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Superannuation Schemes (War Service) Bill
04 June 1940
Volume 361

Order for Second Reading read.

4.53 p.m.

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I beg to move, "That the Bill be now read a Second time."

As the House is aware, one of the principal aims of the Ministry of Labour at the present time is to secure the best use of skilled labour. To get this it is obviously necessary for skilled workers to leave the employment in which they find themselves in order to go into factories engaged in the production of war munitions. It has been found that in certain cases the fact that a man is covered by a superannuation scheme in his present job is an obstacle to his leaving it and going where he is most wanted, as it means a loss to him of certain benefits upon which he had been very properly counting. The purpose of this Bill is twofold. It is designed, in the first place, to enable trustees and others concerned with administering superannuation schemes to prevent loss of rights under a scheme which might otherwise result from employés going into the Armed Forces or into civil employment for war purposes. Secondly, it is to enable the payment of contributions to be continued on behalf of persons after they have left the employment to which the schemes relate.

I would remind the House that the rights of persons affected by the Military Training Act, 1939, and the Reserve and Auxiliary Forces Act, 1939, were protected by provisions of this nature made by Orders-in-Council under those two Acts. There was power also under the Armed Forces Act, 1939, to protect men called up for service by similar Orders-in-Council, but this power did not extend to men who volunteered for service nor to men transferring to war employment. It is necessary, therefore, to ask the House to pass this Bill in order to cover such cases. I do not think I need stress the desirability of a Measure to maintain the rights of men serving in the Forces, and I need hardly add that many concerns have been most anxious to do this for their employés, but in some cases have not legally been in a position to do so.

As far as civil employment goes, unless power is given to trustees and others concerned, any men or women covered by a superannuation scheme who transfer to war employment would suffer loss which it would be hard for them to bear. We have already made provision in the Local Government (War Service) Superannuation Act, 1939, and in other Acts, to protect the rights of local government staffs, teachers, constables, firemen and civil servants, and the Ministry of Health is co-operating with the Ministry of Labour in taking the most active steps it can to encourage members of local government staffs who can be released for war work. In view of the urgent need for every skilled man and woman to find his or her way into vital war industries, it is clear that no measure should be neglected which will help to achieve this object. There are many private firms as well as a number of public and semi-public bodies whose staffs are covered by superannuation schemes and who should be encouraged, when they can be spared, to transfer to war work. Such schemes are of very diverse kinds, and about 1,500,000 employés are covered by them. Some are operated by individual employers or groups of employers through insurance companies. A few workers are covered by independent group schemes, but the vast majority are covered by schemes operated by individual employers themselves.

The House will observe that this is an enabling Bill. It enables trustees, employers or insurance companies to take advantage of its provisions. It has been discussed by the National Joint Advisory Council, which represents the organisation of employers and the trade unions. As the employers' organisations have welcomed the Bill, and in view of their attitude and of certain undertakings given on behalf of life insurance companies, for which I should like to express my appreciation, the Government are asking the House to pass the Bill in the confident expectation that full use will be made of it and that employers who can spare workpeople covered by their superannuation schemes for work of a more urgent national importance, will do so to the greatest extent possible and will put no obstacle in the way of such transfers. It is in this confidence that the Bill is made permissive instead of imposing obligations which would not be easy to define owing to the very wide variation in the nature and terms of superannuation schemes. If, however, the Bill does not achieve the object desired, I want to make it clear that the Government will not hesitate to come to the House for further legislation in this matter.

Hon. Members will notice that the Bill covers all service in the Armed Forces whether or not a man has entered the Armed Forces as a volunteer or has been compulsorily called up. It will be for the Minister of Labour and National Service to determine what employment should be recognised as employment for war purposes, but I think I should tell the House that it is the intention of the Minister to recognise employment in all industries essential to the war effort, including such occupations as agriculture and coal mining, as well as those industries directly connected with the production of arms. It will also be possible for the Minister to give the necessary certificate in the case of men who undertake training to fit them for the war employment they propose to take up.

The proposals contained in the Bill have been discussed with representatives of the life insurance companies which are concerned in this matter. As the House is aware, many private firms make provision for superannuation by taking out group policies on the lives of their employés and in order that the rights under such schemes may be preserved, it was necessary to obtain an undertaking from the insurance companies as to the way in which they will deal with policies affecting any employés in respect of whom arrangements are made under the provisions of this Bill. The policies taken out with the companies often provide not only pension benefits but also life assurance benefits. With regard to pension benefits, the companies have given the Government to understand that they will continue to accept payment of contributions in respect of men serving in the Armed Forces or transferred to war employment. Where payment of contributions is continued the insurance companies will allow the employé concerned to continue in any scheme without loss of pension rights. If pension contributions are not continued after the date of the transfer to the Armed Forces or to employment for war purposes, the benefits secured by the contributions to the date of cessation of payment will be protected and contributions may be resumed at the end of the war upon the return of the employé and his re-entry into the scheme.

With regard to the second class of benefits, life insurance benefits, and, in certain cases, total disablement benefits, the group premiums cover only the risks allowed for in the original employment and make no allowance for increased hazards such as military or certain other war-time services. Therefore, the insurance companies have intimated that they cannot continue to pay life assurance benefits under the group policies in respect of employés transferred from their original employment in cases where the employé is transferred to service in the Armed Forces or to war employment where there is a material increase in the hazard. In most cases, however, under the existing schemes an employé,on the termination of assurance under the scheme, is entitled, when he is under 60 years of age, to effect an individual policy for the amount for which he has hitherto been covered in the group scheme at the rate for his attained age, and this he can do without any evidence of health. If in a group assurance, as was the case in many policies taken out before 1937, there was no restriction as to war risks, the individual policy would be issued free from war restrictions or the imposition of any special war extra premium. The insurance offices have, however, agreed that where employés are transferred to war employment where there is no material increase in hazard they will continue to hold the employé covered both for life assurance as well as for pension if both contributions are maintained, provided that there is no selective discrimination by the employer in the choice of the men for whom he will continue to contribute. In the case of men serving with the Armed Forces, provision has already been made by the Government for death and disability, and as a general rule, of course, this provision is much in excess of the cover usually provided under group life assurance. In view of the urgent need of the transfer of workers to the production of armaments, I ask the House to give this Bill a Second Reading this afternoon, and I hope very much that it will be possible for it to be passed into law with all convenient speed.

5.7 p.m.

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:On behalf of my hon. Friends and myself, we welcome this Bill. I should have been a little happier if the Minister had not stopped short when he spoke about what transpired in the negotiations between his Department, the assurance companies and the trade unions. He told us that the insurance companies had agreed to certain propositions, but I do not think he made clear what was the attitude of the trade unions; and before this Debate is closed, perhaps he will be good enough to tell us exactly what is their attitude. This Bill is necessary for the reasons which the Parliamentary Secretary has very well stated. The number of superannuation schemes in this country has grown enormously during our life-time, and it would be a thousand pities if men who, together with their employers, have paid contributions towards these schemes for years, were deprived of the benefit of them because they may have left their employment temporarily, either to go into the Armed Forces or some other occupation.

For my part, I wish this Bill was not merely an enabling Bill; I think it ought to be made compulsory. Hon. Members and the Government will understand that during the earlier period of any war, the enthusiasm for men who join the Forces is very much greater than it is later on. I remember in the last war that at the beginning of hostilities employers made up the whole of the wages of their staffs when they joined the Army, but they did not continue the practice until the war ended. They made payment in respect of some of their employés who joined up first, but when the war had gone on for two or three years they paid nothing in respect of those who joined the Forces later. I imagine that a similar attitude may be adopted in connection with payments to superannuation schemes. Incidentally, I am myself within a small superannuation scheme, and I have been wondering what would happen to me if I were conscripted into the Forces and my superannuation payments suffered.

I should like to put two or three points to the Parliamentary Secretary, and I hope he will look into them. I am never happy when a Minister of the Crown talks about discussions with insurance companies. We have discussed this sort of problem before. The impression given is that this Bill is, in a large measure, if not entirely, the Bill which the insurance companies want Parliament to pass. The Parliamentary Secretary shakes his head. I wish he had sufficient grounds for shaking his head. I know the insurance companies probably as well as most hon. Members do; I have a fair idea of what they can do and what they will not do. This Bill is an enabling Bill, and the Parliamentary Secretary has told us that should it be found later on that this permissive Measure is not working properly, the Government will bring in compulsion. I ask the hon. Gentleman to bear in mind the tragedy that would occur if a man left his ordinary occupation to enter another, and died or was killed when following that new employment. Is the hon. Gentleman absolutely satisfied that under this Bill the committees which administer some of these schemes would make a payment to the widow and the dependants—because that is allowed under some of the schemes, if not most of them—if the man died before he arrived at the superannuation age?

I will give an example. In most superannuation schemes the contributions are paid by the employer and the employed at about an equal rate. If a man dies before the age at which he is to be superannuated, generally speaking the contributions which he has paid, plus interest on them, are handed over to the widow. In other cases the contributions of both the employer and employed, plus the accrued interest, are all handed over to the widow. Those are the principles on which these schemes work. This, however, is what concerns me about this Bill, and it is a matter which is very much more important than appears on the surface. Suppose a man works in an occupation where the staff is covered by a superannuation scheme, and he goes into an occupation where there is no such scheme. That would probably be quite a common thing. For instance, in the co-operative movement, with which I am connected, nearly all the employés are covered by superannuation schemes. Suppose that such an employé became a coal miner, say, in South Wales, and there is no superannuation in that coal industry. Or supposing a shop assistant or a bank clerk were transferred to an occupation connected with the production of munitions. In his original employment there might be a superannuation scheme, but in the new employment there is none. Frankly, I know of no means whereby a man in such a new occupation where there is no scheme compelling a deduction from his wages would voluntarily pay his contribution to the old scheme covering his former employment. Therefore, unless there is compulsion, it seems that a great deal of hardship will ensue later on to that type of person.

I was a little surprised when the Parliamentary Secretary talked about the insurance companies. I can almost predict now that in everything the insurance companies have done in connection with this Bill, about group schemes, annuities and contributions, they will have worked out the figures to decimal points and to the smallest fraction, and in the end their balance sheets and profit and loss accounts will not be affected adversely in the least by what they give away in this Bill. Having said that, and being usually a little critical of insurance companies, let me say that we welcome the principles of this Measure. We want it to pass into law. I think nevertheless it ought to be made compulsory, because otherwise I can foresee all manner of difficulties arising in connection with the administration of these schemes. We shall watch with interest how these provisions operate in practice, and if complaints reach us from people who find that they are likely to lose their rights under superannuation schemes as a result of transference to other occupations, I hope the hon. Gentleman, even though he is a Minister in a Coalition Government, will not be offended when we call his attention to those facts. I hope, too, that if it is found necessary, he will then take steps to make these provisions compulsory.

5.16 p.m.

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I am glad that the Government have, for the present at any rate, made this only an enabling Measure. I think the hon. Member for Westhoughton (Mr. Rhys Davies) does not appreciate some of the difficulties which are involved in these schemes. Roughly speaking, there are two kinds of schemes. There are the schemes in which employers and employed work together, with hard-and-fast rules which cannot be varied. There is the other type of scheme in which the payments connected with the scheme go to an insurance company.

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Does the hon. Gentleman suggest that under any scheme, anywhere, there are rules which cannot be altered?

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Of course I do not. I have no doubt that a Government of which the hon. Gentleman was a member, would probably alter the rules, whatever anybody might say. I am merely pointing out the distinction between the two kinds of scheme which now operate. The point is that when you are dealing with an insurance company you must, as far as possible, keep the contract which you have made. A contract has been made on a certain basis, and it has to be kept. We cannot complain if the insurance company says, "This risk which it is now thought desirable to include was not part of our original bargain, and if it is to be brought in, it must bear a certain monetary relation to the whole position." That is only fair. I am glad, therefore, that this Bill is permissive, because there are many schemes in existence which have nothing to do with insurance companies. Since the war started the rules of those schemes have been altered so as to do just what this Bill provides for doing. If the Government should think it necessary, in future, to bring in a Bill to make the plan of this Measure compulsory, I hope they will put in a Clause allowing for exceptions under certain conditions so as to allow schemes which are already fulfilling all the requirements of this Bill, to be treated as exceptions subject to all proper conditions being observed. In effect, I hope they will allow "contracting out" of any compulsory Measure, if such should be introduced later. If there is in existence a hard-and-fast set of rules and if they are being carried out, you should allow that to continue, but where the conditions are not being justly met then, I think, there might be ground for applying compulsion. I suggest, however, that my hon. Friend, before bringing forward a general proposal, ought to produce some individual instances by which his general suspicions might be crystallised into real evidence and let us deal with the matter on the basis of that evidence as far as it goes. I do not think it is just to make general accusations about insurance companies when, on the whole, they are at present helping all they can.

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Has the hon. Gentleman read the Cohen Committee's report on industrial insurance?

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I have read the report, but it is not germane to this question and does not really affect this situation. But I do suggest that if my hon. Friend has anything real to produce in the way of evidence, he should specify it and not treat this as a general question in the way he has done.

5.20 p.m.

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This Bill is obviously necessary to fill certain gaps in previous legislation and to cover the cases of certain men who have joined the Colours or who are accepting civilian employment at war work. I presume that the scope of this proposal includes service in A.R.P. work, A.F.S. work, and other work of that kind. I am particularly interested in the type of insurance scheme, of which there are many in this country, in which an individual firm has its own joint scheme, contributed to by employer and employed. I think a certain measure of compulsion ought to be brought in wherever it is proved necessary. In a great many cases—I hope in all—it is practicable now for an employer to pay not only his own contribution but those of the employés, and this is being done. I think it is the desire of the Government that that should continue under the provisions of this Bill.

The workers attach enormous importance to these schemes. I have noticed it during discussions in works councils connected with businesses with which I am associated. They are more anxious to ensure something for the years of their retirement than about almost anything else. If under war conditions the admirable schemes which now exist were spoiled or their value diminished in respect of persons who are giving their services to the State, it would be a great pity. I know that the Government desire to avoid that eventuality. Perhaps the Minister will tell us, when he replies, how far the Government themselves are acting in accordance with the provisions of this Measure. Are they keeping alive the insurances of persons in their own employment and setting an example to the rest of the country? If the Minister can give us any information about the practice in that respect, I am sure it will be appreciated by hon. Members and by the country as a whole. I do not know whether any difficulty is likely to arise as regards the question of period. I take it that the Bill is to operate until the war ends. It is easy to see how it would work in relation to the Forces, but as regards civilian employment, there are possibilities of difficulty. A man might stop work some time before the war ended, or might be required to carry on his work for a certain period after the war ended. I presume that in all such cases the rights of the men concerned will be preserved.

5.23 p.m.

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I intervene to seek elucidation of one point only, but before dealing with it, I would like to say that this is a very wise Measure. At a time of great stress like the present, it is tremendously important that all who give their services where those services are most required, should have their superannuation rights preserved. A man may easily be trans- ferred, in present circumstances, from an employment in which there is a superannuation scheme to another employment which is more urgent at the moment, but which is without a superannuation scheme. It is unfair to ask the man to sacrifice his rights and it is right that he should be able to carry on his superannuation benefits, even though he undertakes a new employment. This Bill may help to give the Ministry powers which they require in order to fit men in where their services will be most valuable.

The point which I wish explained is how railway superannuation funds will be affected. In the Schedule there is a list of persons to whom this Measure will not apply. They are mostly people in the Civil Service and the local government service, and they are all members of statutory superannuation schemes. The railway clerical, supervisory and technical employés also belong to statutory superannuation schemes, but they are not mentioned specifically in this Bill. I realise, as I am sure the Minister realises, that it is unlikely that servants of railway companies, in clerical, supervisory and administrative capacities, would be transferred in any large number to other industries. The railway companies are carrying on their undertakings with the very minimum of staff. When we consider the strain which has been imposed on the Southern Railway in bringing the men of the B.E.F. back from the South-East Coast during the last few days, and performing that task so successfully, it is obvious that no great deduction can be made from the staffs of the railway companies. I would like the Minister to say whether this Bill will affect the statutory railway superannuation funds, and, if so, in what way.

5.26 p.m.

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I wish to ask the Minister, first, whether this Measure has been made an enabling Bill because of the complications which would arise if it were made compulsory? I can foresee the possibility of many complications. The next question which I would ask the Minister to resolve is this: Is there any provision in the Bill to enable those who have contributed to schemes for many years and who fall into arrears, to pay up those arrears afterwards, so that their position may be restored? Suppose that a man has been paying so much a year into a superannuation scheme. Owing to the war he is unable to continue payment. At the end of the war, will he be able to say, "I will pay now the premiums which I should have paid during the war years, and you will restore me to the position which I should have been in, if I had not been on active service or engaged in war work as the case may be"? The third question to which I would like an answer is this: Will this apply to all persons engaged in war work except those mentioned in the Schedule, and in cases where there is any doubt, will the matter be left to the determination of the Minister of Labour?

5.28 p.m.

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I can speak again only by leave of the House. [Hon. Members: "Agreed."] There are one or two points which have been raised and with which I desire to deal as far as I can. The hon. Member for Westhoughton (Mr. Rhys Davies), who, with other hon. Members, welcomed the Bill, asked about the attitude of the trade unions. I may tell him, although he may know it already, that the trade unions welcomed the Bill, but they too desired that it should be compulsory rather than permissive. There is, of course, a number of difficulties in the way of making it compulsory. Some of these were referred to by my hon. Friend the Member for Ecclesall (Sir G. Ellis). I have given the House an assurance that the Government will be prepared to propose further legislation if this Bill fails to fulfil the desires of the Government, after a reasonable period has elapsed in which we can see how it works. There was another point raised by the hon. Member for Westhoughton. He was somewhat critical of the insurance companies. I think it right to say in this particular case that insurance companies have made some very reasonable concessions, and only just before the House met this afternoon, one of the points which created some difficulty was decided, and in that particular case the insurance companies fell in entirely with the wishes of the Government.

The hon. Member for East Wolverhampton (Mr. Mander) also asked one or two questions. He asked in the first place what the Government did for their own employés. I understand that the position is that the Government do not contribute in these schemes, but the period of service of men who are away with the Forces is, of course, counted in their favour in determining their pension rights.

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Is that the case if they go away on civil work?

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I should like to make some inquiry upon that point, and I will let the hon. Member know. The hon. Member for East Wolverhampton also asked about A.R.P. workers, and other workers doing that sort of work. The answer is that, as far as concerns paid workers, they will, of course, be amongst those people whom the Minister of Labour and National Service would certify as being employed for war purposes. It is entirely left in his discretion, as the House will observe at the bottom of page 2 of the Bill, whom he certifies as being employed for war purposes, and certainly he will exercise his discretion in the direction suggested by my hon. Friend. The hon. Member for Central Hockney (Mr. Watkins) asked about the railway companies. They are not among those exempted under the Schedule, and, therefore, they are covered by the Bill itself and are able to take advantage of its provisions. I do not think there are any other points, but if there are, perhaps we shall have an opportunity of dealing with them on the Committee stage.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for To-morrow.—[ Mr. Whiteley.]