(Eleventh Day)

Monday, 18 October 2004.

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]

I will miss very much his wonderful, humorous, elegant, witty way of ransacking the 17th century for instances of real rights and poor law overseers in which the state required people to do X, they refused, and of course the state was wrong on every count, which was clear evidence of why the state continues to be wrong on every count. I did not want the opportunity to go by without saying how much those of us who worked with him loved him and will miss him. I shall pause for a second in case anyone wishes to join me in paying tribute to Earl Russell.

Although it is a platitude to say it, he will be greatly missed. He was a unique personality—I suppose that we are all unique personalities but his was more unique than many. Therefore, it is with great sadness that we should find that he no longer takes part in proceedings on issues of the kind which we are debating today. I am pleased to join with the noble Baroness in paying tribute to a remarkable person who was a hereditary Peer in the best possible sense of the word. He devoted a huge amount of time to the place and worked incredibly hard for the good of the people of this country as a whole.

Being one of Conrad's colleagues was always interesting. My noble friend Lord Addington once said: "The great thing about sitting beside Conrad is that it is a bit like being next to the best bowler of his generation. You never know whether he will take the wickets out of the ground or whether he will get hit for six, but either way it will be spectacular"—and it was. Over the few years in which I had the immense privilege to work with Conrad, I learnt that two things above all else fired him: his passion for justice and liberty. The extent to which poverty compromised those two things, and inflicted indignity on those who suffered it, was the fire that made everything that was good about Conrad come alive.

Had he been so good and unremittingly good on all of that he would have been insufferable. But he was not. He was blessed with a wicked—I repeat, wicked—sense of humour, which was great to be a part of. Last week, I recalled the night when, I think, there were only the noble Baroness, Lady Hollis, the noble Lord, Lord Higgins, our respective Whips, a Bishop and myself in the Chamber. We were in the depths of the pension credit Bill. The noble Lord, Lord Higgins, had proposed an amendment to delete the word "etcetera" on the perfectly reasonable grounds that none of us on the opposition Benches had a clue what it meant. Conrad sidled in beside me and said, "Do you mind if I take this?". I said, "Feel free". He stood up, proceeded to talk about 17th century history and an ecclesiastical court case that had rendered the definition of "etcetera" as the Antichrist.

We all sat back: it was vintage Conrad and we had had enough of what we were doing. The noble Baroness, in customary fashion, stood up like an indulgent schoolmistress and firmly told him and us why we did not want to delete all that because it meant serried ranks of social security legislation that was terribly important.

People outside this place see it as a place of privilege, but they often mistake the privileges that it gives. The great privilege is to have worked with someone like Conrad Russell. I thank all noble Lords for their sympathies.

Clause 275 [ Occupational pension scheme receiving contributions from European employer]:

Page 209, line 26, leave out from "have" to end of line 28 and insert "received information forwarded to them by the Regulator in accordance with section 278(1)."

The noble Baroness said: The amendments on cross-boundary schemes relating to Part 7 are probably one area of the Pensions Bill that has almost no mapping on of Conrad's particular interest. In moving Amendment No. 322, I shall speak also to the rest in the group. I could introduce each amendment separately, but there are rather a lot of them. I have a copy of the speech here, which indicates the purpose of each amendment. If Members of the Committee allow, I shall give each of them a copy of the speech. I shall just make some brief points and then respond to any queries.

Members of the Committee will have also had the background briefing paper that we circulated some time ago, which I hope will have set out the intentions of this section. But, briefly, we are seeking to comply with the European directive, especially Articles 19 and 20, by September 2005. In the briefing and the directive, the proposed structure is, first, to organise itself on a distinction between the home country where the pension scheme is registered and the host country, which is normally where the employer would be. It is a bilateral assumption. Of course, part of the difficulty is that the employees may not always be where the employer is. Sometimes the employer may be where the scheme or corporation is. We may therefore have to seek to produce triangular relationships within a home/host framework. That needs to be worked on.

Secondly, behind the amendments is the fact that the home state where the scheme is incorporated will do the bulk of the regulation, but the host state—that is, where the employer and usually the employees are—will be responsible for ensuring that it is responsive to and subordinate to the social and labour law relevant to occupational pensions within that host country.

My third broad blue-sky statement is that these schemes have higher levels of stringency in their funding requirements and in their need to make good any funding deficits than we are proposing for our schemes, and to give assurances too that the PPF would come into play only where a levy had been raised, which would normally be on a scheme registered in the home country.

We do not expect there to be rapid movement on this; we think that it will be slow for various reasons. The first reason is a very practical one. Most of the details have not yet been worked out. Although three countries—Britain, the Netherlands and Ireland—have well developed occupational schemes and Germany has some schemes, other countries like France and Greece have very little in the way of occupational regimes. This means that the regulatory regimes of all EC countries will get together and work through the working group on harmonising structures and developing the detail. The DWP is to play an active part in that and will be represented at meetings from late October onwards.

However, this will go slowly. For example, what is to happen with a scheme where there are employees in several different quasi host countries? The structure required has to be both rational and sensitive.

Secondly, this will progress slowly because multinationals are only going to go for cross-national, pan-European schemes where they are comfortable about doing that, where they have a substantial number of employees, and where the trustees in either the home or the host country are comfortable. It is also worth saying that most trans-national schemes are quite likely to be defined contribution schemes and therefore only to some degree will come within this regulatory regime. But we want to encourage this development, in part because we think that as a result multinational companies may be able to offer more effective management of their schemes and administration on their assets, thus producing better value for their employees. Moreover, we believe that British pension companies will be able to offer services to a market which is open for development and which may very well play to Britain's financial market strengths. We certainly want to encourage that.

Finally, in the speediest of terms, I shall set out what the amendments will do. Government Amendments Nos. 322, 326 and 327 will ensure that we comply with Article 20 of the directive. Government Amendment No. 323 modifies the existing definition of "European employer" because it is problematic where the employer is not the same as the host state, and it is necessary for the regulator to have the power to enshrine the discussion as it proceeds.

Government Amendments Nos. 324 and 325 clarify the two-step process of authorisation and approval. Government Amendment No. 328 permits the regulator to ring-fence assets. However, again the forthcoming meetings of the EC working group will refine this further. Government Amendment No. 329 describes the situation of a non-UK cross-border scheme. Government Amendment No. 330 returns to a degree to the ring-fencing issue by referring back to and implementing the provisions of Article 19 and the protection of assets. Finally, government Amendments Nos. 329A and 330A are minor and technical.

So, I have gone through this group of amendments briefly, having also circulated a speech and a briefing paper and I hope, with those, that the Committee will find our approach—which is to work together with our colleagues in other countries to develop a coherent response to Articles 19 and 20—is the right way forward. I beg to move.

At the very beginning of our discussions in this House, the noble Baroness kindly provided a comprehensive statement about the problems associated with this area, and has again provided us with more extended speaking notes than she used today. That being so, I do not propose to go into it in enormous detail at this moment, but to ask whether arrangements could be made for those particularly involved with these matters, either those with multinational schemes or companies providing such services across European borders, could be issued with something approximating to the extremely helpful notes distributed to us, and perhaps also drawing on the remarks made by the noble Baroness today.

Back in the 1970s, I well remember that those in the pension and insurance industries would remark on what a fantastic opportunity the EC was because we were so competitive. Alas, I am afraid that it was noted in the information that the noble Baroness provided to us that the measure is really the first step in going ahead in this direction, so far as occupational schemes are concerned. In the mean time, the UK insurance industry has shrunk very considerably. At all events, we must certainly do everything that we can to take the opportunities presented to us. As I understand it, that is effectively what the clauses seek to do.

3.45 p.m.

It is also clear, however, that agreement has still not been reached with regard to a number of definitional problems. Consequently, the Government have to resort to leaving scope to agree to whatever definitions are eventually agreed by statutory instrument. It is very sad that, in the course of the lengthy negotiations, so many issues are not covered. Even the definition of what is meant by a European employer is outstanding. One would have thought by now at least that that could have been agreed. It is very important that we get universal definitions so far as possible if confusion and perhaps subsequent litigation are not to take place.

Generally, the clauses distinguish between the regulator giving authorisation in a general sense and approval of a particular arrangement. However, Clause 276, I think, suggests that in between that there will be a process of accreditation. I am not clear how that takes place. Perhaps we could be told something more about that, at whatever the noble Baroness regards as the appropriate moment.

I mentioned earlier that the provisions are concerned with multinational companies and those providing services across borders. As a Unilever pensioner, I suppose that I ought to declare an interest—although not in a very large pension, I regret to say. None the less, it is one that is of some relevance to me. I imagine that there have been great consultations with all the major multinational companies on the matters.

There also seems to be some confusion about the definition of a home member state and a host member state. Although the clauses seek to give definitions of them, the actual terms seem wholly interchangeable. That is not very satisfactory but, given that negotiations have been going on, I imagine that they have at least been agreed as terms of art, so will provide a reasonable basis for discussing the matter.

Overall, we welcome the clauses. We hope that rapid progress can be made and that, as a result, as the noble Baroness said, there will be opportunities for those in this country who operate in the particular markets. It is not quite true to say that there is a European market; we are talking about something rather different from that, with individual companies or sponsors dealing with particular cases. None the less, the clauses are helpful and we do not have any particular points on them, given the extremely helpful notes and explanations that the noble Baroness has given us, to pursue. However, we will look carefully at the more elaborate notes that she has given us and, if necessary, return to matters on Report. My initial impression is that, so far as things go—they have still not gone as far as one would like—the arrangement is reasonable.

I am grateful to the Committee for its welcome for these clauses. I am grateful also that it understands why we cannot yet go into any further detail. We are dependent on bringing other countries into a common understanding and a common vocabulary in regard to what we are doing.

I shall be very happy, again, to ensure that these notes are circulated to all companies and organisations which have an interest. Our officials are working with them all the time. That is why we are getting the steer that we are. If any noble Lords have any concerns that any company or possible player is being overlooked, please let me know and I shall ensure that they are included. But certainly all the major companies of which I am aware—both companies which may have schemes, such as the oil companies, and possible players in the market place who are pension providers—have been actively involved, and we are grateful for that.

Finally, the noble Lord, Lord Higgins, asked what "accreditation" might mean. This is one of our words rather than a European word. It simply refers to the total process within which there are two steps: authorisation and approval. Accreditation simply encompasses the whole regime. With that, I hope very much that the Committee will accept the amendment.

On Question, amendment agreed to.

Page 209, line 33, leave out from "employer"" to end of line 36 and insert "has the prescribed meaning;"

On Question, amendment agreed to.

Clause 275, as amended, agreed to.

Clause 276 [ General authorisation to accept contributions from European employers]:

Page 210, line 4, at end insert—

"(1A) On receipt of the application, the Regulator must—

Page 210, line 8, leave out "grant or"

On Question, amendments agreed to.

Clause 276, as amended, agreed to.

Clause 277 agreed to.

Clause 278 [ Notification of legal requirements of host member State outside United Kingdom]:

Page 211, line 3, at end insert "and as to the other matters referred to in Article 20(5)"

Page 211, line 5, at end insert—

"( ) Where—

(a) the trustees or managers of an occupational pension scheme are approved under section 277 in relation to a European employer, and

(b) in pursuance of Article 20(8) of the Directive the Regulator receives information ("the new information") from the competent authority of the host member State as to changes affecting any information previously forwarded under subsection (1),

the Regulator must as soon as reasonably practicable forward the new information to the trustees or managers."

On Question, amendments agreed to.

Clause 278, as amended, agreed to.

Clause 279 agreed to.

After Clause 279, insert the following new clause—

(1) Where the trustees or managers of an occupational pension scheme receive contributions to the scheme from a European employer, the Regulator may in prescribed circumstances issue a notice ("a ring-fencing notice") to the trustees or managers of the scheme directing them to take, or refrain from taking, such steps of a prescribed description as are specified in the notice for the purpose of ring-fencing some or all of the assets or liabilities (or both) of the scheme.

(2) In subsection (1), "ring-fencing" has the same meaning as in the Directive.

(3) If the trustees or managers of an occupational pension scheme fail to comply with a ring-fencing notice given to them, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance."

On Question, amendment agreed to.

Clause 280 [ Functions of Regulator in relation to institutions administered in other member States]:

Page 212, line 5, leave out "that member State" and insert "the member State in which the institution has its main administration"

Page 212, line 24, leave out "pensions" and insert "pension schemes"

On Question, amendments agreed to.

Clause 280, as amended, agreed to.

After Clause 280, insert the following new clause—

(1) This section applies if the Regulator receives a request from the competent authority of a member State for assistance in prohibiting the free disposal of UK-held assets of a European pensions institution that has its main administration in that member State.

(2) The court may—

from disposing of, or otherwise dealing with, assets to which the claim or application relates.

(3) If the court grants an injunction or interdict under subsection (2), it may by subsequent orders make provision for such incidental, consequential and supplementary matters as it considers necessary to enable the competent authority that sent the request to perform any of its functions in relation to assets subject to the injunction or interdict.

(4) If the institution is not a party to proceedings under subsection (2) or (3), the institution—

(5) In deciding any question as to costs or expenses, a court before which any proceedings take place—

(6) For the purposes of this section—

"European pensions institution" has the meaning given by section 280;

"UK-held assets" of a European pensions institution are assets of the institution held by a depositary or custodian located in the United Kingdom, and here "assets", "depositary", "custodian" and "located" have the same meaning as in Article 19(3) of the Directive.

(7) The jurisdiction conferred by subsections (2) and (3) is exercisable by the High Court or the Court of Session."

On Question, amendment agreed to.

Clause 281 [ Interpretation of Part]:

Page 212, line 46, leave out "pensions" and insert "pension schemes (within the meaning of that Article)"

On Question, amendment agreed to.

Clause 281, as amended, agreed to.

Clause 282 [ Persons entitled to more than one Category B retirement pension]:

On Question, Whether Clause 282 shall stand part of the Bill:

It was available until April 1992, but provision to allow people to make that choice was inadvertently omitted when contributory benefits legislation was consolidated into the Social Security Contributions and Benefits Act 1992. We discovered the omission in 2001 and, as I said, have been allowing the more beneficial category B pension to be paid on an extra-statutory basis. We seek to regularise that situation. In practice, no one has lost out or will lose out, but it is sensible to bring it within the framework of the law.

Clause 282 agreed to.

After Clause 282, insert the following new clause—

(1) The Social Security (Widow's Benefit and Retirement Pensions) Regulations 1979 (S.I.1979/642) is amended as follows.

(2) In Regulation 6(1), for "25" substitute "0".

In Regulation 6(2), for "25" substitute "0"."

The noble Lord said: After that brief skirmish, perhaps I may make a few other points about state pensions more generally, before turning to the amendment.

It is clear that general debate on state pensions would not be appropriate in Committee; it is more appropriate on the Floor of the House. As I said the other day, apart from what may be said on Report, it is important that we should have a general debate in the light of the Turner report at an early date. There has been a general appeal in the Turner report and from the Association of British Insurers and others for consensus. My impression is that there is now an almost total consensus among all interested parties with the exception of the Treasury: namely, that there should be an increase in the basic state pension, on the one hand, and a reduction as far as possible in the use of means testing, on the other. Even the Prime Minister, we are told in the press, has come round to the view that means testing on the scale that we now have as a result of the obsessive introduction of every conceivable kind of tax credit is having a serious effect on saving. That was confirmed by the Turner report.

Therefore, I do not want to make a general speech on pensions, but turn to Amendment No. 331, which concerns the reduced rate of pensions to be paid. The principle behind the new clause, which was proposed to us by Age Concern and several other outside interest groups, is that it would be desirable to end the unfair 25 per cent rule, which means that people with fewer than 10 years of full national insurance contributions receive no pension at all in their own name.

It is almost exactly 40 years since I made my maiden speech in another place, which specifically concerned giving pensions to the over-80s, who had been totally excluded from the National Insurance scheme when it was introduced by Beveridge. I made my maiden speech on that subject. I was incredibly fortunate in the ballot shortly afterwards to secure a Private Member's Bill to do justice. It was opposed by the Labour government Front Bench and they filibustered it all through the night until close of play, which cut it off just after midday the following day. But I am happy to say that, when we came to office in 1970, that was the first thing that we did.

So I have some background in this area. In some ways, it is analogous to this situation. Women's pension provision is very inadequate. It has been said that for every £1 a male pensioner in a couple receives from a pension, a woman receives 32p. That is extraordinary. In a similar way to the over-80s, women simply have not been allowed to make up the contributions.

The main argument is costs, and one can understand that. However, some commitment to say that the Government would like to move towards rectifying the rule, with particular reference to not only those who get nothing at all, but part-pensioners generally, would be appropriate. For that reason, I beg to move.

4 p.m.

The provision obviously has its roots in the 1948 Beveridge settlement, under which a married woman is essentially expected to become entitled to a basic state pension on her husband's national insurance contributions once he has reached state pension age. In fact, the majority of people that the amendment is intended to help will get a state pension of 60 per cent—well above the 25 per cent de minimis—based on their husbands' national insurance contributions once the husbands reach state pension age.

The first concern is that, in practice, the amendment would help "wives in waiting"—those who are younger and will not yet draw down the 60 per cent because their husbands have not met state retirement age. That issue will itself reduce from 2010 on, as pension ages equalise for men and women. The second concern—it is serious—is administrative.

There is therefore a period in which the noble Lord's amendment on the category A pension would cover the gap between a woman's leaving the labour market and her drawing a basic state pension by virtue of her husband's contributions. I used the phrase "wives in waiting" as a colloquialism. When that age begins to equalise from 2010, the issue will be lessened because she would not be entitled to draw the pension either until she was 65—the same age as him. At that point, even if she had 25 per cent, she would not stand to gain unless her own category A pension was more generous than the category B pension that she would get from him.

The second consideration is the administrative one, a point that goes to many of the amendments, from LEL to carer's leave. I have done a lot of work on this issue as I was interested to see how far we could take it and how far we could bring women into the framework of an adequate basic state pension. In this case the Government would be paying very small amounts of basic state pension—perhaps one or two years' worth—which might generate £2, so that one was paying out £2 or £4 a week because someone had two years' worth of entitlement. It is possible that people would not actually benefit from that because any extra gained in the state pension could reduce the amount of pension credit paid, which is the guarantee element. So we have no plans to abolish the rule. However, I recognise the problems that the issue generates and some of the thinking behind it.

Society is changing. All of us have engaged in that debate. However—to use a phrase to which we often have recourse, but it is more relevant here than on most occasions—I do not think the time is right for this amendment. During the Bill's Committee stage in another place, my right honourable friend the Minister for Pensions, Malcolm Wicks, committed the department to publishing a report in 2005 on the pension position of women. I do not doubt that that will take further some of the issues raised by the Turner report. Before that, we will be looking at a number of areas relating to the pensions position of women and what we can do to improve it. I do not want to preempt that at this stage.

The interlocking of issues such as addressing the 25 per cent rule and some of those raised by the EOC and Fawcett, such as whether the LEL and the carers' trigger for those looking after older people on DLA should be reduced, add ever more complexity to the basic state pension without ensuring that everyone receives an adequate pension in retirement in that format.

I absolutely accept the intellectual argument behind the amendment—that women will have earned this and the de minimis is too high, particularly as more women will not be protected by the 60 per cent pension rule. And although there is a cost element, I am not using that as a basis for urging that the amendment not be pressed. I am urging it on the basis of complexity and the fact that this should be one of a number of issues—as I suspect I will be saying in response to quite a number of these amendments—that should be taken on board coherently together. I expect that we will do that as we respond to the commitment made by my

right honourable friend in another place. With that explanation, I hope the noble Lord will feel able to withdraw the amendment.

What the noble Baroness says is perhaps right. However, I think the key issue is not complexity for the Government but complexity for pensioners, particularly women pensioners. It is not normal for reports from the noble Baroness's department to talk much about administrative complexity, but I hope that this one will.

As to costs, presumably a number of people who might benefit from the amendment are anyway on means-tested benefit and it would not involve any extra costs as far as that group is concerned.

I shall not press the matter now but I hope the noble Baroness will think about it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 283 [ Deferral of retirement pensions and shared additional pensions]:

On Question, Whether Clause 283 shall stand part of the Bill?

I can speak personally about another matter which really worries me. A member of my own family decided to defer their pension—despite my suggesting that it was not worthwhile—and they did so for a year. They then said that they would like it paid, but it took them another year to get it paid. The problems with the computers and so on in the department are well known, but that does seem quite strange. One would hope that whatever interest or increase is allowed, it will be up to the date when it is actually paid and not the date when the person asks to have it deferred.

Clause 283 agreed to.

4.15 p.m.

Schedule 11 [ Deferral of retirement pensions and shared additional pensions]:

Page 296, line 5, leave out paragraphs 9 to 11 and insert—

"9 After paragraph 3B (inserted by paragraph 8 of this Schedule) insert—

3C Where a person has accrued a right to a lump sum payment under paragraph 3A of this Schedule the value of the lump sum accrued by the time of death shall be payable to the estate of the deceased.""

The noble Baroness said: Following on from our previous discussion, I want to rehearse and advance an argument put forcefully in another place by my colleague and honourable friend, Steve Webb. It turns on the issue of the deferment of state pensions and deals specifically with the case where a pensioner has decided to defer his retirement pension in order to be able to draw a lump sum at a later date, but who dies before that date is reached. In such a case, the pensioner's spouse will have a claim on the lump sum; that is, he or she should be able to choose to "inherit" either the lump sum or the increments based on the deceased's deferral entitlement. However, in order to be able to inherit the lump sum, the survivor must have been married to the deceased at the time of death, have reached pensionable age and have claimed his or her own pension.

Page 179 of the Explanatory Notes puts the word "inherit" in inverted commas, because apparently the Government believe that the accrued lump sum does not in itself constitute a property of the deceased person and therefore cannot be bequeathed to anyone. Therefore the possibility of inheriting any such lump sum seems to depend entirely on the generosity of the Government and is not something on which the deceased's heirs would have an independent claim.

My colleague in another place argued the point about equality, saying that allowing only married partners to inherit lump sums was likely to represent discrimination. It would also make it less attractive for unmarried pensioners, of whom there are many, to defer their retirement pensions for a lump sum. We think that that may be a reason for someone in the future to invoke Article 14 of the European Convention on Human Rights on the grounds of discrimination.

However, the more substantive case which I want to make today concerns whether such an accrued pension is in fact a possession. As I have said, the Government seem to be treating this as a kind of ex gratia payment which is not a possession. We would argue that because it is the result of the accrual of a contributory pension—the person has paid their contributions into it—the fact that it is deferred means that it is a possession. For example, if a person chooses not to defer their pension but to take it immediately, and to put any resulting savings week by week into a savings account, they would accrue a sum of money which would form part of their estate. There is no difference whether the money is in a bank account or is with the Government; it should be treated in the same way. In failing to recognise this money as a possession, we think that the Government are opening themselves up potentially to actions under not Article 14, but Article 1 of the ECHR, covering every person's entitlement to the peaceful enjoyment of their possessions.

As it stands at the moment, given the risk—the noble Baroness talked a moment ago about the slight risk that people were running in deferring pensions; that to me seems to add a significant risk—what possible advantage could there be for someone to defer? Why should they not just take the pension early and put it away in a savings vehicle? That does not make sense. So, on those two bases, we think that it is a possession and an entitlement and something against which a survivor could make a claim. I therefore beg to move.

The noble Baroness then asked what happens to that lump sum. In those circumstances, I can understand that the lump sum should be paid to the deceased person's estate or on the transmission, however that may be—often, to the wife, but through the will there may well be a division in some other way. That is fine. But as I understand the position in the Bill, which is the Government's position, you will not make an election until after you have retired finally at age 67, 70 or whenever. Therefore, until that point, there is no accrued sum in prospect. Indeed, you then have to make a decision yourself whether, as I should prefer, to take the extra weekly or monthly pension or to take the lump sum. So, much as I regret to say so, I do not think that the amendment would work.

Of course there are all sorts of unfairnesses about that that have not even been mentioned today, such as that a single person will pay the same NI rate as a married person but will never be able to draw a 60 per cent dependant's payment from it. Most of the problems that we face today arise because we are dealing with that structure. Given that, the situation has always been that his increments, when he draws them, will benefit her and, if he dies and she goes on to his category A pension, she inherits his increments. Therefore, if his lump sum has already been paid, it is part of his estate and, in the normal course of events, she would inherit that, if that is what he chose. The question is what happens when someone has deferred drawing his basic state pension—he may be 67 or 68—and dies. A potential right has not yet materialised about the woman's position on that. The same framework should cover that situation. In the same way as she would inherit increments—it would be her choice—she would inherit the lump sum. However, in the same way as the increments would not be a property available to a dependent child or some other person, or would be turned into a lump sum to go into a will, the lump sum would not be either.

In other words, within the framework of the contributory benefits as it is now, it is a long established principle that provision is made for a surviving spouse. While both members of a married couple are still alive, the contributions of one member may entitle the other to a pension if their own contributions are deficient.

The inheritance arrangements that we have produced in the Bill for lump sums are an extension of the current rules governing the provision of survivors' benefits, which explicitly recognises that marriage implies enduring mutual financial support and obligations. The amendment would undo that principle, by requiring a lump sum to be paid to the estate of a deceased deferrer in any case where the conditions of entitlement to it would have been met by the deferrer, regardless of whether they were married or not. As matters and the framework stand, we do not think that the right approach. Obviously, it would treat unmarried couples and single people differently from what is currently the law. It would allow children or any other beneficiary of the deceased, including a neighbour or friend if they saw fit, to benefit.

We do not believe that to be right. It is an extension of our current increment rule. All the provisions may need looking at in a wider context; no doubt we will have the discussion in the next year. However, the noble Lord, Lord Skelmersdale, is right. At the moment, we are trying to treat the lump sum in exactly the same way as we are treating increments—no more, no less. A woman would inherit the increments and the lump sum, but no one else would. We do not have sufficient basis to go beyond that. If we did so, it would open up the whole issue of whether we turned increments into a lump sum to be inheritable, whether there was a dependant's pension for unmarried partners, and so on. One could not draw the line anywhere, except with the existing framework.

In terms of its value, the lump sum set out is not less than 2 per cent above bank base rate, which we think fair. At the moment, the best current rate would be 6.75 per cent. Today at Abbey, one can get about 7 per cent. Our rate would ensure a return—as and when the changes come through, if noble Lords agree to them—of 10.4 per cent. People would do much better under this arrangement, provided that they took the gamble on their own life expectancy. That is the risk. I am sorry that I shall not be able to be more helpful to the noble Baroness but, while the current structure of category A and B pensions remains and increments follow those rules, we will treat lump sums in the same way.

4.30 p.m.

Amendment, by leave, withdrawn.

Schedule 11 agreed to.

Before Clause 284, insert the following new clause—

There shall be no requirement for a holder of a stakeholder, personal, occupational or other defined contributory pension to take the pension in the form of an annuity by a specified age."

The noble Lord said: This amendment is, in effect, a peg on which to hang a trailer, in the sense that it seemed worthwhile to have a preliminary debate on the issue but we will no doubt wish to return to it on Report. I suspect that the amendment is defective, but the noble Baroness may be assured that I shall seek to deal with that problem by Report. The position of the Conservative Party is clear: we are committed to abolishing the obligation to take an annuity at the age of 75 and wish instead to require people only to ensure that they have sufficient income to avoid relying on means-tested benefits.

The noble Baroness will know that we have debated the issue on several occasions. On at least two occasions your Lordships' House has decided that in essence it is in favour of the position that I have just described, but that decision has then been reversed in another place. We remain strongly of the view that it is right to make such a change, not least because people are forced to take an annuity at a moment when it may be that, if they were to defer taking it, they could gain a better rate of interest. I referred earlier to the immense amount of borrowing that the Chancellor is carrying out at present. He is likely to have to increase interest rates and, in the longer run, annuity rates, as a result of having to fund that requirement. Therefore, those who must take out an annuity today will find that they would have been better off if they had not taken it immediately. There are wider issues regarding inheritance and so on, which we can no doubt pursue again on Report.

Although the matter had been debated for a very long time, suddenly in the Finance Act the Chancellor, who hitherto had been remarkably obstinate on the issue—I could express it in more forthright terms but "obstinate" will do for the moment—came up with an extraordinarily complex scheme. His passion for means-testing and complexity is one thing, but this was a strange scheme—I must confess that I am not sure whether I fully understand it. The reason why he came up with the scheme seems even more bizarre than its complexity. The Chancellor came up with what was known as an alternative secured pension—I will not bore Members of the Committee by explaining exactly what it involves—apparently as a result of representations from the Plymouth Brethren, who felt that, if he did not do something about it, people would be taking a bet or gambling on someone's life. It seems that, if he accepts that argument, he will come out against life insurance altogether. Is that the case? If so, we should all get a little worried, as it would have radical effects on the entire pensions industry, apart from those taking out such insurance.

In any event, the previous Finance Act does not abolish compulsory annuitisation; it merely provides for this very strange animal, the alternative secured pension. It is argued by some that that will enable people to get round the requirement to take an annuity at age 75. I take no view on that at present. Perhaps the noble Baroness can tell us how many people the Treasury expects will take out this form of secured pension. It is not the same as a nice straightforward, very clean break. The only thing is that there is no reason why you should suddenly find that individuals spend all the money and end up on social security benefits.

This is a very important issue, to which we will certainly return on Report. I wanted to give the noble Baroness and the Government notice of our intention. This has been going on far too long. The bizarre solution provided by the Chancellor is absurd. We should make a clean break and take a clear-cut decision on the issue as soon as possible. I beg to move.

There is academic evidence that the requirement to secure an income produces a welfare gain, as people are poor judges of their own life expectancy and would therefore tend to consume capital at the "wrong rate". For example, although average life expectancy of men at age 65 is 81.7 years, men now have a 25 per cent chance of living until 90. None of us knows when we will die, but an annuity provider can pool this mortality risk—my note says "morality risk"; one should be so lucky at the age of 85 or 90—and therefore get better value overall.

4.45 p.m.

So let me indicate three of the possibly unintended consequences that would follow from such an amendment. First, unrestricted removal of the need to annuitise could have a huge destabilising effect across the whole pension structure. For example, an employer's DB pension promise will not for many seem as attractive as taking 100 per cent of entitlement as a single lump sum on retirement and on very favourable tax terms. So it would be quite possible for large numbers of DB schemes and scheme members to switch across to personal pensions in order to take advantage of these new regimes. Do we want that?

If we do not—and I believe the noble Lord would not want that because I know he is a strong advocate of DB schemes—mechanisms would have to be devised which would prevent switching. These restrictions would, in turn, lessen the attractiveness of being a member of a DB scheme and possibly worsen the situation.

In the same way—this is my second point—it would be necessary to ensure that individuals who cashed in their money-purchase pension pots did not gain from exceptional tax privilege or, as all noble Lords have so far agreed, become reliant upon the state. For these individuals it would be necessary to ensure that they had an income stream which meant that they did not have to rely on income-related benefits.

I want to put a health warning on this example because it depends considerably on what assumptions we are making, as I will go on to show. Let us assume for illustrative purposes that the sum required to do this safely and over an extended period—to float off IRBs, accrued pension credit and so on—is between £120,000 and £250,000, depending on whether the individual had a full BSP, and therefore whether the moneys had to make good that, had a single or joint life annuity, had a level or rising annuity, or had any other retirement income, and depending also on what assumptions one makes for income-related benefits in regard to inflation and earnings. For the purposes of today's discussion I shall take the middle figure in that range as a sum with which to do this safely, and knowing that it would be required for a possible 20–year life after 65. So, from between £120,000 and £250,000, which is the kind of range we could be talking about, let us take an amount of £180,000, which is near enough mid-point.

Legislation would be needed to ensure a minimum annuity purchase for this purpose. In addition, however, to remove the exceptional tax privilege that this amendment would create, an appropriate rate of recovery for previous tax relief would have to be applied. So if someone had a pension pot of £500,000—that would not be inconceivable if there were a big movement away from DB to DC schemes, although they are still at the moment very much a minority—by the time we had taken off the first £180,000, the £500,000 would have decreased to £320,000 remaining after the purchase of a minimum annuity.

It would then be subject to, on average, a 55 per cent recovery charge. In other words, it is precisely because the tax benefits make the pot so generous, so attractive and so large, that stripping those out would reduce the pot significantly. This would be an appropriate rate of recovery, I am assured, from the better off in order to create a level playing field with other forms of saving.

It would need to take account of an individual's tax relief, the national insurance relief on the employer's contribution and tax-free returns on contributions during the accumulation period. I have worked through how the 55p in the pound figure builds up. Given the size of the pot, it would be reasonable to assume that the people concerned are higher-rate taxpayers.

Following recovery, a balance of £144,000 out of that original £500,000 is available to the individual. Of course, that £144,000 will have to work harder and harder to ensure that the saver does not lose out substantially as a result of not having the annuity which the £320,000 could have purchased.

So I do not think that this would be an attractive option. Indeed, as the requirements around our alternatively secured pension make clear, any alternative approach to annuity purchase is likely to be profoundly unattractive—except to those who have very strong religious beliefs—in financial terms, if we are not to create highly tax-privileged savings vehicles for inheritance purposes. We do not expect very many people to take this up. So even for the well-off—the beneficiaries of the amendment the—outcome might not be as desirable or attractive as first thoughts might suggest.

We must ask ourselves how many of those who have money-purchase pension pots would benefit from the amendment. I fully accept that it will change over time, given what we know will happen, but it may be worth sharing the figures. More than 80 per cent of pension pots are valued at less than £30,000, which is why the bonus of rolled-up increments in terms of a lump sum could prove so attractive. I am slightly taken aback that adding to choice in that way was not necessarily thought desirable.

Only 3 per cent are valued at between £100,000 and £250,000. Only 1 per cent are worth more than £250,000, at which point the advantages of floating off IRBs and having some left over after the extraction of tax privileges come out. Those seeking to gain from the amendment would be few in number. We should be pretty careful not to allow wholesale disruption to an industry that provides annuity income to more than 250,000 people and contributes more than £7 billion a year to the savings market, for the sake of people who, if they chose the option, would be far less than 1 per cent of those who had pots, I suspect.

The Government are already making savings simpler by enabling people to save in more liquid assets earlier on, and in pension savings vehicles as they near retirement. The open-market option allows people to shop around for the best annuity. The FSA is bringing new transparency to the market. We are making annuities more flexible through limited-period annuities, value-protected annuities and the alternatively secured pension. We have made it easier for pension savers to commute small entitlements—up to £15,000, which we expect again to help women.

The Government's approach of enabling consumers to make choices and encouraging motivation in the market is the right one. There is a wealth of savings vehicles available to people, from ISAs and unit trusts to more complicated financial products. Some people push us on the matter, as Members of the Committee have done today, precisely because pensions are so tax-privileged that the pot rose far faster courtesy of the taxpayer, whom the noble Lord invoked, than any other savings vehicle. Because the pot therefore looks so substantial, not surprisingly, people eye it and would like more of the same, for other purposes such as personal savings and inheritance. They are not wrong to want that, but it might be wrong of the Government to respond to that pressure.

The relatively rich can already leave, in their inheritance pot, their home free of capital gains, their other financial assets—bonds, equities and the like—and other non-financial goods, from fine art to fine wine. They can consider trusts. Is it reasonable that they should leave part of their pension as well? With the pot reduced by the need to float off benefit and by the requirement to extract tax gains, would they still want to? The Government cannot accept the amendment.

The noble Baroness then went on to deal with homes. She believes that the strength of her argument about annuities is that people will inherit some of the proceeds, but, my goodness, many people also inherit homes. For many people, the extent to which inheritance tax levels have not kept in line with house prices far outweighs any kind of benefit they may gain on annuities. We are therefore not persuaded.

Perhaps I may raise a third point now on an impromptu basis. The Government argue that people have received tax relief to provide for their retirement. People certainly need to have enough to keep off means-tested benefits, subject to a point made just a moment ago by those on the Liberal Democrat Benches. However, people are receiving far less income from annuities than they were expecting because annuity rates have plummeted under this Government. People thought, "I ought to save for my retirement. I will get tax relief. I am likely to get such and such an income", but then found that their income was far less than expected because annuity rates have plummeted. They may well have been persuaded by the tax relief, but, on the noble Baroness's assumption, they lose both ways.

Overall—in marketing terms—I believe that this is a product whose time has come. It is in fact long overdue. We will return to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Before Clause 284, insert the following new clause—

The Secretary of State shall require the Government Actuary—

The noble Lord said: By way of background, in April 2004, in the Standing Committee on this Bill, Ministers committed the Government to publishing a report on the pensions entitlement of women by the end of 2005. The objective of this amendment on self-employed people is aimed at securing a similar commitment for another very large group of under-pensioned people. It is a large group. Something like two-fifths of all workers are either self-employed or in part-time or temporary jobs. Self-employed people are less likely to be saving for retirement than people in employment, less confident about their retirement income prospects than other people, and are unlikely to be making other provision through business or home equity.

5 p.m.

We have an anomaly here. In certain circumstances, self-employed people could have an entitlement to SERPS. However, no self-employed earnings are taken into account under the second state pension, which is generally referred to as S2P. The estimated number of people affected by the change would range from 68,000 to 150,000—again, from the Standing Committee on the Child Support, Pensions and Social Security Bill on 8 February 2000. Bringing self-employed people within S2P would reflect the reality of the modern labour market, in which many people move between employment and self-employment during their working life, as I have done.

The situation is even more muddled because in December 2001 a government-commissioned report from the Pension Provision Group recommended,

"that periods of self-employment should be brought into the State Second Pension when it has become flat rate, on a compulsory basis but with the option to contract out. Compulsory pension cover for self-employment will then be on the same basis as for employees".

The same paper also noted that,

"Voluntary participation would be unduly complex and represent a one-way bet against the taxpayer, attracting only those with low, or under-declared incomes with no direct cross-subsidy from the better off self-employed. It would also go against the redistributive nature of the Second State Pension and contrast with the position of employees where membership, or contracting out, will be compulsory".

Despite the Pension Provision Group's advice, the 2002 pensions Green Paper suggested allowing self-employed people to opt into the state second pension on a voluntary basis.

I have to say that the policy disappeared from view quite shortly afterwards. What has happened to the policy? Why has the department gone quiet on this? Is the time now right to investigate the situation properly? I beg to move.

Responses to the Green Paper were not significant in number. Various organisations questioned whether extending S2P on a voluntary basis provided the best way forward. We have been working with colleagues at the Treasury and with the Government Actuary's Department to establish options to bring the self-employed into S2P.

However, there have been difficulties in trying to get schemes that are transparent, fair and affordable for the self-employed which do not require a cross-subsidy. Already the self-employed get the equivalent of something like £1.7 billion of cross-subsidy from national insurance now and, in addition to that, at a relatively tax-advantageous rate compared to employees. Would we be willing to continue that regime if it were cost neutral? Could the people we are talking about and whom we most want to help afford it and benefit from it?

An age-related voluntary scheme would be complicated to understand, but it might be the right way forward. A more transparent non-age-related voluntary scheme would not remove the possibility of financial advice being necessary and would start to move away from the underlying objections of S2P.

There are real problems, but we are working on this. It has not gone to sleep; it is on the back-burner in the sense that it is being quietly worked on. This issue will not go away. We are working on further policy options. The problem is that, if a scheme is compulsory, it will hit people who cannot afford to save; if it is voluntary, there is a risk of either exploitation or mis-selling. We have got those issues to reconcile. We are not yet sure of the right way forward. These issues are being considered but we do not yet have answers. The noble Lord is right to suspect that work is continuing but that it is not in the public domain.

Amendment, by leave, withdrawn.

Before Clause 284, insert the following new clause—

In section 44A(2)(c)(i) of the Social Security Contributions and Benefits Act 1992 (c.4) (deemed earnings factor), for "six" substitute "twelve"."

The noble Lord said: Still on the subject of S2P, clearly home responsibilities protection (HRP) helps people who are not in paid work and who receive child benefit on behalf of one or more children aged 16 or below by reducing the number of qualifying years needed for the maximum basic state pension.

When I was in the predecessor department to that of the noble Baroness, I discovered that there were an enormous amount of women who did not know anything about home responsibilities protection.

In addition, there is a distinct logic to having a cutoff date for HRP in relation to S2P, which reflects the point at which someone's youngest child starts secondary school. School hours tend to increase then and it is easier for the caring parent to seek paid employment. Indeed, the Government and the official and unofficial Opposition all encourage that. So this makes sense on a whole range of bases. I beg to move.

The state second pension was designed for something else; namely, to give those who were in the labour market an alternative pension that was more generous than SERPS because it produced the same, whether a person had an income of £5,000 or £11,000 a year, unlike SERPS which was an integration all the way up, for people who could not or did not have access to a private occupational pension. It was therefore deliberately linked to being in the labour market.

In my view, we rightly made appropriate concessions—perhaps that is the wrong word. But we shaped it so that those who were caring and, therefore, those for whom they were caring were protected by S2P because they did not have access to waged work that would have generated an alternative pension.

As regards women with young children, we have accepted that where the youngest child was under the age of six, a woman, unless she has access to childcare that she is able to afford and trusts, cannot reasonably be expected to enter the labour market. But once a child is six years old, it is reasonable to expect that a woman can and could work if she wishes to enjoy this pension. The lower earnings limit at which one would trigger one's entitlement to S2P is 16 hours a week or just over three hours a day and earnings of about £79 a week. Obviously, national insurance is not paid until a person earns the lower earnings threshold, which is some £10 or £15 higher.

We do not think that this is an unreasonable requirement for S2P, which is meant to be a pension for those in the labour market, except where a person cannot be by virtue of caring responsibilities or being disabled. That pension should be attached to women in the labour market once the youngest child is six years old. From the experience of my friends and colleagues, but also people in my local ward in my city, when children were six years old most women I knew were choosing and wanting to go into part-time jobs. Three or four hours working a day would cover it. Therefore, it is not unreasonable that the break should be at six rather than at 12 years old. As a result of that, I hope that the noble Lord will withdraw his amendment.

As regards the sum of £1.3 billion, that is the latest figure and not an early run at it.

Amendment, by leave, withdrawn.

Before Clause 284, insert the following new clause—

In section 13 of the Social Security Contributions and Benefits Act 1992 (c. 4) (class 3 contributions), after subsection (1) insert—

"(1A) The prescribed conditions referred to in subsection (1) above shall not include any limits on the period between the payment year and the contribution year.""

The noble Lord said: We turn to the thorny subject of national insurance contributions, which are divided into four. Class 3 national insurance contributions are voluntary contributions that boost entitlement to the basic state pension and also affect bereavement benefits, but do nothing else for the social security fund or the social security benefits of this country.

5.15 p.m.

Generally, class 3 NICs must be paid within six years of the end of the tax year to which they relate. They are especially helpful for people who have not reached the minimum number of contributory years. For someone who is just beneath the threshold for receiving any state pension, it is likely to be worthwhile paying sufficient class 3 NICs to gain an entitlement.

The trouble is that one must have a pension forecast in order to make that calculation. Again, in the multi-question mode that I seem to be in today, I ask: how many people ask for state pension forecasts in advance of being likely to retire? The time limit for the payment of class 3 NICs for 1996–97 to 2001–02 is 5 April 2008. Moreover, any contributions for that period can be made at their original rates rather than, as is usually the case, the rate at the time of making the payment. Indeed, I suggest that should this extension be given, the rate of payment should be the rate pertaining at the date to which the NICs are paid rather than the rate of payment at the date when they should have been due: perhaps that explains matters clearly.

The extension to the period during which contributions for past years can be made is a result of the decision taken in 1998 by the Contributions Agency to stop issuing automatic NICs deficiency notices. These had previously been sent to people who had paid insufficient contributions, but were stopped because of the serious problems experienced by the National Insurance Recording System 2 (NIRS2) computer system. The decision was supposed to be temporary, but was not rescinded even after NIRS2 had stabilised, which I am pleased to say it now has. Therefore, I ask: will it be reinstated? If so, when? Clearly, that would save an awful lot of hassle for an awful lot of people. I cannot imagine that it is vastly expensive from the point of view of the pensions agency.

Effectively, the proposed new clause would extend those temporary arrangements by extending the six-year time limit for paying class 3 NICs and, as a result, would provide greater flexibility for people to fill in any gaps in their contributory records, which must, by definition, be desirable. I beg to move.

If the amendment proposed by the noble Lord was to win favour, it would mean that most people would wait until the last moment before paying contributions. Class 3 NICs would be an infinitely better buy. They would then be able to make a judgment based on the actual status of their contribution record rather than assumptions about earnings and employment over their working life. Most people would pay the minimum amount needed to complete their record.

That has a number of implications. First, the contributory principle that people contribute through their life for out-of-work benefits would be seriously undermined. The employed and self-employed who are required to pay regular contributions while they are working might justifiably be aggrieved if others were able to wait until just before they retired before paying contributions and were then able to judge the minimum amount needed to receive the level of state pension that they wanted.

It matters because the subsidy to those paying class 3 NICs compared to those paying contributions to other classes would increase. The class 3 contribution rate is low. In 2004–05, it is £7.15. If class 3 contributions were to be actuarially mutual so that they actually paid for the benefits that they bought—in other words, not just for six years, which is, so to speak, a concession—but extended to those, such as married women, who had ultimately decided that it was worth the difference between 60 per cent and 100 per cent pension to pay in, the sum would have to be £20.50 as opposed to the current £7.15. Given that the person who might benefit from this, as cited by the noble Lord, would be a woman perhaps earning a minimum wage but working below the LEL—and therefore earning at best, say, £75 a week—would she be willing to come forward with a contribution of £20 a week in order to gain coverage through class 3? That is what the noble Lord's amendment suggests.

Perhaps the serious question behind this is whether the pensions agency will ever again send out forecasts to people who have a deficiency in their payments, as it used to some time ago.

Amendment, by leave, withdrawn.

On Question, Whether Clause 284 shall stand part of the Bill?

Clause 284 agreed to.

On Question, Whether Clause 285 shall stand part of the Bill?

5.30 p.m.

5.45 p.m.

Clause 285 agreed to.

After Clause 285, insert the following new clause—

(1) A person shall be entitled to a Category A retirement pension as defined by the Social Security Contributions and Benefits Act 1992 (c. 4) ("the 1992 Act") whether or not in any particular week he paid national insurance contributions on earnings above the lower earnings limit, provided that any one of the conditions in subsection (2) is met.

(2) The conditions are—

(3) The benefits referred to in subsection (2) above are—

(4) Paragraph 5(7) of Schedule 3 to the 1992 Act is repealed."

The noble Baroness said: I wish to move this amendment and to speak to Amendment No. 336B. I do so with a little trepidation because this whole area of pensions is increasingly complex. There are very serious questions about whether the current structure will serve us in the future. Certainly last week's Pensions Commission report made clear that the whole area is very complex. Support for a universal state pension is growing; I am drawn to it. We will have to look at the whole area of pension provision in the UK, which has grown like Topsy over the years—for all the right intentions.

My two amendments do not help with the simplicity argument; I accept that immediately. They are probing amendments, however, so the Minister can take comfort from that. The amendments do not deal solely with the position of women, but, because of the position of women on pensions, the majority of beneficiaries under them would be women.

It is interesting that in all the coverage that the Pensions Commission report rightly drew last week, I saw none that drew out the position of women in receipt of pensions in the UK—I guess there must have been some. Sixty-four per cent of retired people are women, and yet on retirement they receive on average 50 per cent of the income that men receive. It is a big area of concern.

Amendment No. 336A is about persons entitled to a category A retirement pension, which is paid throughout life. I have two areas of concern. First, although credits are given to those who are paid carer's allowance, to qualify one must be a carer for at least 35 hours a week. My amendment would change that to 20 hours. The figure of 35 hours a week is arbitrary. We should remember that many carers also work part-time and do not meet the 35-hour requirement.

The Minister rightly referred earlier today to the home responsibility protection payments. Those are certainly a great help, reducing the number of years in which one must contribute in order to qualify for the basic state pension. Over the years, a number of Members of the Committee have argued for that very positive move. However, the payments will apply only in relation to children under 16. As for the second state pension, it will apply only to care for children up to the age of six. I listened with great interest to the compelling points that the Minister made earlier. The flaw in the arrangements is that they apply only to total years. If someone works for only one week in a tax year, she will not qualify. It is very arbitrary. Receipt of any other benefit also will exclude her from entitlement to the benefit.

I do not wish to take up too much of the Committee's time. However, these two amendments are a manifestation of the great unfairness to women in our present pensions system.

I turn to Amendment No. 336B. Some 41 per cent of women in work are working part-time. It is an enormous percentage. In Britain, about two-thirds of married women with families are working. Thirty years ago, the figure was about 50 per cent. Outside Scandinavia, Britain has the highest number of working married women in Europe, I think; I am not sure whether that is still true.

I believe that the Minister's heart is with me on Amendment No. 336B, even if her head or logic may not allow her to be because of the complexity in a number of other issues. The whole nature of work is changing. The idea of a job for life is gone. Many people, men included, now have to work for up to four employers. All of that employment may be low-paid. Cumulatively, that employment may pay them a higher wage than the lower earnings level for a pension. Individually, it may not, and that is where the system falls down. Anyone earning from a single employment will not qualify. On recent figures, 1.4 million women earn less than the lower earnings level of £70-odd a week, so they do not start to qualify, even if they want to pay into a state pension. We are perpetuating in a way the anomaly whereby although a majority of retirees are women, a substantial minority are on an unfeasibly low income and have to rely on state support.

I fully accept the complexity of the issue. These are probing amendments. As for reviewing pension schemes, I believe that the universal state pension would deal with many of the anomalies we have talked about today and in earlier amendments. However, these amendments do not deal with that. I beg to move.

6 p.m.

The amendment would also extend help to carers looking after disabled people for 20 hours a week or more. The current limit is 35 hours a week. This limit is used not only for HRP and S2P, but also and importantly—for the carer's allowance, which my noble friend will know is triggered by the disabled person being cared for qualifying for the middle or higher rate of disability living allowance.

I have worried about this issue because I think that there is a problem regarding those who are caring sometimes for two people for 20 hours each a week. However, the difficulty here—I have been trying to find a way through—is that it is easy to cover in law responsibilities for looking after children by relating those duties to their age. They are born and reach a certain age, so there is an easy audit trail. However, with caring it is not easy once you move away from clear passport entitlements such as middle-rate DLA, 35 hours of caring duties and the carer's allowance. Below that, should we allow for someone who generously helps to keep afloat five different people, each for a package of between three and five hours? How would we put together a paper trail for that?

From my experience, it would not be customary for someone who receives DLA at the middle rate to require care for as few as 20 hours a week. Normally the requirement is much higher than that. Furthermore, how can we achieve recognition in the national insurance system for caring responsibilities where there is no easy audit trail for care of the elderly as there is for children? The carer's hours may fluctuate. One week may include laundry and shopping duties so that 25 hours is spent on care, while during another week the carer may just be popping in for an hour a day, amounting to only five hours. I find it difficult to envisage exactly how it could be calculated. For these various reasons, therefore, I do not think that I can help my noble friend.

I turn to Amendment No. 336B. This new clause seeks to allow for the aggregation of earnings below the lower earnings limit for people with a number of paid jobs, thus providing a qualifying earnings factor for both basic and additional state retirement pension.

Again, we recognise the issue here. Around 60,000 people have total earnings above the LEL for these purposes. most of them women. The crux of the issue which this amendment seeks to address is that liability for national insurance is determined by the level of a person's earnings in an individual employment, as opposed to being able to calculate two jobs together. As a result, a person could he earning well above the LEL and not qualify.

However, again there would be a number of practical difficulties, such as the need for employers to record more information. Let us take someone who has five different part-time jobs. Would we ask one of those employers to be the nominal employer for these purposes and the other four employers not? In a sense this is a version of the carer's dilemma: at the moment we have an easy option whereby we can follow a paper trail for audit purposes.

When significant benefits hinge on the robustness of the paper trail, does my noble friend suggest that we should stipulate two employments but not three, or three but not five? Alternatively, would my noble friend pursue an income-related test? That might be sturdier, but even in that case you would still need one of the employers to be responsible for the employer's side of the national insurance contribution. How would that responsibility be spread?

I suspect that all noble Lords, including myself, are sympathetic to the entire bundle of issues raised here, so many of which are related to women's access to the basic state pension by virtue of some of the anomalies that we have inherited from Beveridge. However, I repeat that I do not think that we can address them on a piecemeal basis because each would have knock-on effects. Not only would those be costly and complex, they would often subvert other things that we are seeking to do on the pensions front. Again, as I asked noble Lords earlier today, I would ask my noble friend to await our report on women's pensions due in the forthcoming year.

Amendment, by leave, withdrawn.

[ Amendment No. 336B not moved.]

Clause 286 [ Dissolution of OPRA]:

Page 218, line 8, leave out subsection (3) and insert—

"(3) Subject to subsection (4), information obtained by the Regulator by virtue of subsection (2) is to be treated for the purposes of sections 76 to 81 (disclosure of information) as having been obtained by the Regulator in the exercise of its functions from the person from whom OPRA obtained it.

(4) Information obtained by the Regulator by virtue of subsection (2) which was supplied to OPRA for the purposes of its functions by an authority exercising functions corresponding to the functions of OPRA in a country or territory outside the United Kingdom (the "overseas authority") is to be treated for the purposes mentioned in subsection (3) as having been supplied to the Regulator for the purposes of its functions by the overseas authority."

The noble Baroness said: This is a vast raft of amendments and perhaps I could speak very briefly to them. They are minor, technical amendments. For example, Amendment No. 340AA is a consequential amendment on pensions liberation, which we discussed much earlier. However, I draw the Committee's attention to Amendment No. 344A, in which we agree that there should be parliamentary scrutiny of orders relating to amounts to be raised by pension protection levies. That amendment, partly in response to the Committee's concerns, makes them subject to the affirmative procedure. I am happy to give further examples if the Committee wishes, but, as I said, the amendments are minor, technical and drafting in nature. The only one of substantive significance is that to which the Government propose that orders affecting pension protection levies should be passed by affirmative resolution. I hope that noble Lords will agree to the amendments. I beg to move.

On Question, amendment agreed to.

Page 218, line 10, at end insert—

"( ) Where tax information disclosed to OPRA is obtained by the Regulator by virtue of subsection (2), subsection (3) does not apply and subsections (3) and (4) of section 82 apply as if that information had been disclosed to the Regulator by virtue of subsection (2) of that section.

For this purpose "tax information" has the same meaning as in that section."

On Question, amendment agreed to.

Clause 286, as amended, agreed to.

Clause 287 [ Transfer of employees from OPRA to the Regulator]:

On Question, Whether Clause 287 shall stand part of the Bill?

Clause 287 agreed to.

Clause 288 [ Dissolution of the Pensions Compensation Board]:

Page 218, line 28, leave out subsection (3) and insert—

"(3) Information obtained by the Board by virtue of subsection (2) is to be treated for the purposes of sections 188 to 192 and 194 (disclosure of information) as having been obtained by the Board in the exercise of its functions from the person from whom the Pensions Compensation Board obtained it."

On Question, amendment agreed to.

[ Amendment No. 338 had been withdrawn from the Marshalled List.]

Page 218, line 30, at end insert—

"( ) Where tax information disclosed to the Pensions Compensation Board is obtained by the Board by virtue of subsection (2), subsection (3) does not apply, and subsections (3) and (4) of section 193 apply as if that information had been disclosed to the Board by virtue of subsection (2) of that section.

For this purpose "tax information" has the same meaning as in that section."

Page 218, line 34, after first "to" insert "192 and"

On Question, Whether Clause 288, as amended, shall stand part of the Bill?

Clause 288, as amended, agreed to.

Clauses 289 to 291 agreed to.

Clause 292 [ Overriding requirements]:

[ Amendment No. 340A had been withdrawn from the Marshalled List.]

Page 221, line 30, at end insert—

"( ) any regulations made under section (Pensions liberation: court's power to order restitution)(7);

( ) any regulations made under section (Pensions liberation: repatriation orders)(4);"

Page 221, line 36, leave out from "any" to end of line and insert "subordinate legislation made under that Part;"

On Question, amendments agreed to.

[ Amendment No. 340C had been withdrawn from the Marshalled List.]

Page 221, line 41, at end insert—

"( ) any ring-fencing notice issued by the Regulator under section (Power of Regulator to require ring-fencing of assets);"

Page 221, line 42, after "section" insert "274,".

Page 221. line 42, after "293," insert "(Modification of pensions legislation that refers to employers),"

Page 221, line 42, after "303(2)" insert "or (3)".

On Question, amendments agreed to.

On Question, Whether Clause 292, as amended, shall stand part of the Bill?

Clause 292, as amended, agreed to.

6.15 p.m.

Clause 293 [ Modification of this Act in relation to certain categories of scheme]:

Page 222, line 20, at end insert—

"( ) any case where a partnership is the employer, or one of the employers, in relation to an occupational pension scheme."

Page 222, line 24, leave out paragraph (c).

Page 222, line 26, leave out "and"

Page 222, line 28, at end insert ", and

( ) Part 7 (cross-border activities within European Union)."

Page 222, line 33, after first "scheme" insert "rules"

On Question, amendments agreed to.

Clause 293, as amended, agreed to.

After Clause 293, insert the following new clause—

(1) Regulations may modify any provision of pensions legislation for the purpose of ensuring that it, or another provision of pensions legislation, does not purport to refer to the employer of a self-employed person.

(2) Where a provision of pensions legislation contains a reference to an employer in connection with an occupational pension scheme, regulations may modify the provision, or another provision of pensions legislation, for the purpose of excluding from the reference an employer who is a person—

(3) For the purposes of this section—

(4) In subsection (3)(b) "employment" includes any trade, business, profession, office or vocation."

The noble Baroness said: The new clause introduces regulation-making powers to modify provisions in pensions legislation referring to employers. The clause is consequential to the new definition of occupational pension schemes in Clause 229. In accordance with the European directive on the activities and supervision of institutions for occupational retirement provision, that definition includes provision for the self-employed to join an occupational pension scheme and, for consistency with Inland Revenue provisions in the Finance Act, it provides that a non-employed person may be a member of an occupational scheme, subject of course to the rules of the scheme.

The effect is that where a scheme member is self-employed or non-employed, certain references to "employer" in pensions legislation may not be appropriate.

"Page 222, line 28, at end insert and

() Part 7 (cross-border activities within European Union).—"",

does not have an amendment number on the Marshalled List. I have already called it and it has been agreed to.

On Question, amendment agreed to.

Clause 294 [ Offences by bodies corporate and partnerships]:

Page 223, line 19, at end insert—

"( ) In this section "Scottish partnership" means a partnership constituted under the law of Scotland."

On Question, amendment agreed to.

Clause 294, as amended, agreed to.

Clause 295 agreed to.

Clause 296 [ Protected items]:

On Question, Whether Clause 296 shall stand part of the Bill?

Clause 296 agreed to.

Clause 297 agreed to.

Clause 298 [ Crown application]:

Page 225, line 20, after "303(2)" insert "and (3)".

Page 225, line 28, leave out "Parts" and insert "provisions".

On Question, amendments agreed to.

Clause 298, as amended, agreed to.

Clause 299 agreed to.

Clause 300 [ Subordinate legislation (general provisions)]:

On Question, Whether Clause 300 shall stand part of the Bill?

Clause 300 agreed to.

Clause 301 [ Parliamentary control of subordinate legislation]:

[ Amendment No. 344 not moved.]

Page 226, line 44, at end insert—

"( ) regulations under section 145(10) (winding up of public sector schemes)"

The noble Lord said: As the noble Baroness said, there will be something like 100 different sets of regulations following on from the Bill, 17 of which, at the moment, will be affirmative regulations. My intention is to persuade the noble Baroness that there should be 18.

Why? My 18th affirmative regulation concerns the changes to or the abandonment of public sector pension schemes. There is an enormous interest in this issue at the moment as virtually any newspaper article which has reported on the effects of the Turner report—and, indeed, outside of it—has mentioned over the past six weeks or so.

I cannot imagine that the concerns about this perceived unfairness will go away. Therefore there will be enormous interest immediately any public sector scheme is changed. On that basis, it is only reasonable that there should be a debate in both Houses of Parliament about the issue. Of course, the only way one can guarantee a debate in the Houses of Parliament about a particular subject is for the issue to be enacted by affirmative resolution. I beg to move.

Page 227, line 4, at end insert—

"( ) an order under section 168(7) (orders relating to amounts to be raised by pension protection levies);"

Page 227, line 6, after "order" insert "or regulations"

Page 227, line 18, at end insert—

"( ) regulations under section 303(2)(b) (power to extend meaning of employer);"

On Question, amendments agreed to.

Clause 301, as amended, agreed to.

Clause 302 agreed to.

Clause 303 [ General interpretation]:

Page 228, line 21, leave out from first "of' to "to" in line 22 and insert "persons in the description of employment"

Page 228, line 48. at end insert—

""the PPF Ombudsman" has the meaning given by section 200(1);"

Page 229, line 3, leave out "47(1)" and insert "47"

Page 229, line 3, at end insert—

""the register" has the meaning given by section 53(1);"

Page 229, line 5, at end insert—

""the Tribunal" has the meaning given by section 96(1);"

Page 229, line 5, at end insert—

"(1A) In this Act, unless the context otherwise requires, references to the scheme rules, in relation to an occupational pension scheme, are references to—

(1B) For the purposes of subsection (1A)—

Page 229, line 7, leave out "and 5" and insert "to 7"

Page 229, line 8, after "include" insert"—

"(a)"

Page 229, line 8, at end insert ";

(b) such other persons as may be prescribed"

On Question, amendments agreed to.

Clause 303, as amended, agreed to.

Clauses 304 to 306 agreed to.

Clause 307 [ Commencement]:

Page 230, line 39, leave out "to 5" and insert "to 7"

On Question, amendment agreed to.

On Question, Whether Clause 307, as amended, shall stand part of the Bill?

Clause 307, as amended, agreed to.

Clause 308 [ Extent]:

Page 231, line 14, leave out ", (5) and (6)" and insert "and (5) to (8)"

Page 231, line 14, after "200" insert "(other than paragraphs (b) to (d), (f) and (g) of subsection (4), subsection (6) so far as relating to any of those paragraphs and subsections (7) and (8))"

Page 231, line 14, after "201" insert ", 202(2A) and (2B)"

Page 231, line 14, leave out "and 203" and insert ", 203 and ( Pension sharing)"

Page 231, line 23, at end insert—

"( ) Part 6 (financial assistance scheme for members of certain pension schemes),"

Page 231, line 26, leave out from "sections" to "and" and insert "286(1) and (2), 287, 288(1) and (2)"

Page 231, line 26, after "288" insert ", 293"

Page 231. line 26, after "288" insert ", ( Modification of pensions legislation that refers to employers)"

Page 231, line 27, leave out "291" and insert "292.

Page 231, line 30, after "sections" insert "304(2),"

Page 231, line 34, after "304" insert "(1)"

On Question, amendments agreed to.

On Question, Whether Clause 308, as amended, shall stand part of the Bill?