Pension Schemes Bill

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Committee stage
Monday 23rd February 2026 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, I am simply not going to relitigate that all over again. Okay, I will give it two minutes, since the noble Lord has raised it. If he is referring to asset allocation mandation, as I made very clear during our debates on that subject, the trustees’ fiduciary duty should guide them, were those provisions ever to come into operation. If the trustees believe that they were not in the interest of their members, we would expect their duties to guide them to make representations and seek an exemption under the savings interest exemption test. That, along with all the other safeguards around it, deals with that question. Now, let me try and focus on climate for today; I have no doubt we will have plenty of other opportunities to discuss mandation, and I look forward to those.

Under the existing regulatory framework—I think that the noble Baroness, Lady Stedman-Scott, put it very well—trustees of UK pension schemes must already set out their policies on financially material environmental, social and governance factors, including climate change, within their statement of investment principles. They then have to publish annual implementation statements showing how those policies have been applied in practice. Since the Pension Schemes Act 2021, the larger schemes also have to publish annual reports aligned with the Task Force on Climate-related Financial Disclosures framework, the TCFD. Those disclosure requirements ensure that trustees have the information they need to make informed investment or divestment decisions.

The Government are strengthening these reporting frameworks to equip businesses and investors with the tools, standards and clarity they need to plan credible transitions and seize the opportunities of a net-zero economy. For example, last year DESNZ advanced an important manifesto commitment and consulted on transition plan requirements for UK financial institutions. Alongside that, DBT consulted last year on new UK sustainability reporting standards. My own department, DWP, working with the Pensions Regulator, is currently reviewing trustees’ TCFD requirements to assess the impact of the current climate disclosure regime, including a comprehensive stakeholder survey exploring the impact of TCFD requirements on governance, strategy, scenario analysis, risk management, member outcomes, engagement, reporting costs and future reporting. To support that, the regulator will present its findings on the practicalities of introducing transition plans for pension schemes to us this spring. These future reporting reforms are intended to modernise disclosures and provide schemes with critical insights into companies’ decarbonisation plans, which is information trustees can then use to judge whether investment or divestment is the appropriate course of action.

We should acknowledge the scale of the voluntary action that is already under way. Around two-thirds of UK pension funds now have net-zero commitments, many of them ahead of 2050. Funds are backing these commitments for significant investment: the London Pensions Fund Authority has allocated £250 million to its environmental opportunities fund; Border to Coast is investing in new UK wind and solar projects; and Nest has committed almost £1.3 billion to renewable energy infrastructure.

There is no single correct approach to managing climate-related risk. Trustees can, and do, divest where appropriate—for example, the Church of England Pensions Board announced its divestment from Shell plc and other remaining oil and gas holdings in 2023, following more than a decade of engagement. However, we recognise that some pension funds could, and should, be doing more. We will continue to support and challenge the sector in rising to that task. The right levers are better governance, better data and better transparency, not hard-wired requirements to decarbonise that remove trustee judgements and risk unintended harm to savers’ long-term outcomes.

Amendment 212 would prohibit schemes holding certain fossil fuel-related investments, even where companies have credible decarbonisation plans. The Government believe that such rigid prohibitions risk rushed divestment and would undermine trustees’ ability to exercise informed judgement. For those reasons, the Government cannot support this amendment.

[Baroness Bennett of Manor Castle (GP)]

It is very easy to cherry-pick individual schemes that have taken action but, as I said in my initial comments, the Financial Innovation Lab says that there are still more than £10 billion in thermal coal investments. Some industry research due to be published shortly by Corporate Adviser Intelligence shows that seven of the largest 19 schemes used for automatic enrolment, including Aviva, Royal London and Scottish Widows, remain invested, via their default fund, in one or more of thermal coal, tar sands and Arctic drilling. Another, SEI, reported that it has excluded these sectors but, last summer, it still had holdings in Glencore, which mines around 100 million tonnes of coal a year.

So, although there are these nice examples, such as those just provided by the Minister, surely the Government must look at this as an overall whole and see not just some good case studies but the norm and the rule right across the industry.

[Baroness Sherlock (Lab)]

It is probably worth me being really clear on the Government’s position. We recognise the high financial and climate risks associated with thermal coal investment. We support strong climate risk governance and expect trustees to integrate climate considerations into decision-making. We welcome industry-led reductions in coal exposure, as well as broader alignment with net-zero goals where we see them. However, we want to see more. As I have just said, we want specifically to challenge schemes to do more; I was offering examples of where things are going. Exposure is expected to decline over time, driven by market forces, global moves towards cleaner energy and evolving investment practices, but we still think that it is essential that trustees and managers retain the flexibility to make responsible long-term investment decisions in the best financial interests of their members.

I turn to Amendment 218A from the noble Baroness, Lady Hayman. I thank her for taking the time to come and discuss these issues with me; it was a very helpful meeting. The question of whether pension trustees may take long-term factors into account in their investment decisions is manifestly not a new one. I will not rehearse the full history, but we should acknowledge the considerable body of work that already exists in this space; in case I did not want to do so myself, the noble and learned Lord, Lord Thomas, helpfully reminded us of some of that. We had major contributions from the Law Commission in both 2014 and 2017. More recently, in 2024, as the noble and learned Lord said, the Financial Markets Law Committee produced its comprehensive report. Alongside these, there have been several respected legal opinions, including Eversheds’ work on behalf of NatWest Cushon and that of Sackers for ShareAction, which relates directly to this amendment.

Across all these analyses, one central principle emerges with complete consistency: a trustee’s primary duty is, and must remain, to invest in the best interests of scheme members. However, what is equally clear is that a degree of uncertainty persists, although I take the noble and learned Lord’s point on whether or not it should. Trustees can, and do, reach different interpretations of how their duties apply when considering factors that extend beyond immediate financial returns, such as climate risk, demographic pressures and impacts on members’ future living standards. Although these matters are often long term in nature, they can be financially material and are plainly relevant to both savers and the wider economy. We recognise the need to give trustees greater confidence in this area.

However, the Government do not agree that creating a new statutory duty in primary legislation is the right or necessary approach. The current legal framework already allows trustees to consider ESG factors, systemic risks and long-term impacts where they are financially material. That position has been consistently affirmed.

Women’s State Pension Age Communication: PHSO Report

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Monday 2nd February 2026 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, tempting though it is, I will save my wider comments on the Pension Schemes Bill for tomorrow, when I look forward to seeing the noble Lord once again in Grand Committee. It has been a great delight in recent weeks and I look forward to having the pleasure of discussing these things again tomorrow.

In answer to his questions, the decision was not inevitable. The Secretary of State looked at the evidence, assessed it all carefully and made a decision. Having made that decision based on the evidence, he issued a statement and put his reasons for the decision in the decision document which has been placed in the Library of the House.

I have two further points. One is serious, in that I agree on the importance of people saving. The Government are pursuing the Pension Schemes Bill and all the measures in it to make sure people get proper returns on their money, to ensure people can save more. That is why we set up the Pensions Commission to look at questions of adequacy. Secondly, if the noble Lord’s Government had really wanted certainty on this matter, they could have made their decision at any point before the election—but they did not.

[Baroness Bennett of Manor Castle (GP)]

My Lords, following the previous question, I note that saving for a pension is extraordinarily difficult for so many people who are struggling to put food on the table and keep a roof over their head. It is really important not to preach to them about savings that they cannot possibly make.

I declare an interest in that I first met the WASPI women in 2015 and advised them on their first petition to Parliament. I am afraid I had to somewhat gently say that yes, they would get 100,000 signatures on that petition and Parliament would debate it, but it did not mean that the obvious sense of their argument would suddenly win. Politics does not work like that. So, here we are now in 2026.

My question to the Minister refers to one particular WASPI woman I met on the road outside here. She had quit her job at the age of 59 because her company was making redundancies. She thought she would get a pension very soon, so she left and took the redundancy so that younger people could keep their jobs. She then found that she would not get her pension for years. She ran out of the redundancy money and ended up on jobseeker’s allowance. She applied for job after job and did not get them. She had been an office manager for decades for a medium-sized enterprise. Then, the Department for Work and Pensions insisted that, to keep her jobseeker’s allowance, she must go on a CV-writing course and a whole lot of other really basic pieces of training. She felt utterly mistreated and abused.

I understand why the terminology in this Statement is the way that it is, and that the Government are talking in careful legalese, but as we have seen in reports today, the WASPI women are planning to fight on, and good on them. More than that, can the Minister understand how people who have been put through that ringer of a decade of poverty and struggle, and of being thoroughly disrespected by the system, would also like to hear words that acknowledge that?

Welfare Reform

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Wednesday 2nd July 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I probably have not explained this as well as I could have—I apologise to the noble Lord. We absolutely regard as the single biggest challenge the fact that the incentives are in the wrong place when it comes to universal credit. So we are doing two different things. First, we are separating support from your capability to work, abolishing the work capability assessment and looking at how a single assessment can be used to make the appropriate judgments, giving support on the basis of need.

Secondly, we are making absolutely sure that we do not put you in the position of there being perverse incentives, so you end up making decisions that would not be good for you in the long run. There are 200,000 disabled people who reckon that they could work now with the right support and would like to. We should start by giving the right support to those who want to work but simply are not able to. The noble Lord is right that we should be challenging everybody, making sure that they are making the right choices and supporting them, but the first thing to do is to get the incentives in the right place, or it will never work.

[Baroness Bennett of Manor Castle (GP)]

My Lords, in continuing the cuts to the health element of universal credit and denying it entirely to people under the age of 22, the Government are offering in recompense the fast-track £1 billion support plan to get people back into work. Yet in a BBC report on 27 June, a senior DWP official was quoted as saying that the Government did not have

“a properly considered or deliverable programme”.

Another DWP official was quoted as saying that not much has been done since this plan was announced in March. How many officials are working on that plan and how far has it progressed?

[Baroness Sherlock (Lab)]

I assure the noble Baroness that the department is absolutely focused on this. There is not one single aspect of these changes. We are trying to turn around the entire department, from one that had a very heavy focus, understandably, on processing benefits, to one that is focusing on supporting people into work. The crucial bit, as I mentioned earlier, is helping every individual work coach to focus on how we get somebody into work and support them appropriately. To correct one thing that the noble Baroness said, she mentioned access to PIP for young people. We consulted on that—

[Baroness Bennett of Manor Castle (GP)]

It was universal credit.

[Baroness Sherlock (Lab)]

I apologise. We consulted on support for young people in the Green Paper and will look carefully at the results.

This Government are committed to making the lives of sick and disabled people better. If people have severe conditions and are never going to be able to work, they deserve to live in dignity and we will support them. However, if they could get a job and improve their own lives and those of their families, we will support them in that too. I hope that the whole House will want to support me in doing that.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Committee stage
Wednesday 25th June 2025 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, I hope I have made the case, in speaking to the amendment that we have been discussing, that the law already provides those protections—or it will do so when the provisions of the data Act are implemented, if those changes have not already been made. For my money, we could not have been clearer that the Bill creates no new automated decision-making powers. DWP and fraud and error decisions are always made by humans. There is a debate to be had, broadly for the future, which is where the work being done by DSIT is really important. That is where protections across government to future-proof things need to be brought in—not in this Bill, which does not introduce any new automated decision-making powers.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank all noble Lords who have taken part in this debate, in particular the noble Viscount, Lord Younger of Leckie, for his strong support, and the noble Lord, Lord Palmer. I thank the noble Lord, Lord Vaux, for his expert contribution, which essentially said what I was about to say in my summing up: we are not necessarily talking about what this Government are doing; we are talking about ensuring that the legislation is there to put controls on what future Governments do.

This is the second time in a week that I have basked in the warm glow of support from everyone except the Government; I could get used to it. It is as the noble Lord, Lord Vaux, said. If the Minister is saying that this will happen, why not put it in the Bill? I will go and have a look at what she said about the data Bill. I suspect that I am probably involved in that one, too—I have so many Bills at the moment that I slightly lose track. We will look at this carefully before Report.

This will be my final contribution in this Committee because I will shortly have to run to the Chamber. We have had very fruitful debates. It is a pity that such an important Bill was not discussed in the Chamber; it will impact on many of the most vulnerable people in our communities. It is crucial that we get the Bill right and that it is seen to have had the full and proper scrutiny it deserves, but I think everyone in this Committee has done their best and we have made a good foundation to take forward to Report. I beg leave to withdraw my amendment.

Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Committee stage
Monday 16th June 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister made a powerful point about the position of the current Opposition. As she identified, the old-age pension being covered in the former iteration of the Bill caused an enormous amount of concern. Obviously, all the groups we are talking about are potentially vulnerable, but old-age pensioners are particularly vulnerable and prone to be stressed and worried about this situation. Can the Minister assure me that the Government will not put the old-age state pension underneath the Bill?

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Baroness for giving me the opportunity to recover my voice and to say that not only will we not do it but the Bill says explicitly that the measure cannot be used on the state pension, so there is no question of it being used for that.

The case load is really straightforward. Fraud in the state pension is so low that it is the one area where the NAO does not qualify the accounts. We have to have a rationale. The reason we have chosen these three benefits initially is specifically because they are the areas where fraud is significant, and we know the information is out there that could make a difference. I can absolutely reassure the noble Baroness on that point: without amending primary legislation, this measure cannot be used on the state pension, and the Government will not do that. Any subsequent Government would have to change the law to be able to do it. I am grateful to the noble Baroness.

Pension Review: Phase 2

Debate between Baroness Bennett of Manor Castle and Baroness Sherlock

Wednesday 18th December 2024 Lords Chamber

[Baroness Sherlock (Lab)]

I think that might be slightly above my pay grade. The Government want to make sure that everybody can save an appropriate amount for retirement. For that to work, one of the starting points is that people have to earn enough in their working lives to be able to have an option of saving anything. The measures that the Government have taken, in our plans for jobs and in looking at what we are doing with the national living wage and to try to drive good work, are about trying to drive economic growth, get more people into good jobs and help them to stay there and to grow in their careers. The work has been done around the Get Britain Working White Paper. All the plans around that are trying to get people to develop in their working life and to be more productive to drive economic growth. That is a win-win. It is good for the country and good for individuals and their families.

[Baroness Bennett of Manor Castle (GP)]

My Lords—

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

Returning to the case of the WASPI women and the Government’s ruling against them, can the Minister tell me whether the fact that the Government have overruled the evidence-based decision of the Parliamentary and Health Service Ombudsman is likely to be open to legal challenge? If there is a legal challenge, will the fact that the Labour Party campaigned for WASPI women during the election campaign have an impact on the case?

[Baroness Sherlock (Lab)]

My Lords, I think anything is open to legal challenge if one can find a lawyer to take a case. There have been legal challenges in the past on this decision. If there are again challenges, the Government will present their case. The noble Baroness mentioned that the ombudsman looked at the evidence —so did the Government. We looked very carefully at the evidence. One of the things we have been doing for the past six months is going through line by line every piece of evidence that the ombudsman offered, looking at the evidence we have and what we understand, and we reached evidence-driven conclusions. That is the basis on which we made the decision.

I recognise that it is not a decision that everybody is happy with. I recognise that there will be women born in the 1950s who are disappointed. But I am also convinced that most of the disappointment and, indeed, much of the campaigning and noise were actually about the change in the state pension age and its timing, rather than the very narrow decision that the ombudsman took. The ombudsman said that it was simply about the way DWP communicated with people about the state pension age. The ombudsman found that between 1995 and 2004 the communications were absolutely fine. There was a 28-month period when, although other communications were out there, such as campaigns, employer campaigns et cetera, those letters should have been sent earlier. We have accepted that, and if any legal case comes we will present our case in court, as we always do.