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Pensions Bill

rose to move, as an amendment to Motion D, Motion D1, at end insert, ““but do propose the following amendments in lieu thereof— 22B: Insert the following new Clause- ““Temporary restriction on purchase of annuities (1) The Secretary of State must by regulations make provision for securing that, during the period of 9 months beginning with the date on which the regulations come into force, the trustees of relevant pension schemes are prohibited from purchasing, or agreeing to purchase, annuities on behalf of qualifying members, unless- (a) before that date they have entered into a binding commitment to purchase the annuities, or (b) the purchase of the annuities is approved in pursuance of subsection (2). (2) The regulations must make provision- (a) for enabling the trustees of a relevant pension scheme to apply to the scheme manager for approval of the purchase of annuities on behalf of qualifying members; (b) for authorising the scheme manager to approve the purchase of any such annuities if the scheme manager thinks it appropriate to do so. (3) For the purposes of this section an occupational pension scheme is a ““relevant pension scheme”” at any time during the period mentioned in subsection (1) if at that time the scheme is a qualifying pension scheme which has not been fully wound up. (4) Regulations under this section- (a) must be made as soon as is reasonably practicable after the passing of this Act; (b) may make such consequential, incidental, supplemental or transitional provision as the Secretary of State considers appropriate. (5) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament. (6) In this section ““occupational pension scheme””, ““qualifying member””, ““qualifying pension scheme”” and ““scheme manager”” have the same meanings as in section 286 of the Pensions Act 2004 (c. 35).““ 22C: Page 26, line 36, at end insert ““and section (Temporary restriction on purchase of annuities)”” 22D: Page 27, line 10, at end insert ““and section (Temporary restriction on purchase of annuities)”””” The noble Lord said: My Lords, I put down Amendment No. 75 in Committee as a means of keeping the Government to their promise of discovering whether better use could be made of the residual assets of pension schemes coming into the FAS. Ministers have already set up the Review of Scheme Assets led by Andrew Young, of which we have had some discussion over the past hour or so. That published its interim findings, very conveniently, late last week. The review gave strong indication that scheme by scheme annuitisation, the approach on which the current financial assistance scheme is predicated, does not offer the best use of assets and that there are a number of potential alternatives that should be able to secure better value for money and therefore increased assistance levels. I know that the Government have written to scheme trustees—indeed, the Minister just said so—in the light of last week's announcement that they believe the Young review is on the right track, emphasising for them the key role that trustees have to play in helping to ensure that assistance levels can be increased beyond the current 80 per cent level of core pensions. The amendment makes explicit the sort of behaviour needed from responsible trustees to achieve that, giving the Government powers to enforce such behaviour in the best interests of the majority of those who have lost their pensions and who can now expect help from the financial assistance scheme. The amendment requires the Secretary of State to make regulations suspending the purchase of annuities by trustees of pension schemes that have qualified for the FAS and which are still winding up for a period of nine months from the date the regulations come into force. That would give sufficient time for the Young review to complete its work and for the Government to make significant progress towards implementing its recommendations and securing better outcomes for scheme members, as long as the Government lay the regulations promptly. I hope that the Minister will be able to say how promptly he anticipates being able to lay them. However, I recognise that there will be circumstances in which it might be appropriate for trustees to seek to annuitise. That is why the amendment gives the FAS scheme manager discretion to allow annuities to be purchased in some—I expect rare—instances. For example, that could be where a scheme is only lightly under-funded and therefore members are unlikely to benefit from the FAS overall. Although Ministers in the other place did not like our original amendment as drafted, I detect from the Minister's words that they have seen the force of my argument that while the review completes its work there should indeed be a temporary bar on trustees from annuitising their assets in most cases. I beg to move. Moved, as an amendment to Motion D, Motion D1, at end insert, ““but do propose Amendments Nos. 22B to 22D in lieu thereof””.—(Lord Skelmersdale.)