The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)
I congratulate the right hon. Member for North Durham (Mr Jones) on securing the debate and I thank all hon. Members who have contributed to it.
It is absolutely vital that pension savers have confidence in the running of their pensions, as we have discussed this evening. Employers and trustees must be open and transparent with their pension scheme members, and be absolutely clear when they make changes to the benefits members will receive or how they are able to take their pensions.
Savers in defined-benefit schemes are in entirely advantageous positions, which is why the Government require specialist advice to be sought in advance of anyone wanting to transfer significant savings out of a defined-benefit scheme and into a defined-contribution scheme.
It is equally important that when members opt to make changes to the way they receive their benefits, or indeed any pensions, they can access the information and guidance they need to understand what the implications of that would be. It is extremely concerning that there seems to have been a lack of communication, as the right hon. Gentleman outlined. It is of course the case that many schemes offer members a number of choices of how to take their benefits, such as partly in a lump sum if the scheme rules and tax rules permit it. In these cases, the scheme rules detail the calculations to be used, and the trustees can change the details of the scheme rules if they are able to do so within the scheme.
Although legislation is silent on the way in which these rules and calculations must operate, there are safeguards for members. Trustees, as discussed, have a duty to act in the interest of all members rather than of any particular group, and to do so they must take into account a range of factors. They will, for example, take into account the funding position of the scheme to protect the interests of current and future members and may make changes to the shape of benefit arrangements in the pursuit of that goal provided that the scheme rules allow it. Trustees should also work closely with the scheme actuary to ensure that all members get a fair value from the commutation arrangements. But— this is the key point of the debate today—it is crucial that each member has sufficient information before deciding whether alternative arrangements, such as taking a lump sum, are the best course of action for them. If members feel that they were given incorrect or insufficient information to make an informed choice, or if the trustees did not act according to the scheme rules, then they can take their complaint to the pensions ombudsman.
The right hon. Gentleman said that he wrote to the regulator and to the ombudsman and both referred him to the other, and he asked what redress there is for members in this situation. Let me clarify the role of the two organisations. The Pensions Regulator is the UK regulator of workplace pension schemes. It makes sure that employers put their staff into a pension scheme and pay money into it. It also makes sure that workplace pension schemes are run properly, so that people can save for their later years. Its focus is on the running of those pension schemes, trustees and scheme managers. There are duties on those parties and those working with them, including to report breaches to the regulator.
The pensions ombudsman, on the other hand, adjudicates on disputes between pension schemes and their members, as we are discussing in this case. If members of any scheme would like help in understanding options for retirement income and any documentation they have received for their scheme, I encourage them in the first instance to contact MoneyHelper, which is provided by the Money and Pensions Service, an independent, non-departmental public body.
Julie Elliott (Sunderland Central) (Lab)
Many dozens of my constituents are affected by the Nissan pension scheme. We have discussed in this debate the role of the ombudsman. The answer the ombudsman has given in this case is entirely unsatisfactory, and I know that all my constituents affected think so too. What was the Minister’s view of the ombudsman’s response in this case?
Laura Trott
I will come to that in a moment. If the hon. Lady thinks I have not answered her question properly, then she is very welcome to intervene again.
As I was saying, the Money and Pensions Service is an independent, non-departmental public body, which provides a free information and guidance service to the public on all matters related to workplace and personal pension schemes. In this case, I understand that in determining one case—not the individual case of Mr Steve Clare, but a case relating to identical issues in the Nissan pension plan—the ombudsman noted that the plan members were presented with an illustration of future benefits and options in retirement. However, if that was not the case—and certainly from the speech of the right hon. Member for North Durham that is not what appears to have happened—I ask him to provide me with all the details that he has and I will raise it directly with the ombudsman myself and provide a copy of the response.
Ben Everitt
That is exactly the case, certainly for one of the two constituents I have been contacted by. Further to that, the word they use in their correspondence to me is that they were “encouraged” to take out a lump sum. To me, that goes beyond giving information and crosses over potentially into giving advice. Given that that advice was not in their best interest, because it has affected their pension so disastrously—to the tune of more than £100,000—is there a case for looking at the regulatory side, rather than the ombudsman, in relation to the advice that has been given?
Laura Trott
It is absolutely correct that scheme members should have received an illustration, as discussed. If that was not the case, that is something we need to pursue. If instead they received advice that was indeed misleading, that should absolutely be taken up with the ombudsman and, where necessary, the regulator. Again, if my hon. Friend would like to pass me any information he has on that case, I will take it up directly with the ombudsman.
Mr Kevan Jones
I am not aware of any illustrations being given, but, if they were, that illustration would also have had to explain to individuals where the lump sum was coming out of and its impact on future increases on the pension. I shall do more research and talk to people, but I am not aware that that type of detail was ever explained to people, as the hon. Member for Milton Keynes North (Ben Everitt) said.
Laura Trott
The right hon. Gentleman is right that that should have happened; if it did not happen, that is a matter for the ombudsman. That is what I think we need to pursue following this debate. He is also absolutely right that those changes should have been communicated clearly and directly, to allow people to plan properly for retirement.
I am about to sum up, so if anyone else would like to intervene, please do. Otherwise, I just want to say that I am of course happy to discuss the matter further with the right hon. Gentleman, and indeed with anybody else who would like to take it up with me. I commend him once again for bringing this very important matter to the attention of the House.
Question put and agreed to.