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Postal Services Bill [HL]

I shall try to help the noble Lord, Lord Skelmersdale, to understand the detail of what is proposed here. The intention of Clause 16(3) is to make clear the powers of the Secretary of State in making orders to establish the new public sector scheme and for its operation. It enables the new scheme to include: provision for the increase of benefits under the new scheme, as would be required to match the indexation of benefits currently provided for under the RMPP, and the revaluation of deferred benefits. The noble Lord will understand that salary increases in excess of indexation will fall to be the responsibility of the RMPP, even if they refer to past accrued service. The provisions also include flexibility in the treatment of members who have deferred entitlements in the government-backed scheme but are still employed by Royal Mail, as might be required if a member sought to take early retirement on grounds of ill-health. That is why the clause enables a potentially different treatment between active and deferred members. They also include provision for payment of transfer values, as would be required for members who wish to transfer out their accrued benefits to another pension scheme. These provisions for the new scheme are important to ensure that the new scheme can provide benefits which compare with members’ entitlements under the existing Royal Mail pension plan and therefore meet the intention of ensuring that members with benefits in the new scheme are no worse off. These provisions will be reflected in the rules of the new scheme, which will be set out in secondary legislation. We believe that this clause is necessary to ensure that the Government can meet their obligations under Clause 19(2) to ensure that members are no worse off in relation to their pension provision. The deletion of these powers would leave the Government without a firm legal basis to provide such benefits. I hope that that has clarified what Clause 16(3) is meant to achieve. On Amendment 45A, the effect of Clause 16(4) is to make the scheme capable of being treated as an occupational pension scheme for the purposes of the relevant legislation. These purposes will be set out in secondary legislation. As the noble Lord recognised, such treatment would put the new scheme in an analogous position to other public service schemes, which are occupational pension schemes. For pay-as-you-go schemes, some of the requirements that apply to other occupational schemes, such as those relating to investment, would not be relevant. But there are others, such as those relating to the provision of information to members and dispute-resolution procedures, which will be relevant, and where the Government expect them to be applied by order to the new public service scheme created under Clause 16. I am sure that noble Lords will agree that these safeguards under general pensions legislation are important for members. That is why we have that formulation for Clause 16(4). One has to identify which bits of those provisions are relevant and which are not. Clearly, those relating to investment are not relevant because this is an unfunded scheme. On Amendment 47, subsection (5) provides for the designation of the new public scheme as a salary-related contracted-out scheme. The Royal Mail pension plan is currently contracted out from the state second pension. But because the new scheme is not established by an employer for its employees, it would not normally be issued with a contracting-out certificate by HMRC. If the new scheme was not contracted out, the effect would be to restrict the transfer of contracted-out benefits between the RMPP and the new scheme. It would also prevent transfers between the new scheme and other contracted-out schemes, as would be required if a member of the new scheme wished to transfer their accrued benefits to another scheme. The treatment of the new scheme as a contracted-out scheme therefore allows for a seamless transfer of total accrued rights, including contracted-out rights, from the RMPP to the new scheme. The noble Lord specifically asked why we did not include indexation in the Bill. The indexation of benefits will reflect provisions in the RMPP rules and needs to be specified, together with other rules in the new scheme, in secondary legislation. In undertaking that, we will consult with the trustees. In the light of this explanation regarding the effect of these measures, I hope that the noble Lord, Lord Skelmersdale, is satisfied and will withdraw the amendment.