OPA AMENDMENTS ON:

1. SCHEME TRANSPARENCY
2. SPECIFIC INCLUSION OF PENSIONER ORGANISATIONS
3. MEMBER NOMINATED TRUSTEES
4. INDEXATION
5. DEFINITION OF ORGANISATIONS REPRESENTING PENSIONERS

SCHEME TRANSPARENCY
Several amendments on this topic were debated en masse under Clause 94 (Duty to notify insolvency events in respect of employers) on Thursday, 25th March afternoon session.

Although these amendments were not accepted, Malcolm Wicks did offer reassurance that when regulations are brought forward under Clause 165 (Provision of information to members of schemes etc) all the sections that we were concerned about will be covered. The extract is below:

Malcolm Wicks: As I told the hon. Member for Tatton (Mr. Osborne), I am sympathetic to his amendment's objectives. Indeed, similar amendments have been proposed to other parts of the Bill and I have replied in a similar way, because essentially they involved the same question. His proposal is not necessary because clause 165(1)(b), which deals with the provision of information to scheme members, ensures that regulations will require trustees or managers of a scheme to inform members of all appropriate information. That will include most notices, applications or determinations that relate to a scheme and its status as regards entry to the PPF. Thus the amendment would needlessly replicate existing provision. Perhaps the hon. Gentleman will withdraw it.

Mr Osborne: It is useful to have the Minister tell us what will be in the regulations, since we have not seen them, so the debate has been worth while. We take him at his word and that the regulations issued under clause 165 will require trustees and managers to keep scheme members fully informed.

I have a final question for the Minister. Will the events prescribed by regulations under clause 165-detailing where scheme members will have to be contacted-cover all the amendments: the events under clause 94, which requires the insolvency practitioner to give notice to the PPF and the trustees; the events under clause 96, whereby the insolvency practitioner issues a notice; the event set out in clause 97, when the insolvency practitioner has failed to issue a notice and the board steps in to do that; the events under clause 102, when the board receives an application from trustees and managers; and, indeed, the events under clause 117, which details the circumstances in which the board ceases to be involved with the scheme?

Malcolm Wicks: Yes.

However, Nigel Waterson moved another amendment (Conservative amendment number 295) in the 18 March afternoon session which proposed that one third of MNTs should be nominated by a "Recognised pensioners' association". Chris Pond responded to this saying:

Chris Pond: Amendments Nos. 295 and 296, taken together, would effectively require all schemes to set up or recognise pensioners associations, regardless of the size or profile of the membership. There would be no problem at all with the pensioners associations-quite the opposite, as hon. Members might expect-but it is for trustees, employers and members to decide between them whether they have a formal role in a particular scheme. Again, that is not something that the Committee, or a Government, should impose.

It is likely that our amendments, although not demanding a specific role for pensioner organisations, would have drawn a similar reaction from the government - i.e. that it is for trustees, employers and members to decide what role pensioner organisations and trade unions should play in the scheme. However see Definition below.

MEMBER NOMINATED TRUSTEES
The OPA amendment was debated on Thursday, 18 March.

Mr. Waterson: This is another group of amendments that is intended to strengthen the position of member-representing trustees. I am grateful for the help and advice I have received from various quarters. I thank the Industrial Training Boards Pensioners Association in the shape of Mr. Peter Austin and his colleagues, and the Occupational Pensioners Alliance , in particular Mr. Roger Turner . There are strong feelings about how the Bill deals with the issue.

Steve Webb later added his support to the Amendment 267, saying that it is probably "the first amendment in our proceedings that has been tabled in the names of Conservative Members as well as Liberal Democrat Members. We have read the same briefings, met the same people and reached the same conclusions".

In response, Chris Pond explained why the Government was unable to accept the amendments:

Chris Pond: If we accepted the amendments, far from creating simpler legislation, we would make the legislation significantly more onerous than the present Act-the 1995 Act. If it were amended in that way, the Bill would require every scheme to involve every active and pensioner member, even when that meant tens of thousands of people. In every case where trustee nominations exceeded vacancies, every scheme would be required to recognise a pensioner association. As I stated earlier, the aim of the clauses is to provide flexibility by radically simplifying the legislation. We accept that simplification comes with a degree of risk attached. We are handing the responsibility to trustees to decide what is best for their scheme. That may carry risks, but it is the right thing to do.

The amendments would be an unnecessary step backwards to the sort of prescriptive or restrictive legislation that we are trying to get away from, and would impose unnecessary burdens on schemes. Clause 198 contains a power to make regulations modifying the application of clauses 196 and 197 in prescribed cases. We will consider in due course how those regulations should deal with schemes that have no active members, which is a matter for concern to members of the Committee. I hope that the hon. Gentleman will feel able to withdraw his amendment.

INDEXATION
Although they were not formally moved, these amendments were discussed on Tuesday 30th March in the afternoon session.

Mr. Waterson: Amendments Nos. 270 and 271 examine another aspect of the salami slicing that the Government are trying to impose on their promise. The amendments are inspired by the Occupational Pensioners Alliance, although it is not the only concerned group. It is quite exercised by the widening gap between the hype attached to the Bill, the effects of the PPF and the reality.

.The Government have not been keen to disguise the situation. In their paper published on 23 February, they said:

''PPF pensions in payment will be indexed in line with the Retail Price Index . . . capped at 2.5%'',which we have just debated,

''but only in respect of rights built up since April 1997 (which is when the statutory obligation to index occupational pensions in payment was introduced). Deferred PPF pension rights will be revalued in line with the RPI capped at 5%.''

Again, to quote the Occupational Pensioners Alliance:

''This will be an unacceptable position for many pensioner scheme members who will lose a significant proportion of their revenue based on this calculation.''

It urges Committee members to vote against those proposals.

.Although I imagine that the Minister will berate us for increasing the costs of the PPF, we are trying to reinvest it with the reality suggested by its image. As I said, there is a danger that it may be oversold. Conservative Members do not want to be party to that.

.Finally, Mr. Orton, a pensions lawyer with Eversheds, which I think is the body that the Government are recruiting to find out the size of the problem of people who have already lost their pension rights, says:

''I am struggling to understand what the Bill is trying to do. We already have muddled pensions law. This Bill looks likely to make it worse. Ministers promise fundamental reform, and all they're doing is tinkering.''

This is certainly tinkering, but it is tinkering that will wreak unfairness on pensioners, because this is dependent purely on the arbitrary date of 6 April 1997 . That is eroding and diluting the pensions promise that the Bill and the fund are meant to be offering people. I commend my amendments to the Committee.

Malcolm Wicks:.The Bill's provisions allow for indexation to apply to compensation derived from or rights attributable to pension service on or after 6 April 1997 . That is based on the requirement on schemes to provide limited price indexation as contained in the Pensions Act 1995. As a result, all pension scheme and pension credit members will receive indexation capped at 2.5 per cent. on the PPF compensation for the pensionable service from 6 April 1997 . Restricting the indexation in that way ensures that the fund can better protect its liabilities and plan ahead financially. In addition, we do not think it appropriate that the PPF should pay indexation prior to 1997 when that is not a requirement for all pension schemes. Providing indexation increases prior to 1997 could also result in some members receiving a level of PPF compensation in excess of the level that would have been provided from their scheme, and that is hardly the intention of the PPF. That would be inconsistent with our principles.

We need to strike a balance between affordability, protection against moral hazard and the provision of a meaningful level of compensation. The PPF is being set up to provide adequate protection for individuals who face losing some or all of the pension entitlement, not to provide compensation that attempts to match scheme benefits or even offer more. Let us remember that the schemes we are talking about have gone bust. Government amendments Nos. 507 and 508 are technical amendments, and that is why I moved amendment No. 507 formally.

Although the amendments on definition were later withdrawn, Malcolm Wicks had earlier said: "The amendments would also require disclosure to organisations representing pensioner members. However, in contrast to trade unions, pensioner representative groups have no precise legal definition, which would make it difficult for scheme trustees to determine their status. As I said, trustees will anyway be required to disclose the information to all scheme members, including pensioner members.

Nevertheless, I accept that where recognised pensioner organisations exist, it is important for schemes to communicate properly with them.

...There may be scope for regulator guidance to encourage best practice. In the case of scheme funding, that could be achieved by enabling members or their representatives in trade unions or pensioner organisations to register to receive the documents automatically and regularly. We shall certainly consider what could be achieved for pensioner members in that way."

Thus the OPA has had some success!