Financial Services and Markets Bill

Debate between Baroness Altmann and Lord Naseby

Committee stage
Wednesday 25th January 2023 Grand Committee

[Baroness Altmann (Con)]

My Lords, I too congratulate the noble Lord, Lord Sharkey, on his amendment. I agree with his explanation of why parliamentary scrutiny is so important and his interesting explanation of the choice of words he has used in his amendment. I accept that later on, as my noble friend Lady Noakes said, we will debate parliamentary scrutiny once again, but in my view it is absolutely vital that we in this House recognise the dangers coming at us from various legislation that is taking away Parliament’s future ability to oversee and scrutinise important legislation.

I also understand what my noble friend Lord Trenchard said about the importance of allowing competition. However, we must not lose sight of the fact that what is sometimes called regulation may of course be inconvenient for the financial services providers and hamper the ability for innovation and free-for-alls to try different things, but it is also relevant to think of regulation as consumer protection. These are rules that will stop financial services companies taking advantage of consumers.

Asymmetry of information in financial matters is obviously something we are all too aware of, but just doing away with regulation, rushing to get rid of all the EU regulations without proper scrutiny and saying that the Financial Conduct Authority must work to a deadline, otherwise it will drag its heels, misses the point. If there is a forced deadline that precludes scrutiny and consideration of what these regulatory changes will mean for the general public or even more informed investors, without considering those risks, one has to ask whether it is resourced enough to do that. If not, which most of us would probably suggest is the case, what other elements of its duties will not be attended to while it is rushing to perform this job to an artificial deadline? It is a massive task—I respect that.

We need to take seriously the thrust of the remarks by the noble Lord, Lord Sharkey. I also look forward to hearing my noble friend’s remarks about the Government’s own amendments.

[Lord Naseby (Con)]

My Lords, I was one of the 34 who took part in the debate on secondary legislation, and I previously had the privilege of being on the Public Accounts Committee for some 12 years.

The debate on those two reports was an absolute watershed. Here is a golden opportunity to ensure that this Bill, which is so fundamental to the growth of our country, particularly the City of London, at a particular time can be pioneering. I am sorry to load that on to my noble friend; at any other time it might not be loaded on to her.

The key elements are there: secondary legislation basically means that those of us here in Parliament, in both Houses, have an opportunity to debate any changes made to a Bill. If I had to take issue with the noble Lord, Lord Sharkey, it is that he has in his amendment, at proposed new paragraph (b), the word “significant”. One company’s “significant” might be insignificant to another, and vice versa, so I do not think that is quite the right word to use.

We will go through this Bill in detail. Others have made their points, but for me—I did previous work with two quoted companies and a friendly society in the role of chairman—this is an opportunity. We must recognise that growth for our country is fundamental. That fundamentality is, to a fair degree, influenced by the Bill before us.

Taylor Review of Modern Working Practices

Debate between Baroness Altmann and Lord Naseby

Tuesday 11th July 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords—

[Lord Naseby (Con)]

My Lords—

[Lord Naseby]

Normally I would not respond to that but I think perhaps the noble Baroness would recognise the seniority of a privy counsellor in this House. However, I will stand by and sit down for a second. Go on, get up.

[Baroness Altmann]

I thank my noble friend. I congratulate Matthew Taylor on his excellent report and I particularly congratulate the Government on achieving record levels of employment and record low unemployment. It is important that we recognise the benefits to this country’s employment market of flexibility. We have achieved great success; indeed, I point out that when I was business champion for older workers, I found that it is not only students who welcome zero-hours contracts, it is also older people. Does the Minister agree that we need to recognise the increasing importance for people in a pre-retirement phase of being able to work flexibly, part-time and zero hours? Indeed, when McDonald’s offered all its workers on zero-hours contracts the opportunity of fixed contacts, 80% said they wanted to stay on the zero-hours contracts.

Pension Schemes Bill [HL]

Debate between Baroness Altmann and Lord Naseby

3rd reading (Hansard): House of Lords
Monday 16th January 2017 Lords Chamber

[Lord Naseby (Con)]

My Lords, I welcome the amendment from Her Majesty’s Government, as I very much welcome the Bill. However, it still raises the outstanding problem in Clause 10, on scheme funding. The point is that a master trust can, if it so chooses, be treated as a separate legal entity and, as the Bill stands, can still transfer the risk to another entity. That remains one of the problem areas, because solvency for any of these master trusts is absolutely vital to current and future pensioners. I place on the record that although what we have heard this afternoon is an improvement, it does not solve that problem.

While I am on my feet, there is still concern from insurance companies that run master trusts that, under the Bill, they may be required to keep separate solvency requirements for the master trust element of their business when the majority must already comply with Solvency II financial regulations, which are extremely stringent and ought to be enough to cover any of the required security for their master trust business.

[Baroness Altmann (Con)]

My Lords, I echo some of my noble friend’s concerns. I welcome the Minister to his position and wish him much success.

Obviously, I welcome the Bill, which is much needed. It is vital that we protect members’ pensions and ensure that accumulated savings are safe in the event that the master trust scheme fails. Therefore, I broadly welcome the measures in the Bill. However, having engaged with Ministers to try to tidy up some important points to ensure that the Bill works as intended and needed without serious side-effects, I would like to place on record some issues that still require attention.

Pension Schemes Bill [HL]

Debate between Baroness Altmann and Lord Naseby

Committee: 1st sitting (Hansard): House of Lords
Monday 21st November 2016 Lords Chamber

[Lord Naseby (Con)]

My Lords, I support my noble friend Lord Flight in his amendments, in broad terms. The Minister will recall that at Second Reading, at col. 570, I raised the question of mutuals and the mutual movement. His noble friend on the Front Bench confirmed that since a great many of them were defined benefit pension schemes, they would be outside the scope of the Bill. However, that does not take everybody out. Since that time I have had discussions with the Universities Superannuation Scheme. It is perhaps a bit of an oddball, but it is deeply concerned about the Bill and its effect on it and its members. Its representatives emphasised to me in our meeting that they were very much behind the intention of the Bill—so it is not a question of some organisation trying to undermine the situation.

They made three particular points on why the Universities Superannuation Scheme should not be subject to the Bill. First, there is,

“the comprehensive regulatory regime already in operation for hybrid schemes, which already provides a well-established, ample level of protection for pension savers”.

Secondly,

“the protection already afforded to USS members with Defined Contribution … benefits both under statute and the scheme rules, whereby the DC benefits are underwritten by the whole fund (DB and DC) which means that the only circumstances where DC benefits could not be fully satisfied would be where the whole scheme fund (assets currently circa £49 billion) was depleted in full”.

Lastly, there are,

“the anticipated costs of compliance”—

a common thread that has been raised by noble friends across the House. The cost of compliance is estimated at,

“in the region of £10.5 million in order to satisfy the financial sustainability requirements over 2 years, plus a further £250,000 per annum for compliance with the requirements of the Bill, which would be funded from the scheme assets”.

I hope very much that the Minister will take these points on board. I do not expect a full and complete answer this afternoon, but I would have thought that schemes such as this—there probably are others that have not been brought to noble Lords’ attention—could be dealt with in secondary legislation. It certainly seems to me that they need to be addressed at some point. All I am seeking this afternoon is a reassurance that my noble friend recognises that there are some schemes out there that should not be covered by the Bill but may need to be covered in some form in the regulations. I look forward to his response.

[Baroness Altmann (Con)]

My Lords, I will make just a few remarks at this stage. My noble friend Lord Flight mentioned the position of the NAME schemes. There are significant problems with the DB sections of those schemes, and a number of employers have written to me who are about to go personally bankrupt because they cannot meet the obligations—and that is setting aside the defined contribution issue that we are talking about today. From the perspective of the Universities Superannuation Scheme and other schemes that may have AVC-only sections to them, it would seem to me that we cannot, given the intentions of the Bill to protect scheme members’ benefits in the event of wind-up, just assume that the money will come from somewhere if there is not any proper provision for it—and currently there is not. It would suggest—my noble friend the Minister might consider this—that there may be a case for extending the Pension Protection Fund itself, which already covers the DB benefits of those schemes, to take care of any residual risk in the AVC section.

Indeed, the capital adequacy mentioned in the Bill will not necessarily achieve the aim that the Pension Protection Fund achieves for defined benefit schemes. In the event of wind-up, with a scheme’s records in disarray, it is not clear that any initial estimate of capital adequacy might be sufficient to cover those costs. I would be grateful for some comment from the Minister on the possibility of some sort of backstop or tail-risk insurance. That could also pick up the AVC schemes that have been mentioned. I understand the points that have been made there.

Occupational Pensions: Survivor Benefits

Debate between Baroness Altmann and Lord Naseby

Monday 13th July 2015 Lords Chamber

[Lord Naseby (Con)]

My Lords, in asking the Question standing in my name on the Order Paper, I declare an interest as a trustee of the parliamentary pension fund, and that my wife is a retired full-time NHS GP.

[The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)]

My Lords, the Government are absolutely committed to equality. Current legislation requires all couples to be treated equally and survivor benefits are built up on an equal basis going forward. The review covers complex issues of legislation and entitlements built up in the past. Any changes could have significant implications, including costs, for private and public sector pension schemes so we must consider the review’s findings thoroughly and understand those implications fully before making a decision about whether retrospective changes should be made.

[Lord Naseby]

I am most grateful to the Minister for that Answer but I would like to focus on the situation of female GPs, many of whom retired around the beginning of this century. They contributed an identical amount to that of their male counterparts. The widows of the male doctors get a 50% pension. Is my noble friend aware that current widowers, and possibly those in the future, get only about 18%? Can she rectify this anomaly, bearing in mind that both parties, male and female, have contributed an equal amount of money to the pension?

[Baroness Altmann]

My noble friend will know that the specific differences in treatment between male and female scheme members for the purpose of survivor benefits in public service pension schemes for service prior to 1988 were held to be lawful in 2011. This judgment was made in the Cockburn case, which specifically discussed a widower whose partner was a member of the National Health Service Pension Scheme. The judgment effectively said that there was in that case,

“an objective and reasonable justification”,

not to make retrospective changes in relation to new policy being introduced.

Benefits for widows were introduced much earlier than for widowers. The Social Security Act 1975 first imposed obligations on contracted-out schemes to provide a surviving female with a survivor pension. In those days it was usual for the man to be the partner who was working, with a dependent female partner. A female worker with a dependent husband was not the social norm. The scheme funding would have been based on the expectation that a female member would not have a dependent survivor, whereas the male would have a dependent survivor.