Postal Services Bill

My Lords, Amendment 24EB seeks to place a duty on the Secretary of State to provide certain information to Royal Mail pension plan scheme members before their accrued pension rights are transferred to a new public scheme. Clause 16 allows the Secretary of State to create by order a new public scheme and to make provision to transfer members’ qualifying accrued rights under the Royal Mail pension plan on a date still to be specified into that new scheme, thereby allowing the Government to take responsibility for those liabilities. The pension rights that members of the Royal Mail pension plan have accrued up to that date will be covered by that government support. Pension rights accrued after that date will remain with the Royal Mail pension plan. I am sure that scheme members will be reassured by the additional security for the funding of accrued benefits which the new scheme provides because it will be backed by the covenant of the Government, but these members will still be looking for reassurances as to the protection of their individual rights and interests. I am sure that there is much detailed consultation between the trustees and employee representatives still to take place. All the privatisations of public corporations and utilities over the past 20 years have had carefully to address the issue of accrued defined benefit pension rights. The solution taken has not been the same in each instance. In the case of the sale of BT, a Crown guarantee was given. On the privatisation of the railway, the Government assumed responsibility for pensioner liabilities which existed up to the point of privatisation. Other privatisations have taken other approaches. The pension arrangements proposed in this Bill, on the sale of Royal Mail, which are intended to facilitate privatisation and give greater security to members given the current level of deficit, are quite complex. They cover all categories of scheme members, active, deferred and pensioner, in respect of their pension rights accrued up to the specified date, which is yet to be determined. Some conditionalities continue between the new public scheme and the Royal Mail pension plan post privatisation. I am not arguing against that complexity where it enhances the protection afforded to scheme members, but it goes to support my amendment that members should know prior to the transfer to a new public scheme what their accrued rights are that are to be transferred to that scheme. There are three concepts in this Bill which will need to acquire flesh: a qualifying member, qualifying accrued rights, and qualifying time before members of the Royal Mail pension plan definitively know who is affected, what the rights are and what the cut-off date is for determining the accrued rights that are to be transferred. The members will be anxious to know. It is human nature, given the importance of this matter, that they will be so anxious. The other conditionalities relate to such matters as the increases in the value of pensions which occur after the qualifying date where they are linked, for example, to a final salary, and who bears the cost for this. The Bill reserves powers for the Secretary of State to amend the rules of the Royal Mail pension plan to address these matters. Complexity can carry ambiguity over the long term unless it is made very clear and people know precisely what their rights are and what the arrangements mean. Time moves on, key players go and memories fade. The BT Crown guarantee has had to be clarified at judicial review and the statutory framework of pension protection in the rail industry has from time to time required the assistance of legal opinion and clarification. It is very important that members of the Royal Mail pension plan affected by this transfer of their accrued rights to the new scheme are personally informed before the transfer takes place so that they know who they are, what their accrued rights being transferred are and details of the arrangements and procedures applying in the new scheme. The amendment seeks to ensure that that happens. It would be totally unreasonable for them not to be so informed before the transfer of their rights to a new scheme. I have absolutely no doubt that the Secretary of State will be motivated to treat people well, but people will be anxious. They need the confidence of knowing what is to be done to them before it is actually done. This will give them peace of mind. Clause 16(7) makes provision for an order to have retrospective effect; for example, where the effective date for the purpose of the transfer of pension liabilities has been agreed as a part of a wider arrangement with a third party and precedes the date of any order to set up the new pension scheme. The amendment does not prevent such a provision, but in the same way as the implementation of a retrospective date would be after the order had been made, so, too, the transfer of people’s accrued rights should not be implemented until after the individual scheme members have been provided with the relevant information about the treatment of their pension benefits. What I propose in my amendment is no more than good practice and is wholly consistent with regulatory requirements placed on occupational pension schemes. It is not undermining in its intent or impact. A public scheme, however, is often not covered by occupational pension scheme regulations precisely because it is a public service scheme covered by Crown guarantee. In the case of an ordinary private sector transaction, if members are transferred from one pension scheme to another, the trustees or managers of the transferring scheme would have to provide details of the transfer and the benefits that the new scheme will provide one month before the transfer. That is required by Regulation 12 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991. However, that regulation will not apply to the transfer from the Royal Mail pension plan to the new public scheme. It would require a specific order under Clause 16(5) of the Bill for that to be so. Subsection (5) gives to the Secretary of State the discretion, by order, to decide whether any provision which applies to occupational pension schemes applies to the new scheme. The purpose of the amendment is to make an explicit provision in the Bill for members of the Royal Mail pension plan to be given details of the transfer, the new scheme and their accrued pension rights in the new scheme prior to the transfer taking place. I note that several of the amendments in the group tabled by my noble friend Lord Young seek similarly to establish provisions that are no more than would exist in a normal occupational pension scheme as determined by Parliament. This is a common theme that runs through many of the amendments in the group. This is particularly so as the powers given to the Secretary of State in Clauses 16 to 24 have significant implications not only for the new scheme but for the remaining Royal Mail pension plan which is not backed by Crown guarantee. I would be delighted for someone to contradict me and say that it is and that it will continue to have the status of an occupational pension scheme. To my knowledge, no assurance has been given by the Secretary of State that the spirit of Regulation 12 of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991, to which I have referred, will be met and that members will be provided with the information referred to in the amendment before the transfer takes place. The amendment seeks to require the Secretary of State to follow disclosure requirements which are equivalent to the obligations that Parliament has decided are appropriate for transfers from one pension scheme to another in the private sector—that is, information prior to the transfer for those individual scheme members so affected. In view of the debate in the other place, perhaps I may anticipate the Minister and say that I do not believe that the amendment is problematic or would cause additional confusion. The Royal Mail pension plan is under an obligation to provide information to members and will no doubt continue to do so. As some members will have some of their accrued pension rights in the new scheme and some of their accruing rights in the Royal Mail pension plan, they will no doubt be receiving benefit statements from two sources for some time to come even if they are contained in one envelope. However, the Royal Mail pension plan has no obligation to provide information about the new public scheme—that falls to the Secretary of State—and its trustees may well not have all the required information before the transfer takes effect. There are some 400,000 members of the Royal Mail pension plan and many of them are current employees. They are going to be extremely anxious about the detail of the provision in respect of their individual pension entitlements. They are anxious and they should be informed before the transfer takes place. That is what Amendment 24EB seeks to achieve. I beg to move.