Pensions Dashboards (Prohibition of Indemnification) Bill
Friday 3rd March 2023
(1 year, 9 months ago)
Lords 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
Lord Young of Cookham
That the Bill be now read a second time.
Lord Young of Cookham (Con)
My Lords, in moving that the Pensions Dashboards (Prohibition of Indemnification) Bill be read a second time, I reassure noble Lords that these dashboards are totally different from the ones in the REUL Bill which have generated such excitement this week.
After gathering significant cross-party support in the other place, where Mary Robinson successfully steered the Bill through the parliamentary process, I am hopeful that it will receive a similarly positive reaction here. This is a simple yet important measure designed to safeguard the interests of those saving for their pension.
By way of background, I have a long-standing interest in pensions legislation, having spoken in the 1970s when Barbara Castle introduced the state earnings-related pension scheme, and more recently speaking about the potential benefits of the pensions dashboard during the passage of the pensions Act 2021. I see in their places today several aficionados from that debate.
With record numbers of people saving for retirement, it is more important than ever that people understand their pensions information and prepare for financial security in later life. Pensions dashboards will be digital tools available free of charge to consumers, designed to bring together individuals’ different pensions, including the state pension, in one place online. This will fundamentally change the way that people interact with their pensions, thereby helping to support more informed retirement planning.
As my noble friend the Minister will confirm, the Government continue to work closely with industry and their key delivery partners, such as the Pensions Dashboards Programme—which is part of the Money and Pensions Service—the Pensions Regulator and the Financial Conduct Authority, to progress this dashboards project. I am grateful to my noble friend for arranging meetings for noble Lords with the FCA to update us on that progress, and I am grateful to his officials for their briefing for this debate.
While it is true that millions of people are saving for their retirement, it is also the case that consumers are not generally well engaged with their different pensions. This has been highlighted by the FCA, which estimates that 53% of adults contributing to a defined contribution pension have not reviewed how much their DC pension pots are worth in the last 12 months. In addition to this, the Pensions Policy Institute estimates that over 2.8 million pension pots were considered to be lost in 2022, representing an increase of 73% since 2018. Pensions dashboards can help to address this issue by bringing together people’s various pensions, including state pension, in one place online. This will reconnect savers with their lost or forgotten pension pots, and by doing so will help people plan for their well-deserved retirement.
There is a requirement in the Pension Schemes Act 2021 for the Money and Pensions Service to provide a pensions dashboard service. This was a welcome addition to that Act which I pressed for at the time, along with other noble Lords. Moreover, it will also be possible for others to enter the market and provide dashboards, which will be bound by requirements set out in the Pensions Dashboards Regulations and regulated by the FCA. That will provide scope for innovation, helping to engage a broad range of users and meet the varied needs of the millions of people with pensions savings. Importantly, individuals will see the same information regardless of which dashboard service they use, and robust rules will be in place to ensure consumers’ interests are at the forefront of all dashboards.
The Pensions Dashboards Regulations 2022, which were approved by this House in November last year and subsequently came into force in December, place requirements for occupational pension schemes to be connected to a digital ecosystem designed by the Money and Pensions Service. These requirements include, for example, the need for pension schemes and providers to continue to comply with the connection, security and technical standards published from time to time by the Money and Pensions Service. There are also requirements relating to the provision of pensions information at the request of a pension scheme member.
Under the Pensions Dashboards Regulations, the Pensions Regulator may, if necessary, take enforcement action against trustees or managers of occupational pension schemes in the event of non-compliance. For each breach of the regulations, this could result in penalties being imposed of up to £5,000 for individuals or up to £50,000 in other cases, such as for corporate trustees. These are significant penalties, but the House may be surprised to hear that there is nothing in the legislation which prohibits the trustees or managers being reimbursed for those penalties using the assets of the pension scheme. My noble friend the Minister can confirm, but I understand that this was simply an oversight during the passage of the Pension Schemes Act 2021, and the omission escaped the eagle eyes of noble Lords scrutinising the Bill.
My Bill addresses this critical issue by making it a criminal offence for trustees or managers of occupational pension schemes to reimburse themselves from the assets of the pension scheme for penalties imposed for compliance breaches under the Pensions Dashboards Regulations. If a trustee or manager was found guilty of this offence, the Bill’s provisions would allow for a maximum sentence of up to two years in prison, or a fine, or both. This is intended to provide an effective deterrent to such unscrupulous behaviour.
The Bill does not place any new costs or requirements on occupational pension schemes but rather works by extending existing legislation which provides for a similar prohibition in a number of other areas of pensions legislation, including automatic enrolment. I hope noble Lords agree that it increases protection for pension savers from any unscrupulous persons. I look forward to working with the Minister and other noble Lords as we aim to secure its swift passage through the House. I beg to move.
Baroness Altmann (Con)
My Lords, I congratulate my noble friend Lord Young on his excellent introduction and sponsorship of this important but limited Bill. I also congratulate our honourable friend Mary Robinson on introducing it in the other place. I am delighted that the Government and my noble friends on the Front Bench are supporting this Bill.
As my noble friend Lord Young has explained, the pensions dashboard should be, and I hope will be, an important element of the pensions landscape for ordinary people who have pensions savings and perhaps wish to know more about what they have in their pension fund. Given the complexities of pensions, and even with contributions going into them, so many people do not really understand or know quite how much money is going in on their behalf or how much is accumulating for them. So there is a job of work to do on financial education.
What is so important is that, once people can see all their pension information, they can be assured that the system in place to oversee the dashboards protects them. This Bill is an added element of the armoury that is so important in ensuring that rogue operators of a pensions dashboard would not be able to cover up their mistakes or pay for their mistakes by taking money out of individuals’ pension funds. It is hard to see how someone would argue against the measures in the Bill, which simply will mean that, if the person providing the dashboard or responsible for the dashboard is fined by the regulator for doing something against the rules, they cannot just take money out of the ordinary customers’ pension funds but would have to pay it themselves. Although my noble friend considers the penalties significant, one might argue whether a £5,000 fine, or even a £50,000 fine for a corporate, is sufficient to deter wrongdoing. I think the level of penalties is applicable across pensions and will, I hope, be sufficient to ensure that we have a safe system.
I have given my noble friend notice of a few questions I have about the dashboard, which are very important in terms of the programme itself, especially after the announcement yesterday by our honourable friend Laura Trott, the Pensions Minister, that the dashboard programme is going to be reset—whatever that might mean; we will find out soon.
The first question, which relates to the clear need to delay the introduction of this long-awaited measure, is on the security of Verify, or its alternative system, which is designed to protect members’ data. I do not know if my noble friend could update the House on that. Some of the problems were due to what we have learned recently about the errors in state pension records, especially for women, where many women have found that the information is incorrect and, in some cases, has been for many years—they were already in retirement and still had not had the correct amount. How is the department getting on with its correction exercise?
The other concern might be around the records and readiness of public sector pension schemes to connect to the dashboards. With the McCloud remedy needing to be implemented, there are going to be significant administration issues. Could my noble friend give us any comfort on that or an indication of timescales? I hope he can assure us that at least the Nest Pensions fund is ready for connection. That is a very large one, set up by the Government to cater for low-paid workers and people with small amounts of pension.
Finally, I ask for clarity from my noble friend on an issue I have raised so many times in this House, and have tried to insert in the legislation as it has been going through. What is the status of the checks on the accuracy of all pensions data? I understand that the fines we are discussing may be imposed if people fail to connect to a dashboard or do not have a service that works properly on the dashboard, but are there also fines and penalties for people who load incorrect data? It is not just about loading the information. Is there any requirement in law—and who would it fall upon and what would be the penalties for failure—to ensure that the pension information for each person has been checked and verified and is as accurate as that process could produce?
Overall, I welcome the Bill and am pleased that the Government are supporting it. I wish it safe, quick passage through the House.
Lord Sharkey (LD)
My Lords, I can be very brief. We support this Bill and congratulate the honourable Mary Robinson MP on seeing the necessity for it, devising it and seeing its safe passage through the Commons. During that passage, the Bill attracted widespread and enthusiastic support from all sides, including from the Government themselves.
The Bill clearly fixes what could have been an extremely unfortunate loophole, and I confess to some chagrin that we did not spot the loophole at an earlier stage. I had thought that we had been pretty thorough—and lengthy—in our scrutiny. It is surely obvious that we should prevent trustees or fund managers who are fined for breach of the dashboard regulations reimbursing themselves from the funds of which they are trustees or managers. Equivalent prohibitions already exist for other aspects of pensions governance, and we clearly need to add the Bill’s prohibitions to that list.
We would also like to speed the progress of this Bill through this House, ideally unamended, to ensure that the loophole is closed quickly. We want to be able to prevent, for example, reimbursements for fines levied for failures to meet the required target dates for connection to the MaPS dashboard—although, as the noble Baroness, Lady Altmann, just pointed out, that may not be quite so pressing as it was before yesterday.
Having said all that, there are just a few areas in which I would welcome a little more detail from the noble Lord, Lord Young, who has introduced this Bill with his customary clarity and fluency. I understand that for a breach of the dashboard regulations, such as a failure to connect to MaPS on time, TPR can issue a penalty notice of up to £5,000 where the trustee or manager is an individual, or up to £50,000 where the person is a body corporate. These do not seem to me to be very large amounts, especially given the resources available to large pension funds. How were these amounts decided on and why is it thought they will prove an adequate deterrent to noncompliance with the regulations?
I understand that, under the terms of the Bill in Clause 1, the penalty imposed for use of the pension funds to reimburse managers for fines imposed for breach of the regulations would be, on summary conviction, a fine not exceeding the statutory maximum and, if convicted on indictment, a maximum of a two-year prison sentence, a fine or both. What is the level of the statutory maximum fine, is there is a similar limit to the fine levied for conviction on indictment—because that does not does not appear to be clear in the Bill—and could the noble Lord say, for these penalties, as for the penalties for breach of the regulations themselves, how they were arrived at and how they were assessed as providing sufficient punishment for breaching, or disincentive to breach, the regulations? Finally, I ask the noble Lord for reassurance that the extent of the recovery of any funds illegally diverted as reimbursement for fines will be taken into account when deciding the appropriate penalty for that action.
I conclude by once again congratulating Mary Robinson and the noble Lord, Lord Young, on this Bill and wishing it a speedy passage.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in this Second Reading debate and, in doing so, I declare my financial services interests as set out in the register. I congratulate Mary Robinson on securing this Private Member’s Bill: it is the model of what a Private Member’s Bill should do. My noble friend Lord Young said in his excellent introduction that it was specific and effective—and it is certainly that. Again, congratulations to Mary Robinson, my noble friend Lord Young and everybody who has helped in the preparation of the Bill to get it to this stage.
Pensions have somewhat lost their sheen since perhaps the 1970s, when my noble friend Lord Young spoke about them, yet, when you look at what is behind a pension, it still makes sense today. It is still a positive proposition to have something separate from the employer, protected by a trust structure, to set you up for your retirement. But, since the development of pensions, in relatively recent history, Equitable, Maxwell, Brown and other issues have taken the sheen off that pensions promise—but they should not. Perhaps there is a need for a great big branding exercise to be done.
Auto-enrolment has certainly played its part: perhaps we should all consider how best to rebrand what is fundamentally a very positive proposition for people to connect and commit to as early as possible in their working lives to ensure that security when they reach the age of retirement, be that 65, 66, 67, 68—or whenever that may come to all of us. To my noble friends the Minister and Lord Young, I say: should we not consider effective means to increase our efforts to promote the whole proposition of pensions as a positive means, which is potentially in need of rethinking but essentially a very good thing to have as part of our society and economy?
Moving to the issue at hand of dashboards, the simple and effective measure in the Bill is just that. Will my noble friend Lord Young or the Minister confirm that it simply brings into line the proposition which runs through all pensions legislation when it comes to the behaviour of trustees in such situations, so it is a clear and obvious reset of what the 2021 Act did not include? The great possibilities of pensions dashboards are in what we are able to do with data. If we have clear and coherent data and people are able to have it in real time on their devices, that can only be a positive thing, if the right levels of education, communication and understanding can also be put into that mix.
As my noble friend Lady Altmann asked: what is being done to ensure that that data is robust, reliable, consistent and the complete picture? It is true in this instance, but also across all that we may be able to do in fintech with the new technologies we have available to us, that it is only as good as the quality of the data that underpins it, and dashboards are the obvious, clear example in front of us today. That data point is critical to consider at every point to ensure that, when an individual looks at their dashboard, they can know that that is the real-time, accurate representation of what they hold across all their pension pots.
Finally, on the question of digital ID, again it is pertinent in this instance, as it is to everything we seek to do in a digital economy for the UK. None of this will work effectively unless we get to grips with digital ID. So is the Minister satisfied with the progress we are making on digital ID for the UK? Where are we currently and where will the responsibility for digital ID rest, with the changing departmental structure across Whitehall? Can he urge ministerial colleagues to further increase the pace in this digital ID work, because it is critical to so much of what we are trying to achieve? It must be secure, it must be reliable, it must cover all the issues around privacy, and we still have quite a journey to cover on that issue.
To conclude, again I offer congratulations to my noble friend Lord Young and Mary Robinson. This is a specific, clear and effective Private Member’s Bill. I wish it swift, safe speed into statute.
Baroness Sherlock (Lab)
My Lords, I thank the noble Lord, Lord Young of Cookham, for introducing this Bill, and all noble Lords who have contributed. I am grateful to the noble Lord, Lord Young, for his characteristically clear introduction. I commend him on his many years of service in the interests of debating pensions and, like him, I say it is nice to have those of us interested in pensions dashboards back together again. It is always good to get the band back together again, even if the pensions dashboards crew is about as un-rock and roll as it is possible to be. But it is lovely to be here today.
I have a long speech on the importance of pensions, which I am going to spare your Lordships this morning because, if nothing else, the noble Lord, Lord Holmes of Richmond, has done a fine job of this and it is a very narrow Bill today. But since the discussion has ranged a bit more widely, I will say that we were supportive of the idea of pensions dashboards in the original legislation but that support came with a number of questions. Like so many things, things can be a good idea, but how they are done is crucial to whether they end up being a good idea. We raised questions about ID, data security, governance and redress. What happens when things go wrong? This is an unusual situation, where tens of billions of pounds of assets will be mandated by the state to be released and put on to this central spot. If something goes wrong, this is potentially very serious indeed.
I think that was amplified by the Government’s insistence on going with commercial dashboards from the outset. This House had to press to insist that a public dashboard be there from day one, but I still think the Government’s attachment to commercial dashboards raises some risks. Imagine for moment that you are a commercial pensions company. You can sit somebody down, show them your dashboard and say, “Look at your pots all over here. Let’s gather them all into one tidy pot in this corner. Should I just move them into this space?” It does not take very much imagination to consider the possibilities for mis-selling even within what is legal. Those questions have been raised and have yet to be satisfactorily answered.
The principle of today’s Bill is very simple. It is that the interests of pension scheme members should be protected from the actions of rogue trustees and others who fail in their statutory duties. The Bill, as we have heard, will make it a criminal offence for a trustee or scheme manager who is given a penalty for failing in their duties to dip into scheme funds to pay the penalty. Inasmuch as it aligns the position in relation to penalties for failure to fulfil dashboard requirements with those for other comparable penalties, the Bill seems straightforward and we are very happy to support it.
But I would like to add a few brief questions to those put to the noble Lord, Lord Young, and the Minister may wish to reflect his view as well, given the Government’s wholehearted support of this Private Member’s Bill. First, can somebody confirm to the House that this Bill simply replicates for dashboard-related breaches the prohibition in the Pensions Act 2004 which prevents trustees or managers using member funds to pay regulatory penalties; in other words, that there is nothing novel hidden in here?
Secondly, why was the provision not included in the Pension Schemes Act 2021? Was it, as the noble Lords, Lord Young and Lord Sharkey, have suggested, simply an oversight? If so, I do not think the noble Lord, Lord Sharkey, should beat himself up. I do not think it is his job to bury in the small print details of how things may align with the original legislation. I certainly feel no guilt at all. Frankly, I am prone to feeling guilt but, on this occasion, I feel absolutely fine.
Thirdly, will it be permissible for trustees to be covered by indemnity insurance paid for out of scheme funds? I think this can be done elsewhere.
On a related point, when we debated the Pensions Dashboards Regulations on 15 November 2022, the then Minister, the noble Baroness, Lady Stedman-Scott, said
“we accept that the regulatory requirements on trustees have grown a great deal over the years”.—[Official Report, 15/11/22; col. 839.]
It is always the case that rogue trustees can simply ignore the rules, but has the DWP made any assessment of whether there is a point at which the demands and risks of trusteeship might deter individuals and lead to a growth in the use of corporate trustees, and whether that might lead to a reduction in the important diversity of trustee experience which may be necessary to protect members’ interests?
My final question was going to be to ask whether trustees are ready for the first connection deadline on 31 August 2023. However—as the noble Baroness, Lady Altmann, rightly pointed out—yesterday, from a clear blue sky, dropped a Written Ministerial Statement which was just 418 words long. It calmly and simply said that additional time would be needed to deliver the technology and for the
“industry to help facilitate the successful connection of a wide range of different IT systems to the dashboards digital architecture.”
The Minister continued:
“Given these delays, I have initiated a reset of the Pensions Dashboards Programme in which DWP will play a full role. The new Chair of the Programme Board will develop a new plan for delivery.”
The Statement also said:
“DWP will legislate at the earliest opportunity to amend the timing of these obligations”.
We do not know, therefore, when the start date will be, but given that we are not promised another update before the Summer Recess, presumably it is not imminent. Can somebody, either the mover or perhaps the Minister, tell the House what on earth has gone wrong? Is it technical? Is it problems with schemes? Is it data?
When did the Government know? Did they know when this Bill was going through another place just recently? Did they know when we debated the regulations in November in some considerable detail? I am really interested to know to what extent the problems associated with creating commercial dashboards and connecting them to the dashboard architecture from day one have contributed to the need for a reset. What does it mean that
“DWP will play a full role”
in the new programme? Was it not playing a full role already? Has that changed?
When will the Government legislate to delay the programme? Are there plans to amend, for example, the many forthcoming pensions regulations we have before us? Also, I wonder, given that there is now no urgency at all, would government legislation not be a better way to deal even with the matters under debate today than a Private Member’s Bill which has the wholehearted support of the Government?
The Government were so confident of being able to meet their dashboards timetable—–on which we challenged them—that they hardwired the connection dates for schemes into the schedule. It says that the “staging deadline” for
“master trust schemes that provide money purchase benefits only”
for 20,000 or more relevant members is 31 August 2023, and so on. They were that confident. But since then, because that was published, pension schemes have spent time and money scrabbling to get ready for those hard deadlines. I suspect the irony will strike them that we in Parliament are debating a Bill designed to ensure that trustees pay penalties if they do not get their schemes connected to the dashboards in a timely and appropriate manner and the DWP just slips out a Written Statement saying, “You know what, we are not going to make it for August, after all. We are just going to reset the programme and we will give you some kind of update before the summer.”
I know that things go wrong. I get this. I have been a special adviser in government. I have been involved in enough programmes. But when things go wrong, I think the House is owed an explanation of exactly what went wrong. I suggest to the Minister that one thing he might usefully do is to forward to his colleagues in another place the proceedings of this House on the original legislation, the debates on the regulations and the associated debates. The Government were warned that this was incredibly complex. They were warned about the issues about data, ID and all kinds of things. I think this may be a good opportunity, since we are to have a pause enforced, for the Minister to tell the House that he will take the opportunity both to engage with the concerns raised around the House and to brief the House on how these are going to be addressed. I look forward to the replies.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)
My Lords, I congratulate my noble friend Lord Young on his excellent introduction to the Bill. My noble friend has made it clear to the House that the Bill will increase protection for pension savers. It has the full backing of His Majesty’s Government, and it gives me great pleasure to speak in support of it today.
The introduction of automatic enrolment has been a resounding success in helping people save for retirement, on a scale which was hard to imagine just 10 years ago. It has normalised workplace pension saving, with more than 10.8 million workers being enrolled into a workplace pension to date, and £33 billion more saved in real terms in 2021 than in 2012.
This success has, at the same time, resulted in challenges for the Government, consumers and the pensions industry more broadly. Research by Aegon found that 73% of people have multiple retirement or pension plans. While it is usual for people to move around the labour market throughout their working lives, this can make it difficult for people to keep track of what they have saved. Indeed, research by Scottish Widows in October 2022 has shown that nearly half of workplace pension holders do not know how many pension pots they hold with previous employers.
Pensions dashboards will help to address these issues—and I will come back to the point raised on dashboards. They will put the saver in control and allow them to view information about their pensions, including the state pension, in one place online. By doing so, dashboards will enable savers to be reunited with pension pots they may have lost or forgotten about over many years. To highlight how significant the total value of lost pots may be, the Pensions Policy Institute suggested in its paper last year that it could be as high as £26.6 billion.
The Pensions Dashboards Programme is supervised by the Money and Pensions Service to deliver the technology underpinning dashboards. This is far from a straightforward task. It involves connecting thousands of pension schemes so that millions of consumers are able to search for their pensions.
Yesterday, as has been mentioned in the House this morning, the Government published a Written Ministerial Statement which explained that additional time is needed to deliver the complex and technical solutions to enable the connection of pension providers and schemes, in accordance with the connection deadlines set out in the Pensions Dashboards Regulations 2022 and the Financial Conduct Authority’s corresponding rules for pension providers. Given these delays, my honourable friend in the other place, the Minister for Pensions, has initiated a reset of the Pensions Dashboards Programme, in which the DWP will play a full role. This will include a new chair of the programme board and the development of a new plan for delivery.
The noble Baroness, Lady Sherlock, spoke about the importance of ensuring 100% quality and security for these dashboards. I cannot give her more detail on precisely what the reset will mean, which was the gist of her question, but the DWP will play more of a part in terms of those who are managing the dashboard, including MaPS—she will know more about that. But I will endeavour to update her and the House as soon as I can on progress. Obviously, the WMS has just come out, but she rightly asked these questions and that is as much as I can tell her.
The Government will also amend the Pensions Dashboards Regulations 2022 at the earliest opportunity to provide the pensions industry with clarity about the timings of its legal obligations. The Government will ensure that the pensions industry has adequate time and the necessary technical information to prepare for any revised connection deadlines. The Minister for Pensions will provide a further update to Parliament before the Summer Recess, as the noble Baroness, Lady Sherlock, mentioned.
However, none of this detracts from the importance of this Bill, which is needed irrespective of the timeline for delivery. The Pensions Dashboards Regulations 2022 set out detailed 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. As set out in the Written Ministerial Statement, this framework for dashboards set out in the regulations remains fit for purpose. The Pensions Regulator may take enforcement action for non-compliance with any of the requirements in part 3 of the Pensions Dashboards Regulations. Once connected to the dashboards ecosystem, occupational pension schemes may be in breach of the regulations—for instance, if they fail to maintain connection to the digital architecture or fail to provide information within the timeframe set out in the regulations. In the event of non-compliance, the Pensions Regulator may issue penalty notices of up to £5,000 for individuals or up to £50,000 in other cases, such as those involving corporate trustees. Several questions were raised in this respect, notably by my noble friend Lady Altmann and the noble Lord, Lord Sharkey.
Having covered the basic penalties, I add that the Pensions Regulator is required by the Regulators’ Code to take a proportionate, consistent and targeted approach to enforcement. However, in the event of multiple compliance breaches, the regulations allow TPR to issue multiple penalty notices within the same document. The Pensions Regulator’s consultation on its compliance and enforcement policy closed on 24 February 2023. In that consultation, TPR set out its intention to consider the total amount of any penalties issued in the light of the circumstances of the breaches and the impact they have had. TPR expects to publish its consultation response and final compliance by the summer. Hopefully, this helps to answer the questions raised by the noble Lord, Lord Sharkey. We feel that the levels are consistent with other areas of pensions legislation. He may know more about that than me, but that is what we believe. Regarding the question raised by the noble Baroness, Lady Sherlock, there is nothing novel in the approach we are taking in this respect.
My noble friends Lord Holmes and Lady Altmann raised the important issue of data accuracy checks. It is critical that savers be able to trust the information in front of them. Trustees and managers have existing legal obligations in respect of data quality, including the accuracy principle under UK GDPR, which requires organisations to ensure that data remains accurate and up to date. The Pensions Regulator has set out its expectations on data quality in its record-keeping guidance. This includes that data be measured at least once a year. The regulator’s guidance on dashboards is also clear that trustees and managers must ensure that the values provided are accurate, and it urges them to work with administrators to improve data if required.
Bringing us back to base, this Bill from my noble friend Lord Young focuses on solving one key issue: that current pensions legislation does not prevent a trustee or manager being reimbursed for these penalties using funds from the pension scheme. The Bill increases protection for pension savers by prohibiting trustees and managers of occupational personal pension schemes from being reimbursed out of scheme asset in respect of penalties imposed on them for non-compliance with the Pensions Dashboards Regulations. The Bill would achieve this by amending Section 256 of the Pensions Act 2004, which already provides similar prohibition in other areas of pensions legislation. I confirm to my noble friend Lord Young—the noble Baroness, Lady Sherlock, mentioned this as well—that that was indeed an oversight. It did indeed escape the eagle-eyed lawyers—including that of the noble Lord, Lord Sharkey, so I am sure that he can be forgiven.
Under the Bill’s proposals, if a trustee or manager were to be reimbursed, and knew or had reasonable grounds to believe that they had been so reimbursed, they would be guilty of a criminal offence unless they had taken all reasonable steps to ensure that they were not so reimbursed. Should a trustee or manager be found guilty, the provisions of the Bill allow a maximum sentence of up to two years in prison, or a fine, or both. Additionally, were any amount to be paid out of the assets of a scheme in such a way, the Pensions Regulator would have the power to issue civil penalties to any trustee or manager which fails to take all reasonable steps to secure compliance.
The Bill has been drafted to make provision across the United Kingdom. As noble Lords will know, pensions policy is transferred to the Northern Ireland Assembly and the usual process would be for the Assembly to provide a legislative consent Motion for any provision relating to a transferred area. However, the Government’s position is that if the Northern Ireland Assembly is unable to consider the matter before the final amending stage of the Bill, it should proceed unamended. Ultimately, the Government are of the view that it would be wrong for these protections not to extend to pension members in Northern Ireland.
A number of questions were raised in relation to and beyond this Bill. My noble friend Lady Altmann asked about NEST and its readiness for connection. The announcement yesterday allows the programme to develop a firmer footing and put it on a path to successful delivery, including ensuring that all data providers can connect safely and securely. The programme and DWP have been in regular contact with NEST and will continue to be over the coming months, to support it in preparing to meet its connection duties when the revised timeline is in place.
My noble friend Lady Altmann also asked about One Login, the successor to Verify. As she may know, there are currently more than 340 services on GOV.UK, with around 190 accounts accessed via 44 different sign-in methods. GOV.UK One Login will replace these with a single ubiquitous way for users to sign in and prove their identity. It will improve inclusion and save millions of pounds through collaboration, efficient service delivery and tackling fraud across departmental boundaries. Development of GOV.UK One Login is progressing at pace, and I can reassure my noble friend Lord Holmes that the core of the system has been launched—its sign-in element, a web-based identity verification journey and a fast-track identity-checking app. There are currently five live services using One Login, with more services expected to onboard in 2023-24. The Cabinet Office and the Government Digital Service are working closely with central government departments to ensure that the programme meets their and their users’ needs.
My noble friend Lady Altmann asked about security and the alternative to Verify. The Pensions Dashboards Programme has procured an interim identity service provider, whose contract runs until January 2024. The service it provides is aligned with the Government Digital Service’s good practice guide. The Money and Pensions Service is engaging with officials in the Cabinet Office and the Government Digital Service, as well as the wider market, building on the engagement work undertaken in 2020, to identify all possible options that may comprise its new identity service delivery model.
Returning to the Bill, the noble Baroness, Lady Sherlock, raised an important point about trustees using schemes to buy indemnity insurance. I can reassure her that the Bill would make it a specific criminal offence for pension scheme trustees or managers to reimburse themselves using the assets of the pension scheme in respect of penalties. It also includes taking out an indemnity policy but having the cost of that reimbursed through the scheme.
The noble Baroness also asked about—I am paraphrasing what she said—a chilling effect, particularly for non-professional trustees; it is a very good point. The Government acknowledge that many trustees do an excellent job, often on a voluntary basis. The vast majority of trustees are in schemes with fewer than 99 members and so would be outside the scope of these regulations unless they connected to pensions dashboards voluntarily. While we accept that the regulatory requirements on trustees have grown a great deal over the years, this is only right given what is at stake, since we are talking about the pensions savings of millions of people. The Pensions Regulator will provide an extensive programme of communications to support trustees to meet the requirements in the pensions dashboards regulations.
The noble Lord, Lord Sharkey, asked about the statutory maximum fine in relation to summary conviction. I may have covered that, but I will write to him if I have not answered the question; I hope that is helpful.
To conclude, I am firm in my view that everyone rightfully deserves protection for their pension savings; we all know that, and that is exactly what the Bill does. It is a simple Bill in that it will extend a prohibition in existing legislation rather than placing new requirements or additional costs on to occupational pension schemes. However, the proposals under the Bill are powerful enough to swiftly deter any rogue actors from reimbursing themselves using pension assets that belong to hard-working people. I hope that the House recognises that and supports its passage today.
Lord Young of Cookham (Con)
My Lords, I am grateful to all noble Lords who have taken part in this debate and for their support for this modest legislation. As my noble friend Lady Altmann said, the Bill is impossible to oppose, and I hope that optimistic forecast is carried out. She raised issues about penalties. My noble friend the Minister answered that, but so far as this Bill is concerned it seems to me that two years in prison is quite a severe deterrent for anyone who seeks to break the rule set out in the Bill.
The noble Lord, Lord Sharkey, fired at me four technical questions about penalties, and I am grateful to him. Fortunately, the bullets were intercepted by my noble friend the Minister, who answered them. As we have heard, if by any chance the replies do not come up to standard, my noble friend has promised to write to the noble Lord.
I am grateful to my noble friend Lord Holmes, who reminded us about the success of auto-enrolment. I agree with what he said about the need to promote early investment in pensions to get the benefit of the magic of compound interest. He also touched on a subject close to my heart; namely, digital identification and the history of the Verify programme. My noble friend the Minister dealt with that, but as I understand it, rather than wait for the Government to come up with their solution, the programme dashboard is developing an interim programme which will be compatible with the one the Government end up with.
Those who came along to listen to the longer speech of the noble Baroness, Lady Sherlock, on pensions will have been disappointed, as she decided not to deliver it. We look forward to hearing that on a separate occasion. She referred to the Written Ministerial Statement announcing a delay in the programme. I want to congratulate the Whitehall wordsmith who came up with the expression “initiated a reset”. I think the train operating companies will want to follow that example, and I look forward to hearing on Monday that Great Western Railway has “initiated a reset” to the 8.14 from Cookham to Paddington.
Finally, I am very grateful to my noble friend the Minister, who answered, I hope, all the questions that were theoretically directed at me. He reminded us of the large sum of money—£26 billion—represented by “lost” pensions and reminded us about the complexity of the plumbing involved in getting the dashboard going. I am also very grateful to him for his comprehensive reply to the debate and for the Government’s support.