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Postal Services Bill [HL]

I thank my noble friend Lord Clarke for explaining his amendments. The intended use of subsection (4), like subsections (2), (3) and (5), is to cover the scenario of qualifying accrued rights remaining in a separate government-sponsored section of RMPP, as we have just discussed. This is the fallback position, not our preferred option. Qualifying accrued rights would be protected in this section with the Government making payments to the trustees as benefits fall due. We intend that subsection (4) would be used only in relation to this government-backed section of the RMPP. It allows for the Secretary of State by order to require his consent to the exercise of discretionary powers and amendments made to the scheme rules. The Government have no intention of applying this power of veto to the separate Royal Mail group and Post Office Ltd sections. Subsection (4)(a) concerns the exercise of discretionary powers. The trustees currently have discretion over the level of certain benefits that are paid to members. For example, under the RMPP rules, members can give up part of their pension in exchange for a lump sum, and the trustees have discretion over how that lump sum is calculated. Other discretionary powers include the power to grant early payment of a pension on grounds of ill health and the calculation of transfer values when a member chooses to move benefits to another scheme. In a section containing qualifying accrued rights that are paid for by Government it is appropriate that the Secretary of State’s consent to the exercise of these discretionary benefits is required both to protect members’ interests and the taxpayer. Amendment 56 recognises the need for the Secretary of State’s power of consent but restricts it to where the exercise of discretionary power increases the qualifying accrued rights of members. However, this is not sufficient to protect the Government from incurring additional costs relating to the RMPP. An important distinction needs to be made that the RMPP does not define a level of qualifying accrued right that the trustees can then vary up or down but, using the example of a member exchanging his pension for a lump sum, a member’s qualifying accrued rights will be the right to an additional lump sum assessed on a basis to be determined by the trustees. However the trustees decide to calculate the lump sum, qualifying accrued rights have not increased or decreased. For that reason we do not think that Amendment 56 is workable or provides sufficient protection for taxpayers and so the Government cannot accept it. Amendment 57 refers to subsection (4)(b). Currently the principal employer, which is Royal Mail Group and the trustees, may make amendments to the rules of the scheme. Going forward we would not expect Royal Mail Group to have any interest or powers in a section containing qualifying accrued rights, which will instead be backed by the Government. Without subsection (4)(b) the trustees would have unilateral powers over this section but there would be no protection for the Government and the taxpayer. Amendment 57 would again restrict the Secretary of State’s power of consent to where amendments to the RMPP rules would increase the qualifying accrued rights of any member. The Government believe that that is too restrictive. The trustees could potentially amend the RMPP rules in a number of ways that would not increase a member’s qualifying accrued rights but which would potentially impose a cost on Government. For example, the trustees could decide to make changes to the dates that payments are made to members or similar administration changes that do not increase a member’s qualifying accrued rights, but which impact on the arrangements that the Government have for making payments to the trustees. It is appropriate that the Secretary of State can agree that the changes are sensible. I hope that I have reassured my noble friend that the Government intend to use the powers in subsection (4) only in relation to a government-backed section containing qualifying accrued rights. Given the difficulties with the amendments, I ask my noble friend not to press them.