Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021

Monday 6th September 2021 Grand Committee

Considered in Grand Committee

17:12

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I am pleased to introduce this instrument, which was laid before this House on 21 June. Subject to approval, these regulations will continue the Government’s reform of occupational defined contribution—DC—pension schemes and prepare them for the opportunities that lie ahead.

With more than 10 million workers now saving for retirement in an occupational pension thanks to the success of automatic enrolment, we want these savers to achieve the best possible outcome in retirement. These regulations put improved member outcomes at the centre of the defined contribution occupational pensions market in the UK and ensure that the best interests of pension savers are driving the administration, governance and investment strategies of schemes.

By introducing a new “value for members” assessment for schemes with less than £100 million in assets and which have been operating for at least three years, we will ensure that members are not languishing in poorly governed and under-performing schemes. By requiring the trustees of certain occupational DC schemes to publish information on the performance of their investments for the first time, we will ensure that competition on overall member value replaces a narrow focus on cost.

By allowing occupational DC schemes to smooth performance fees over a multi-year period within the charge cap, we will make it easier for trustees of such schemes to pay higher fees for products where they have evidence that this will provide greater returns to members.

The Government are committed to building on the success of automatic enrolment with a consolidated, innovative, member-focused market for saving in occupational DC pension schemes. These regulations take significant action to this end. I am satisfied that the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021 are compatible with the European Convention on Human Rights.

Occupational defined contribution schemes, or DC schemes, are the future of occupational pension saving. The Government are committed to ensuring that the DC market in this country can continue to grow and deliver the best possible outcomes for the millions of workers now saving in a DC scheme. These regulations take forward several measures which amend a number of existing sets of regulations. The first of these, which is made by Regulation 2 of this instrument, is the introduction of a new “value for members” assessment for occupational DC schemes with less than £100 million in assets. While there is currently more than £100 billion of pension savings in occupational DC schemes, this is split among more than 3,000 schemes. This system risks inefficiency and creating inequality. For example, some people, as a result of the scheme their employer chose, possibly years ago, may be getting a lower return on their savings, paying higher charges or having a worse customer experience, therefore limiting their engagement with their pension and outcomes in retirement. We aim to change this.

That is why this instrument amends the Occupational Pension Schemes (Scheme Administration) Regulations 1996 to require trustees of relevant schemes, a term which covers most occupational DC schemes, with less than £100 million in assets and which have been in existence for at least three years to conduct an annual assessment of the value that the scheme offers to its members. The regulations specify the criteria that must form part of this assessment. They include the quality of the scheme’s record-keeping, the promptness and accuracy of administration and the extent to which existing requirements in the Pensions Act 2004 concerning trustees’ knowledge and understanding are being met.

However, the most important aspect of this assessment is the comparison between the scheme’s net investment returns, ie the performance of its investments less costs and charges, relative to three larger schemes. Larger schemes are likely to be better governed and to achieve greater investment returns than a smaller scheme with limited expertise, capacity and budget. We expect that the majority of schemes will not perform favourably in this test.

Regulation 3 of this instrument requires schemes to report to the Pensions Regulator the outcome of this “value for members” assessment. If schemes in scope determine that they do not offer value for members, Regulation 3 of the Register of Occupational and Personal Pension Schemes Regulations is amended by these regulations to require such schemes to inform the Pensions Regulator of whether they intend to wind up the scheme or to explain the reasons for not doing so and the immediate improvements that will be put in place. These measures will encourage a quicker pace of consolidation in the occupational DC pension schemes market and help members who are stuck in schemes that are delivering sub-optimal retirement outcomes for them. Scheme consolidation is a priority for DWP so that members are able to benefit from the economies of scale and access to a diverse range of asset classes that larger schemes bring.

The other measures in this instrument aim to broaden the range of asset classes available to occupational DC schemes. At present, occupational DC schemes are primarily invested in traditional assets such as listed equities and bonds. Only a small number of the largest schemes are accessing so-called illiquid assets, such as infrastructure, property, private credit and private equity. These illiquid assets have the potential both to diversify an investment portfolio and deliver greater returns. As a result, Regulation 2 of this instrument amends Regulation 23 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 to require occupational DC schemes to report, for the first time, the return on investments after deduction of any charges or transaction costs, known as net investment returns. We believe that members deserve to know how their investments are performing and how they fare relative to other schemes.

This will also catalyse competition between pension providers not just on cost but on overall value. Employers, consultants and members should be able to assess a scheme based on this metric, and competition should incentivise trustees of occupational DC schemes to explore illiquid assets and other innovative investment strategies. This is essential given that net investment returns have a much greater effect on retirement outcomes than whether a scheme charges its members 0.3% or 0.4%.

Both these measures, the new “value for members” assessment and net investment returns reporting, have been introduced alongside statutory guidance entitled Completing the Annual Value for Members Assessment and Reporting of Net Investment Returns, which will help trustees of schemes that are in scope to meet these requirements.

Finally, this instrument makes additional changes to regulations to improve governance of occupational DC schemes. All occupational pension schemes will be required to report on the total assets of the scheme annually to the Pensions Regulator at the scheme year end.

The changes to regulations in this instrument will also require schemes to produce costs and charges illustrations for all funds and not just those currently available. They will exempt wholly insured schemes from some governance requirements and ensure that occupational DC schemes “with a promise”—a small number of schemes that contain a commitment to members—report on their statement of investment principles to those members.

In conclusion, the measures in this instrument offer opportunities to improve member outcomes and help prepare the occupational pensions market for the challenges that lie ahead. I therefore commend the instrument to the Committee and beg to move.

[Baroness Janke (LD)]

My Lords, we certainly agree with the policy aims and mechanisms of this instrument and endorse the Government’s actions to make sure that

“members do not languish in sub-optimal arrangements that do not meet governance requirements and are unable to take full use of investment opportunities, to the benefit of the end saver’s eventual retirement outcome”,

as the Explanatory Memorandum states.

As the Minister has said, paragraph 7.6 of the Explanatory Memorandum explains that Regulation 2 requires that schemes holding assets worth less than £100 million and which have been operating for three or more years are to compare charges, transaction costs and the return on investments with three other schemes. We are not clear how those schemes are to be selected and who is to select them. Is it the trustees, for example? Are there selection criteria other than that they have assets of more than £100 million and are personal pension schemes? If it is not the trustees, who selects the comparator schemes?

Paragraph 7.8 states:

“Where the trustees have reported that the scheme does not provide good value for members, they are also required to report whether they propose to wind up the scheme and transfer the members’ rights into another scheme or explain to TPR why … not … and what improvements they are planning to make.”


What happens if these improvements are not acceptable to the Pensions Regulator and what powers does the regulator have based on compliance or non-compliance with Regulation 3?

We would probably all agree that it is a good idea to encourage smaller funds to transfer rights or improve if Regulation 2 comparisons show poor performance, but what about larger funds? Should there not be a requirement for them to undertake the same comparisons and take the same actions if their schemes show poor value for money for their members? It is easy to see why small funds should be encouraged in this way but hard to see why larger firms are not similarly encouraged. I would welcome the Minister’s clarification on these points.

[Baroness Drake (Lab)]

My Lords, I refer to my entry in the register of interests, particularly as trustee of a large master trust and the Telefónica pension scheme. I thank the Minister for the clarity of her explanation. It is a pleasure to talk face to face, rather than digitally, for once.

Of the three main provisions in these draft regulations, one requires smaller DC schemes with less than £100 million to demonstrate overall good value. If they cannot, the expectation is that they will wind up and consolidate into another scheme. The regulations also require schemes to take their net investment returns and increase flexibility to take account of performance fees when calculating the 0.75% pension cap on pension savings.

I support the focus on smaller schemes and the drive to consolidate them into larger schemes. The TPR evidence reveals that many smaller schemes struggle to match the governance, investment opportunities and charges delivered by schemes operating at scale, but the Minister’s aspirations are high. I quote Guy Opperman, who wrote:

“It is not my intention to stop at £5 billion”,


and that

“There is no doubt in my mind that there must be further consolidation”,


and that

“further action will follow”.

However, even a threshold of £5 billion goes beyond small and will catch all but the very largest of DC schemes.

The Minister believes that consolidation drives better member outcomes, a view again with which I agree, and I accept that scale matters. The Minister wants to understand the barriers to further consolidation through two lenses. He stated:

“I am particularly keen to understand how the creation of greater scale in the DC market can benefit members through economies of scale and access to alternative investments.”


However, the Government have to recognise that they created some of those barriers, even though the case for scale was well documented at the time. When auto-enrolment was introduced, they took the view that there should be an open market with virtually no barriers, or few barriers, to entry, with the inevitable proliferation of provision and the acceleration of small pot numbers that followed, which made decisions for employers even more complex. The transfer of the cost of market failure on to the members of the growing number of poorly regulated master trusts was eventually recognised and led to the new authorisation regime. At the start of that authorisation regime there were 90 master trusts; 37 were granted authorisation, a reduction in the overall size of the market by 58.8% in a little over a year, perhaps an indication of how inefficient the original policy had been. Is it anticipated that the drive to accelerate the consolidation of schemes will lead to a further reduction in the number of authorised master trusts? Will the TPR be expected to modify its approach to the authorisation criteria? Given the Minister’s aspiration and the Government’s drive for greater consolidation, what do they consider would be the optimal outcome in terms of the number of schemes? How do they define optimum scale in terms of assets under management?

The Government’s policy that consolidation into fewer and larger DC schemes will facilitate greater investment into a wider range of assets and bring benefits to scheme members and the UK economy was captured in the letter of 4 August from the Prime Minister and Chancellor, entitled Igniting an Investment Big Bang: A Challenge from the Prime Minister and Chancellor to the UK’s Institutional Investors. They called for the need to,

“seize this moment … to unlock the hundreds of billions of pounds sitting in UK institutional investors”—

particularly pension schemes—

“and use it to drive the UK’s recovery”,

and growth. They added that the Government were,

“doing everything possible—short of mandating more investment in these areas as some have advocated—to encourage a change in mindset and behaviour among institutional investors, and we remain open to addressing further barriers”.

17:30

The three main measures in the SI are clearly intended to encourage DC schemes to invest in more illiquid assets, private equity and venture capital: first, by driving consolidation to create scale; secondly, by amending the charge cap regulations to allow schemes to smooth performance fees so that the 0.75% cap can be breached in any one year as long as at the end of the multiyear period the mean average across the years is within the cap; and thirdly, by requiring schemes to state their net investment to returns, the intention being to get schemes to shift their focus away from low-cost investment to overall value, which may push trustees to more illiquid asset classes.

Again, to quote the Minister:

“The cap itself continues to offer members’ important protections against high or unfair charges. However, costs should not be the sole factor in determining overall value for members. I want to see schemes considering overall performance and returns on investments for members as well as costs.”

I certainly support greater visibility for net returns, but the Government seem to be moving to a view that charges must rise to secure greater value for members or that the high fees charged by some asset managers are reasonable, when in fact they may not be fair value for members. There are many able and committed professional and lay trustees who already consider overall performance and returns on investment, including net returns, risks and volatility, and consider more than costs in assessing value for members. The Minister is not working, as he may suggest, on a completely blank canvas.

I am wary also of a reverse call that lower costs must indicate lower value. Scale and transparency can drive costs down without prejudicing value. There are strong providers in the market offering good-value, diversified propositions at significantly below the 0.75% cap. The CMA, the FCA and others have provided evidence on the sometimes weak correlation between higher charges and higher performance. It is to be remembered that the 0.75% cap was introduced in significant part in recognition of the fact that when the Government increased private saving by harnessing the inertia of many millions of people, they had to address inefficiencies in the investment markets, whereby complexity, lack of transparency, lots of intermediaries in the supply chain and the weak position of the end investor had led to higher charges which did not provide fair value for pension savers.

Trustees’ fiduciary duties require them to take account of all long-term financially material considerations. Indeed, they are under increasing pressure from regulators and Governments on how they interpret that duty when making investment decisions. What is considered good practice is changing, as with ESG and the green economy; it is now a near-universal truth that if the climate is not addressed then pension scheme members’ interests and values will not be addressed in the longer term. By investing in companies and infrastructure that will drive growth and prosperity across the UK, there can be a virtuous alignment between the needs of the economy and the value delivered to the members of the pension scheme.

However, charges and member value remain important, and the governance around such a policy is key. The Government need to create the environment to allow that virtuous alignment, but not to transgress into appropriating the long-term private savings of many millions of people. It is those with a fiduciary duty who should decide which particular investments are in the interests of their scheme members. Any assurance from the Minister about the intent behind the 4 August letter on “Investment Big Bang” would be reassuring in that context.

[Lord Davies of Brixton (Lab)]

My Lords, I thank my noble friend very much for her remarks. She has obviously been much more deeply involved than I have been. I have come to these regulations pretty fresh, but a number of points strike me about them, and I would be grateful for the Minister’s comments.

It is important to appreciate that we are only talking about the default schemes. To get a feel for the significance of this impact, we need some idea of how significant default schemes are. My understanding, having seen figures, is that virtually everyone joins the default schemes, but this applies only to the default arrangements within a scheme. Does that mean that those people who for whatever reason choose the non-default arrangements are left uninformed about these important arrangements? Surely value for money is just as important? I accept that they are very difficult to judge, but value for money applies as much to the non-default arrangements as to the default ones.

The other exclusion from the regulations is that of small, self-administered schemes and EPPs. The notes are a bit weak on justifying that exclusion. There was probably more debate during the course of the consultation, but the comment is made that most small businesses do not run their own schemes. Well, “most” implies that some do run their own schemes. Will they be left to drift? Why do they not fall within the remit of this protection for members?

Regarding small schemes, I never believe very round figures, and £100 million is an extremely round figure. The table in the Explanatory Memorandum had the number of schemes in different sizes. The issue comes up of why, if we are going for £5 billion, why not to go for £5 billion? I think that I am echoing my noble friend’s question. Another question lies behind that. Is this really just a way of getting rid of small schemes? Are we establishing a bureaucratic mechanism that will make small schemes think that it is just not worth the candle? Which of those small schemes that we are envisaging will say: “We are prepared to go through this process, we believe that we are providing value for money, and we want to continue?” Which are the schemes that this regulatory structure is being introduced to cater for? Would it not be more straightforward just to say “£5 billion is it” and that you want to get rid of small schemes?

On the policing of the process, the question of who selects the three comparators is being asked. Is there some scope there for gaming the system? What protection do we have on which schemes get selected as comparators? Advisers could have 10 comparator schemes that were not really suitable. Will the Pensions Regulator have the power directly to prevent the choice of inappropriate comparators? It may be explained somewhere, but I can see nothing explaining how the choice of comparators will be policed.

It comes back to the question of what is perceived by the Government and/or the regulator as the endgame here. Is this a one-off, and we will continue with this situation, or is this just one step in a longer term process of eliminating smaller schemes and ending up with a relatively limited number of mega-schemes catering for this particular market? I am not convinced that this is necessarily in the members’ favour. It would be good to have an idea of whether this is part of a longer process, whether there is an endgame here and this is just one move on the chessboard, with other complicated moves coming up later, or whether it is just there on its own terms?

Then there is the more important question. In setting up this structure and this process, how meaningful is the information that is going to be provided to members? Is this the sort of information that members are looking for? Is it the sort of information they will understand? Has there been any research into the value and effect of providing this information for members? We also need a bit more clarity, which perhaps the Minister cannot give. I believe the Pensions Regulator could be clearer as to what exactly it will do if the trustees produce a report saying that they are not providing value for money, in effect—I am sure they will dress it up in particular words—but in practice are not going to do anything about it. We need greater clarity on what steps the regulator will then take in response. It is all very well having the information that a scheme is not providing good value for money, but the regulator needs to be clear in exactly what it will do in response to that situation.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her careful explanation of these regulations. I must say it is a pleasure to see her in person across the Dispatch Box once again, especially on so exciting a subject. I also thank all noble Lords who have contributed today.

There have been so many policy and statutory interventions into the private pensions scheme post auto-enrolment that I have to say that I am slightly with my noble friend Lord Davies here. It is quite hard to follow the long-term strategic objectives and outcomes that the Government are seeking to achieve. I get that this set of regulations is designed to take forward government policy to enable and encourage DC schemes to invest in a more diverse set of growth assets, including private equity and venture capital, in the belief that this will benefit both the British economy and the interests of pension scheme members.

We have heard the headlines today. Trustees of smaller schemes will have to do a more holistic annual “value for members” assessment and, if the regulator does not think that they can demonstrate good value, they will be pushed to wind up and consolidate. Trustees of all relevant schemes will have to give net investment return statements for default and self-selected funds. Then there is an amendment to the charge cap regulations to smooth the impact of performance fees over five years.

As we have heard, the Government in their call for evidence are seeking views on how to accelerate the pace of consolidation of schemes and are looking ahead to the second phase of consolidation for medium to large schemes with assets of between of £100 million and £5 billion. As my noble friend Lady Drake was hinting, £5 billion is way more than small. Obviously, strengthening the regulatory framework in pension schemes is welcome and, presumably, here the aim is to do that through more stringent “value for members” assessments, reporting on investment performance net of fees and the promotion of consolidation into larger schemes to create scale and leverage to deliver value, drive down charges and consider more diverse and innovative investment strategies that will benefit members. However, given the Government’s intention to drive greater consolidation, even of schemes with assets of above £5 billion, we really do not have much detail as to how and when this accelerated consolidation into a much smaller number of very large schemes is going to take place.

My noble friend Lady Drake was pushing into this subject. We need to know what the optimal number of schemes is against which the Government are benching their drive to consolidation. I think the Committee deserves to have a clear answer to that. If we are to be asked to approve one set of interventions after another, it is only reasonable to be given a vision of the end state the Government have in mind once they all work their way through the system.

17:45

I therefore have some questions. What guidance will be given to trustees and, indeed, to employers who may be keen to consolidate their own occupational schemes but who do not want to transfer their members and their assets into schemes which may subsequently become subject to regulatory pressure to wind up under the “further action to follow” and “not stopping at £5 billion” statements of Guy Opperman?

We know that the Minister for Pensions supports collective DC schemes as a way of sharing risk more efficiently between scheme members and achieving better outcomes in retirement. At the moment, authorisation of CDC schemes is restricted to single or associated employers, which must of course limit their scale. What are the implications of driving the consolidation of schemes with assets both below and above £5 million for the Government’s policy on encouraging the growth of CDC schemes?

The Government seem to believe that requiring schemes to state their net investment returns will push trustees away from a preoccupation with costs to consider how investments in more illiquid assets and growth equity might improve member outcomes in a way which would also be beneficial for the UK economy. The joint letter issued by the Chancellor and the Prime Minister spelled out the Government’s reasoning. My noble friend Lady Drake made the point that investing more money in the companies and infrastructure that will drive growth and prosperity across the UK could lead to a virtuous alignment between the needs of the economy and the value delivered to members of pension schemes, but she was spot-on in saying that charges and member value remain important and governance around such a policy is key.

One sentence in that letter from the Chancellor and the PM states:

“The Government is doing everything possible—short of mandating more investment in these areas as some have advocated—to encourage a change in mindset and behaviour among institutional investors, and we remain open to addressing further barriers where they are identified.”

I confess to being a little surprised that a letter of this magnitude chose to reference those who advocate mandating trustees on where they should invest. I hope that was not a hint to the sector. There is a lot at stake here. Given the current, very high level of public trust in auto-enrolment, the double-default on which scheme and investment fund, and all the associated fiduciary and regulatory oversight of their interests which has produced such a positive behavioural response, we cannot put that at risk.

In their call for evidence, the Government advised that they wanted to establish the likely appetite for investment in illiquid assets and/or growth equity and offered the prospect of removing the look-through requirement for closed-end funds among the possibilities for removing potential barriers for investment in such asset classes. The Government’s aim was to publish a response on this matter before the Summer Recess, but they have not been able to do so. When do the Government anticipate publishing such a response?

As they look to the funds in pension schemes to support the rebuilding of the UK economy, it is crucial that the Government do not weaken their commitment to transparency and to protecting members against high or unfair charges. Do the Government have any plans to raise the 0.75% charge cap?

These regulations, which we are debating at the back end of the first day back in a wholly physical Parliament, are part of a government trajectory which could have a significant effect on the pensions landscape in the UK. We need some solid answers, and I look forward to hearing them.

[Baroness Stedman-Scott (Con)]

I thank everybody who has taken part in this interesting debate for their contributions. I shall take some of the points that noble Lords have raised and will deal with them as they come.

I thank the noble Baroness, Lady Janke, for her positive endorsement of the regulations. The noble Baroness and the noble Lord, Lord Davies, asked how the schemes are to be selected. We would expect trustees to choose the scheme to compare their scheme to, and master trusts are likely to be the best schemes to compare against.

The noble Baronesses, Lady Janke and Lady Sherlock, asked about the Government’s plans for future DC consolidation. The Government have been very open that consolidation is key to the future of the defined contribution pension market and that the pace of consolidation must increase. Consolidation will improve governance and enable more occupational DC schemes to reach the critical mass needed to access a broader range of investments and drive down costs through economies of scale. In September 2020, DWP consulted on new regulations to require trustees of occupational DC schemes with less than £100 million in assets to justify their continued existence via a new “value for members” assessment, and this will come into force this autumn. This was phase 1, and now we turn to phase 2, which will look to drive consolidation further and faster.

The noble Baronesses, Lady Drake and Lady Sherlock, both raised a question about the call for evidence, which was launched on 21 June, being far too ambitious. We know from other countries such as Australia that scale is among the biggest drivers in achieving value for money for savers and ultimately better retirement outcomes. It is therefore important that we move quickly, and I echo the commitment made by the Minister for Pensions. However, we recognise concerns about the pace of change. That is why we have developed a phased approach, starting with occupational DC schemes with less than £100 million in assets. The call for evidence closed in July. We are currently considering the responses received and will issue a response in due course. We are exploring options for consolidation, and, as the Minister for Pensions said, this is likely to include all schemes, including master trusts.

The noble Baroness, Lady Drake, made the point that the PM and the Chancellor are calling for an “investment big bang” and that these measures could wrongly force schemes to invest in illiquid assets. The Government do not wish to direct the investments of trustees of pension schemes. Trustees must invest in line with their fiduciary duty—that is, in the best financial interest of their beneficiaries. Instead, we are seeking to remove barriers to investments in illiquid assets. The provisions in this instrument have received support from the pensions industry.

The noble Baroness, Lady Drake, raised the point that the Government believe that high charges are fair. We want to ensure that net returns are considered, which balances cost against performance. Low-charging investments can deliver value for money, but cost should not be the only factor.

[The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)]

My Lords, there is a Division in the House. The Committee will adjourn for 10 minutes.

17:51

Sitting suspended for a Division in the House.

18:01

[Baroness Stedman-Scott (Con)]

The noble Baroness, Lady Drake, referred to the PM and the Chancellor calling for an “investment big bang” and said that these measures wrongly force schemes to invest in illiquid assets. The Government do not wish to direct trustees of pension scheme investments. Trustees must invest in line with their fiduciary duty; that is, in the best financial interest of their beneficiaries. Instead, we are seeking to remove barriers to investments in illiquid assets. The provisions in this instrument have received support from the pensions industry.

The noble Lord, Lord Davies, talked about default schemes. He is correct that almost all members save into the default arrangement. Those who self-select still receive regular information on charges and are generally engaged. He raised the subject of the threshold for “value for members” assessment being set at less than £100 million, which had increased from £10 million at consultation. He asked whether it would increase further in future. The Government increased the “value for members” assessment threshold following consultation with industry. The reason for this was to capture as many potential poorly performing occupational DC schemes as possible. We have evidence that the smaller a scheme is, the more likely it is to be poorly governed. By our moving the “value for members” assessment threshold from assets under £10 million to £100 million, more occupational DC schemes will have to undergo this rigorous new assessment. This will mean that more members will benefit from improved governance, administration and returns as a result. We will review the assets under the £100 million threshold regularly but have no plans to change it at present.

The noble Lord, Lord Davies, asked how meaningful to members the information would be. The Government are taking forward several measures—dashboards and simpler statements among others. The SI is about how these schemes are governed internally. We are intervening to prevent members languishing in poor schemes.

The noble Baroness, Lady Sherlock, raised a point about CDC. I am advised that we will write to her on that. She also asked what the instrument would mean for the future of look-through and said that the Government had said that they would advise on a policy in July. The instrument does not amend the Government’s policy on treatment of such costs. In our consultation response on improving outcomes for members, published on 21 June, we state that occupational DC pension schemes should continue to look through closed-ended funds as they would all funds of funds and incorporate such costs within their regime of charges levied on members.

If there are points raised by noble Lords that I have not dealt with—

[Baroness Sherlock (Lab)]

I am grateful to the Minister. Could she write to me with that last point, as I did not quite catch the bit about look-through funds and look-through operations of closed-ended funds? I asked two questions. First, my noble friend Lady Drake and I both asked what the Government’s optimal number of schemes is. Would it be one big or enormous scheme—would that be fine? Is it fine to have lots of schemes? Can the Minister give some idea what the centre is in that? The other thing I asked about, which I do not think she answered, was what guidance would be given to trustees or employers who might want to consolidate but were concerned that the moving goalposts would mean that they could end up simply being moved again and, potentially, again. If she did respond to that, I apologise for having missed it.

[Baroness Stedman-Scott (Con)]

I will write to the noble Baroness on the three points she has raised and put a copy in the Library for everybody to see. If there is anything, having looked at Hansard¸ that we have not dealt with, other than that which the noble Baroness raised, I will write to all noble Lords.

This instrument makes several different changes to several different sets of regulations. It has one theme at its core: improving outcomes for pension savers. We have a duty to ensure that those who have engaged in pension saving in their workplace as a result of automatic enrolment can rest assured that their occupational DC pension scheme is on course to deliver the best possible outcome for them. This instrument does this by tackling poor levels of governance, shifting the attention of the market from a narrow focus on cost to overall value, and removing barriers to schemes allocating to a wide range of different assets. I therefore commend it to the House and beg to move.

Motion agreed.