Pensions Bill

moved Amendment No. 4: 4: After Clause 27, insert the following new Clause— ““Sections 20, 24 and 26: certification that quality requirement is satisfied (1) The Secretary of State may by regulations provide that, subject to provision within subsection (6)(f), a scheme to which this section applies is to be taken to satisfy the relevant quality requirement in relation to any jobholder of an employer if a certificate given in accordance with the regulations is in force in relation to the employer. (2) The certificate must state that, in relation to the jobholders of the employer who are active members of the scheme, the scheme is in the opinion of the person giving the certificate able to satisfy the relevant quality requirement throughout the certification period. (3) This section applies to— (a) a money purchase scheme to which section 20 applies; (b) a personal pension scheme to which section 26 applies; (c) a hybrid scheme, to the extent that requirements within section 24(1)(a) apply. (4) The ““relevant quality requirement””— (a) for a scheme within subsection (3)(a), means the quality requirement under section 20; (b) for a scheme within subsection (3)(b), means the quality requirement under section 26; (c) for a scheme within paragraph (c) of subsection (3), means the requirements mentioned in that paragraph. (5) Regulations may make further provision in relation to certification under this section. (6) Regulations may in particular make provision— (a) as to the period for which a certificate is in force (the ““certification period””); (b) as to the persons by whom a certificate may be given; (c) as to procedures in connection with certification or where a certificate has been given; (d) requiring persons to have regard to guidance issued by the Secretary of State; (e) requiring an employer to calculate the amount of contributions that a scheme, and any section 26 agreements, required to be paid by or in respect of any jobholder in the certification period; (f) as to cases where the requirements of a scheme, and any section 26 agreements, as to payment of contributions by or in respect of jobholders of an employer did not satisfy prescribed conditions. (7) Provision within subsection (6)(f) includes in particular provision for a scheme not to be treated by virtue of regulations under this section as having satisfied the relevant quality requirement unless prescribed steps are taken (which may include the making of prescribed payments). (8) In subsection (6) ““section 26 agreements”” means the agreement required, in the case of a scheme within subsection (3)(b), by section 26(4) and any agreement required, in the case of such a scheme, by section 26(6). (9) The Secretary of State may by order repeal this section.”” The noble Lord said: My Lords, I shall speak also to the other government amendments in this group. I now return to qualifying earnings, which we discussed in earlier debates. On Report, we amended the Bill to confirm that employers may assess whether their arrangements meet the new quality standard over the course of a year and not just pay period by pay period. Following further detailed discussions with stakeholders, Amendments Nos. 4, 30 and 31 now go one step further. They will enable employers or a designated person connected to them to certify that their scheme meets the forthcoming quality standard. Our intention throughout the passage of the Bill has been to make it as easy as possible for employers who offer generous pension contributions today to continue to do so under the employer duty. The trick has been to find a way to achieve this without opening up the unacceptable risk that some individuals might routinely or materially save at levels below the minimum standard. I believe that the certification procedure provided for in the amendments strikes the appropriate balance. Certification will be based on three principles, which I agreed last month with the employer and industry stakeholder group. The first is that, if employers or a connected person are confident that each worker in their scheme is on course to receive the new minimum level of pension saving, they will be able to certify that their arrangements meet the new quality standard. The second principle deals with cases where a member’s contributions unexpectedly fall short of the minimum during the certified period. In such cases, employers will not be required to make retrospective reconciliation payments unless the detriment to an individual exceeds certain minimum levels. The third principle is that the minimum levels for reconciliation will be set in such a way as to protect individuals from significant, systematic or persistent detriment. Certification on the basis of these principles should provide greater certainty to employers and some key administrative easements around reconciliation payments, while at the same time protecting the savings outcomes for individuals that are fundamental to the success of the reforms. I shall now give way to the noble Baroness, Lady Noakes, who has tabled an amendment to Amendment No. 4, and I shall have an opportunity to respond to that. I beg to move.