Pensions Bill

Debate between Lord Bates and Lord Lawson of Blaby

Monday 20th January 2014 Grand Committee

[Lord Bates]

The noble Lord will therefore know that our position is that we do not comment on speculation in the press, even when it is in the Financial Times, and that the Minister’s announcement, which will be given to the House later this week, will be delivered first to the other place, and therefore we will have to respond to it.

[Lord Lawson of Blaby]

I am glad to hear that Steve Webb will make a statement in another place on this range of issues. Will my noble friend go further and say that the statement will accept the problem of the principal agent position as it affects pension funds, as was outlined in the contributions made by the noble Lord, Lord Browne, and myself, in this debate, and that it will put forward a remedy?

[Lord Bates]

After making deferential remarks to the noble Lord, Lord Browne, I have to make even more deferential ones to the noble Lord, Lord Lawson. The direct response is that I am not privy to the content of that statement, confirmation of which has been received only recently. However, addressing the principal agent problem which he so eloquently outlined for us was at the heart of the consultation process which was launched back in October, and was at the heart of what the OFT was driving at in its review. Therefore, in responding to that consultation, I reassure my noble friend that he will find—I hope—that this offers the reassurances he seeks. If not, he is at liberty to bring this matter back on Report, should he choose not to press his amendment at this stage.

On the definition of charges and transaction costs, Schedule 17 gives the Secretary of State the power to restrict administration charges by regulation. In the consultation we proposed specifying a broad definition of charges to encompass any expense that does not result in the provision of pension benefits for a member. We also asked for views on whether transaction costs should be included within a charge cap. Any charges that are restricted—even those under a possible cap—will have to be defined in regulations. These regulations will, of course, be subject to public consultation and we have accepted the DPRRC’s recommendation that these regulations be subject to the affirmative procedure on first use. Government Amendment 70 will achieve this.

With regard to the noble Baroness’s Amendment 62H on the Henry VIII power in Schedule 17, we have noted the comments and recommendations put forward by the DPRRC. However, we believe that it is vital that the Government’s ability to regulate effectively in this area is not inadvertently undermined by future legislation that could not have been foreseen. We are back to an earlier point.