Pension Schemes Bill [HL]

(Limited Text - Ministerial Extracts only)

3rd reading (Hansard): House of Lords
Monday 16th January 2017 Lords Chamber

Moved by

[Lord Henley]

Clause 11, page 7, line 16, at end insert—
“( ) The regulations may include provision— (a) setting out requirements relating to the audit of accounts;(b) applying some or all of the provisions of Parts 15 and 16 of the Companies Act 2006 (accounts and report; audit), with or without modifications.”

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Henley) (Con)]

My Lords, this is a technical amendment and simply clarifies the scope of the regulation-making power in Clause 11 to ensure it meets the policy intention. Clause 11(4) provides that the Secretary of State may make regulations setting out requirements relating to a scheme funder’s accounts. The Government have always intended that the power would enable regulations to be made requiring scheme funders to produce full audited annual accounts, if they are not otherwise required to do so—for instance, in accordance with the Companies Act 2006. This is set out in the delegated powers memorandum, which has been published. However, it was brought to our attention that specific provision about audit in existing legislation might cast doubt on the breadth of the power, so this amendment is intended to put that position beyond any doubt.

The Secretary of State will be able to require in regulations, where appropriate, that scheme funders’ accounts must be audited. This is an important clarification because the scheme funder’s accounts, along with the scheme accounts and the business plan, will provide key financial information on which the Pensions Regulator will base its assessment of the master trust’s financial sustainability. The scheme funder’s accounts will enable the regulator to monitor the scheme funder’s financial position and assess the strength of any financial commitment to the master trust set out in the business plan. Requiring the accounts to be audited ensures that the scheme funder’s financial position is independently verified by a qualified auditor.

The amendment makes it clear that the regulation-making power may be used to apply some or all of the provisions in Parts 15 and 16 of the Companies Act 2006, which relate to the preparation and auditing of accounts and other related matters in respect of different types of scheme funders. Having this flexibility will enable the Secretary of State to take account of the range of master trust structures and financial arrangements with their scheme funders.

Before I conclude, I offer my thanks to the noble Lord, Lord McKenzie, and other noble Lords who have taken part in the debate for the generally positive approach they have taken during the passage of the Bill. I appreciate that my noble friend Lord Freud has already offered his thanks to all who have been involved in the Bill. However, as he moves on to pastures new, I echo those thanks and offer my thanks to him and to my noble friend Lord Young of Cookham for the help they have given me and for ensuring that I was appropriately briefed for this final and, I hope, rather short stage. We all trust that another place will be able to give it equally effective scrutiny, as it always manages to do.

To conclude, the amendment is intended to ensure that the scope of the regulation-making power in Clause 11(4) is wide enough to enable the policy to operate as intended. On that basis, I beg to move.

--- Later in debate ---

[Lord McKenzie of Luton (Lab)]

My Lords, I begin by welcoming the noble Lord, Lord Henley, to his role, even at this 12th hour on the Bill.

We certainly do not oppose the amendment. As explained, it is intended to put beyond doubt the ability to introduce regulations relating to audit, particularly in relation to scheme funders, which under the Companies Act are not required to provide audited accounts. Perhaps for the record the Minister can set out the nature of scheme funders which might fall into this category. Presumably they could be partnerships, entities incorporated overseas or smaller entities, although I am not sure how they might feature in these arrangements. Can he also tell us whether it is planned to use these powers differentially in respect of scheme funders that fund benefits other than money purchase benefits? As an adjunct to that, we very much share the concerns expressed by the noble Lord, Lord Naseby, about how Clause 11, as it will now be, will work.

As the Bill passes to the other place, it is time to offer our thanks to the Minister, the noble Lord, Lord Young of Cookham, for the courteous and inclusive manner in which he has handled the Bill. We look forward to the same from the noble Lord, Lord Henley, on subsequent Bills. We have already given our thanks to the noble Lord, Lord Freud, for the role that he played. This is a narrow Bill but one with significant implications, which is why we want to see it make speedy progress. It has not been the easiest Bill to scrutinise, given the combination of the technical nature of its subject matter and the raft of regulation-making powers that it contains, but we have seen a Government in listening mode in some respects—although of course not all, and the noble Baroness, Lady Altmann, identified some of those.

I should take this opportunity to thank my noble friends who have participated in our deliberations—in particular, my noble friend Lady Drake for the expertise and precision that she has brought to our work. We trust that the important amendment concerning the scheme funder of last resort which she pressed on the Government will endure.

I also express our thanks to the Liberal Democrats, led by the noble Baroness, Lady Bakewell, the government Back Benches for their constructive approach, and indeed the Cross Benches. We have seen a Bill team who are thoroughly on top of their brief and have patiently spent time explaining to us aspects of the Bill which might otherwise have fallen on stony ground. Taking this matter forward now falls to the tender mercies of our colleagues in the other place.

[Lord Henley]

My Lords, I thank noble Lords for their very kind words and in particular, the noble Lord, Lord Kirkwood, for his high expectations of me in replacing my noble friend Lord Freud. If I do only half as well as my noble friend, I think I will be doing pretty well—I hope the House accepts that I will try my best. I can also confirm to the noble Lord that impact assessments will be updated for the new regulations. The timing for the formal consultation on the draft regulations will obviously depend on a number of factors, but we would expect that the initial consultation will take place some time in the autumn of this year.

I am very grateful to the noble Lord, Lord McKenzie, for not opposing the amendment. He had a number of questions, particularly in relation to scheme funders and I would prefer to write to him about those. He also asked whether the Government were going to table an amendment on scheme funders of a master trust that offers both money purchase and non-purchase benefits. I can confirm that they intend to table such an amendment and that can be a matter for another place.

My noble friends Lord Naseby and Lady Altmann raised concerns that go wider than this simple amendment, which merely relates to audit. Those matters can be considered and no doubt, will be noted by my noble friends when they take this Bill through another place. As I said in my introductory remarks, I expect another place, as always, to look at this Bill with its usual due diligence and I am sure that it will take note of the comments made by both my noble friends. If it can assist them, I shall try to write to them before that, but everything they have said will be noted by my honourable and right honourable friends. With that, I echo the remarks of the noble Lord, Lord McKenzie, in thanking all those who have been involved in this Bill.

Amendment agreed.