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Dr Matthew Offord (Hendon) (Con)
I beg to move,
That this House has considered the pensions dashboard.
It is a great pleasure to serve under your chairmanship, Ms Ryan. For many people—particularly younger people—pensions are not a priority. In the early years of anyone’s career, their financial demands usually concern paying off student debt and paying for accommodation, mortgages and travel, no doubt with a bit of socialising thrown in. Only when people gain responsibilities such as a partner, a spouse, a mortgage or children do their minds turn to providing for the future.
Some people are fortunate enough to be provided with a pension through the terms of their employment. That is particularly true for those who work in the public services. Unfortunately, in the past, those who worked for private employers and the self-employed were unable to access the same financial products. There were a variety of reasons for that, including affordability, knowledge of pension products and simple ignorance about how to start a pension. I am pleased that the Government have addressed those problems and that in order to allow employees—our constituents—to understand the level of their pension contributions, the Department for Work and Pensions has proposed the pensions dashboard, which we are speaking about today.
A pensions dashboard is an online service that allows people to see information from multiple pensions all in one place. It is a welcome step towards better financial awareness for everyone.
Julian Knight (Solihull) (Con)
I congratulate my hon. Friend on securing the debate. The fact that it is so well attended shows exactly how important the subject is to our constituents. My hon. Friend will probably recognise that when the pensions dashboard was first suggested, it was seen as something that might not happen, but now we are on the cusp of it. Does he agree with me that it would be good to see such data sharing across the whole financial services industry? It benefits consumers and gives them power over their own information.
Dr Offord
My hon. Friend is entirely right. I certainly would like to see that across a range of financial instruments. Recently, I was required to find the level of my ISA trust fund. In the past I would receive a statement only every six months, but nowadays I can go online and use my PIN to verify my identity and see my daily amount. I can see the value of my trust fund here today. When I say trust fund, I mean the one I have paid into over the years, rather than one that was provided by my parents.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate the hon. Gentleman on securing the debate. Like me, he has probably had a large number of constituents write to him wanting the dashboard to be as simple and clear as possible, and to contain as much information as it can. Would he agree that the Minister should look at that, so we get a sensible system that people actually understand?
Dr Offord
I believe that proposal is a good one, but whether it is looked at by the Minister or the steering group—I will come on to that—is another matter. As the debate unfolds, perhaps some of those questions will be answered. I always say that the dashboard should be made as simple as possible, so that people can engage with their pensions and their future, which is a good thing.
Nick Thomas-Symonds (Torfaen) (Lab)
I am grateful to the hon. Gentleman for giving way, and I congratulate him on securing the debate. I entirely agree that it is a very good idea to have all this information in one place, but does he agree that there must be appropriate regulatory compliance concerning the way the data is held?
John Howell (Henley) (Con)
Is it not true that we need to get the governance of the pensions dashboard correct? We have just seen that a hotel booking website has had to end its misleading sales activities. Is there a risk that without the right level of governance, something similar could happen to the dashboard?
Dr Offord
Once again, my hon. Friend has anticipated my speech. He is absolutely right; we need to get this right and ensure that people have confidence in the system, so that our constituents are not only keen to invest their money but reassured, after recent financial problems, that their concerns will be addressed. We will do that as part of the process.
Janet Daby (Lewisham East) (Lab)
I thank the hon. Gentleman for securing such a significant debate. Does he agree that the Government must lead the implementation of the pensions dashboard, if they are to compel all pension providers to take part and if the dashboard is to be a truly useful tool for many retired people aged 55 and over who do not know the size of their savings?
Dr Offord
I hope that the dashboard provides for those people. I was about to come to a statistic that indicates that many people do not know the size of their pension pot. That has repercussions, particularly when people retire and they suddenly realise that they will not have the level of income or the kind of lifestyle that they had expected or previously experienced. Some 25% of people over the age of 55, including those who are retired, say that they do not know the size of their pension pot. The dashboard will address that. It will offer those people and others the ability to access information about their financial contributions from multiple pensions, any time they want to, on their smartphone, iPad or computer. Effectively, it will bring our pensions into the 21st century.
Stephen Lloyd (Eastbourne) (Ind)
I thank the hon. Gentleman for giving way and for securing this important debate. I have been supporting and pressing for the pensions dashboard for many years, since the time of the coalition. Does he agree that it is crucial that in the next pensions Act, the Government make it a legal requirement for all pension providers to go into the pensions dashboard and provide all the necessary information, otherwise the dashboard will fail? Does the Minister—or, rather, the hon. Gentleman—agree that at this late stage, that is critical?
Dr Offord
That is a very important point. Unfortunately, I am not a Minister, but the debate provides the opportunity to put that question to the Minister. Perhaps the Minister in summing up will provide the reassurances that the hon. Gentleman seeks.
Once again, the hon. Gentleman seems to have pre-empted my speech, because I was about to name him and thank him for coming along. I was going to say that it is very pleasing that the proposal has cross-party support, and that I welcome his support and attendance, along with that of my hon. Friends the Members for North Warwickshire (Craig Tracey), for Solihull (Julian Knight) and for Henley (John Howell).
Dr Offord
Of course, if I had had any forward notice I would have thanked the hon. Gentleman as well. I am particularly pleased to see the SNP here, because the hon. Member for Airdrie and Shotts (Neil Gray) signalled his approval for the social security statutory instruments we debated on Monday, so I thank him and the SNP for that.
From the comments I have heard from the Opposition today, I understand that the proposal that we are debating is not only welcome, but something that all parties are agreed on. With that support, the Government have already engaged in a consultation about how the pensions industry can create the dashboards. In the absence of a clear industry lead, it is proposed by my hon. Friend the Minister that a new single financial guidance body should be convened to oversee an industry delivery group to enable successful implementation.
As I see it, there are two issues that some hon. Members or people outside the Chamber may be concerned about. The first is whether the pensions dashboard should be held in public or private ownership. Like some other hon. Members, I have a Merseyside pension scheme from my time of employment in local government, and as a result I would prefer the dashboard to be in private ownership. Merseyside is notoriously difficult to engage with and refuses to discuss its scheme with organisations or the financial advisers that I have had over the years. However, I acknowledge support for the provision of a non-commercial dashboard supported by the Government; some hon. Members may also agree with that.
The Department for Work and Pensions research has built on the recommendation of the pensions dashboard project that a non-commercial service, endorsed by the Government, must be made available. As key stakeholders have commented, multiple dashboards in the private sector would complement a Government-sponsored offer, which should still be available for those who would prefer it, or who may not be targeted by the market.
It was suggested by the pensions dashboard project group—and, earlier last year, by the Work and Pensions Committee—that the single financial guidance body, which launched services to the public last month, would be a sensible place to host such a dashboard. The industry delivery group will need to consider how best to implement commercial dashboards alongside the non-commercial one. Which? magazine and others across the industry have suggested that a gradual expansion, starting with a single, non-commercial dashboard, is likely to reduce the potential for confusion and help to establish consumer trust.
The second issue of contention is that passing the pensions dashboards on to the private sector will mean that there is no guarantee of compliance from all providers, and will centralise huge amounts of financial information for the private sector to access. In answer to that, I say that in developing the infrastructure for pensions dashboards, industry must adhere to the rights of the individual and principles as set out in the Data Protection Act 2018, which reflects the general data protection regulation. That includes the individual’s right to data portability and principles of accuracy, storage, access and security. There would be no aggregation of the user’s information in the storing of the data in any of the components in the dashboard’s ecosystem, other than by the pension scheme or an integrated service provider operating on behalf of the provider. That supports the overarching delivery principles of keeping data secure and putting the individual in control of their data. Access to the data would be available only to the user unless specific consent is given—that goes back to my point about Merseyside. Dashboard operators would not be allowed to access the data for any purpose unless they had the specific consent of the user.
I anticipate that the delivery group, working with the regulators, will seek to agree data standards for pension providers and dashboards. Those data standards will need to support whatever level of functionality is required through different phases of implementation and ongoing development of the dashboard service. The pensions dashboard is so important because of the number of people who have now invested in their own pension pot. In the five years from 2012, the percentage of eligible employees participating in a workplace pension rose from 55% to 84%.
Kirstene Hair (Angus) (Con)
I thank my hon. Friend for bringing this important debate to the House. Does he agree that the auto-enrolment programme that the Government introduced has ensured that many low-paid and younger people are also investing in their retirement? As a young person, I would say that is something we would always push into the future. The system must be accessible to young people as much as to older people, and we must ensure that they are educated in the system that is introduced.
Dr Offord
I must have left my speech on the photocopier, because once again, I have been anticipated. My hon. Friend is absolutely right; among those aged 22 to 29, participation has increased from 35% to 79% over the same period. That is certainly something we can all be pleased about. Automatic enrolment, which was also launched in 2012, has driven that increase and created millions of new savers, with nearly 10 million eligible employees having been automatically enrolled. Since April 2018, those savers are contributing at least 5% of their eligible income into their private pension pot, inclusive of employer contribution, and next year that will rise to 8%, including employer contributions.
In addition to those young people, it is worth mentioning the number of females who are now enrolled in pension schemes. Compared with the figure for 2012, an additional 3 million women now have a workplace pension thanks to auto-enrolment. As I said before, in the 22 to 29 age group, participation in the private sector has risen from 35% in 2012 to 79% in just five years. In total, the number of people who possess a workplace pension reached a record high of 41.1 million in 2017, up nearly 50% since 2012.
I ask the Minister to tell me in his summing-up speech whether he will provide not only me, but perhaps the House of Commons Library, with the auto-enrolment figures for all constituencies across the United Kingdom. I am particularly keen to see those figures for my Hendon constituents.
In conclusion, I believe pension freedoms have given people greater choice about when and how they use their pension savings. That is truly a transformation of our savings culture. The initiative displays true Conservative values of creating opportunity, nurturing aspiration and assisting people to take responsibility for their own futures. I hope the pensions dashboard is considered by other Ministers and inspires them to take similar actions in their own Departments.
Joan Ryan (in the Chair)
I will just say to the Back-Bench speakers that if they take about four or possibly five minutes and manage themselves, the Opposition Front-Bench speakers will have five minutes each and the Minister will have 10, and everybody should be able to get in.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate, and I congratulate the hon. Member for Hendon (Dr Offord) on securing it. I am happy to make a comment within the timescale that you have set out, Mrs Ryan,
Pensions are a thorny issue; many people made their financial plans based on the promise of a pension that has not materialised. There are also those who invested, only to lose their money and get only 30p in the pound of their investment, but that is a debate for another day; in fact, we had a debate on that last Thursday in the main Chamber; it was on Equitable Life, and those who had paid into a pension but did not get their money. It is easy to understand the concerns that some of us have about people’s need for a pension; the hon. Gentleman referred to the need for a pensions dashboard.
I can well recall—although it was not yesterday—my mum taking me down to the Northern Bank, as it was, to open my first account when I was 16. I also remember that when I turned 18, she took me to fill in the policy with the insurance man and said, “Make sure you’re putting money aside every month for that purpose.” That was thriftiness, but it was also really good direction from my mum, as always, because it was important that we knew why we did those things. I am a wee bit older now, and I am glad that I signed up for those things many years ago, because I will benefit from them in the years ahead.
Today’s debate is an attempt to ensure that people are not left in the lurch in the way that women born in the 1950s and the Equitable Life savers have been. It is an issue that it is certainly worth people considering if they are working hard and seeking to invest, so that someday they do not have to work, but can enjoy life without having to miss out on the things that they have while working a nine-to-five job. It is my sincere hope and desire that the work that the Treasury Committee and others are doing to prevent another Equitable Life scandal will be successful, but irrespective of that, a dashboard with real-time information has to be useful for those who are planning their future, as the hon. Gentleman said.
I must say that the key decisions that came from the Government consultation give rise to some concern. One concern relates to data security. The fact that all financials are held and accessible by the industry independently raises concern. I hope the Minister can reassure me on that. My concern is heightened by the breach in Independent Parliamentary Standards Authority data security, which led to the addresses of my staff members being released. That shook our office and caused great concern, given that we hail from a political party in Northern Ireland, and given its history. Such data security breaches underline my concerns. The Government must ensure that there are guidelines in place to reassure people, including my constituents and me.
I also have grave concerns regarding proposals that would result in pension fund members being targeted by those who want their business. Although I agree that multiple dashboards would improve consumer choice, it is essential that alongside those—I think the hon. Gentleman referred to this—there be a non-commercial dashboard, hosted by the single financial guidance body, and offering an impartial service to those who prefer that, or who may not want to be targeted by the market. We must cover all choices and tastes.
Another essential issue for me is that the cost of this dashboard should not hit the pension or the consumers; there should rather be an obligation on the industry to bear the cost. Although the autumn Budget has made available funding for 2019-20 to facilitate the industry’s making dashboards a reality, it is clear that that is to get the dashboard on its feet, as opposed to making it a Government service. That is another consideration.
I am conscious of time, so I will conclude with this point. In principle, I support the idea of people having greater knowledge of their financial status. There are so many people who come into my office with their pension annual statement, not understanding what it means—not only older people, but young career people who have been made to sign up to a pension, but have no idea what the money that they pay, or their employer pays, is used for. It is surprising how many people do not know.
Dr David Drew (Stroud) (Lab/Co-op)
That is why we need proper enterprise education in schools. Does the hon. Gentleman agree that that is when it should start, and that it should not end until people enter the workplace?
Jim Shannon
I thank the hon. Gentleman; just as the hon. Member for Hendon thought that someone had read his script, my next words are on the very subject to which the hon. Gentleman refers. The subject is not covered in school, but it clearly should be, because these young people literally have no idea what their pension means. He is absolutely right, and his intervention underlines the responsibilities that we have a duty to perform. I sincerely believe that a pension dashboard can help this generation, but the safety and security of financial information is paramount.
I look forward to the Minister’s response; I feel that some of the assurances I have sought in this small contribution are assurances that he can provide, and if he does, he will set a lot of minds at rest.
Paul Masterton (East Renfrewshire) (Con)
It is a pleasure to serve under your chairmanship, Mrs Ryan. I congratulate my hon. Friend the Member for Hendon (Dr Offord) on securing this debate; I thought he did a brilliant job of explaining why the dashboard is so welcome and so necessary, so I will not take up too much time going over old ground, but I want to comment once again on why the dashboard is so important and so necessary.
While it is true that we have 9 million new people coming into the workplace pension scheme through auto-enrolment, and those people can hopefully be more engaged in their pension savings throughout their working life, historically that is simply not what has happened. Quite frankly, many people have absolutely no idea what sort of pension savings they have built up over 20, 30 or 40 years of work. Many companies that they have worked for will no longer exist, and the insurance companies that held their pension schemes may have been amalgamated or no longer exist at all.
Those people will suddenly find themselves coming up to their retirement not really having any idea of what sort of pension savings they have, other than those savings made with a main employer that they were with for a long time. It is not particularly surprising that research shows that one in five adults will admit to having lost at least one pension pot. I think that probably understates it, because there will be people who will not admit that they cannot remember what pension savings they have, and there will be people who do not know that they do not know what pension savings they have.
The Pensions Policy Institute research suggesting that consumers have lost track of about £19.5 billion in pension pots really reinforces why we need the dashboard, why it needs to be all-encompassing and, as was said, why we need to make sure that all providers are properly committed to providing the information. The dashboard will not be much use if whether it is any good depends on which provider a person was linked with in the workplace; what would be the point? It needs to work for absolutely everybody.
I thought it was perfectly sensible that the Government decided to take a slightly different approach and push the private sector to lead more on the dashboard’s development; it had been doing most of the running on that, anyway. However, whatever the final dashboard or various dashboards look like, it is vital that the state pension element be included in it, to give people that full picture of their retirement saving. I liked the idea from my hon. Friend the Member for Solihull (Julian Knight), who is no longer in his place, of looking at ways to link up the dashboard with broader financial products, but we should probably walk before we can run, and make sure that the dashboard is up and running before we start making it more complicated.
I have a couple of questions for the Minister. First, the hon. Member for Strangford (Jim Shannon) raised the issue of data security and identity risks, which I think are very real. The Government Gateway is doing a lot of good stuff to protect against those risks, but we will need to be pretty satisfied, through the regulatory framework, that data is secure, and that there will be no danger.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It may help the House if I address the point raised by my hon. Friends the Members for East Renfrewshire (Paul Masterton), and for Hendon (Dr Offord), and the hon. Member for Strangford (Jim Shannon). For those who have not had the opportunity to see it, chapter 4 on page 29 of the consultation sets out in quite a lot of detail the efforts we propose to take on data security. The matter is clearly subject to consultation, but without any shadow of a doubt, it will not be proposed that the dashboard be a data storage device. Pension companies will provide one individual’s data back to that individual, rather than it going through a conglomerated site, which would be eminently more hackable, for obvious reasons.
Paul Masterton
I thank the Minister for that intervention, which was very useful and clarifies the point nicely. My other questions are on the industry delivery group. Is the Minister in any kind of position to explain the process for setting that up, and when it is likely to be set up? The main point is to make sure that the members of the group have the right mix of experience and backgrounds to deliver.
The pensions dashboard is another example of good pensions policy built on a consensual, cross-party basis. As more people come into the pension system because of auto-enrolment, it will be absolutely critical that they are able to keep track of what they have saved in the long term, over their working life.
Nick Smith (Blaenau Gwent) (Lab)
I congratulate the hon. Member for Hendon (Dr Offord) on securing the debate. To state the obvious, pensions are critical, but they can also be extremely complicated. People have an average of 11 jobs over their working life, so they are bound to build up several different pension pots over time. There are more than 40,000 private pension schemes in the UK, so bringing all the information together in one place and making it easy for people to access is sensible, though clearly a big step. That is why the pensions dashboard was supported cross-party, and by the industry.
However, there are real concerns about delegating the operation to the private sector. I will emphasise the areas where we need clarity urgently. First, the Government state that they expect people’s state pension entitlement “to ultimately be part” of the dashboard, but do not elaborate. Given that that is a major segment of many people’s total pension pot, will the Minister say by what date the state pension will be part of the dashboard?
Secondly, the Government say that they expect “the majority” of pension schemes to be included on the dashboard within three to four years, but then say they would legislate to ensure that occurs within
“a reasonable timeframe agreed by industry”.
To make better progress and to aid future pensioners, will the Government set a three-year timeframe in legislation and require all pension schemes to comply with it? I understand how big this task is, but we need to be ambitious on the timeframes.
Thirdly, the Government say that they expect
“a standard level of identity assurance”
for the service. I thank the Minister for his intervention, but given that people’s most sensitive financial information will be centralised, should the safeguards here not be made as strong as possible, just as they should for our consumer banking services? That is really important.
Finally, it was reported today that the Financial Conduct Authority has only 10 staff, out of a total of 3,700, working on investment scams, which is way off being enough. Does the Minister believe that is adequate, given that nearly £200 million was lost to scams last year?
Accurate and straightforward information is essential to helping people navigate this important but sometimes complex field. We need to make sure that they have that information, so that they have peace of mind when making critical financial decisions for the future.
Giles Watling (Clacton) (Con)
I am grateful to my hon. Friend the Member for Hendon (Dr Offord) for securing the debate. Speaking as one who probably had many thousands of jobs over my career, I think it is terribly important that we make clear how the pensions system works. This dashboard does just that.
As the Government announced when launching the consultation on the dashboard last December, the platform will put individuals in control of their data. I have to be absolutely honest: I was never clear about the data on my pensions at any given moment, and I used to have to sit down for some time to sort it all out, so this change makes sense.
I have no doubt that the dashboard will be a positive development for Clacton, where, like most places across the country, we have an aging population. In fact, we have the third-highest percentage of retirees in the country. There are 27,485 pensioners in Clacton—a number that now includes me—and by 2030 that is expected to increase by more than 20%, to 32,982. That means that at least 5,497 individuals out there working hard for their retirement will end up living, by sheer good fortune or whatever, on the glorious sunshine coast of Clacton in my wonderful constituency.
I want every one of those people to have a comfortable retirement, just as I want those who are already retired and living in my constituency to be comfortable; they are, after all, 40% of my electorate. As a matter of fact, I will be holding an older people’s fair in June, to ensure that they have all the support that they need. However, I also recognise the range of steps that the Government have taken to help older people during their retirement. Most important is the triple lock, which we are very sensibly retaining, and which means, as we well know, that the basic state pension will rise in line with inflation or earnings, or by 2.5%, whichever is highest. There are many beneficial policies for older people.
However, while I welcome these changes, I am worried about the prospects of future retirees. Even with more people saving, the workers of today are just not saving enough, despite their continuing hard work and the fastest wage growth for 10 years. In the future, when the savers of today retire, they are likely to come under greater pressure from a combination of factors, including reduced wealth and higher expenditure on social care and housing. We must mitigate those pressures, and I believe that the pensions dashboard gives us the opportunity to do just that.
The Pensions and Lifetime Savings Association recommended in its “Hitting The Target” report that
“the UK should develop and implement a series of targets”
on retirement income
“which build on the current analysis of what people need in retirement.”
According to the report, only 23% of people are unlike me and know how much they need to save to achieve an adequate retirement income. Workers of today must be encouraged to save more, and 70% of those workers say that targets would help them to do just that.
Unsurprisingly, I therefore argue that those targets must be incorporated into the Government’s version of the dashboard, and I ask that the industry does the same when developing its offering. In fact, that should be the minimum of our ambitions for this potentially transformative platform.
I ask the Government to approach the development of the dashboard platform with one aim in mind: ensuring that everyone saves more, but especially the young. The ease of access to data that the dashboard will provide should encourage that. Only 40% of millennials are likely to achieve an adequate retirement income. We are exposing ourselves to huge potential pressures on the welfare and social care systems—issues that we are already struggling to grapple with today—if current savers move into retirement without adequate income. Make no mistake: I do not believe that the dashboard is a silver bullet. However, it is at least a start. A well crafted and ambitious pensions dashboard is central to what I have described.
Craig Tracey (North Warwickshire) (Con)
It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my hon. Friend the Member for Hendon (Dr Offord) on securing the debate. I declare an interest as chair of the all-party parliamentary group for insurance and financial services.
I welcome the concept of the pensions dashboard. My hon. Friend the Minister knows that I am a huge fan of it. The world of work is changing. The Government estimate that people will have up to 11 jobs during their working life. That potentially means 11 different pension pots during that time, so it will be very difficult for people to keep track of the funds and work out how much money they will have when they stop working. I cannot claim to have had anywhere near as many jobs as my hon. Friend the Member for Clacton (Giles Watling), but having had two jobs before this one, even I find it difficult to keep up to date with the pension funds and who administers them now. The issue is not just that I have changed jobs, but that the companies that administer the funds have changed because the funds have changed hands. It is really difficult to keep up with that.
Figures from the insurance company Aviva show that there is about £400 million-worth of unclaimed pension savings. That highlights the fact that people do not know how much they have or where their pensions are. The Department for Work and Pensions estimates that, without the dashboard, 50 million pension pots will be dormant by 2050. I am therefore sure that, across the Chamber, we will agree that there is huge merit in the pensions dashboard, which will allow savers to view all their pension savings, including the state pension, in a single online place of their choosing. Certainly the feedback that we have had in the all-party group is that there is strong consumer support for that.
I congratulate the Minister on his tenacity in persevering with the pensions dashboard. I know that it has not always been straightforward, but he has seen this as a really good concept, and that is to be applauded.
I reiterate many of the points made by other hon. Members. The hon. Member for Strangford (Jim Shannon) made an interesting point about his mum. My dad was a financial adviser, and I remember him saying to me when I was 17 and had my first job, “Put £10 a month into your pension pot. You’ll never miss it.” He was paying me only £15 a month at the time, I think, but I did not really miss it. There was good economic sense in doing that at the time. We need to get people engaged early in life. The more we can do that, the more their pots will accrue. With an ageing society, it is more important than ever to help people keep track of their pension savings, as I have said.
Having echoed those points, I want to raise just three points with the Minister, and I would be grateful for his remarks on them. First, I agree with the DWP and the Association of British Insurers that competition is key, so multiple dashboards should be available. That will encourage a greater level of innovation, personalisation and consumer orientation. The proposed collaborative approach between the industry and Government is absolutely the right one to take.
However, there is a worry in the industry—this point was raised by my hon. Friend the Member for Hendon—that the state dashboard might be done first and then be followed by subsequent dashboards at a later date. Will the Minister comment on the current thinking on that? I think that it could lead to confusion, with people switching and so on, so it would seem sensible to launch them all together.
Secondly, I have heard concerns raised about the funding of both the dashboard and the single financial guidance body. The feedback is that it is important that all providers pay their fair share. There are worries that the proposed model, which uses only the Financial Conduct Authority levies, means that not all will contribute equally. I am thinking in particular of occupational pensions. Again, I would be grateful if the Minister commented on that.
My final point is something of a personal crusade. There is talk of a midlife MOT for people so that they can check where they are in life—how well they are doing and how prepared they are. I suggest that we go further than that and introduce checks every 10 years from point zero, where people are given feedback about their pension pots. If people see that the money starts at zero and they have to build it up by being in work and accruing a fund, I think it will encourage them to work. They will see that they are actually working towards their future by being employed and that if they want a better quality of life in retirement, putting more in their pension pot during their working life will assist that.
To conclude, I welcome the proposals and again thank the Minister for the work that he has done to get them on the table.
Richard Graham (Gloucester) (Con)
Ms Ryan, I apologise for joining the debate slightly late. It is a pleasure, though, to follow my hon. Friend the Member for North Warwickshire (Craig Tracey). I congratulate my hon. Friend the Member for Hendon (Dr Offord) on this important debate. I entirely agree with much that has been said so far.
The key thing is that the pensions dashboard is a modern solution for modern needs, at a time when having a single-employer career and a defined-benefit pension is largely a minority and public sector exception to the rule. In today’s world, as a result of the pension freedoms introduced by this Government, there are many opportunities for individuals both to access their pension and to pass it on. That means that, alongside the figure that my hon. Friend the Member for North Warwickshire cited for unclaimed pensions, there is not only greater opportunity for people in how to use the pension pots they have accumulated, but greater uncertainty about how to use them and, as my hon. Friend the Member for Clacton (Giles Watling) said, about how to access the relevant information. For all those reasons, a pensions dashboard is a very good thing.
I ask my hon. Friend the Minister to respond to just one thought. There are two aspects to the pensions dashboard. One is the technology, on which members of the ABI have made significant progress. No doubt we will hear more about that, because it is very encouraging. The other aspect is the preparation that is needed from pension providers. That is important because if the dashboard is up and ready but the information from the pension providers is not there, it will be as much use as a new car without wheels. That would be a very sad thing for the current cross-party consensus in the House that a pensions dashboard will be very useful for many people. I therefore encourage the Pensions Minister to say a few words about what the Government might do to encourage pension providers to ensure that when the technology is ready, everything on their side of the equation will be ready as well.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I thank the hon. Member for Hendon (Dr Offord) for initiating the debate. We have heard today, and I think we can all agree, that a pensions dashboard is a positive step. The utility of an online tool that shows users facts and figures about their pensions, such as how much money they can expect their pension pots to hold, is clear, particularly in view of the fact that research shows that 47% of the UK’s population do not know how much their pension pots contain. Given that people have, on average, about 11 jobs in their lifetime, pension pots can be challenging to keep track of, as we have heard.
I know from my own constituents that there was some alarm when the UK Government appeared to distance themselves from the pensions dashboard pilot, before going on to announce that they would introduce multiple pensions dashboards. Nobody would argue that the UK Government should not work in partnership with the pensions industry to deliver a pensions dashboard, but it really should be the Government’s responsibility. For the purposes of clarity and simplicity, there should be only one dashboard. If, as is proposed, there are multiple dashboards, the only thing we know for sure—and experts in the industry agree—is that there will be confusion and risk, and the whole thing may become ineffective. Ultimate responsibility for the delivery of a clean, simple, comprehensive and user-friendly pensions dashboard must rest with the Government and not the pensions services sector.
A proper pensions dashboard would allow people to see the value of their state, occupational and private pensions in one place, thereby helping them to keep better track of their pension income. In my correspondence and communication with the Minister on this matter, he has demonstrated no firm commitment to ensure that state pension data is included from the outset. I am keen to hear, unequivocally, that that has been reconsidered.
The Minister has offered me no commitment that providers will be compelled through legislation to contribute information or supply data to a pensions dashboard, as the hon. Member for Eastbourne (Stephen Lloyd) pointed out. I am keen to hear that the Minister has also reconsidered that. According to experts in the field, not compelling providers to supply information will mean that the most important pensions data is not captured by the dashboard. It seems that private companies will develop a model for themselves. Now I hear that the pensions industry will take a lead on this matter. That risks the entire dashboard being incomplete and far less useful than it should be.
Many pensions experts have expressed concern that without strong commitment from the Government, the project may fail in its aims. If there is missing data in the pensions dashboard, it will be as useful as a recipe with only some of the ingredients listed. It seems that the UK Government will merely facilitate a dashboard, which I take to mean—perhaps I am wrong and the Minister will correct me—that it will be entirely in the hands of private companies and the information it contains may well be incomplete.
I know that the Government think that their plans for dashboards are revolutionary and radical—or transformative, as the hon. Member for Clacton (Giles Watling) said—and it is true that the potential is there, but I fear that it will not be met. I remind the Minister that a single dashboard is essential, not only for the reasons I have already given, but because it will provide a safeguard against scammers through restricted access. We know that consumers who have been scammed have been tricked out of an average of £91,000 of their pension savings. Those who work in this field have warned that unless the public are absolutely clear how many dashboards there are, multiple dashboards could make it easier for scammers to trick the public into divulging personal data, despite what the hon. Member for Hendon said.
We know that data security will be key in giving consumers confidence to use the dashboard to plan their retirement. I heard what the Minister had to say about data security, but I believe that there are ongoing concerns. I ask the Minister to take those concerns on board and to ensure that all those who are retired or are planning to retire can have confidence in a single pensions dashboard that helps to support their understanding and management of their financial future. I believe that the Government must have ultimate responsibility for this, and they must not be seen to abdicate that responsibility to the private sector, given all the concerns I have raised.
Jack Dromey (Birmingham, Erdington) (Lab)
It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Hendon (Dr Offord) on raising this crucial debate at a crucial moment. To state the blindingly obvious, pensions are about a decent income in retirement, and ensuring security and dignity. To achieve those objectives, it is crucial that people know precisely what they have saved thus far, and what they need to do at the next stages to ensure that they are saving enough to enjoy a decent standard of living, and security and dignity in retirement.
The pensions landscape has been troubled, most recently through scandals around British Steel. My hon. Friend the Member for Blaenau Gwent (Nick Smith) was absolutely right. I will never forget the story of the shift supervisor in south Wales who wept as he told how he had been mis-sold a bad deal. Not only would he suffer as a consequence, but the 20 people he was responsible for supervising all followed his lead and all stood to lose. Pension cold-calling was an utter outrage. I will come back to that in a moment.
Are there still problems? Yes, there are. However, it is also right that we record that welcome progress is being made, cross-party, on four fronts. First, progress is being made on auto-enrolment. The Minister has heard me say before that I was proud to chair the policy discussions when Labour, then in government, appointed Adair Turner to carry out his inquiry, leading to the establishment of auto-enrolment. I welcome the continuity of that policy under this Government.
Is auto-enrolment perfect? The hon. Member for Hendon raised this issue earlier. No, it is not. There remain problems. Because of the threshold, 37% of female workers, 33% of workers with a disability and 28% of black, Asian and ethnic minority workers do not qualify. Auto-enrolment does not cover the self-employed or workers in the gig economy. Having said that, 10 million more people are now saving for their pension, and that is a thoroughly good thing.
Secondly, the Act that the Minister and I took through the House last year, which established the single financial guidance body and banned cold-calling, was a welcome step in the right direction. Thirdly—again, we have been working cross-party on this—the ground-breaking notion of collective defined contribution schemes marks significant progress. The historic agreement reached by Royal Mail and the Communication Workers Union, covering 143,000 workers, delivered a pension outcome infinitely better than if the workers concerned had had to fall back on DC schemes.
Fourthly, the dashboard is a sign of progress. As the hon. Member for Clacton (Giles Watling) said, the dashboard is important, because to enjoy a decent income in retirement, one needs to know what one needs to save. There have been some fascinating initiatives taken within the industry. NOW: Pensions provided three examples for consumers: “If you want an old banger for the rest of your life in retirement, choose this one; if you want to buy a new car in five to 10 years’ time, choose this one; if you want to go somewhere exotic on holiday, choose this one.” That is very interesting information, which helps to guide people, so that they know what they need to save. Crucially, in the first place, they need to know what they are entitled to, so the dashboard is absolutely key.
The hon. Member for East Renfrewshire (Paul Masterton) was right when he said that there are billions of pounds locked away and unclaimed, which people are entitled to. Hopefully, the dashboard will help to overcome that problem, too. There is no question but that this is a welcome step in the right direction. I stress that we stand ready to work with the Government to give effect to primary legislation as quickly as possible. Yesterday, we spoke about the importance of progress on CDC pensions. The sooner a pensions Bill can be brought forward that focuses on those two areas in particular, the better. While the devil is in the detail, there is such substantial cross-party agreement that we want to get this legislated on, acted on, and taken to the next stage.
The dashboard is a welcome step in the right direction. There has been a great degree of dialogue and an extensive consultation, which is now closed. Some useful points were made in that consultation. The plans for the SFGB-run dashboard are welcome. I agree with the hon. Member for Strangford (Jim Shannon) that a non-commercial approach would be preferable. Indeed, one dashboard would be preferable. Against the background of what the Government are proposing, will legislation to compel providers to supply data be in place before the SFGB-run dashboard is live? That is key to ensuring that savers are not given a half-baked product at launch. Will the regulations that compel providers to comply cover all dashboards, or just the SFGB one? When will the state pension data be available to view on the dashboard? Will the Minister reassure us about the point made by the hon. Member for East Renfrewshire in relation to data security?
In conclusion, this is a historic and welcome step in the right direction. The Government need to listen to the concerns that have been raised, including in the consultative process, in order to get this right. The sooner that we can move forward to legislate and bring the dashboard into being, the better.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Thank you, Ms Ryan, for chairing this debate. I thank the 16 colleagues who have supported my hon. Friend the Member for Hendon (Dr Offord). He has brought forward a debate that is clearly topical and important. In times when some might argue that Parliament is not debating matters, here is an example of a cross-party approach, to try to address a problem for our times with a modern, FinTech solution. I believe that has application to one and all.
There is no doubt that the pensions dashboard will be part of the FinTech revolution. It is a reform that can harness innovative technology to tech-charge pensions. It will provide accurate, secure and easy-to-understand information about people’s pension pot in one place. Fundamentally, it is a democratiser. It will bring a traditional 20th-century—some would say 19th-century—industry into the 21st century, so that the information is available to one and all on an iPad, smartphone or tablet. That is surely the right thing to do at a time when, as hon. Members have outlined, auto-enrolment has been transformational. Nearly 10 million people have auto-enrolled, and 1.4 million businesses are in a position to provide auto-enrolment to their workers.
I accept the point made by my hon. Friend the Member for Hendon, and I will put the auto-enrolment statistics in the Library for all Members. I will also see whether I can make a short written ministerial statement about putting it there. In his constituency, 14,000 people are benefiting from auto-enrolment, thanks to more than 2,000 employers on his patch who are supporting individuals in that way. The stats on how many individuals have the benefit of auto-enrolment, and how many business are supporting it, are available to hon. Members for each and every constituency.
As was rightly outlined by hon. Members, there is cross-party consensus. That is the right way forward, because pension policy works on a cross-party basis. The consultation closed on 28 January, and we hope to respond to it by approximately mid-March. It answers some of the points made by hon. Members. We hope that the dozens of responses submitted will provide further answers, and that the Government response will also provide some answers. Hon. Members will understand that I am constrained in how I can respond to matters raised today by the fact that I am making a live, formal response, but I will endeavour to respond to the best of my ability.
On the point about compelling individual providers, paragraph 180 of the consultation clearly sets out that it is the Government’s intention to proceed to compulsion. My hon. Friend the Member for Gloucester (Richard Graham) and the hon. Member for Blaenau Gwent (Nick Smith) raised the issue of the timetable for data provision by providers. I was interested to hear the suggestion of the hon. Member for Blaenau Gwent of a robust three-year time limit. Several providers responded to the consultation, and we will go through those responses in some detail.
There can be no doubt, however, that compulsion is coming, and that the only issue is the timeline. Certain providers could provide the data quite quickly. By and large, they know who they are, because they are the modern master trust providers that are already up to speed. Others will take longer. There is a legitimate debate to be had in this House, as we introduce the Bill, about whether we put in place a specific time limit for data provision, or whether that is done in secondary legislation, and with merely indicative outlines.
I will briefly deal with the Financial Conduct Authority. I am conscious of the evidence given at the Work and Pensions Committee today, and I have spoken to the Chair, the right hon. Member for Birkenhead (Frank Field). I accept that there must be a better way to regulate pension transfers, and to give individuals advice on how they handle their money; there was examination of that point by the all-party Work and Pensions Committee. I welcome its views.
The hon. Member for Coventry South (Mr Cunningham) said that simple is good. There is no doubt that the view of the Government, and of the vast majority of providers, is that simple is the way ahead. If the dashboard cannot be accessible on a laptop or mobile phone, and give an understanding of what assets an individual has in their pension, there will be difficulties. We need to make a traditional, paper-based business accessible to the individual, and that is certainly what we will seek to do.
I do not have time to go into the detail of the difference between commercial and non-commercial providers of the dashboard. As set out in some detail in the consultation, however, it is definitely the Government’s view that there should be a commercial and a non-commercial provider; they would provide individual dashboards. To harness industry innovation and maximise consumer engagement, the right way forward is to have an open standards approach that allows for multiple dashboards in the future.
However, the delivery body—it should be the single financial guidance body, as we set out in the consultation—should be the provider of a non-commercial dashboard that is effectively state-run through a third party. Such provision is obviously dependent on the delivery model and the delivery group that is set up. That works hand in hand with the response to the consultation, so I cannot give more detail, given where we are at this stage. I hope to update the House in the formal consultation response in March.
Nick Smith
The Minister did an elegant soft-shoe shuffle around my question about whether the FCA had sufficient capacity to deal with financial scammers. It would be unfair to press him on it now, but I ask him to challenge the FCA privately about whether it has enough people working for it to ensure that rogues are held to account.
Guy Opperman
We all wish to ensure that the difficulties that the hon. Gentleman’s constituents went through with the British Steel pensions scheme do not happen again. I assure him that I met the FCA on Monday. It had an interesting time today in front of the Work and Pensions Committee. The views of the right hon. Member for Birkenhead are clear, and I will liaise with him on an ongoing basis. We know what direction we are going in, but with regard to how we proceed, the devil is in the detail. That relates to not just the transfer, but the advice to the individual thereafter, which is complex. There are various versions of a way ahead on that.
Several other issues have been raised. My hon. Friend the Member for North Warwickshire (Craig Tracey) made the point about funding. In other countries, funding has been provided through a levy system on the pensions business, as has traditionally been the case in this country. I will take away his point about occupational pensions, but I certainly anticipate that we will go down the levy route, unless others persuade me otherwise.
On my hon. Friend’s other point about the timings of the non-commercial and the commercial dashboards, again relates to the response to the consultation, and is that a matter for the delivery organisation. There is no question but that we desire all organisations to be up to speed as soon as possible. As for how we do the non-commercial and commercial dashboards at the speeds that we are talking about, that is something that we genuinely cannot say at present, but I take the point on board.
My hon. Friend knows that I am a passionate advocate of the mid-life MOT, and I am happy to discuss it in the House on an ongoing basis, because it is definitely the right thing for the future. Various companies, particularly Aviva and Hargreaves Lansdown, are pioneering it; more specifically, the Department for Work and Pensions is considering conducting one for some of its staff.
I am conscious of the time, and that I must give my hon. Friend the Member for Hendon a minute to respond to the debate. I thank hon. Members for their many recommendations. I hope that the dashboard can be used across all financial products, so that our banking apps, and information about our pension providers and our savings, all become available to us in that way in the longer term. I welcome the cross-party support that clearly exists in the House for it, and I look forward to developing it with hon. Members.
Dr Offord
I thank all hon. Members who attended the debate, even though the House has adjourned.
The hon. Member for Strangford (Jim Shannon) spoke about saving from an early age, which is something I did with my first TSB account; the dashboard will encourage that. My hon. Friend the Member for East Renfrewshire (Paul Masterton) spoke about the £19 billion in lost pensions, which is a sum that could help many people across the country, if it could ever be identified who the money belonged to.
The hon. Member for Blaenau Gwent (Nick Smith) talked about the importance of there being clarity about providers, and the inclusion of the state pension, which is a good idea. My hon. Friend the Member for Clacton (Giles Watling) spoke about individuals being in control and the triple lock, which are both good things.
My hon. Friend the Member for North Warwickshire (Craig Tracey) raised the issue of the mid-life MOT; I would certainly like to see such an MOT for every decade. My hon. Friend the Member for Gloucester (Richard Graham) spoke about the pensions value accrued over his career, and the hon. Member for North Ayrshire and Arran (Patricia Gibson) spoke about the single dashboard provider. The inclusion of state pensions would be interesting, as I said.
The hon. Member for Birmingham, Erdington (Jack Dromey) brings great experience to the debate, particularly as a former trade unionist. He spoke about the achievements. Finally, I thank the Minister for all his work. He has made pensions interesting.