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Pensions Bill

Volume 705: debated on Wednesday 19 November 2008

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Pensions Bill, has consented to place her Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Before the House begins Third Reading on the Pensions Bill, it may be helpful for me to say a few words about the Third Reading amendments. In line with the guidance recommended by the Procedure Committee and agreed by the House, the Public Bill Office has advised the usual channels that one amendment on the Marshalled List for Third Reading today falls outside the guidance given in the Companion and set out by the Procedure Committee. This is Amendment No. 17 in the names of the noble Lords, Lord Judd and Lord Joffe.

On the basis of the Public Bill Office’s advice, the usual channels have agreed to recommend to the House that the amendment should not be moved. As ever, this is ultimately a matter for the House as a whole to decide.

My Lords, that is helpful, but it would help us if the noble Baroness were to explain the reason for that.

My Lords, the subject of the amendment has already been dealt with on the Floor of the House twice and, therefore, it is not appropriate for it to be debated again today.

Bill read a third time.

1: Clause 8, page 6, line 1, at end insert “or in respect”

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 2, 3, 6 to 9, 20, 24 to 29 and 32.

We wish to ensure that the Bill is as clear and as error-free as possible before we send it back to the Commons. Therefore, as is normal at this stage, parliamentary draftsmen have suggested a number of minor and technical amendments designed to correct inconsistencies and improve drafting. I will take each of the amendments in turn.

On Amendment No. 1, if a jobholder opts out of pension saving under Clause 8, the jobholder and the employer get their contributions refunded. As drafted, the wording suggests that the regulations on refunds made under Clause 8(2)(b) should deal only with “jobholder” contributions. The amendment is intended to make clear that the clause covers employer and employee contributions and brings the drafting into line with other clauses that refer to contributions.

Amendments Nos. 2 and 3 are designed to clarify the drafting of the clause that introduces the test scheme standard for defined benefit schemes. The amendments confirm that the terms “such persons” and “J” refer to scheme members.

On Amendment No. 6, Clause 37(3) allows the Secretary of State to make regulations about the way in which the regulator can estimate the amount of contributions that an employer has failed to pay. Amendment No. 6 is intended to make clear that regulations can be made covering how the regulator can estimate contributions paid by the employer on behalf of the worker, as well as contributions paid on the employer’s account in respect of that worker. The amendment will also bring parity with Clause 38(2), where the same terms are used.

On Amendments Nos. 7, 8 and 9, Clause 60 currently gives the regulator power to inspect employers’ premises where it has reason to believe that documents relevant to the administration of a qualifying scheme are being kept. However, an employer’s scheme would not be a qualifying scheme in relation to workers without qualifying earnings under Clause 9. It is also possible that an employer might declare his pension scheme to be a qualifying scheme when, in fact, it does not satisfy the requirements as set out in Clause 16. Amendments Nos. 7, 8 and 9 replace the reference to a “qualifying scheme” with a reference to a,

“pension scheme that is relevant to the discharge of those duties”,

of the employer, and will therefore ensure that the regulator’s powers of inspection would apply in all relevant circumstances.

Amendment No. 20 amends the interpretation clause for Part 1 to make clear that people without qualifying earnings who opt into a workplace personal pension under Clause 9 are active members of their scheme, just as jobholders who opt in are active members.

I shall now speak to Amendments Nos. 24 to 29 and 32. The amendments to Clauses 132 and 133 clarify two things. First, any conditions associated with the purchase of additional voluntary class 3 national insurance contributions under Clause 132 must be prescribed in regulations by the Treasury. Secondly, the clause requires that an eligible person must have 20 qualifying years or 20 full years of home responsibilities protection in order to buy the additional contributions. This amendment clarifies that we are referring to a qualifying year for the purposes of entitlement to certain social security benefits.

The amendment to Clause 146 clarifies that an order is not required for the commencement of the extension to the rules on the purchase of voluntary class 3 national insurance contributions. The right to buy additional years for eligible people will take effect automatically on 6 April 2009, and this is specified in the Bill at Clause 146(4).

I hope that noble Lords will agree that these amendments are straightforward but necessary to ensure that the Bill leaves this House in the best state possible. I beg to move.

My Lords, we are generally happier with these amendments today. The way in which the Minister and the department have tidied up and brought forward the amendments is a credit to them. We had vigorous discussions at earlier stages of the Bill, and on these amendments today the noble Lord has generally shown himself to be a listening Minister, which is not something that I would say about every Minister in this Government.

On Question, amendment agreed to.

Clause 22 [Test scheme standard]:

2: Clause 22, page 11, line 12, leave out “such persons” and insert “them”

3: Clause 22, page 11, line 14, at end insert “J and”

On Question, amendments agreed to.

4: After Clause 27, insert the following new Clause—

“Sections 20, 24 and 26: certification that quality requirement is satisfied

(1) The Secretary of State may by regulations provide that, subject to provision within subsection (6)(f), a scheme to which this section applies is to be taken to satisfy the relevant quality requirement in relation to any jobholder of an employer if a certificate given in accordance with the regulations is in force in relation to the employer.

(2) The certificate must state that, in relation to the jobholders of the employer who are active members of the scheme, the scheme is in the opinion of the person giving the certificate able to satisfy the relevant quality requirement throughout the certification period.

(3) This section applies to—

(a) a money purchase scheme to which section 20 applies;(b) a personal pension scheme to which section 26 applies;(c) a hybrid scheme, to the extent that requirements within section 24(1)(a) apply.(4) The “relevant quality requirement”—

(a) for a scheme within subsection (3)(a), means the quality requirement under section 20;(b) for a scheme within subsection (3)(b), means the quality requirement under section 26;(c) for a scheme within paragraph (c) of subsection (3), means the requirements mentioned in that paragraph.(5) Regulations may make further provision in relation to certification under this section.

(6) Regulations may in particular make provision—

(a) as to the period for which a certificate is in force (the “certification period”);(b) as to the persons by whom a certificate may be given;(c) as to procedures in connection with certification or where a certificate has been given;(d) requiring persons to have regard to guidance issued by the Secretary of State;(e) requiring an employer to calculate the amount of contributions that a scheme, and any section 26 agreements, required to be paid by or in respect of any jobholder in the certification period;(f) as to cases where the requirements of a scheme, and any section 26 agreements, as to payment of contributions by or in respect of jobholders of an employer did not satisfy prescribed conditions.(7) Provision within subsection (6)(f) includes in particular provision for a scheme not to be treated by virtue of regulations under this section as having satisfied the relevant quality requirement unless prescribed steps are taken (which may include the making of prescribed payments).

(8) In subsection (6) “section 26 agreements” means the agreement required, in the case of a scheme within subsection (3)(b), by section 26(4) and any agreement required, in the case of such a scheme, by section 26(6).

(9) The Secretary of State may by order repeal this section.”

The noble Lord said: My Lords, I shall speak also to the other government amendments in this group.

I now return to qualifying earnings, which we discussed in earlier debates. On Report, we amended the Bill to confirm that employers may assess whether their arrangements meet the new quality standard over the course of a year and not just pay period by pay period.

Following further detailed discussions with stakeholders, Amendments Nos. 4, 30 and 31 now go one step further. They will enable employers or a designated person connected to them to certify that their scheme meets the forthcoming quality standard.

Our intention throughout the passage of the Bill has been to make it as easy as possible for employers who offer generous pension contributions today to continue to do so under the employer duty. The trick has been to find a way to achieve this without opening up the unacceptable risk that some individuals might routinely or materially save at levels below the minimum standard.

I believe that the certification procedure provided for in the amendments strikes the appropriate balance. Certification will be based on three principles, which I agreed last month with the employer and industry stakeholder group.

The first is that, if employers or a connected person are confident that each worker in their scheme is on course to receive the new minimum level of pension saving, they will be able to certify that their arrangements meet the new quality standard. The second principle deals with cases where a member’s contributions unexpectedly fall short of the minimum during the certified period. In such cases, employers will not be required to make retrospective reconciliation payments unless the detriment to an individual exceeds certain minimum levels. The third principle is that the minimum levels for reconciliation will be set in such a way as to protect individuals from significant, systematic or persistent detriment.

Certification on the basis of these principles should provide greater certainty to employers and some key administrative easements around reconciliation payments, while at the same time protecting the savings outcomes for individuals that are fundamental to the success of the reforms.

I shall now give way to the noble Baroness, Lady Noakes, who has tabled an amendment to Amendment No. 4, and I shall have an opportunity to respond to that. I beg to move.

5: After Clause 27, line 10, leave out subsection (2)

The noble Baroness said: My Lords, we congratulate the Government on bringing forward their amendment to the qualifying earnings test. This is one of the issues that have been with us throughout our consideration of the Bill, and at times I wondered whether we would ever get to this stage.

We have made it clear from the outset—not least to the organisations that have provided briefing to us—that the best outcome would be a government amendment. A victory in the Division Lobby may have given us a passing thrill in this House but a solution embraced by the Government gives hope for auto-enrolment arrangements which will work well in practice.

Amendment No. 4 offers the possibility that existing private sector provision may be preserved and not levelled down. If Amendment No. 4 avoids levelling down by existing employers, it would, in turn, help to maintain a body of pension provision which was above the minimum and, if that were the case, it would set a market level which may encourage new employers in the market to offer more than the minimum. What is at stake is potentially important. As we know, levelling down could take the form of rewriting an existing pension scheme to meet the formula in the Bill or, more plausibly, would result in employers just saying that they are not prepared to continue with their own scheme and defaulting to personal accounts. Either way, it would result in less pension saving. At present, employers contribute more than 6 per cent to defined contribution schemes, which compares with the Bill’s 3 per cent. Admittedly, the bases are different, but I would guess that on average the difference is slightly more than 3 per cent, which, over a working lifetime, is a lot in pension provision.

My probing amendment deletes subsection (2) of the new clause. At the heart of whether this new clause will do the trick is whether the regulations made under it will allow the calculations to be made at the level of the whole active membership of the scheme or whether they will directly, or indirectly, force the calculations to be made at the level of the individual. The question posed by my amendment is whether subsection (2) allows the certificate to be given at the level of the active member jobholders as a whole. I am aware that the Government changed the drafting of subsection (2) at a late stage before tabling in order to clarify its meaning, but I believe that the version in Amendment No. 4 can still be read either way. My request to the Minister is to clarify the Government’s intention of what subsection (2) is intended to mean in practice.

The Minister will also be aware that the provisions in subsection (6)(e) and (f) and subsection (7) cause some concern because those provisions would allow the Government to produce regulations which were onerous in both administrative and financial terms. I have to put the Government on notice that if they produce regulations which are onerous in administrative and financial terms, the likely outcome will be the levelling down, which this clause is intended to avoid. In particular, the tolerance levels of employers for sticking with their own schemes may well be tested if, by virtue of subsection (7), significant payments are required by the regulations.

The Bill does not require the Government to draft the regulations in a way that results in levelling down, but the danger is there and it is entirely in the Government’s hands. The groups with which we have discussed these issues are keen to work closely with the Government on the content of the detailed regulations so that they achieve the aim, which I think is shared by all parties, of keeping private provision going. I hope that the Government will work closely and constructively with those groups. I would be grateful for the Minister's comments on that.

Lastly, I must mention subsection (9), which seems to be a rather unnecessary act of aggression. Subsection (9) contains the unusual power for the Secretary of State to repeal the whole section and, with it, the hope that levelling down might be avoided. That is unorthodox drafting. Most Bills are not drafted with such provisions. Admittedly, this Bill contains another example in Clause 69. The Minister never satisfactorily explained that one, but I invite him to explain why it is appropriate for this new clause. I even harbour a faint hope that the Minister will say that subsection (9) is a big mistake and that, if we pass this amendment today, as I hope we shall, the Government will amend it in another place. I beg to move.

My Lords, inevitably we cannot be sure how this will work in practice, but it seems to us on these Benches a sensible compromise, following the discussions which we had on Report. As the Pensions Policy Institute, in its characteristically helpful and thorough note, said, there has to be a trade-off. A trade-off has to be made between a lower burden on employers with a small minority of individuals receiving less than the minimum but the majority of individuals receiving the minimum and higher, and ensuring that every individual receives at least the minimum but, as we know, with a potentially much higher administrative burden on employers. From the discussions I have had—I particularly pay tribute to Tim Breedon and his colleagues at Legal & General, who took me through it very carefully and discussed how their discussions with the ministry were going—I am satisfied that this is a sensible compromise. The right trade-off has been made, and we look forward to seeing how it works in practice.

My Lords, I am grateful to both noble Lords for their support for the thrust of this amendment. I am particularly grateful to the noble Baroness for providing me with an opportunity to explain the significance of subsection (2) of the government amendment, which sets out what the certificate must state.

Subsection (2) requires a certificate to state that in the opinion of the person giving the certificate the scheme is able to meet the minimum contributions standard for all its active members throughout the certification period. This subsection effectively achieves in the legislation the first of the policy principles I set out earlier; namely, that an employer must be confident at the point of certification that the scheme will provide minimum contributions for everyone participating under the duty. This is crucial if we are to ensure that certification may be used by employers with good schemes only. We do not want to leave open a risk that some individuals could be enrolled in schemes where it was clear that from the outset they would persistently save below the minimum level. I am sure we have common cause on that issue.

The noble Baroness indicated—I accept that her amendment is a probing amendment—some concern that subsection (2) could drive employers to undertake individualised checks of their membership in the same way as they would under the existing test. Let me reassure her on this matter. Certification enables an employer to look at its scheme once a year and, provided it is confident that it meets the minimum standard at that point, to proceed for the coming year in the knowledge that it will remain compliant even if individuals go on to experience minor or sporadic shortfalls. In that sense, certification reduces the need for an employer to consider whether to future-proof an existing scheme in case of unexpected changes to an individual’s pay.

While the standard that must be met at the start of each certification period relates to all members, we envisage the process in part being a matter for regulations. I accept that some of the important detail is yet to come through in those regulations, particularly what de minimis will mean in this context. We anticipate that the process will include scope for discretion on the part of the employer or connected person; for example, in relation to the extent of the analysis he must undertake before signing a certificate. In that way, employers or connected persons who are confident of the quality of the scheme could elect not to conduct fully individualised checks. It will depend on the circumstances of the individual scheme and in part on the level of contributions that are paid under the existing scheme and on the number of employees whose pay is comprised of components that are not covered by the existing scheme arrangements and perhaps on how sensitive outturn pay is to the varying business levels that are undertaken.

Although there will probably be a degree of prescription in the regulations, it will be important for employers to have discretion about the extent of the work they need to do to gain the assurance that they believe is necessary to go through that certification process. I hope that on that basis the noble Baroness will feel that she need not press her amendment. There is still some detail to be worked out. We want continued engagement with stakeholders. It has been important in taking us from where we were to where we are.

In relation to subsection (9) and the opportunity to repeal, it was put in place, at least in part, because we believe that there is a reasonable prospect that, once auto-enrolment gets under way, employers will be less inclined to follow this route, and it will be easier for them down the track to establish that their schemes are compliant.

From another point of view, if, in the event, the certification process is not working satisfactorily and is throwing up persistent undersaving by people, we would not want to proceed with it, but we want to give it a fair wind and work with stakeholders to see whether we can complete the detail. As the noble Lord, Lord Oakeshott, said, it is important to strike the right balance. This is part of the arrangement that we are putting in place to avoid levelling down, which is crucial, especially at the current time.

My Lords, I thank the Minister for that reply and I shall not prolong the debate. We share the same aims. From our perspective, some of the language in the subsection could be used in a way that does not achieve the right result; that is the point that I was trying to make. Much will depend on how the Government implement this in practice in whether they achieve the agreed outcome, which is to maintain private provision at a higher level than the basic required under the Bill. As we share that aim, we will just have to see how things turn out, but I just record that if the Government do not implement it with sensitivity, levelling down will follow. I beg leave to withdraw the amendment.

Amendment No. 5, as an amendment to Amendment No. 4, by leave, withdrawn.

On Question, Amendment No. 4 agreed to.

Clause 37 [Calculation and payment of contributions]:

6: Clause 37, page 18, line 44, after “pay” insert “on behalf or”

On Question, amendment agreed to.

Clause 60 [Powers to require information and to enter premises]:

7: Clause 60, page 33, line 5, leave out “qualifying scheme” and insert “pension scheme that is relevant to the discharge of those duties”

8: Clause 60, page 33, leave out lines 11 and 12

9: Clause 60, page 33, line 16, leave out ““worker” or “qualifying scheme”” and insert “or “worker””

On Question, amendments agreed to.

Clause 66 [Duty to establish a pension scheme]:

10: Clause 66, page 36, line 24, leave out “powers conferred by subsection (1) are” and insert “power to make provision in pursuance of subsection (1) is”

The noble Lord said: My Lords, I shall speak also to the other government amendments in the group. As noble Lords will recall, during Committee, the noble Baroness, Lady Noakes, successfully moved an amendment that resulted in a duty on the Secretary of State to set up the scheme, rather than providing a power to do so. There was a clear feeling in the Committee that there should be no ambiguity in the drafting. The need for clarity on such a crucial issue is understandable, which is why we will not seek to overturn that amendment.

However, I want to introduce these amendments to ensure that we do not inadvertently restrict the Government's ability to make future changes to the scheme order. As I explained during Committee, the details of the scheme will be set out in the scheme order and it may be either desirable or necessary at some time in future—we are potentially looking at a long time here—to amend the scheme order.

In accordance with the provisions of the Interpretation Act 1978—much maligned last time that I used that expression—we would have been able to use the power in the clause as drafted to do so. These technical amendments to Clauses 66 and 67 will ensure that the duty remains without unintentionally harming the objectives or technical workings of the Bill.

Amendment No. 10 amends Clause 66(8) and will put beyond doubt that the scheme order could be amended under Section 14 of the Interpretation Act if that proves necessary. Amendments Nos. 11 to 15 then amend each of the subsections in Clause 67. The amendments will make clear that subsections (2) to (5) of that clause refer to any order under Clause 66, not just an establishing order. So they would, for example, apply to an amending order also.

I hope that noble Lords will agree that, in addition to the amendment moved by the noble Baroness, Lady Noakes, in Committee, these amendments will provide absolute clarity about the duty to establish a scheme. I beg to move.

My Lords, taking it on trust that the effect of the amendments is what the noble Lord says, we have no objection to them.

On Question, amendment agreed to.

Clause 67 [Scheme orders: general]:

11: Clause 67, page 37, line 2, after “order” insert “under section 66”

12: Clause 67, page 37, line 5, after “order” insert “under section 66”

13: Clause 67, page 37, line 7, after “order” insert “under section 66”

14: Clause 67, page 37, line 9, after “order” insert “under section 66”

15: Clause 67, page 37, line 15, after “order” insert “under section 66”

On Question, amendments agreed to.

16: After Clause 72, insert the following new Clause—


(1) The Secretary of State must appoint a person to review in relation to a scheme established under section 66—

(a) the effect of provision made under section 69 (maximum amount of contributions),(b) the effect of any restrictions on rights to transfer into the scheme or transfer out to another pension scheme, and(c) such other matters as the Secretary of State may direct.(2) The appointment under subsection (1) must be made on or after the later of—

(a) 1 January 2017;(b) the end of five years beginning with the first day on which contributions are paid to the scheme by or in respect of members.(3) The person appointed under subsection (1) must—

(a) prepare a report of the review, and(b) send a copy of the report to the Secretary of State.(4) The Secretary of State must lay before Parliament a copy of the report.

(5) The Secretary of State may pay to the person appointed under subsection (1) such remuneration and expenses as the Secretary of State may determine.”

The noble Lord said: My Lords, as noble Lords will be aware, we are committed to a review of all aspects of the personal account scheme in 2017. When we debated this issue on Report, my noble friend agreed to consider putting that commitment in the Bill. Following this consideration, the amendment puts into the Bill a requirement for the Secretary of State to commission an independent review of the features of the personal accounts scheme that are designed to focus it on the target market; specifically, the annual contribution limit and the prohibition of pension fund transfers to and from the scheme. As my noble friend explained, the review will consider these policies and gauge whether they have been effective in focusing the scheme on its target market without detriment either to the scheme or to its members.

We also debated whether the scope of the 2017 review should be extended to include other issues. My noble friend Lady Hollis, for example, suggested that it should consider voluntary contributions on earnings below the contributions bands. We agree that it might be right to include other issues in the review. We have therefore included in the amendment scope for a future Government to decide the exact remit of the review. This is not something that we can or should decide so far in advance. Other issues may arise between now and 2017 that are more appropriate to include in the review. It will be up to the Government at the time to consider what, if anything, in addition to the contribution limit and the transfers ban the review should cover.

We have always been clear that it is our aim to have a review in 2017; that is, five years after the scheme became operational. We see no reason why the scheme would not become operational as planned, but the amendment, in line with the spirit of the amendment tabled by the noble Lord, Lord Skelmersdale, and the noble Baroness, Lady Noakes, on day one of Report allows us to ensure that there will be a gap of five years between the scheme becoming operational and the date of the review.

On Report, the noble Lord, Lord Skelmersdale, expressed interest in how we would define “operational”. The amendment makes it clear that it means the first day on which contributions are paid to the scheme by or for members. This ensures that the timing of the review is tied to when the scheme starts to act in its capacity to accept contributions and invest them for its members.

Our approach, on both the scope and the timing of the review, is to make clear our intentions but to allow for all eventualities. We believe that this is the right approach when developing pensions policy for the long term without the benefit of hindsight. I beg to move.

My Lords, I must first express my gratitude to Ministers for accepting that it would be right to put the review into a formal setting in the Bill. However, the amendment is a lot more definite than mine was. For one thing, the word “must” appears four times in it. I have never, in all my time in your Lordships’ House, seen any Act of Parliament, which this Bill will become, with the word “must” in it four times.

The Government are still maintaining what my noble friend and I believe is a fiction—that personal accounts will start on or about 1 January 2012. I do not think that they will, so I was surprised to see in proposed new subsection (2) that the appointment of the individual to conduct the review, and the review itself,

“must be made on or after the later of (a) 1 January 2017”—

in other words, five years after the beginning of personal accounts—or at,

“(b) the end of five years beginning with the first day on which contributions are paid”.

I suggest that proposed new paragraph (b) is a lot more likely than (a). However, having teased the Government slightly on this, I must say that I am more than content with the amendment.

My Lords, I obviously welcome this amendment. I, too, am puzzled at the use of the word “must” rather than “shall”, which is conventional parliamentary counsel language, but no doubt it is desirable if it adds extra emphasis. Subsection (1)(b) of the proposed new clause refers to,

“the effect of any restrictions on rights to transfer into the scheme or transfer out to another pension scheme”.

Does that mean that, despite my understanding of the assurances from the Minister about the department’s approach to stranded pots, nothing will be done before 2017 and only then will it be reviewed; therefore, any action may take until one or two years after that? People may find that any money they put into a personal account between 2012 and 2017 could end up being a stranded pot because they cannot move it into another pot that they already hold. I should like some assurances that stranded pots will be dealt with as of now and not postponed to 2017. It is an injustice. It is institutional theft of money and should not happen.

All this is on the accountability of the Secretary of State to Parliament once the report has been completed. Will my noble friend assure me that, as regards the scope of such a report, there will be either a letter to which we can respond or, better still, a debate or some other format so that Members of your Lordships’ House can add to the shopping list of issues to be reviewed in the report and not merely depend on such other matters as the Secretary of State may direct? I could conceive that the views of the Secretary of State as to what should be reviewed could be at odds with what many of your Lordships might wish to see reviewed. I do not want to see those issues missed because the power lies exclusively with the Secretary of State to determine the report’s content. I ask my noble friend to assure us that vehicles will be devised, of whatever form, for this House and, no doubt, the other place, as well as other stakeholders and players in the field of pensions, to have input on the issues of concern to the person handling this report, back to the Secretary of State and then on to Parliament.

My Lords, I shall, rather than must, speak on this amendment, which we on these Benches support, as we supported with our votes the original amendment tabled by the noble Lord, Lord Skelmersdale. I also strongly support what the noble Baroness, Lady Hollis, has just said about stranded pots. That has been one of the cop-outs—I hope that I can put it that way—in this Bill. It is very unsatisfactory that it has not been dealt with and I hope that we do not have to wait for five years or, if the crystal ball of the noble Lord, Lord Skelmersdale, is right, even longer, before action is taken to rectify this, as the noble Baroness puts it, serious injustice.

My Lords, I thank the noble Lord, Lord Skelmersdale, for counting the “musts”. Apparently we are at a watershed and parliamentary counsel has changed its general view from the word “shall” to “must”. Noble Lords here are the first to note it. I hope that I do not have to withdraw any of these words, but that is what my note says. I understand that our commitment is not to 1 January 2012 but to “during” 2012. We continue with confidence that we will achieve that.

We have given a series of assurances during the passage of this Bill on stranded pots and other matters. This amendment in no way modifies those assurances. This is an enabling amendment and does not in any way limit the commitments we have already given. I am not willing to give a specific assurance about how we will handle the scope. That will be for 2017. But our record to date, and I believe any Government’s record on this important issue, will inevitably and quite properly involve close liaison with stakeholders and all groups in establishing the scope. It is inconceivable that there will not be a process by which the House will be able to express its views.

On Question, amendment agreed to.

[Amendment No. 17 not moved.]

Clause 80 [Finance]:

18: Clause 80, page 41, line 31, after “may” insert “, with the consent of the Treasury,”

The noble Lord said: My Lords, I shall also speak to the other amendments in this group. They have similar wording and intent, but the amendments to Clause 80 apply to financial provisions for the delivery authority while those to Schedule 1 are to provisions for the trustee corporation.

There has been considerable interest in the financial arrangements for the personal accounts scheme during the passage of the Bill through the House. I recognise the legitimate concerns raised by a number of noble Lords, particularly the noble Baroness, Lady Noakes, that there must be adequate protection for the taxpayer. That is the Government’s intention but I accept that there is scope to make that clearer on the face of the Bill. On Report I undertook to look again at the financial provisions in Clause 80 and Schedule 1, and as a result I have tabled these amendments to the finance provisions in the Bill to make clear that any financial assistance that the Secretary of State may make to the delivery authority or the trustee corporation will be consistent with general rules on government lending. In particular, the amendments specify that any loans must attract an interest rate consistent with the conditions that would apply under Section 5 of the National Loans Act 1968; that is to say, at a minimum they must cover the Government’s cost of borrowing. The amendments therefore reinforce our policy commitment to delivery the scheme at nil cost to taxpayers and that the scheme should be self-financing over the longer term. These amendments give Parliament further reassurance of the Government’s intentions with regard to funding the personal accounts scheme. I beg to move.

My Lords, I thank the Minister for bringing forward these amendments, and in particular for clarifying the basis on which loans should be made, which follows in part a suggestion I made in one of my amendments on Report. The Bill still allows non-commercial terms to grants to be made to either the delivery authority or the trustee corporation when that is up and running. I simply note for the record that we on these Benches do not accept the concept of a universal service obligation necessitating long-term subsidy for the personal accounts scheme, but we are grateful for these amendments.

My Lords, I am grateful for that support. I note that the noble Baroness has not changed her position on the universal service obligation that we believe these provisions imply, but that is a debate that will doubtless continue.

On Question, amendment agreed to.

19: Clause 80, page 41, line 35, leave out from first “conditions” to end of line 36 and insert—

“(c) in the case of a loan, must be given on a condition requiring the loan to be repaid with interest at a rate approved by the Treasury.(3) Section 5 of the National Loans Act 1968 (rates of interest on certain loans out of the National Loans Fund) has effect as respects the rate of interest on a loan under this paragraph as it has effect as respects a rate of interest within subsection (1) of that section.””

On Question, amendment agreed to.

Clause 97 [Interpretation of Part]:

20: Clause 97, page 50, line 9, at end insert “or (where section 9 applies) a worker in relation to whom there are direct payment arrangements (within the meaning of section 111A of the Pension Schemes Act 1993 (c. 48)) between the worker and the employer;”

On Question, amendment agreed to.

21: After Clause 124, insert the following new Clause—

“Review of the initial operation of sections 38A and 38B of the Pensions Act 2004

(1) The Secretary of State must carry out a review of the operation of sections 38A and 38B of the Pensions Act 2004 (c. 35) (which were inserted into that Act by paragraph 2 of Schedule 9 to this Act) during the period of 4 years beginning with the day on which that paragraph fully comes into force (“the commencement date”).

(2) The Secretary of State must set out the conclusions of the review in a report and lay the report before Parliament.

(3) The report must be laid before the end of the period of 5 years beginning with the commencement date.”

The noble Baroness said: My Lords, this amendment would introduce a new clause after Clause 124. I should state at the outset that I am quietly confident that the Minister will look kindly on it, not least because I accepted all the Government’s helpful drafting amendments. Clause 124 and the associated Schedule 9 introduce amendments to the Pensions Act 2004, the most significant of which is the new material detriment test for contribution notices in Section 38A and its associated due diligence defence in Section 38B. I will not go over the history of this; suffice it to say that we welcomed on Report that the Government had rethought this approach, and in broad terms we supported what is now in Schedule 9.

On Report, however, my noble friend Lord Lucas and I raised a number of specific concerns with the Minister, based largely on concerns raised with us by organisations such as the Confederation of British Industry, the British Venture Capital Association and several professional advisers. The Minister gave a number of helpful replies, which was appreciated by both the House and those outside who follow our proceedings. There remain some concerns in the business community, though, about how these new provisions will work in practice. I shall list a few.

The provisions can apply to individuals. Will they be used in that way in practice? Will directors and others start to behave in a risk-averse way against that possibility? We are promised that there will be guidance to cover the concepts of likelihood and materiality, which are an integral part of the material detriment test. Will that guidance in practice prove satisfactory and easy to apply? The statutory code of practice contains a list of circumstances in which contribution notices might be issued but does not preclude the regulator from issuing contribution notices in other circumstances. Will that happen in practice, thus undermining the usefulness of a code? The defence in Section 38B is not framed as an objective test but rests on the regulator’s judgment. Will it in fact protect those whom it is intended to protect?

There is also an overarching issue in that several of the concerns we aired were met by a ministerial response that the regulator had to act reasonably. We need to see what that means in practice because one man’s reasonableness can be another’s irrationality. We also had a debate about what “reasonably” actually means in practice. Is it reasonableness in the context of the regulator’s own duties or is it set in a broader context? Our advisers say that there is no settled case law on this, so we need to see how the regulator will in fact behave.

In the light of all this and some other detailed points, I felt that a review of the workings of the new sections was not an unreasonable thing to put in the Bill. A review would need to establish whether the new sections did in fact help to protect pension funds and the PPF from the unreasonable acts of employers in the areas set out in the code, but there is the other side of the coin in the impact that the new sections will have on commercial life. Will, as some suggest, the new provisions stop beneficial corporate transactions from happening where a defined benefit scheme is involved? Are there any unintended consequences such as exponential growth in indemnities and warranties with associated complexity and cost? Will the volume of clearance applications be high or low? Will they be handled expeditiously, and will they cost a lot or very little?

The amendment does not require it, but I hope that the DWP would consult broadly in carrying out the review required by this amendment. It may be that the fears expressed to us will prove completely unfounded, but it is no bad thing to search for that answer.

On timing, the new clause asks for the review to be carried out after four years, with a report available within 12 months from that. I confess that I would have liked a review to start sooner, but I have accepted the Government’s opinion that a meaningful review would need the time-frame set out in this amendment. I look forward to the Minister’s response and I beg to move.

My Lords, this allows what seems to be a reasonable time to elapse before the review is carried out, and when all is sweetness and light in this way between the Government and the Official Opposition Front Bench, far be it from us to interfere.

My Lords, I thank the noble Baroness for tabling the amendment and I thank the noble Lord, Lord Oakeshott, for his support. I shall start by saying that the Government accept the principle that the operation of new Sections 38A and 38B should be kept under review. These are new provisions and we want to ensure that they operate as intended, which is to provide adequate protection for members and the PPF, and that they do not have unforeseen consequences for business. Under current arrangements, these provisions will be monitored by the regulator and the department. The regulator will want to keep the operation of the anti-avoidance measures under regular review, as they have an important role in encouraging appropriate behaviours. These powers will also be overseen and evaluated by the department as part of the regular liaison between the department’s officials and the regulator. This regular review will assess and evaluate the operation of policy and legislation alongside formal performance reviews and liaison at senior official and ministerial levels.

The Government recognise that stakeholders and the Opposition have raised a number of concerns about the operation of these provisions. Unless the noble Baroness presses me to do so, I will not go back through them, as they are on the record, but I would be happy to try again if she so wishes. However, concerns have been raised about the operation of these provisions in respect of whether there will be any unintended consequences, in particular that, while deterring what we would all agree is bad practice, they should not operate unreasonably to deter genuine and desirable corporate activity. I appreciate that there may be a desire for a commitment in the Bill for the department to carry out a review to ensure that the policy is operating as intended. Therefore, we are content to agree to the noble Baroness’s amendment seeking a formal review with a report to Parliament. This will put beyond doubt our commitment to evaluate the operation of these provisions.

On the time period, two years is too short; four years is a more realistic and appropriate timeframe for a review. It is important to allow time for the legislation, the regulator’s code of practice and its guidance to bed in and for these to be tested in operation. A period of four years will provide the regulator with an opportunity to properly implement the amended powers and for employers and those who advise them to become more familiar with the regulator’s approach. A four-year timeframe will ensure that the immediate and longer-term impacts can be properly considered, based on a robust and substantial body of evidence.

Following the introduction of the 2004 Act moral hazard provisions, there was a period during which the market adapted to the legislation. It is important to note that the regulator experienced an initial high volume of clearance inquiries as the market responded to the 2004 Act changes. This has since stabilised and there has been a decline in clearance inquiries since 2005. Similarly, there may be an initial increase in inquiries relating to the amended powers, but we expect that this will decline over the longer term. We therefore believe that a review after four years would better ensure that the business community has had sufficient opportunity to understand the new powers and that we are past any initial learning curve as experienced in 2004. We are pleased to accept the amendment and thank the noble Baroness for tabling it.

My Lords, I thank the Minister for his response.

On Question, amendment agreed to.

Clause 130 [Delegation of powers by the Regulator]:

22: Clause 130, page 66, line 17, leave out from “functions),” to end of line 21 and insert “the existing provision becomes sub-paragraph (1).

(2A) For paragraph (e) of that sub-paragraph substitute—

“(e) permitting the Regulator to authorise such persons, in such circumstances and under such arrangements, as the Regulator may determine, to exercise on behalf of the Regulator—(i) the power to determine whether to exercise any of the functions listed in sub-paragraph (2);(ii) the power to exercise any of the functions listed in sub-paragraph (2) or such other functions as may be prescribed.”(2B) After that sub-paragraph insert—

“(2) The functions mentioned in sub-paragraph (1)(e) are—

(a) the power to issue an improvement notice under section 13;(b) the power to issue a third party notice under section 14;(c) the power to recover unpaid contributions under section 17;(d) the power to require information under section 72;(e) the power to vary or revoke a determination, order, notice or direction under section 101;(f) the power to require payment of a penalty under section 10 of the Pensions Act 1995;(g) the power to issue a compliance notice under section 34 of the Pensions Act 2008;(h) the power to issue a third party compliance notice under section 35 of that Act;(i) the power to issue an unpaid contributions notice under section 36 of that Act;(j) the power to issue a fixed penalty notice under section 39 of that Act;(k) the power to issue an escalating penalty notice under section 40 of that Act;(l) the power to recover penalties under section 41 of that Act;(m) the power to review a notice under section 42 of that Act;(n) the power to issue a compliance notice in respect of prohibited recruitment conduct under section 50 of that Act;(o) the power to issue a penalty notice in respect of prohibited recruitment conduct under section 51 of that Act.””

The noble Lord said: My Lords, these technical amendments are designed to ensure that there is no confusion about the regulator’s ability to contract out its functions. Paragraph 21 of Schedule 1 to the Pensions Act 2004 enables regulations to be made permitting the regulator to contract out its regulatory functions. Through the introduction of Clause 130 of this Bill, we amended Schedule 1 in Committee to facilitate the regulator’s ability to contract out its functions by removing the requirement to specify the identity of the contractor in regulations.

As I said at the time, it is important that the regulator has the ability to contract out the functions associated with the compliance regime to ensure that it can fulfil this new role in the most efficient and cost-effective way. However, as the Bill is currently drafted, there remains some doubt as to whether the regulator will be able to deliver through contractors. Our intention in delivering the compliance regime is that the regulator will be able to delegate both the power to determine whether to exercise its functions and its power to actually exercise those functions.

This distinction is made in other parts of the Pensions Act 2004 but not in paragraph 21 as amended by Clause 130. Without this distinction, there is a risk that the regulator would not be able to delegate decision-making relating to a function. In the case of compliance notices, for example, this could mean that, every time a contractor wanted to issue a notice to an employer who had failed to auto-enrol a jobholder, it would need to pass this information back to the regulator for a formal decision and therefore, potentially, significantly increase the time for processing the notice and the potential for bottlenecks. We are therefore seeking to introduce technical amendments to Clause 130 that would ensure absolute clarity by referring to both exercise and determination.

However, we do not want this power to allow the regulator to delegate both the exercise and determination for the whole range of its functions. We want to explicitly limit the ability to contract out determination to the regulator’s activities to enforce the new compliance regime. The regulator has done further design work over the summer on operational models and has identified the range of functions, both in this Bill and the 2004 Act, to enable it to deliver the compliance regime. The amendment therefore explicitly limits the power to delegate the determination to those functions. The Secretary of State will retain his existing power, as amended in Committee, to enable the regulator to contract out the exercise, but not the determination, of functions that are prescribed in regulations.

Finally, Amendment No. 23 ensures that any regulations that have already been made under the contracting-out powers in Schedule 1 to the 2004 Act remain in force and may be amended for consolidation purposes only.

It is worth stressing that these amendments relate to an existing regulation-making power. To enable the regulator to contract out any of its functions, regulations will have to be laid before the House. In relation to the functions that the regulator is seeking to contract out to deliver the compliance regime, we will be publishing regulations next year for consultation.

I hope that noble Lords agree that it is important to ensure absolute clarity around the regulator’s ability to contract out and that they are reassured by our efforts to limit this power as far as possible. I beg to move.

On Question, amendment agreed to.

23: Clause 130, page 66, line 22, at end insert—

“(4) Subsections (2) to (2B)—

(a) do not affect any regulations made under paragraph 21(e) of Schedule 1 to the Pensions Act 2004 before the coming into force of this section, and(b) do not affect the powers conferred by that paragraph, so far as exercisable for the purpose of making, by way of consolidation, provision having the same effect as any provision of those regulations.”

On Question, amendment agreed to.

Clause 132 [Additional Class 3 contributions]:

24: Clause 132, page 67, line 4, leave out “prescribed conditions” and insert “conditions prescribed by regulations made by the Treasury”

25: Clause 132, page 67, line 24, leave out “of a relevant class” and insert “that are of a relevant class for the purposes of paragraph 5 or 5A of Schedule 3”

26: Clause 132, page 68, line 5, leave out “of a relevant class” and insert “that are of a relevant class for the purposes of paragraph 5 of Schedule 3”

On Question, amendments agreed to.

Clause 133 [Additional Class 3 contributions (Northern Ireland)]:

27: Clause 133, page 68, line 29, leave out “prescribed conditions” and insert “conditions prescribed by regulations made by the Treasury”

28: Clause 133, page 69, line 5, leave out “of a relevant class” and insert “that are of a relevant class for the purposes of paragraph 5 or 5A of Schedule 3”

29: Clause 133, page 69, line 31, leave out “of a relevant class” and insert “that are of a relevant class for the purposes of paragraph 5 of Schedule 3”

On Question, amendments agreed to.

Clause 140 [Orders and regulations]:

30: Clause 140, page 74, line 19, after “17(1)(c),” insert “(Sections 20, 24 and 26: certification that quality requirement is satisfied),”

31: Clause 140, page 74, line 22, after “section” insert “(Sections 20, 24 and 26: certification that quality requirement is satisfied)(9),”

On Question, amendments agreed to.

Clause 146 [Commencement]:

32: Clause 146, page 76, line 22, leave out paragraphs (g) and (h) and insert—

“( ) sections 130 to 133;”

On Question, amendment agreed to.

Schedule 1 [The trustee corporation]:

33: Schedule 1, page 78, line 11, at end insert—

“(1A) Subject to sub-paragraph (1B), the Secretary of State must consult the chair of the corporation before appointing an ordinary member (that is, a member who is not, on appointment, also appointed as chair).

(1B) A vacancy in the office of chair does not prevent the appointment of an ordinary member.”

The noble Lord said: My Lords, we had a discussion on Report about the role of the chair of the trustee corporation. The noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, gave the House the benefit of their extensive boardroom experience, in particular on the distinct role of the chair. Their argument on the need for the chair to be involved in the appointment process of other members was entirely sensible and we committed to bringing back an amendment that would confirm this. Amendment No. 33 requires the Secretary of State to consult the chair before appointing any other members of the trustee corporation. Proposed new sub-paragraph (1B) ensures that, if the chair is vacant, that will not prevent another member of the trustee corporation from being appointed. It also allows for a group of inaugural members to be appointed, along with the inaugural chair. I beg to move.

My Lords, I am grateful to the Government for bringing this back to respond to an issue that we raised.

34: Schedule 1, page 84, line 8, after “may” insert “, with the consent of the Treasury,”

35: Schedule 1, page 84, line 12, leave out from first “conditions” to end of line 13 and insert—

“(c) in the case of a loan, must be given on a condition requiring the loan to be repaid with interest at a rate approved by the Treasury.(3) Section 5 of the National Loans Act 1968 (c.13) (rates of interest on certain loans out of the National Loans Fund) has effect as respects the rate of interest on a loan under this paragraph as it has effect as respects a rate of interest within subsection (1) of that section.”

On Question, amendments agreed to.

Schedule 9 [Contribution notices and financial support directions under Pensions Act 2004]:

36: Schedule 9, page 131, line 26, at end insert—

“3A In section 90(3) (revision of codes of practice), at the end insert “except that the Regulator may not revise the whole or any part of a code issued under subsection (2)(aa) before the expiry of 2 years from the first issuance of a code under that paragraph.””

The noble Baroness said: My Lords, Amendment No. 36 would insert a new paragraph into Schedule 9, which, in turn, amends Section 90 of the Pensions Act 2004 on statutory codes of practice. Paragraph 3 of Schedule 9 introduces the welcome requirement for a code of practice for the circumstances in which the regulator expects to issue a material detriment contribution notice under the provisions introduced by the Bill. The draft code of practice has already been issued by the regulator and that, too, has been useful. I do not know when the code will be issued in its final form. Presumably it will be early next year, as it is retrospective to April this year. Perhaps the Minister can update the House on the likely timing.

My amendment says that, once the code has been issued, it should not be revised for two years. The aim is to provide some stability for those who need to navigate commercial transactions so that they do not run on to the rocks of the contribution notice regime. I am sure that the Minister will be aware that a contribution notice is regarded by companies and their advisers as something to be avoided if at all possible.

The commercial world hates uncertainty and wants a reasonable understanding of what the rules are so that business can be planned and executed in a reasonably secure way. There is quite enough change and uncertainty in markets and in commercial life in general without their having to cope with a constantly shifting regulatory environment. I think that that is a commonplace in terms of what constitutes better regulation, to which the Government are, of course, signed up.

I am aware that the existence of a code of practice does not the prohibit the regulator from issuing a contribution notice under new Section 38A but, as the Minister has reminded us on several occasions, the regulator must act reasonably and should therefore depart from the code only in unusual circumstances. That is why certainty as to the code is important in its own right.

I was prompted to table the amendment by the Government’s recent consultation on Section 75 and employer debt, which was announced by a DWP Minister at a CBI breakfast a week or so ago. Its contents have been made available to a number of organisations, but it is has not been made available publicly, even to the Official Opposition. However, we are resourceful people in the Opposition and we have got a copy.

The consultation document makes the point that any change to the employer debt regime would be targeted at those who provide a strong covenant. It goes on to say that the regulator would use its anti-avoidance powers, including the new material detriment powers, to protect members’ benefits and the PPF. So far, so good.

The following sentence in paragraph 14 of the consultation document caught the eye of one of my contacts:

“Indeed the Government considers that such regulatory intervention may be appropriate when a reorganisation would have a detrimental impact on the pension scheme (for example such as a weakening of the employer covenant or the employer’s obligations to the scheme)”.

This reference to simple “weakening” of the covenant seems to be at odds with the quite clear sets of circumstances set out in the code of practice. The nearest equivalent in the code of practice is about the,

“severing of employer support for the scheme so that employer support is removed, substantially reduced or becomes nominal”.

It has been generally understood that “severing” is much more dramatic than “weakening” and certainly more than we would expect to find in most routine company reorganisations, which is where the employer debt provisions have caused a problem and led to the consultation under Section 75.

Will the Minister confirm that the consultation document does not represent a shift in thinking on the use of the material detriment provisions? Alternatively, are we expecting the code to say that company reorganisations more generally that involve a weakening will be included within the code? Either way, certainty is required. When the Minister responds, perhaps he will comment on why the Section 75 consultation is such a big secret. I hope that he will recognise the business community’s legitimate concerns for certainty and stability that lie behind the amendment. I beg to move.

My Lords, the noble Baroness, Lady Noakes, has been more resourceful than I have, as I have not yet got hold of a copy of the document. However, I have been rather puzzled by the purpose and the timing of the consultation, as it seems that the right honourable Rosie Winterton had hardly got her feet under the desk before it was issued. I wonder whether it is in some way to do with the arrival of the noble Lord, Lord Mandelson, and whether it is all part of a great deregulatory agenda. However, it is surprising that the consultation has suddenly been announced and not made public. A number of individuals, including people in the pensions regulatory area, have expressed serious concerns to me about what is going on. At the very least, will the Minister send noble Lords a copy of the document—and if not, why not? Will he please put a copy in the Libraries of the Houses? Is there any secrecy or problem about it, given that a very short timescale is involved? I would welcome reassurances on those points.

My Lords, I was not sure that our discussion would go in this direction, but I am happy to try to deal with the points raised in relation to Section 75. I stress that an informal consultation is under way in advance of what might be the usual formal consultation. It has been driven because the Section 75 issue has been around for a little while. I am certain from the meetings that I have attended that the CBI would maintain that it is the number one issue for it so far as pension provision is concerned. That is why we have gone down the path of kick-starting the informal consultation, with the intent, depending on where that heads, to go through the more formal consultation processes in due course.

There is absolutely no reason why noble Lords should not see a copy of the consultation document; I shall make sure that they are sent one straightaway. Indeed, noble Lords’ input would be welcome. I attended the first stakeholder group meeting, which began to exchange hints and views on this matter. We need to see where it goes and whether the various propositions set down in this informal consultation are the right way forward. There were four propositions, one of which was to have no change. Another was to switch the process of triggering the debt and apportionment, so that apportionment goes first and the trigger of the debt follows that.

My Lords, I thank the Minister for that assurance. However, it makes me wonder when a consultation is not a consultation. How many people or bodies are being informally consulted at the moment?

My Lords, on the number of bodies being informally consulted, I think that the interests around the table included the Pensions Regulator—this is not a state secret—as well as the CBI, the Association of Pension Lawyers and the actuaries.

Indeed, my Lords—a nice summary. But I shall resist trying to give a definition as to when an informal consultation becomes a formal one.

My Lords, indeed, it was.

There is nothing sinister about this. The issue is a serious one; we are trying to understand the scale of the issue and how it might be addressed, if it warrants a change in the current position. I stress that there is no shift in relation to the position so far as we have discussed the material detriment test and the code of practice.

As for the consultation on the code that we refer to here, it cannot start until Royal Assent, which we hope will be imminent. We hope that the code will be in place in the first half of 2009—obviously, after being laid before Parliament.

Noble Lords will recall that, as part of the package of amendments on the Pensions Regulator’s anti-avoidance powers, we introduced a requirement on the regulator to publish a code of practice. This code would set out the circumstances in which the regulator expects to issue a contribution notice under the material detriment test, as the noble Baroness explained. The Government concluded, in consultation with key stakeholders, including the CBI, that setting out these circumstances in a code was the most appropriate approach. This approach would allow the regulator, in consultation with stakeholders, to update the code in light of its operation while giving employers and trustees a degree of certainty on the application of the law.

Section 91 of the 2004 Act allows for codes of practice to be updated, but such changes have to be consulted on and are subject to the Secretary of State’s approval. The Secretary of State is required to lay the draft code in Parliament for a period of 40 days and either House may resolve that no further proceedings be taken on the draft code.

Amendment No. 36 would remove the regulator’s discretion to modify the code of practice in the light of its operation during the first two years of its introduction. It would not be right to prevent the regulator being able to update the code to deal with new risks to members’ benefits in this fast-developing and innovative market. We cannot rule out that certain parties may see the definitions in the code as a challenge to design structures not falling within these definitions, which may still cause unacceptable risks to pension scheme members and the PPF. However, I understand that employers and the pensions industry require as much certainty as possible.

As I said at Report, officials worked closely with the regulator and key stakeholders during the summer to prepare the contents of the draft code, which was published on 20 October. In drafting the code, the regulator and stakeholders started from a consideration of new business models and the risks that these represented to members’ benefits. They considered a range of circumstances where it could be appropriate to use the material detriment test. For example, most routine corporate activities, such as routine dividend payments, are excluded from the code; whereas other non-routine events, such as the severance of the operating company from its pension scheme which may substantially increase risk to members benefits, would be in scope.

Following this development work, the regulator is confident that the draft code sets out the right circumstances. Therefore, I should like to offer my assurance that the regulator cannot currently envisage any other circumstances which it would need to add to the code in the next two years. As a precautionary measure, however, we could not preclude that if circumstances arose. On that basis, I ask the noble Baroness not to press the amendment.

My Lords, I thank the Minister for that reply and for confirming that there is currently no intention shortly to change the code and that, in particular, the Section 75 consultation document does not imply any change of view at this stage. I am grateful for those assurances. I apologise to the Minister for bowling a fast ball on the Section 75 consultation but I could not resist as this is the last amendment that we will be debating on this Bill. However, the Minister showed his usual, excellent skill and batted my ball away. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

My Lords, I beg to move that this Bill do now pass. Although I would like to say a few words to reflect on the progress made, perhaps I can simply thank all noble Lords who engaged with the Bill and, in particular, the Bill team for their excellent work.

Moved accordingly, and, on Question, Bill passed, and returned to the Commons with amendments.