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Pensions Bill

I shall try to tailor my remarks, because although this is an important group of amendments, which deals with some important issues, we are subject to time constraints—which, of course, were imposed by the Government. I join the Minister in thanking everybody who made going through this process such a huge amount of fun. There is no physical similarity, but the Minister slightly reminds me of Marshal Blücher arriving in the early evening of the battle of Waterloo, just in time to bayonet the wounded. The Minister has arrived in the nick of time and is here to take the victory parade, as it were. Lords amendment No. 198 and related amendments are about the important issue of buy-outs. It is hugely important to get that issue right. Initially, I am afraid, the Government got it horribly wrong. Our position has always been clear: yes, the business models for buy-outs of pension funds have run ahead of the legislation and the regulation, so something needed to be done. However, we did not need to throw out the baby with the bathwater. For some people in some pension funds, a properly regulated and financed buy-out would give an element of security that they would not otherwise have—and, incidentally, would allow the sponsoring company to get on with its core business instead of spending all its time worrying about running the pension fund. That is our position, and we have never wavered from it. Initially, when the Minister's predecessor approached me about the potential concerns about the issue, I said that we were happy to give our general support, subject to seeing the detailed legislation. The then Minister made a statement in April about his intentions, thereby stopping any unsuitable deals in their tracks. With the permission of the Attorney-General, he made it clear that the provision would be retrospective, and we had no difficulty with that. We parted company with the Government when they introduced in the Lords a wide regulation-making power to deal with the issue, without putting any detail in the Bill. That caused huge debates in the House of Lords. The Government forced it through before the summer. However, I am pleased to say that during the summer, wisdom prevailed; organisations such as the CBI, the British Venture Capital Association and others made it clear that if the Government were not careful, and overdid things, they could jeopardise genuine turnaround situations and legitimate business models that give the security to which I referred earlier. In the event, that argument was won; the Government staged a more or less graceful climbdown. Huge thanks must go to my colleagues Lord Skelmersdale and Baroness Noakes in the Lords. The Government tabled a series of detailed amendments for discussion and debate, including more sensible defences, a new alternative test for the use of the contribution notice power, a list of factors to guide the regulator and a code of practice. The proof of that particular pudding will be very much in the eating, but we have now reached a more sensible solution to a problem that was perhaps being overstated. Now we may have the powers just about right; I hope that they will be used with considerable discretion, care and caution. I am not saying that the pensions regulator is like the police, who always want more powers, but we need to be careful about simply giving more and more powers to the regulator if that is likely to upset the delicate balance in situations where a rescue could be staged, and if it is likely to tip companies that could have been rescued, along with their pension schemes, into the arms of the PPF. Now we have the ““reasonably foreseeable”” test and other details that are broadly satisfactory. In its brief for this debate, the CBI said that it"““worked with government to develop effective, targeted powers sought by the Pensions Regulator to properly regulate non-insured pensions buy-outs, while having a limited effect on the normal course of business for the vast majority of employers that sponsor a defined benefit scheme.””" That is absolutely right; indeed, the business models may well change further over time and it is important that we keep monitoring them as they do. Let me refer briefly to amendment No. 256. The lump sum from the PPF for progressive illness when death is likely within six months is an important provision. Amendment No. 194 and others concern the financial assistance scheme. I will not dwell on the long and painful process of getting the Government to face up to their responsibilities following the ombudsman's report, but we welcome the extension of the FAS to schemes that were previously excluded. Another point about the FAS as regards payments for those with illnesses concerns the test being applied people expected to die within five years. The ubiquitous Dr. Ros Altmann points out:"““By definition, if some have an 80 per cent. chance of living beyond 5 years, then 20 per cent. of them may well die in less than that time””" and therefore be excluded from assistance. She argues for more discretion. I hope that the Government will have another look at that in the light of the representations made by Dr. Altmann and no doubt others. These will be my valedictory few sentences on this Bill. On amendment No. 197, I pay tribute to Lord Fowler, who spoke very clearly on the issue of annuitisation. Our position is well known. We do not see why we should be the only country on the face of the planet that has compulsory annuitisation. This week at the ABI conference, I was heartened that Otto Thoreson made supportive remarks about scrapping compulsory annuitisation. We recently urged the Government at least to loosen the rules temporarily during the turmoil in the markets, but they were unwilling to do so. In the long term, this must be addressed, and if this Government will not do so, then we will.