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Pensions Bill

I thank the noble Baroness for bringing forward the amendments, which relate to the auditing requirements on the scheme. As the noble Baroness said, the Institute of Chartered Accountants in England and Wales—a fine body, if I may say so—raised the issue with officials. I am grateful to the institute for its help in ensuring that we get the shape of our legislation right. The amendments relate to the application of regulations under Section 41 of the Pensions Act 1995 to the personal accounts scheme. In short, current regulations under that section require an auditor to state that he or she is satisfied to a high level of detail about contributions made by each employer into the scheme. The requirement from the auditor’s statement about all contributions to the personal accounts scheme will be costly and difficult to compile due to the sheer number of employers and workers participating in the scheme. An auditor may be unable to satisfy himself that contributions had been paid properly and may have to qualify the accounts and the audit will be of relatively little benefit to members. The principle of proper accounting is paramount, but it is true that this scheme will be of a different scale and type from other schemes, for which the provisions in the Pensions Act 1995 were primarily designed. We have been considering the matter with the delivery authority and have concluded that the approach that the ICAEW suggests is the right one. I am pleased to give an assurance that the scheme will not need to apply the provisions made under Section 41 of the 1995 Act. I can also confirm that no amendment to the Bill is necessary as we already possess the legal powers to achieve the objective of the amendment, either by regulations under Section 41 of the Pensions Act 1995, under Clause 116 of the Bill, or within the scheme order. In agreeing that the scheme should not need to apply the auditing requirements, we also agree that we need alternative assurance arrangements based on the principles of openness, accountability and probity. Those arrangements will need substantial consideration in their detail. I believe that the intention of Amendment No. 110DA is a good starting point from which PADA can consider the detail, although I was surprised to see that it reads ““may”” rather than ““must””. The detailed planning work has not yet been carried out, so it is too soon for us to agree to the final audit arrangements now. Fortunately there is no need for primary legislation to stipulate the assurance arrangements as the Bill’s current drafting allows the scheme order to set out the arrangements. The scheme order and the rules will be the subject of full consultation next spring. I hope that my assurances on the scheme audit and the robustness of the financial controls are sufficient for the noble Baroness to withdraw the amendment.