Public Service Pensions Bill

John Bercow Excerpts

Tuesday 4th December 2012 Commons Chamber

Consideration of Bill, as amended in Public Bill Committee

[Mr Speaker]

Before I call the Opposition Front Bencher to move new clause 2, I should tell the House that I have revised my provisional selection of amendments and moved amendments 29 to 31 and amendment 33, tabled by Dr Eilidh Whiteford, to the third group from the first group. A revised list will be circulated shortly. I hope that that information is helpful, not only to the hon. Lady, but, indeed, to the House.

New Clause 2

Member communications

‘(1) Scheme regulations for a scheme under section 1 shall provide for the provision of annual benefit statements to all members of the scheme.

(2) Benefit statements under subsection 1 shall show the following information—

(a) the member’s pension benefits earned to date;

(b) the projected annual pension and lump sum payments if the member retires at his normal pension age; and

(c) the member’s and employer’s current contribution rates.’.—(Chris Leslie.)

Brought up, and read the First time.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 3—Fair deal—

‘A member of a public service pension scheme is entitled to remain an active member of that scheme following—

(a) the compulsory transfer of his contract of employment to an independent contractor; and

(b) any subsequent compulsory transfer of his contract of employment.’.

Amendment 11, in clause 3, page 2, line 25, at end insert—

‘(5A) This Act shall not apply to scheme regulations relating to local government workers in Scotland unless the Scottish Parliament approves its application.’.

Amendment 12, in clause 7, page 4, line 29, at end insert—

‘(3A) A scheme under section 1 which replaces a final salary scheme may only be established as a career average revalued earnings scheme or a defined benefits scheme of such other description as Treasury regulations may specify.’.

Amendment 4, in clause 12, page 8, line 9, after ‘scheme manager’, insert ‘and employee representatives’.

Amendment 19, in clause 16, page 9, line 36, leave out subsection (1) and insert—

‘(1) New scheme regulations made under section 1 and 3 shall replace existing schemes’ current regulations and shall take effect on the amendment date.

(1A) Following the implementation of new scheme regulations under subsection (1), benefits shall only be provided in accordance with those new regulations.’.

Amendment 20,  page 10, line 5, leave out ‘closing’ and insert ‘amendment’.

Amendment 21,  page 10, line 6, leave out ‘1 April’ and insert ‘2 April’.

Amendment 32,  page 10, line 7, after ‘scheme,’, insert—

‘(aa) 1 April 2016 for a Scottish scheme,’.

Amendment 22,  page 10, line 8, leave out ‘5 April’ and insert ‘6 April’.

Amendment 23,  page 10, line 10, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 24,  page 10, line 21, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 25,  page 10, line 23, leave out ‘closing’ and insert ‘amendment’.

Amendment 26, page 10, line 27, at end insert ‘regulations’.

Amendment 27,  page 10, line 28, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 28,  page 10, line 28, leave out from ‘benefits’ to ‘includes’.

Government amendment 35.

Amendment 7, in clause 28, page 15, line 12, leave out ‘may’ and insert ‘must’.

Amendment 8,  page 15, line 12, after ‘new’, insert ‘defined benefit’.

Government amendments 36 to 39.

[Chris Leslie]

Having spent a considerable number of weeks serving on the Bill Committee, I am pleased that we now have the opportunity to press the Government on questions that remain unanswered and largely unaddressed. Considerable changes are being made to many of the public service pension schemes as a result of Lord Hutton’s report on the future shape of those schemes. The report was largely welcomed throughout the House and that has contributed greatly to the improvement of the reforms. However, a number of the report’s aspects have not been adopted in full by the Government in this Bill, and we are concerned about that.

New clause 2, the first in a considerable group of suggested changes specifically to pension schemes, would implement recommendation 18 on page 132 of the Hutton report that

“public service pension schemes should issue regular benefit statements to active scheme members, at least annually and without being requested”.

At present, defined benefit public service schemes are obliged to provide such information only if they are requested to do so. That limited obligation is set out in the Occupational Pension Schemes (Disclosure of Information) Regulations 1996, but normal occupational pension schemes that do not have an arrangement for either a final salary or career average payment at the end of the scheme are obviously a different state of affairs from defined contribution schemes. New clause 2 would simply implement Lord Hutton’s recommendation and ensure that public service workers have a better understanding of the benefits that they have accumulated to date and what they stand to receive if they continue working until their normal retirement age.

We had a very healthy debate on this matter in Committee, where the exchange of views did not follow the usual to-ing and fro-ing of partisan speechmaking. A number of Members agreed that it would be very healthy if we improved the information and transparency for employees to enable them to make more informed decisions in planning for their savings and their financial future. For example, members of the schemes would be better able to judge whether they were saving enough for their retirement. The new clause is therefore compatible with the aim of reducing people’s need for state benefits in retirement—something that many Members across the House want to achieve.

When we tabled a similar amendment in Committee, it gained quite a degree of vocal support. The hon. Members for Bedford (Richard Fuller) and for Finchley and Golders Green (Mike Freer), who are in the Chamber today, helpfully pressed the Minister to resist his usual logic, which says in big block capital letters, “This is an Opposition amendment; thou shalt resist this devious device by Labour Members to do something nasty in the legislation.” That was not our intention. We actually wanted to implement Lord Hutton’s recommendation and bring defined benefit schemes into the modern age, especially in respect of communicating more regularly and effectively with scheme members. I live in hope that those hon. Gentlemen will chip in and offer their support again, because surely the goal of improving people’s understanding of their pension and helping them to plan more effectively for their retirement should find favour on both sides of the House.

--- Later in debate ---

[John Healey]

My hon. Friend is making an important argument in response to the intervention by my hon. Friend the Member for Hayes and Harlington (John McDonnell). It is not just that the Bill includes certain things that advantage employers; the measures are principally to the advantage of the Treasury, which is given the whip hand and ultimate say over schemes that should be run by their members and managers accountable to them.

My hon. Friend quoted the Economic Secretary in Committee. When the Minister rises to his feet, is it not important that he explain the discrepancy between what he said in Committee and what the Chief Secretary to the Treasury said to this House in December last year? He said:

“Because we have agreed to establish new schemes on a career average basis, I can tell the House that we have agreed to retain the fair deal provision and extend access for transferring staff.”—[Official Report, 20 December 2011; Vol. 537, c. 1203.]

There is a big difference between those two statements and the Economic Secretary needs to explain himself on that point.

[Mr Speaker]

Order. Before the hon. Member for Nottingham East (Chris Leslie) replies, let me say that although I have indulged the right hon. Member for Wentworth and Dearne (John Healey) on this occasion I hope he will not repeat such a long intervention. I do not want him to induce the hon. Member for Corby (Andy Sawford) into following bad habits. That would be a very undesirable state of affairs.

[Chris Leslie]

It may be a bad habit but it was a jolly good intervention. I do not often do this, but I commend my right hon. Friend for quoting the Chief Secretary to the Treasury. What is the difference between the Chief Secretary and the Economic Secretary? Well, one is a Liberal Democrat and the other a Conservative. However, my right hon. Friend should take that with a pinch of salt, as I too have a quote from the Chief Secretary, who said that

“establishing a relationship of trust and confidence between the Government and public service workers is critical to the success of these reforms.”

How long will this coalition Government persist? What we need is not just a commitment from a Liberal Democrat Chief Secretary to the Treasury whose parliamentary and ministerial career might not endure. We need to know what would happen should there be the dreadful set of circumstances of a Conservative majority Administration. Would a promise on the new fair deal, given only verbally by Ministers, endure in such circumstances?

Given the Minister’s trajectory and career momentum, I want to hear a commitment from him to the new fair deal on behalf of the Conservative party. That might mean something, although I would still prefer to see it in the Bill. It would be invidious for the Government to speak against new clause 3, let alone vote against it if we decided to test the opinion of the House. I am conscious of the time so I will move on.

Amendment 11 relates to issues of local government workers in Scotland and would exclude the Scottish local government pension scheme from the Bill, unless agreed to by the Scottish Parliament. Primary legislation on public service pension schemes has always been reserved to the UK Parliament. Scottish Ministers have had responsibility for regulations for public service schemes but those have been subject to Treasury approval and have tended to mirror arrangements for England and Wales. The exception is the Scottish local government pension scheme, which is a funded scheme that has not been subject to Treasury approval in the past. The Bill extends certain prescriptions to the design of the Scottish local government pension scheme that, in practice, have previously been left to Scottish Ministers to negotiate and decide—most importantly, they negotiated and decided on normal pension age; that benefits should be based on career-average revalued earnings and not final salary; on the cost cap, as it is known; and on rules for governance and fund valuations.

--- Later in debate ---

[Chris Leslie]

I beg to move amendment 13, page 5, line 21, after ‘age’, insert ‘or deferred pension age’.

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 29, page 5, line 21,after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 2, page 5, leave out lines 22 and 23 and insert

‘65, or current pension scheme age if lower’.

Amendment 1, page 5, line 27, at end insert—

‘(d) prison officers and psychiatric nurses.’.

Amendment 14, page 5, line 28, after ‘age’, insert ‘or deferred pension age’.

Amendment 30, page 5, line 28, after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 9, page 5, line 28, leave out ‘must be 60’ and insert ‘shall be set out in scheme regulations but must be no more than 60’.

Amendment 16, page 5, line 29, at end insert—

‘(2A) Subsections (1) and (2) shall not apply in relation to any category of public service worker as the Secretary of State may by order specify following the publication of a scheme specific capability review.’.

Amendment 15, page 5, line 30, leave out subsection (3).

Amendment 31, page 5, line 30, after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 33, in clause 33, page 19, line 25, clause 33, at end insert—

‘“Scottish scheme” means a scheme for the payment of pensions to persons specified in paragraphs (c) to (g) of section 1(2) in respect of service in Scotland;’.