Postal Services Bill

Yes, my Lords. As a general point, could I say that we are in Committee? So the noble Lord is free to come in after I have spoken, if he wishes. I do not think that my mental calculator is fast enough, but the assets are the difference between the £34.4 billion liabilities and the £8.4 billion deficit. My maths is failing me, but it is something in the region of £26 billion. But I am sure that divine intervention will bring the exact figure to me shortly. Royal Mail will also continue to have full responsibility for past and ongoing accruals in the senior executive pension plan. These proposals will safeguard the pension benefits accrued by members and I am sure that all sides of the Committee share that objective. Member protection is paramount and features prominently in the Bill. In particular, Clause 19 provides that benefits—let me be clear, that is the full range of member benefits including increases and payments to dependants—cannot be adversely affected by transfer into the new public scheme. Our proposals are subject to state aid clearance, which is why some of the detail can only be provided in secondary legislation. On Amendment 24EB, moved by the noble Baroness, Lady Drake, I begin by thanking the noble Baroness for the important contribution that she made to the report of the noble Lord, Lord Hutton of Furness, on public sector pensions. The Hutton report will in general not apply to the new public scheme, as it will effectively be a closed scheme with no new accruals, but the report’s recommendations on the governance and administration of public sector pension schemes will be pertinent. I assure the noble Baroness that we will take full account of the Hutton recommendations in this area when designing the operation of the new scheme. Amendment 24EB seeks, as the noble Baroness explained, to ensure that members are provided with relevant information before their rights are transferred to the new public scheme. We entirely agree that clear and comprehensive communication with members is crucial, and we will absolutely ensure that all members are kept informed before, during and after the transition of benefits into the new public scheme. I am more than happy that that intention is on the record. We are working closely with the trustee to ensure that members receive the right messages at the right time, in line with their circumstances. Although part of this work is ensuring that communications from both schemes dovetail, there are already statutory obligations on the RMPP, as an occupational pension scheme, to provide certain information to members. This amendment would mean that some such members might conceivably receive this information twice, from the two different bodies at the same time. Not only would this be inefficient but, more importantly, it could be unsettling for those members, which I know is not the noble Baroness’s intention. Once the new scheme is up and running we intend to ensure that, at the very least, members continue to receive the information currently provided by the RMPP, and we will give due regard to specifying relevant reporting requirements in secondary legislation. Given these reassurances, I hope that the noble Baroness will feel able not to press her amendment. Amendments 24EC, 24ED and 24GA, tabled by the noble Lord, Lord Young, all relate in essence to consultation on the secondary instruments that can be made under Part 2 of the Bill. For reasons which I hope will become clear, I would be grateful if noble Lords will allow me, perhaps rather unconventionally, to deal with these in reverse order. Dealing with Amendment 24GA first, I wholeheartedly agree that members’ interests should be at the heart of the pensions changes made under Part 2 of the Bill. That is why Clause 24 provides for consultation with the RMPP trustee. The trustee is bound to act in the best interest of all the plan beneficiaries, and the trustee board has strong member representation—five of its 11 directors are member-elected or union-nominated, and the chairman is independent. Our obligation to consult the trustee means that we can be sure that the interests of all beneficiaries are being represented. We also recognise that it is important to discuss our proposals with other bodies representing member interests. We hold—and through the implementation stages will continue to hold—regular meetings on pension issues with the CWU and the National Federation of Occupational Pensioners. However, given the central role that the trustee holds in representing the interests of all members of the pension scheme, we hope that noble Lords will accept that it is neither necessary nor appropriate to broaden the obligation to include other member representatives. Amendment 24ED would require consultation with the Pensions Regulator on orders made to amend the RMPP scheme rules under Clause 18. We will need to make such amendments to transfer liabilities into the new public scheme and to ensure that the salary-related liabilities stay with the RMPP. The changes that we will make to the RMPP rules are complex but the effect is simple. We will ensure that members are left in no worse a position after the transfer than they were before that time, as we are obliged to do under Clause 19. We will work closely with the trustees and their legal advisers to ensure that we get the detail of the necessary changes right. The trustees are the best qualified people for this task as they deal with the rules of their scheme day in and day out, so it would be inappropriate for the Pensions Regulator to be involved in these consequential changes to the RMPP. That would not be an appropriate or efficient use of the regulator’s resources. On Amendment 24EC, I ask noble Lords to accept that this would not provide additional benefit to members, as the Secretary of State is already obliged to consult the trustees on orders made under Clause 17 to divide the RMPP into sections by the general consultation provisions in Clause 24. With these assurances, I ask the noble Lord, Lord Young, not to press his Amendments 24EC, 24ED and 24GA. I turn to government Amendments 24F and 24GB. Amendment 24F relates to the transfer of assets from RMPP to government. Before I deal with the detail of that amendment, I would like to make clear that we intend to leave the RMPP fully funded at the point of transfer, subject only to state aid clearance. The amendment does not in any way change that intention but results from the fact that there will inevitably be a time lag between the effective date of an actuarial valuation and the finalising of that valuation, because of the time required to gather and process relevant member and market data. To deal with that time lag, we intend that assets will transfer in two stages. The bulk of assets will transfer at the same time as the Government take over the historic RMPP liabilities. This initial asset transfer will be determined in line with an interim valuation and will be on a conservative basis, so that there will be further assets to follow. The balance of assets will then be transferred once the actuarial valuation is finalised. Because that second transfer will be some months after the effective date of transfer, an adjustment will be required to account for investment market movements over the intervening period. The restriction at Clause 21 ensures that the RMPP’s funding level is at least as good immediately after transfer as it was immediately before. This funding level test, assessed at the effective date of the transfers, must therefore not be affected by any market movement, whether up or down, in the assets that transfer later. So the amendment simply provides that any adjustment applied to account for market movements in the second transfer is not taken into account by the Clause 21 test. Government Amendment 24GB provides for any order or part of an order made under Part 2 of the Bill to come into force on a specific day and for that specific day to be specified in a separate stand-alone order. It allows the maximum flexibility to synchronise the various parts of the pensions solution. These are technical amendments to facilitate the smooth implementation of the pensions solution and I hope that noble Lords will feel able to support them. I turn now to government Amendment 24G. As I said earlier, we are working closely with the trustee to ensure that active members, who will have rights both within the new scheme and in the RMPP, receive a seamless experience regarding their pensions. By that we mean that these members will, for example, receive a single pay cheque and will not receive the same information twice from the two schemes. To meet these objectives it will be necessary for information to be shared between the public scheme, the Royal Mail pension plan and, in certain cases, the employer. Amendment 24G will facilitate the sharing of information between the parties and thereby help ensure a seamless experience for members. This will be of considerable benefit to pension plan members and I hope that all noble Lords will feel able to support it. In case any noble Lords have concerns in this regard, I assure them that any sharing of information will be fully subject to the safeguards provided by the Data Protection Act.