Pensions Bill

My Lords, the amendment gives us the opportunity to touch upon transparency, which is at its heart. We agree that it is crucial for employers to be aware of penalty levels and how the regime operates. That is why we are setting out the actual penalty levels and structure of the regime in secondary legislation. This will provide the official framework, and the regulator will not have discretion on deciding penalty levels once the regulations are set. Detailed penalty guidance is more appropriate in regimes where penalties are decided at the regulator’s discretion. In such regimes the regulated community will need to be aware of the mitigating and aggravating factors which will influence the level of the penalty. The regulator will, of course, communicate to employers how the sanctions regime could affect them. We appreciate that, as statutory instruments are necessarily rather technical documents, employers may not want to engage directly with the legislation to learn about the penalty regime. However, requiring the regulator to communicate with employers in a particular way and requiring that they have guidance on penalty rates signed off by the Secretary of State is both unnecessary and cumbersome. While the regulator already uses guidance to help the pensions community understand a variety of topics, they are not required to follow a specific process under their present responsibilities. The regulator is developing a strategy for communicating with employers so that all are fully aware of their duties and what may happen if they do not comply. The regulator can use a number of communication channels to achieve this, including internet publication, direct mail exercises and intermediaries. Regulations under this clause will be subject to consultation in the normal way. The content of these regulations will be developed following further analysis and full consultation with stakeholders. These regulations will, of course, be subject to scrutiny via the parliamentary process. I hope that has assured the noble Lord that we will communicate with employers to ensure that they are aware of the regime and how it affects them. Perhaps I can say something about the statutory code of practice for regulators, since the noble Lord referred to Macrory. The code supports the Government’s better regulation agenda and is based on the recommendations in the Hampton report. It promotes efficient and effective approaches to regulatory inspection and enforcement, which includes recommendations that regulators enforce in a transparent manner and publish an enforcement policy as appropriate. Regulators are not bound to follow the code if they properly conclude that the provision is either not relevant or outweighed by another consideration. The Pensions Regulator is transparent in its approach to enforcing existing duties and, as previously mentioned, it is developing a strategy for communicating the new requirements and enforcement actions to employers. One of the communication options that it might consider is an enforcement policy, but there are other ways in which it could meet the transparency objective. I absolutely agree with the noble Lord about the need for transparency. That will clearly be the case. We consulted on the regulations before we reached the final position. I hope that that will reassure the noble Lord.