(Consultation by Employers and Miscellaneous Amendment)Regulations 2006

My Lords, I am grateful to both noble Lords for their contribution. Our congratulations to the noble Lord, Lord Skelmersdale, on spotting the slight difference between these two sets of regulations. An example would have been that, as he said, from April 2008, under these regulations an employer with exactly 50 employees would not have to consult on pension changes, whereas under the Information and Consultation of Employees Regulations 2004, an employer with 50 would. The difference is one employee. We accept that this is a very unsatisfactory situation, and will take action to remedy it at the earliest opportunity. It is our intention to make the necessary amendment in time for it to come into force at the same time as these regulations. The noble Lord, Lord Skelmersdale, asked about the reason for exempting small employers. As I explained in my speech, the exemption for small employers will be phased in over the next two years so that, from April 2008, only employers with fewer that 50 employees will be exempt from the requirement to consult about pension changes. This is consistent with the wider consultation arrangements under the Information and Consultation of Employees Regulations. We would encourage all employers, irrespective of size, to consult their employees as a matter of good practice, but it would not be proportionate to impose an additional burden on small businesses. The noble Lord also suggested that an employer should consult the pension representative and at least one other set of representatives. Our intention is to promote meaningful consultation in ways best suited to individual companies. We do not wish to disturb existing consultation arrangements that are working, nor do we want to prescribe a one-size-fits-all approach. The regulations provide that the employer who is required to consult must make arrangements to ensure that, as far as is reasonably practicable, he consults with all the affected members of the pension scheme. The employer may choose from the consultation arrangements that he has already agreed with his employees or elected pension representatives in deciding how he achieves this. Provided that the employer makes arrangements to consult with all the affected members or their representatives, we believe this to be sufficient. Requiring employers to consult pension representatives and other representatives could be cumbersome and inefficient, as well as placing an additional, unnecessary burden on employers. The noble Lord asked me to explain the arrangements for policing these regulations. The Pensions Regulator will oversee compliance with the regulations. If the consultation requirement is breached, affected employees may complain to the regulator, who will consider action against the employer which could ultimately lead to a financial penalty. I am sure that all noble Lords will join me in supporting the aims of the regulations on consultation by employers. They will provide information and an opportunity for discussion to affected members of an employer’s pension scheme when a significant change is proposed. It is important that individuals are fully aware of the implications of changes to their pensions so they can adjust their savings and retirement plans accordingly. These two sets of regulations will allow the consultation by employers and the information and consultation of employees provisions to operate as intended. On Question, Motion agreed to.