Pension Schemes Bill

Lord McAvoy Excerpts

Wednesday 7th January 2015 Lords Chamber

[Lord McAvoy (Lab)]

My Lords, we have tabled a clause stand part debate to scrutinise the rationale behind Clause 44 and the likely cost savings estimated by the department. First, can the Minister provide a few examples—or even one example—of how the process for selecting trustees under Section 7 of the 1995 Act operates? It is my understanding that following the removal of the requirement to operate a register, the regulator will appoint trustees for a scheme that has suffered an insolvency through a flexible procurement panel. What is the typical cost of recruiting in this way rather than through a register of trustees and how does this compare to the cost of maintaining that register?

In Committee in the other place the Minister discussed the Government’s Red Tape Challenge, specifically the desire to remove £2 million-worth of regulation on businesses for every £1 million introduced. He also said that the savings that will be made by the Pensions Regulator will be passed on to pension schemes and then on to savers. We are therefore understandably keen to get an estimate of the windfall that awaits pension savers once this clause is passed. What is the saving for pension schemes and can the Minister say whether he can guarantee that this is passed to contributors?

The clause stand part debate is intended to probe these details. I hope the Minister will be able to help in this way.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for his contribution to the debate. Clause 44 fulfils a government commitment which he outlined under the Red Tape Challenge to remove statutory requirements which are felt to be superfluous. This is such an example. He rightly set out that there is already an existing power for the Pensions Regulator to appoint trustees where he can appoint a trustee without reference to the register. Therefore, it would not seem to present a problem that the register goes. I will come back to that issue.

I will clarify a point made by the noble Lord. The Minister who made the commitment about savings was the Pensions Minister in another place. I am sure that if he said it we can underline the commitment. It is not a statement that I or a Minister in the Lords made, but I am aware that any savings from this will be reinvested and we will confirm that in writing to the noble Lord. I understand that to be the position.

I am happy to reassure the House that the regulator is committed to ensuring that any process to replace the register would provide the same level of assurance to members and schemes that an independent trustee appointed to a scheme is fit for the task. That, after all, is the paramount issue. The selection criteria would remain rigorous and transparent. The criteria and processes being published on the regulator’s website, along with the procedures for appointing and removing trustees, would be guaranteed. We will ensure that appointments will continue to deliver the best candidate for the job, given the specific circumstances of the scheme in question.

I think there is little doubt that this register is superfluous and that there is the ability for the Pensions Regulator to draw on an existing pool of trustees without the need for the register. As the noble Lord, Lord McAvoy has highlighted, savings will be reinvested and I will confirm that in writing to him. On that basis, I ask that the clause should stand part of the Bill.