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Pensions Bill

We anticipate that the membership of the personal accounts schemes will be very large, numbering in the millions, with members coming from a diverse range of jobs and backgrounds. We also anticipate that there will be many thousands of participating employers with no connection by trade or size. The size and diversity of membership presents the trustee corporation with a unique task in communicating with scheme members and participating employers. However, we firmly believe that the representation of these members and employers is vital to the scheme’s success. That is why we have placed an obligation on the trustee to consult members and employers about the operation, development and amendment of the scheme. Furthermore, we have placed a requirement in the Bill for the trustee to set up panels to represent members and participating employers. These panels will have to be consulted by the trustee prior to any proposed changes to the order and rules. Setting up the panels to ensure proper member and employer representation is clearly not an easy task, and we have asked PADA to consider the options for their functions and composition. PADA has yet to reach its conclusions, but is considering similar panels operated by the Financial Services Authority and has met officials from pension scheme organisations such as Unite. Even when PADA makes its recommendation, we want the order to set out only the higher level composition and functions, which will leave the trustee and the panels with the flexibility to develop the roles of the panels once the scheme is fully functioning. The amendment allows only the trustee corporation to determine the composition and functions of the panels. That would mean that the panels could be realised only after the scheme order came into force and following trustee recruitment. While it is possible to grant the trustee sole discretion as the clause is now written, we believe it is appropriate for the Secretary of State to set the basic parameters in the scheme order. Personal accounts are being introduced as part of public policy changes affecting millions of individuals, many of whom have had little prior involvement with pensions. For this reason, there is considerable interest from the pensions industry and consumer organisations about how members will be encouraged to engage with the scheme. By setting the composition and functions of the panels in the order, stakeholders and Parliament will be able to have their say on the vital question of how members should be represented. We hope to publish the order on the rules consultation next spring. I hope that has explained to the noble Baroness why we have structured it this way. This is a considerable undertaking and there are some key high-level issues that it is right are dealt with by the Secretary of State through the scheme order.