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Pensions Bill

moved Amendment No. 4: 4: Clause 1, page 1, line 8, at end insert— ““( ) who is not a non-executive director,”” The noble Baroness said: I shall speak also to Amendments Nos. 43 and 122. These are probing amendments designed to ascertain the Government’s position in relation to non-executive directors. I declare an interest as a non-executive director in what passes for my spare time. I know that the Minister is aware that it is not normal practice for non-executive directors to take part in any pension schemes that are available for staff and for executive directors. Nor do they receive any uplift to their remuneration to reflect the non-availability of pension benefits. For the vast majority of non-executive directors, what you see in terms of directors fees is what you get, there being no hidden extras. The same is very largely true for chairmen, who are generally also non-executive. Pension benefits are not a normal part of the remuneration of non-executive chairmen. It is not unknown for chairmen to be executive or semi-executive, especially in the non-listed space and to be paid accordingly, but for non-executive chairmen, pension accrual is unusual. The position, as I understand it, is almost exactly the same in the public sector. We discussed these issues during the passage of the previous Pensions Bill, now the Pensions Act 2007, when we debated the creation of the Personal Accounts Delivery Authority. The Minister will recall that some very odd provisions about pensions for non-executives were in the Bill, but he accepted that they were out of line with policy guidance and produced government amendments to put the position back to where it should have been; namely, that the non-executives did not get pensions. In this group of amendments, I have offered two possible ways of excluding non-executives from auto-enrolment. The first, in Amendment No. 4, would remove non-executive directors from the definition of a ““jobholder”” by adding another paragraph to Clause 1. The second way, in Amendment No. 43, would remove non-executive fees from the definition of ““qualifying earnings”” in Clause 12 by adding a new subsection after subsection (3). To support either or both of those amendments, Amendment No. 122 would add to the definitions in Clause 86 that of ““non-executive director””. The Minister will note that this covers both companies and other corporate bodies and hence should deal with the quangos that litter the public sector. This definition may not catch absolutely everyone in the public sector—I am thinking about, for example, the various non-executive members of departmental boards. The status of those individuals is somewhat ambiguous. They are not boards of a corporate body but pretend boards, aping what happens in corporate life or quangos. When we considered the Commissioners for Revenue and Customs Bill in 2005, we raised this point in Grand Committee in connection with the non-executives on that board. The noble and learned Lord, Lord Goldsmith, then the Attorney-General, said: "““In line with the recommended practice for central government departments, the non-executive directors of the predecessor departments””—" that is, the Inland Revenue and Customs and Excise— "““are not employees. The same arrangements will follow forward into Revenue and Customs””.—[Official Report, 22/2/05; col. GC 250.]" The two non-executives on the board of the Treasury, for example, are not employees, but I assume that they are ““jobholders”” within the Bill. How do government departments intend to treat their non-executive directors under the Bill? I return to my main theme. It is quite simply not market practice in either the public or private sectors for non-executives to be treated as receiving pensionable earnings. But without amendment, the Bill would change that practice. It would not be legal for companies or the public sector to advertise for non-executives on a basis which excluded pensions, so the Bill really will change the practice. Do the Government really need to do this? I am sure companies do not want to enrol their non-executives. Most, though I concede not all, non-executives do not expect or want to accrue pension rights in respect of those positions, and it is very clear that non-executives are certainly not in the target group at whom this Bill is aimed. The Minister may well say that it is up to the non-executive to opt out but they may not do so, whether by accident or design. Indeed, signing on as a non-executive does not involve turning up to the personnel department and getting lots of bits of paper to sign. Business life at board level is just not like that. I hope therefore that the Minister will agree that we need to find a way of reflecting the fact that this group of employees, jobholders or whatever, as non-executives should not be dragged into auto-enrolment and all that that entails. I beg to move.