Pensions Bill

moved, as an amendment to Amendment No. 78B, Amendment No. 78N: 78N: Before Schedule 9, line 106, leave out ““might detrimentally affect”” and insert ““was likely detrimentally to affect”” The noble Baroness said: My Lords, the amendment seeks to amend condition A in the defence section, the new Section 38B. If the defence is to be established, a person has to show that due consideration has been given to the extent to which an act or failure ““might”” detrimentally affect in a material way the receipt of scheme benefits. The amendment seeks to change that requirement so that the person has to show that there was consideration of the extent to which the act or failure was ““likely”” to affect scheme benefits. I have tabled the amendment because all kinds of things ““might”” affect scheme benefits. If in routine business decision-making a scenario analysis is undertaken, this involves the construction of internally consistent scenarios which might not be considered to be likely outcomes but which test robustness against extreme conditions. An extreme scenario looked at two years ago could well have foreseen the virtual seizing up of credit markets, bank liquidity and the failure or nationalisation of half the financial services industry. On that scenario, one could easily reach a conclusion that, for example, bank dividend policies ““might”” detrimentally affect their pension schemes. However, looked at two years ago it was not ““likely”” that they would, but a plausible analysis could have shown that they would. So anything that might affect a pension benefit is too extreme a test; a fairer test is ““likelihood””. This may come back to an understanding of what ““due consideration”” means for the purposes of condition A, which is what Amendment No. 78Q in the name of my noble friend Lord Lucas seeks to develop in the context of an objective test, but it might not. I beg to move.