Pensions Bill

moved Amendment No. 48: 48: After Clause 67, insert the following new Clause— ““Scheme orders: transfers (1) An order establishing a scheme must provide that the scheme may not— (a) accept transfers into the scheme from other approved schemes, or (b) make transfers out of the scheme into other approved schemes, except in circumstances which are prescribed in the order. (2) This section ceases to have effect on 1st January 2017.”” The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 49 and 50. These amendments are similar to some which I moved in Committee and focus on concerns which have been expressed about the way in which personal accounts will operate in practice. We had good debates in Committee but concerns remain, so I have tabled these amendments to seek further clarification from the Government. I have been briefed by the Association of British Insurers, which represents the insurance industry and has a considerable involvement in the provision of defined benefit contribution arrangements for employers and individuals. To put it in a nutshell, the industry wants to continue to be involved in defined contribution business but it has real concerns about the way in which personal accounts might operate. Amendment No. 48 amends Clause 67. When a personal account pension scheme is set up, it must, at least until 2017, prohibit transfers in or out except in specified circumstances. Banning transfers has the advantage of minimising complexity in the early days of personal accounts, which PADA has said is an extremely important issue. However, there are also substantive reasons, and the whole area of advice on which we have touched today is one that applies also to transfers. It is important that personal account holders make rational decisions on whether to transfer in or out, and it can never be assumed ex ante that transferring in or out is the correct decision. The Minister explained in Committee that the Government did not intend to ban transfers in or out, at least until the review of personal accounts which will start in 2017. He said that there will be two exceptions to that for pre-vested pension rights and for pension credits on divorce. He then suggested that stranded pots might also be addressed, so it was clear that that was still something of a moving feast. Accordingly, while we were substantially happy with what the Minister said in Committee, I have tabled this transfer amendment in order to hear from the Minister the Government’s latest thinking. I approach Amendment No. 49 in a similar vein. The amendment is to Clause 69 and states that the annual contribution until 2017 should be no more than £3,600—indexed, of course. No annual limit appears in the Bill, and this has been a matter of concern as different figures have been mentioned by the Government. There are still those lobbying for higher figures. The insurance industry is concerned that if a figure higher than £3,600 is used, the personal accounts scheme will stray out of its core mission to provide pensions for those within the target groups. To be fair to the Minister, which I am sometimes, in Committee he said: "““We are committed to an annual limit of £3,600””.—[Official Report, 2/7/08; col. 292.]" I ask him once again to say why, if the Government are genuinely committed to that figure, they will not place it in the Bill—even if it should last only until 2017. Amendment No. 50 also amends Clause 69, by deleting subsection (3). The subsection would, if the Government used the power, allow for an amount of contributions over and above annual contributions. We do not support this added complication, especially as it is far from clear that people would be well advised to lock up their money in a personal account. That is another of the advice-free zones which could cause trouble, and other investment vehicles are available which could offer a better solution. But this amendment, unlike my two previous amendments, takes us into territory for which we do not have a previous government policy statement. The Minister said in Committee that the Government were considering PADA’s advice on a lifetime allowance for extra contributions. Many people have been waiting for the Government to say what they intend to do in this area. If the Minister cannot accept my amendments, I hope that he can instead make a definitive statement of government policy. I beg to move.