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Pensions Bill

My Lords, I beg to move Motion D, That the House do not insist on its Amendment No. 22, to which the Commons have disagreed for their Reason 22A. The other place disagreed with the amendment because, as drafted, it would have undesirable effects. The Government have great sympathy with the spirit behind the amendment, and we have decided to improve FAS benefits to members by matching the extra value produced as a result of funds remaining in schemes. We have written to trustees to urge them to consider carefully whether purchasing annuities, thereby depleting scheme funds, is in the best interests of all their members. The Government accept that there are good reasons why, in order to ensure the greatest possible benefit for the greatest number of people, they may need to take powers to prevent annuitisation by FAS-qualifying schemes. However, the amendment would have made annuitisation unlawful from 18 April. Some trustees will be in the middle of negotiations, or already have proceeded to purchase annuities since then. For that reason, it would not be reasonable to halt annuity purchase without some notice. Once the regulations introduced by Amendment No. 22 are made, the trustees who have purchased annuities believing that they are properly carrying out their fiduciary duty to members, could be held to have acted unlawfully. That would not be a fair position to put trustees in. I would like to take this opportunity to anticipate and welcome Amendment No. 22B tabled by the noble Lord, Lord Skelmersdale, which achieves the aims of Amendment No. 22 without the drawbacks I have already outlined. It strikes a pragmatic approach by putting a hold on annuitisation for the benefit of all members of qualifying pension schemes who hope to see the extra funds generated by the assets within their schemes matched by the Government, while allowing trustees to purchase annuities with the permission of the scheme manager where it would be appropriate for them to do so. Clearly, the Government will need to consider carefully what those circumstances might be and how the scheme manager will exercise his discretion. I am grateful that the noble Lord’s amendment allows us a period of grace to think about this and consult with trustees before we bring forward regulations. We will do that as soon as is reasonably practicable. I beg to move. Moved, That the House do not insist on its Amendment No. 22, to which the Commons have disagreed for their Reason 22A.—(Lord McKenzie of Luton.)