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Pensions Bill

I beg to move, That this House agrees with the Lords in the said amendments. We agree with the Lords amendments. We have only a short time for the debate, so my opening remarks will brief. I hope that I will secure the consent of the House to respond to the points raised and that we can discuss post-legislative scrutiny in the time allotted. The House disagreed with Lords amendment No. 22 on annuitisation because the draft would have had undesirable effects. Subsequently, the other place did not insist on it. However, the Government had some sympathy with the aim of the amendment and accepted amendment No. 22B from the Opposition in its place. We were persuaded by the arguments. The background is that in this House last week I announced that the cost of extending the financial assistance scheme to give pensioners more might be met by better use of the assets remaining in pension schemes, in accordance with the recommendations of Andrew Young, along with a matching contribution from the Government. I am sure that hon. Members will welcome my noble Friend Lord McKenzie’s announcement yesterday that we have decided to accept the Young review’s recommendation that we should not enforce a cut-off date for employer insolvency. The cut-off date of 31 August 2007, announced by my right hon. Friend the Member for Stalybridge and Hyde (James Purnell), now Secretary of State for Culture, Media and Sport, will not be enforced. We will consult on whether there should be any cut-off date and introduce regulations in due course. As I said last week, we wrote to trustees to urge them to consider very carefully whether purchasing annuities is in the best interests of their members. That may well have been enough, but we accept that reinforcing that message in law has some merit. Therefore, we will take powers to prevent annuitisation by FAS qualifying schemes to ensure the greatest benefit to the greatest number of pension scheme members. Amendment No. 22B has the same broad objective as amendment No. 22, but achieves it without the difficulties of the previous version. Amendment No. 22B puts a hold on annuitisation for the benefit of members of qualifying pension schemes hoping to see the extra funds raised by the assets within schemes matched by the Government. However, it also allows trustees to buy annuities, where appropriate, if they have the approval of the FAS scheme manager, who in law is the Secretary of State for Work and Pensions. That is a sensible and flexible approach, although clearly we will need to give careful thought to the circumstances in which it might happen and how scheme managers exercise their discretion.