkins of Putney, L.
Archer of Sandwell, L. Judd, L.
Avebury, L. Kilbracken, L.
Barnett, L. Kirkhill, L.
Beaumont of Whitley, L. Kirkwood, L.
Birk, B. Mar and Kellie, E.
Blackstone, B. Mason of Barnsley, L.
Bruce of Donington, L. McIntosh of Haringey, L.
Callaghan of Cardiff, L. Meston, L.
Carmichael of Kelvingrove, L. Monkswell, L.
Carter, L. Morris of Castle Morris, L. [Teller.]
Cledwyn of Penrhos, L. Morris of Kenwood, L.
Dahrendorf, L. Nelson, E.
David, B. Northfield, L.
Dean of Beswick, L. Peston, L.
Dean of Thornton-le-Fylde, B. Porter of Luddenharn, L.
Donaldson of Kingsbridge, L. Rea, L.
Dormand of Easington, L. Eatwell, L. Redesdale, L.
Eatwell, L.
Ezra, L. Richard, L.
Falkland, V. Robson of Kiddington, B.
Foot, L. Rochester, L.
Freyberg, L. Russell, E.
Gallacher, L. Sainsbury, L.
Gould of Potternewton, B. Seear, B. [Teller.]
Graham of Edmonton, L. Sefton of Garston, L.
Greene of Harrow Weald, L. Serota, B.
Grey, E. Shepherd, L.
Hamwee, B. Simon, V.
Harris of Greenwich, L. Stallard, L.
Haskel, L. Stoddart of Swindon, L.
Hilton of Eggardon, B. Taylor of Gryfe, L.
Hollis of Heigham, B. Tope, L.
Hooson, L. Tordoff, L.
Howie of Troon, L. Tamer of Camden, B.
Hughes, L. Wallace of Coslany, L.
Hutchinson of Lullington, L. Whaddon, L.
lnchyra, L. White, B.
Jay of Paddington, B. Williams of Elvel, L.
NOT-CONTENTS
Aberdare, L. Astor of Hever, L.
Addison, V. Astor, V.
Ailsa, M. Belhaven and Stenton, L.
Aldington, L. Beloff, L.
Alexander of Tunis, E. Blake, L.
Allenby of Megiddo. V. Blaker, L.
Alport, L. Blatch, B.
Ampthill, L. Boardman, L.
Annaly, L. Boyd-Carpenter, L.
Arran, E. Brabazon of Tara, L.
Braine of Wheatley, L. Johnston of Rockport, L.
Bridgeman, V. Killearn, L.
Bridges, L. Kimball, L.
Brougham and Vaux, L. King of Wartnaby, L.
Bruntisfield, L. Kinnoull, E.
Butterworth, L. Kintore, E.
Cadman, L. Knollys, V.
Caldecote, V. Knutsford, V.
Campbell of Croy, L. Lindsay, E.
Carnarvon, E. Long, V. [Teller]
Camegy of Lour, B. Lucas of Chilworth, L.
Carnock, L. Lucas, L.
Carr of Hadley, L. Mackay of Ardbrecknish, L.
Chalker of Wallasey, B. Mackay of Clashfern, L. [Lord Chancellor.]
Charteris of Amisfield, L. Macleod of Borve, B.
Chelmsford, V. Manchester, D.
Chesham, L. May, L.
Clanwilliam, E. Merrivale, L.
Clark of Kempston, L. Mersey, V.
Coleridge, L. Middleton, L.
Constantine of Stanmore, L. Miller of Hendon, B.
Courtown, E. Milverton, L.
Cranborne, V. [Lord Privy Seal.] Monson, L.
Cross, V. Monteagle of Brandon, L.
Cullen of Ashbourne, L. Montgomery of Alamein, V.
Cumberlege, B. Mottistone, L.
Davidson, V. Mountevans, L.
Dean of Harptree, L. Munster, E.
Denham, L. Murton of Lindisfarne, L.
Denton of Wakefield, B. Northesk. E.
Dixon-Smith, L. O'Cathain, B.
Dormer, L. Onslow, E.
Dowding, L. Oppenheim-Barnes, B.
Downshire, M. Orkney, E.
Ellenborough, L. Orr-Ewing, L.
Elliott of Morpeth, L. Oxfuird, V.
Ely, M. Park of Monmouth, B.
Erne, E. Peyton of Yeovil, L.
Faithfull, B. Plummer of St. Marylebone, L.
Ferrers, E. Quinton, L.
Fraser of Carmyllie, L. Rawlings, B.
Fraser of Kilmorack, L. Rawlinson of Ewell, L.
Gainford, L. Rees, L.
Gardner of Parkes, B. Renfrew of Kaimsthorn, L.
Geddes, L. Renton, L.
Gibson-Watt, L. Renwick, L.
Gilmour of Craigmillar, L. Rodger of Earlsferry, L.
Gisborough, L. Roskill, L.
Goschen, V. Shannon, E.
Grantchester, L. Sharpies, B.
Gridley, L. Shaw of Northstead, L.
Hailsham of Saint Marylebone, L. Shrewsbury, E.
Halsbury, E. Simon of Glaisdale, L.
Hardinge of Penshurst, L. Skelmersdale, L.
Harmar-Nicholls, L. St. Davids, V.
Harmsworth, L. Strafford, E.
Hayhoe, L. Strange, B.
Hayter, L. Strathcarron, L.
Hertford, M. Strathclyde, L.
Hesketh, L. Terrington, L.
Hives, L. Teviot, L.
Holdemess, L. Thomas of Gwydir, L.
HolmPatrick, L. Trefgame, L.
Hood, V. Ullswater, V.
Hothfield, L. Vaux of Harrowden, L.
Howe, E. Vivian, L.
Inglewood, L. [Teller.] Wade of Chorlton, L.
Ingrow, L. Warnock, B.
Jenkin of Roding, L. Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.