My Lords, I say at the outset that Labour supports Part 1 of the Bill and the move to create CMP schemes, provided, of course, that they are not used as a means of downgrading good DB schemes. The two amendments in this group deal with different concerns that have been expressed about CMP schemes. Amendment 32 acknowledges that there may be a
divergence of interests between different sets of members in a scheme of this kind. It does not prescribe any particular action but it does require trustees to surface the issue and to assess the extent to which the scheme is fair to all members.
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Meanwhile, my noble friend Lady Drake has clearly explained the concern that lies behind Amendment 8, in our names. There are risks in this kind of scheme, and we are concerned about what happens if a CMP scheme becomes financially unsustainable and cannot meet the costs of dealing with a triggering event—for example, supporting the scheme while the problem is sorted or, if it cannot be sorted, covering the costs of wind-up or transferring members’ assets to another scheme. All Amendment 8 does is give an explicit power to the regulator to seek a contribution from an employer sponsoring a CMP scheme, so that money is there not just to meet the costs of setting up the scheme, but to resolve a triggering event, if it happens.
My noble friend Lord Blunkett was right to stress the dangers of our current economic state, and my noble friend Lady Drake gave various examples of the problems that could arise. A key risk is that the main employer goes bankrupt or downsizes significantly. Both risks, as my noble friend Lord Blunkett pointed out, are all the greater given the fallout from the Covid pandemic. Alternatively, the employer may want to withdraw from the scheme or there may be some failure of administration or governance, which would cause the scheme to lose authorisation. As was pointed out by the noble Baroness, Lady Altmann, dealing with the fallout of events such as that could be seriously expensive. If there are no other employers or only ones connected to the business, who picks up the tab? The scheme cannot raise members’ charges during a triggering event, which leaves us with a core question: if money is needed to cover essential costs, where else would it come from other than members’ funds?
This is not a prescriptive amendment at all. All it does is to make it clear that the regulator can seek a contribution from an employer to provide for the costs of resolving a triggering event. Whether that power is used would be a matter for the regulator in the authorisation and supervision of each scheme. That is our issue. Unless the Minister can demonstrate that my noble friend Lady Drake’s compelling case is wrong and there is some other way that those costs can be covered, there are only two ways the Minister can respond to this. The first is to say the regulator already has such a power, so the amendment is not needed; and the second is to say the regulator does not have the power and the Government do not want it to have it. I very much hope that the answer is the former, but I look forward to the Minister telling us which it is.