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Postal Services Bill [HL]

We have been discussing the Government's intention in Clause 17 to enable the Secretary of State to divide the existing Royal Mail pension scheme into sections. I have made it clear that the primary purpose of that is to allow the creation of a separate Post Office Ltd section to isolate the new partner from any of those liabilities. However, Clause 17 also provides the power to create a new section to contain the qualifying accrued rights. As we have discussed, that is a contingency option that would be adopted only if the establishment of a new scheme as envisaged under Clause 16 proved impossible to achieve on the required timescale. I welcome the intent behind Amendments 58 and 59 to Clause 17 at line 9 on page 22, both of which seek to clarify that, following a division of the RMPP into sections, the RMPP will remain a contracted-out, trust-based occupational pension scheme under the Pension Schemes Act 1993. However, having reviewed the effect of these amendments further, let me explain why they are unnecessary. Amendment 58 would make it a requirement on the Secretary of State to include a provision in any order that divides the RMPP into separate sections to ensure that the RMPP remains contracted out and to ensure that the order makes provision for determining a manner for settling any questions that arise under it. However, it may not be necessary for an order made under Clause 17 to require the RMPP to remain contracted out. This is because if, as is the Government’s preferred option, the order were made solely to create a new Post Office section, and Post Office Ltd were to apply for a contracting-out certificate in the usual way, there would be no need for the Secretary of State to make any provision for this in the order. In those circumstances, the requirement implied by the amendment is unnecessary. If the Government were to adopt their contingency option in respect of the qualifying accrued rights and transfer these to a new section in the RMPP, the Secretary of State would need to ensure that that new section remained contracted out. This power would be required because, unlike the existing scheme or the proposed new sections for Post Office Ltd and Royal Mail Group employees, any new section for the qualifying accrued rights would not be established by an employer for its employees. As we discussed earlier in our debate on Clause 16, the HMRC would not normally issue it with a contracting-out certificate. If the new section was not contracted out, that would restrict the transfer of contracted-out benefits between the RMPP and the new section. 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 existence of the option to create a new section in the RMPP for the qualifying accrued rights, and the fact that it is only an option, means that the powers in the Bill give the Secretary of State the ability to make provisions for contracting out but do not require it. In other words, the amendments would require the Secretary of State to make a provision that may not be needed. Similarly, the Government envisage that existing requirements for a dispute resolution process could continue to apply to the RMPP after it is split into sections and have no intention of changing this process under the RMPP. Subsection (5)(b) is intended to provide a facility to help to determine questions that might arise: for example, over which assets, liabilities or benefits fall to be paid from which section of the scheme. It is not intended to override more general dispute resolution procedures. Amendment 59 would require that the RMPP remains a trust-based occupational pension scheme, as defined in the Pension Schemes Act 1993, after sectionalisation. Again, we see no need for such a requirement. We envisage that the RMPP will continue to be an occupational pension scheme. There are no powers in Clause 17 that enable the Government to change the current trust basis of the RMPP, and there would be no reason for the Government to take any such action in connection with an order under Clauses 16 or 17. I reassure noble Lords that the Government have no intention of requiring a change to the current trust structure of the RMPP. I hope that that provides my noble friend with the reassurance that he seeks through his amendments.