Pensions Dashboards (Prohibition of Indemnification) Bill
Friday 20th January 2023
(1 year, 10 months ago)
Commons ChamberPensions Dashboards (Prohibition of Indemnification) Act 2023 View all Pensions Dashboards (Prohibition of Indemnification) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mary Robinson (Cheadle) (Con)
I beg to move, That the Bill be now read a Third time.
The Bill is a simple yet important measure designed to safeguard the interests of pensions savers. It will help to ensure that unscrupulous trustees or managers of pensions schemes do not help themselves to the hard-earned savings of pension scheme members to reimburse themselves for penalties incurred under the pensions dashboard regulations. I am proud to have brought the Bill before the House and delighted to have received support from the Government for it. I am proud to have brought the Bill before the House and I am delighted to have received support from the Government for it, confirmed by the Minister for Employment, my hon. Friend the Member for Hexham (Guy Opperman) on Second Reading and reconfirmed by the then Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Brentwood and Ongar (Alex Burghart) in Committee. I thank them both profusely for their support.
I welcome the new Minister, my hon. Friend the Member for Sevenoaks (Laura Trott) the Parliamentary Under-Secretary of State for pensions and financial inclusion, to her place and hope that she will confirm that I have a hat-trick of support from pensions Ministers. The cross-party support throughout the passage of the Bill was also extremely welcome, and I hope that that will continue.
For the benefit of those that were not present for the previous stages of the Bill, I will give a brief recap of its policy background and purpose. Millions more people are now saving for retirement, thanks to the success of automatic enrolment, but as people change job roles throughout their career it can become difficult to keep track of multiple pension pots. Likewise, when people move home, updating their addresses with various pension schemes is not always the top priority, so pension schemes might not have up-to-date contact details for many of their members.
We know that many people have little idea how much they have saved for retirement. Pensions dashboards are an electronic communication service that will help to solve those problems. They will revolutionise the way people interact with their pensions by allowing individuals to see pensions information online, including the state pension, in one place, at the touch of their laptop, smartphone, or tablet. Dashboards will help to reunite individuals with their lost or forgotten pensions and support people in better planning for their retirement.
The Money and Pensions Service, an arm’s length body of the Department for Work and Pensions, will provide a dashboard service. Additionally, to help to cater for the varied needs of the millions of people with pensions savings, it will also be possible for other organisations to provide dashboard services. Those organisations will be regulated by the Financial Conduct Authority, which is currently consulting on rules for pension dashboard operators.
Importantly, the technology behind pensions dashboards has been designed with data security at its heart. Pensions information will not be stored in any central database and will continue to be held only by the pension schemes themselves, or by a third party administering the data on their behalf. Pensions information will only be displayed at the request of the individual. Individuals will retain control over who has access to their data, and will be able to revoke that access at any time.
Following parliamentary approval in November last year, the pensions dashboard regulations came into force on 12 December. The regulations set out requirements for occupational pension schemes to be connected to a digital ecosystem, which will enable the provision of pensions information at the request of a pension scheme member. In the event that trustees or managers do not comply with the requirements of the pensions dashboard regulations, there are powers for the pensions regulator to take enforcement action, including the power to issue penalty notices. Those penalty notices could be up to £5,000 for each breach in the case of individuals, or up to £50,000 in other cases, such as corporate trustees.
However, there is nothing currently in legislation to prohibit trustees or managers from being reimbursed for those penalties using the assets of the pension scheme. It is certainly not right in my view that ordinary pension scheme members should have to foot the bill for failures by trustees to meet the legal requirements.
Simon Baynes (Clwyd South) (Con)
Will my hon. Friend clarify whether the dashboards have come into reality yet, or is it just that the regulations are in place and we expect the dashboards to become a reality shortly?
Mary Robinson
I thank my hon. Friend for that question. I share his eagerness for the dashboards to be put in place. The regulations are there and the building of the digital ecosystem has been happening. One key part is that the dashboards must be secure, and that is complex. The expectation is that, from 1 April, pension schemes will be able to and be expected to start to connect with the dashboard system, and their ability to do that will run through until, I believe, October 2025. The Minister will clarify those points. I share his enthusiasm, and we want to get the dashboards going as soon as possible.
I am pleased to say that the problems I have highlighted are being solved and addressed by the Bill. It provides powers for criminal proceedings to be brought against trustees or managers of occupational pension schemes if they reimburse themselves from pension pots to pay penalties imposed for compliance breaches under the dashboard regulations. If a trustee or a manager is found guilty of that offence, the provisions would allow for a maximum sentence of up to two years in prison, a fine, or both.
As I said on Second Reading, the Bill does not impose any new costs or requirements on occupational pension schemes or their sponsoring employers. Section 256 of the Pensions Act 2004 already prohibits reimbursement for penalties incurred under a number of other areas of pension legislation. The Bill will simply extend that prohibition to include pensions dashboards. I hope we can all agree that this is an uncontentious measure that is worthy of our support. I look forward to its making progress through the other House.
Simon Baynes (Clwyd South) (Con)
I thank my hon. Friend the Member for Cheadle (Mary Robinson) for bringing the Bill before the House. As with other Bills that we have considered today, it is astonishing that its requirements even need to be made—pension trustees or managers using scheme assets to reimburse themselves and repay civil penalties is, in any situation, an extraordinary concept. The Bill will be righting a potential wrong, which is extremely important.
Before I came to this place, my background was in the financial services industry. When I was a county councillor in Powys, I was a member of the pensions and investment committee. I have also had considerable experience of acting as a trustee to various charities, overseeing their financial affairs. So, from my point of view, this is a subject of particular interest.
My hon. Friend made the vital point about how pension dashboards, as an electronic communication service, will allow individuals to see their pensions information—including their state pension—in one place online. I am pleased to hear that we are not far off pension schemes being connected to the technology—that is from 1 April—and that they will have until October 2025 to be, I presume, fully up and running. Anything that can be introduced that demystifies the pension world and makes information more accessible to people is vital.
My hon. Friend made two other points about the dashboards, one of which was about uniting people with lost pensions. That might sound peculiar to some, but those who have been in different employments will have been members of different pension schemes and companies—parents may have set up a pension for them—and so on. That is therefore a much more important point than it might appear at first sight.
My hon. Friend’s second point was about better help in retirement in general. At a time when inflation and interest rates are high, and the cost of living is difficult for people, the pensions issue could not be more important. With prices going up sharply, anything that we can do to help people in retirement on a static income, or an income that is not growing much, is vital.
I am delighted that the pensions Minister, my hon. Friend the Member for Sevenoaks (Laura Trott), is present; she is a true champion of the pensions industry and an expert on the subject. I have heard her speak on the subject on several occasions. The point of my hon. Friend the Member for Cheadle about automatic enrolment is extremely pertinent, because the whole pensions industry has been transformed in recent years, particularly under the Conservative Government, so more people are involved in it. The ability to have pensions dashboards as an electronic communication is therefore vital.
To go back to my original point, it is extraordinary that there is nothing in legislation, backed by a criminal sanction, to prohibit the trustees or managers from drawing on and reimbursing themselves from the pension schemes. As somebody who was involved in that industry, one way or another, for a long time, I could not imagine being on a board of trustees where anybody would ever consider doing that, but clearly it does happen. My hon. Friend’s point is that those are, potentially, substantial amounts of money. The financial penalty under the current non-compliance requirements in part 4 of the Pensions Dashboards Regulations 2022 is up to a maximum of £5,000 in the case of an individual or £50,000 in other cases, such as corporate trustees. So if those were to be reimbursed from the schemes, they would be substantial subtractions.
Mary Robinson
My hon. Friend is right to say that it is important that a trustee should not be able reimburse themselves from the scheme for any wrongdoing under any pensions legislation. In fact, under the Pensions Act 2004, some of those regulations are already in place. It appears from the Pensions Regulator that, until now, prosecutions and penalties have not been issued; I am sure that the Minister will want to clarify that. This is very much about having a deterrent when the dashboard is set up. The deterrent effect needs to be strong to ensure that those people, whose pensions are in the schemes and on the dashboard, are properly protected.
Simon Baynes
I thank my hon. Friend for that clarification. Indeed, the deterrent is vital, not only to ensure that the trustees and managers do not take that course of action, but to give a general sense of confidence in the schemes to everybody who contributes to them. As I said, I am very impressed by my hon. Friend for promoting the Bill, which has my wholehearted support as a Member of Parliament and as somebody with considerable experience of the industry. It is high time that we passed the measure.
Dean Russell (Watford) (Con)
I pay tribute to my hon. Friend the Member for Clwyd South (Simon Baynes), who always speaks eloquently and with grace about his insight and experience, which he brought to bear in his speech. I also pay tribute to my hon. Friend the Member for Cheadle (Mary Robinson), who is an incredibly passionate campaigner on this and other topics. It does not surprise me that the Bill has made it to Third Reading, given her experience and her ability to convince others about quite complex issues in such a way that makes sense and brings people along.
I will speak briefly about the Bill’s importance from the perspective of pensions and of transparency and the use of data. Although the Bill is specifically about the prohibition of indemnification, the words in it and the pensions dashboards are absolutely key. We are now surrounded by a world of data, and there are so many complex ways in which our data is used and accessed. Whether it is marketing information on Facebook or a pensions dashboard, it is ultimately information about us and our lives. We are being analysed, reviewed, logged and filed in databases all around the world.
We all hope to get to pensionable age, reflecting and relaxing after a hard-working life, and our pensions will be important. Knowing everything we can about what our pensions will look like, and about what information is stored, protects us from wrongdoing and allows us to plan ahead. That is absolutely key.
During the covid pandemic, we increasingly used dashboards to explain complex information in a simple, effective way. We all remember the sad days of covid, when Professor Whitty, Sir Patrick Vallance or whoever stood up at the daily briefings to go through the charts and to explain what the graphs and information meant for what we could do and what we might plan to do. The pensions dashboard is not dissimilar. It is just data on our lives, showing what contribution we are making, what contribution we will be able to make and what we will get back in future.
This goes to the heart of what government should be about. It should not be about imposing rules. As a Conservative, I think we should have a small-state Government, but they should support people to know what is available and what opportunities they have. They should also support people through welfare, where needed, so there is a safety net to help them live the best life they can.
Pensionable age is often one of the points at which people need support from the Government. Anything they do not know about their state pension contributions could inhibit their ability to live a full and joyful life. Being able to understand the data, and being able to access a dashboard that tells us what our future pension may look like given our contributions, is key.
Also, pensioners want to know that everything they have put into their pension is available to use. The stories of organisations or individuals taking some of that money away from pensioners are not only abhorrent and wrong; it is a failing that they are able to do it off the radar, without sharing the information. I wholeheartedly support this Bill and the wider approach of having a pensions dashboard. The more data-literate we can be, and the simpler we can be in telling people what is available and accessible to them, the better the world will be.
More broadly, this ties into the important role data will have in health. I will not talk about this too much, but I am a great believer in having a single patient view within the NHS and within Government, so that we are able to access our information to see what it means for us. The state could then use that information to improve its services and to connect the dots between different systems while ensuring there is a seamless approach to everything it does.
The challenge is that, because data and technology have grown in a fragmented way within Government and society, there are lots of small bits of data and small systems out there that do not talk to each other. The pensions dashboard is a great way to show that the Government are connecting those dots. I just hope we do that more across other parts of Government and other parts of our lives so that we have a simple view of what the future will look like.
I commend this Bill, and I truly thank my hon. Friend the Member for Cheadle for her work to get it this far.
Selaine Saxby (North Devon) (Con)
I thank my hon. Friend the Member for Cheadle (Mary Robinson) for bringing forward this important Bill.
As a member of the Work and Pensions Committee, I suspect that I spend more time thinking about pensions than many. Trust in pensions is key to ensuring that people engage with saving for later life and adequately prepare for their old age. A Which? survey found that only 23% of people trust long-term financial products such as pensions. The Bill will strengthen people’s trust in the new pensions dashboards and ensure that people feel safe to engage with this useful new tool and gain a greater understanding of their pension.
Pensions dashboards are hoped to be a game-changer for engagement with pension pots and financial literacy when it comes to retirement plans. It is not new that we have poor financial literacy in the UK. Many people do not take advantage of the range of savings and investment products available to them because of a mix of a lack of trust and a lack of education about the benefits. As a former maths teacher, I put on the record my full support for our Prime Minister’s ambition for everyone to study maths to the age of 18, although I very much hope that it will be the practical, day-to-day mathematics that tackles the challenges of compound interest, debt management and, indeed, pensions.
People see pensions as something shrouded in mystery. The lack of literacy around pensions is exacerbated by their constantly being put at the bottom of people’s priority lists. Understandably, people are primarily focused on day-to-day spending, clearing debts, saving for homes and other big expenses and caring for family members. However, we all know that the earlier people engage with pensions, the more they can save and the greater the benefits.
Since 2012 , the Government’s automatic workplace enrolment scheme has proved very successful and ensures that younger people, who are likely not to be thinking of their retirement 40 or so years in the future, are saving from an early point. Although more people are saving through the scheme, it also creates a sense of security and that they do not need to engage with their pensions as they are already providing for their future. Such over-optimism in respect of their savings prevents people from engaging in the time-consuming process of consolidating pensions. These days, people change jobs with much more frequency and accrue lots of small pots. During the summer recess, when I had a little time on my hands, I thought I would try to consolidate my pensions; to date, I have not successfully consolidated a single pension, despite three of them relating to my work in this House.
By making pension savings more transparent, we will give people a clearer idea of their existing situation. They can then make informed decisions about where they put their money. Since covid-19, more and more of our population are confident in the use of online tools in place of physical access to banks. In fact, 23% of British people use Google as their first port of call for financial information, while 16% say they use social media such as Facebook, Instagram and Twitter as their source.
Currently, people with pensions worth more than £100,000 are more likely to engage regularly with their pension. Future planning should not only be the province of the wealthy. Once the dashboard is up and running—according to the MaPS, the pension dashboard programme is coming shortly, as my hon. Friend the Member for Cheadle has assured us, with the system currently being tested—I hope that savers across society use it and take control of their savings.
I also hope that the dashboard will help to alleviate savings gaps. Currently, the value of women’s pensions are 60% of the value of men’s on retirement. Women have historically had to work harder throughout their working lives to earn the same amount. Although the situation is improving, women still face greater caring responsibilities, which often lead to their taking time out of the workforce or cutting back on their hours.
I hope that the introduction of pensions dashboards will encourage more people to engage in planning for their future, because even in the current financial climate it is important that people are educated about their options for the future. The Bill will give people confidence that their money is safe and ensure that they are given accurate information and can make informed decisions about how to save for their hard-earned pensions.
David Johnston (Wantage) (Con)
We do not think about our pensions enough, let alone talk about them enough. We should acknowledge the fact that a lot of people did not have them, which is why auto-enrolment has been such an important policy. Since this Government introduced auto-enrolment, nearly 11 million more people have been saving into a pension, although some people still do not have them. Auto-enrolment has been a welcome development.
Even people who do have a pension can find them difficult to understand. They see an amount on their pay slip that disappears from their pay, but they do not really have a sense of what that will mean for them in retirement. The total sum that they have saved may look large until it is divided across their life expectancy after they have retired; that might make it seem a much smaller sum. We know that contributions are not generally at the levels they should be.
We are very fortunate to have a Minister who is passionate about pensions, and about making sure that people have good pensions that are clearly understood. That is also why these dashboards will be so important, because it is a complex area that people do not understand, and having one place where someone can clearly see how much money they have saved will help them to plan for their retirement. To the point made by my hon. Friend the Member for North Devon (Selaine Saxby), people often collect several pensions through their working lives from different places that are not easily transferable. They can entirely lose the information about them; they have no sense of how much is in each of them, or how to bring them together and what that might mean. As such, the Bill is very welcome.
We have often seen scandals arise from the complexity of pensions, and we all know of very high-profile national scandals involving pensions. We know of some local cases—I have my own local case that I have been working on—where people have thought their money would be well guarded, but have found decades later that the promises that were made to them have been abandoned, and when they have tried to seek redress, they have felt blown off by authorities: “Too late, too bad. You’ve lost that money.” As such, while I would like to think that none of the people managing pensions would take money out of their assets in order to pay fines, I am afraid that based on all the things we have seen in the pension industry over the years, I do not have that confidence. I totally accept that it will be a small minority, but the safeguard in the Bill is a very important one to have in place, and I congratulate my hon. Friend the Member for Cheadle on bringing it in.
Richard Fuller (North East Bedfordshire) (Con)
As is often the case in these debates, one prepares a long speech, only to be told to hurry up and only speak for a couple of minutes—hon. Members may have heard that from me during our last Bill debate. I will take this opportunity to ask the Minister some questions that I hope will be helpful, and to make a broader general point to the House.
As other hon. Members have said, the underlying change regarding pensions dashboards regulations that this Bill, skilfully introduced by my hon. Friend the Member for Cheadle (Mary Robinson), seeks to make is to improve a commonplace problem for many pensions, which is that we do not know where our pensions are. They are very hard to track, which leads to all sorts of unintended consequences: indeed, the Pensions Policy Institute has estimated that 1.6 million pensions with a total assessed value of £19.4 billion have been lost. I do not know whether that is a number that the Minister recognises, but my hon. Friend is absolutely right to bring the Bill forward as an additional measure of consumer or pensioner protection.
Could the Minister clarify the stage at which penalties will be levied? Is it on advisement that a pension provider has done wrong? Will it be after a warning, or after egregious ignorance of warnings by a provider? I think that clarity would be helpful. Will it be in the public domain that a penalty has been levied, similar to the national living wage regulations? It is an important question, because there is a significant imbalance in knowledge between fund operators and pension holders.
What assessment has taken place of levying fines on those with professional qualifications, and the ability of professional standards bodies to operate assessments? Clearly, integrity is a crucial characteristic when managing people’s pensions. When it comes to levying fines against an individual—I understand that fines can be levied against both an institution and an individual—have we investigated the implications carefully enough? Have the Government liaised with professional standards bodies to ensure that if someone is fined, it does not unduly limit their ability to continue to operate? Who will levy and assess the fine: the regulator or the courts? I believe the Minister will say that it will be the regulator, but perhaps she could confirm that.
That point brings me to a more general one about the House’s oversight of regulators. In this instance it is the Pensions Regulator, but we also have Ofgem, Ofwat and the FCA. We assume that providing powers to a regulator means that everything will work wonderfully well, but frequently it does not. There is a significant gap in the oversight of many of our regulators in the UK. It affects the operations of this Parliament, and it needs addressing urgently. For example, when the Financial Services and Markets Bill was going through this House, I sought amendments to ensure that the FCA met certain performance indicators as a requirement for providing services to participants, because without them our competitiveness is hurt.
Another example is Ofgem’s decisions about who can participate in the energy market or how on earth to handle the price cap through 2020-21. Those are serious questions and serious decisions, but where is the accountability? I am not sure that the current structure, in which we rely on Select Committees, is sufficient. Without getting into the general point, perhaps the Minister might find time to say whether she is happy about the ability of the Work and Pensions Committee to fulfil its duties with respect to oversight of the Pensions Regulator.
Matt Rodda (Reading East) (Lab)
I congratulate the hon. Member for Cheadle (Mary Robinson) on her work on the Bill. I thank hon. Members across the House who have contributed to our debates during its passage.
This is an important Bill. People who work hard and save all their lives should have every right to expect a decent pension in their retirement. The Bill will play an important role in helping to protect the interests of people who are saving for a pension, as we have heard. The Opposition agree with the principle that pension scheme trustees should be responsible if they fail to meet their legal requirements, rather than responsibility falling on people who are saving for a pension.
Without the provisions in the Bill, there is a real risk that fines could fall on scheme members. That problem was highlighted recently by the Pensions Regulator—I take note of the concerns that the hon. Member for North East Bedfordshire (Richard Fuller) raised about regulators—which warned that many trustees are at risk of failing to meet their legal pensions dashboard responsibilities. There is a very real risk that fines could be issued as a result. The regulator has made it clear that it will take a dim view of trustees who fail to prioritise their pensions dashboard responsibilities.
People saving for a pension should not be let down by the actions of fund managers and trustees. That is why the Opposition support this important Bill. Indeed, we would have liked the Government to take action earlier; we would have liked Ministers to include the Bill’s provisions in the original dashboard legislation. I wish the hon. Member for Cheadle every success with her Bill, but it would be very helpful if the Minister explained whether the omission of those measures from the original legislation was a mistake or whether there was an element of deliberate policy. I look forward to the Minister addressing that point.
Pensions policy is a long-term issue and a very important one. Legislation introduced in this Parliament and the last Parliament will have implications for many years to come. The dashboard is an important attempt to make information more easily accessible to pension scheme members. I welcome it—I think it will play an important role in explaining pensions, as we have heard from colleagues across the House, and in helping to encourage people to save more for their retirement—but the Government cannot rely on the dashboard alone to address all the issues in the UK pensions system. I believe that Ministers should be doing more both to encourage saving and to support pensioners at this difficult time. We must all do more in this country to ensure that people are saving enough for their retirement.
The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)
I am very grateful to my hon. Friend the Member for Cheadle (Mary Robinson) for promoting the Bill and I congratulate her on navigating it through to this stage. I have done a private Member’s Bill so I know that that is no mean feat. It requires a huge amount of work, which has been on display today, as have her skills in getting this through. I also thank the Opposition for their support for the Bill, and I thank all of those who have spoken today: my hon. Friends the Members for Clwyd South (Simon Baynes), for Watford (Dean Russell), for North Devon (Selaine Saxby), for Wantage (David Johnston) and for North East Bedfordshire (Richard Fuller). I will endeavour to deal with as many of his questions as I can, but I will write to him on any I am unable to address. I also pay tribute to my predecessors in this role, my hon. Friends the Members for Hexham (Guy Opperman) and for Brentwood and Ongar (Alex Burghart), who spoke in support of the Bill on Second Reading and in Committee respectively. I am proud to complete the trio.
Private pensions have undergone a quiet revolution in recent decades. It used to be the case that retirement income was guaranteed by the employer via a defined benefit pension. That started to change with the introduction of defined contribution schemes in the early 1990s. Those types of schemes put the risk of the eventual outcome entirely at the feet of the employees, with no guaranteed contribution from employers. That clearly has a huge potential impact on the adequacy of someone’s private pension for retirement, and introduced a huge new complex financial world for individuals to navigate. The intergenerational impact of this is stark. One group of people is able to retire on a guaranteed pension provided by their employer and have protections—provided by the financial assistance scheme and, latterly, the Pension Protection Fund— in respect of the employer going bust. The second group of people are given no guarantees on the value of their pension, if indeed they have one at all, and they are exposed to market conditions, are reliant on the performance of their individual fund, and wildly different levels of contribution are made by the employer—in some cases, none are made at all.
That is why the introduction of automatic enrolment in 2012 was so important. My hon. Friend the Member for Cheadle is right to say that automatic enrolment has been an incredible success and has achieved a transformational effect on retirement savings in the UK, both by employers and by employees. It has seen millions more people working to contribute to their workplace pension and has normalised workplace pension saving. Automatic enrolment is re-establishing a culture of retirement saving for a new generation, with more than 10.8 million workers enrolled into a workplace pension to date and an additional £33 billion more saved in real terms in 2021 than in 2012.
Matt Rodda
Will the Minister pay tribute to the work of the Pensions Commission and, indeed, the last Labour Government, who designed the policy? Obviously, it was implemented in 2012.
Laura Trott
The Pensions Commission did a great piece of work. As the shadow Minister rightly pointed out, it was implemented by the Conservatives.
Automatic enrolment was designed specifically to help groups who have historically been less likely to save, such as women and lower earners. My hon. Friend the Member for North Devon referred to women, and automatic enrolment has particularly helped them; millions more have been saving into a pension for the first time. Workplace pension participation among eligible women working in the private sector has risen from 40% in 2012 to a brilliant 87% in 2021—that is the same level as for eligible men in the private sector. We absolutely know that there is more to do, particularly to enable young adults, lower earners and part-time workers to achieve greater security in later life. The 2017 review of automatic enrolment sets out the Government’s ambition to enable people to save more and to start saving earlier by abolishing the lower earnings limit and reducing the qualifying age for automatic enrolment to 18. We are committed to implementing these measures in the mid-2020s.
However, the success of automatic enrolment in increasing the number of pension savings and the number of pension pots people have comes with policy problems that we have to solve. People have an average of 11 jobs in their lifetime. With automatic enrolment, they will often have a new pension pot every time they move job. Research in 2021 suggested that 73% of people have multiple pension pots, and research by Scottish Widows suggests that almost half of workplace pension holders do not know how many pension pots they hold with previous employers. Indeed, they will frequently forget about their pension pots from previous employers altogether.
The first policy issue with automatic enrolment that we therefore need to address is ensuring that pots are reunited with people. While estimates and definitions of lost pension pots vary, the latest survey from the Pensions Policy Institute suggests that the value of lost pots in the UK may have grown from £19.4 billion in 2018 to £26.6 billion in 2022.
The second issue that my hon. Friend the Member for Cheadle alluded to is that many people have multiple pension pots, and it can be difficult for people to keep track of what they have saved for retirement. Having lots of pension pots can be confusing. The Financial Conduct Authority’s recent survey showed that 54% of defined contribution pension holders aged 45 to 64 say they have little or no idea of how much annual income they expect to have from their defined benefit contributions.
Members will be pleased to know that we have a solution to these issues: pensions dashboards. Dashboards will allow individuals to view information about their multiple pensions, including their state pension, in one place, online—even pots they had forgotten they had in the first place. As my hon. Friend the Member for Watford said, it will tell us what our future looks like.
Numerous Members asked about timings. The Pensions Dashboards Regulations 2022, which set out the requirements for relevant occupational pension schemes to be connected to the pensions dashboards digital system, were approved by the House in November 2022 with cross-party support, and they have now come into force. We hope to see the first schemes connecting to the dashboards infrastructure in the coming months.
Members also asked when individuals will be able to access these dashboards. We refer to this as the dashboards available point. As set out in the Pensions Dashboards Regulations 2022, the dashboards available point will be when the Secretary of State for Work and Pensions is satisfied that the dashboards are ready to support widespread use by the general public. The Government consulted last year, and in response to the consultation we set out a broad framework of relevant matters that will be considered before the Secretary of State announces the dashboards available point. That will include consideration of the level of coverage; ensuring the safety, security and reliability of the service; and testing the user experience.
Matt Rodda
Could the Minister tell the House what plans the Department has to publicise the roll-out of the dashboards? Clearly many pension savers are already not aware of their full entitlement, and there is a risk that they may not be aware of the dashboard itself.
Laura Trott
The timetable set out in the regulations is about pension providers uploading the information to the dashboard. When that is available for individuals is a decision that the Secretary of State then has to take, but the timetable for information being uploaded is public and is the one agreed in the regulations. I hope that that answers the hon. Gentleman’s question.
As my hon. Friend the Member for Cheadle said, in order to ensure compliance with dashboards regulations, the Pensions Regulator has been given power to take enforcement action for non-compliance with any of the requirements in part 3 of the Pensions Dashboards Regulations 2022. That includes the possibility that the regulator may, at its discretion, issue penalty notices of up to £5,000 for individuals or up to £50,000 in other cases, such as corporate trustees. My hon. Friend the Member for North East Bedfordshire asked me lots of questions, and I will write to him, because I need to hurry up.
In conclusion, it is to the huge credit of my hon. Friend the Member for Cheadle that she successfully brought the Bill forward on a cross-party basis and navigated its passage. I am delighted to restate that the Government support the Bill and will continue to support it as it moves through Parliament. I wish it every success.
Mary Robinson
With the leave of the House, Mr Deputy Speaker, I will take this opportunity to thank the Minister and Members on both sides of the House for their support throughout this process, and extend my appreciation and thanks to the Public Bill Office and officials from the Department for Work and Pensions for their guidance. It has also been brilliant to have cross-party support.
I thank my hon. Friend the Member for Clwyd South (Simon Baynes), who has great experience of dashboards and really knew the subject; my hon. Friend the Member for North Devon (Selaine Saxby), who brought her experience on the Select Committee to the Chamber, and who spoke with wisdom and knowledge; and my hon. Friend the Member for Watford (Dean Russell), who spoke about the importance of transparency, which should be the key to so much that we do. My hon. Friend the Member for North Devon described dashboards as a “game changer”, and my hon. Friend the Member for North East Bedfordshire (Richard Fuller) spoke of the imbalance of knowledge between schemes and members. That imbalance is what we need to address now, for the sake of the 52 million people who will potentially benefit from the Bill.
Question put and agreed to.
Bill accordingly read the Third time and passed.