Pension Schemes Bill

Debate between Baroness Noakes and Earl of Kinnoull

Report stage
Thursday 19th March 2026 Lords Chamber

[Baroness Noakes (Con)]

My Lords—

[The Earl of Kinnoull (CB)]

My Lords, the noble Baroness, Lady Noakes, has graciously allowed me to intervene briefly. Earlier today during Question Time there were two Questions which involved insurance. I forgot to mention my insurance interests in the register. I would like to update the House’s record for that.

[Baroness Noakes (Con)]

My Lords, I am sorry for forgetting having agreed to that intervention.

In moving Amendment 105A, I will also speak to Amendments 114 and 115 in this group. I thank my noble friends Lady Stedman-Scott and Lady Neville-Rolfe for adding their names. In the previous group, we concentrated on size not being everything when determining which pension schemes will be allowed to live on after the consolidation enforced by the scale requirements. My noble friend’s Amendment 77, which the House has just agreed to, has modified the size test. However, even with that important change, the scale requirements will represent a major market intervention by the Government. It is the DC schemes market that I am addressing with these amendments.

My amendments focus on the role of competition and innovation. The one thing that we really need in the long term is a market that will continue to evolve and work for the interests of pension savers. The one thing that we do not need is a mature market consisting of a limited number of large players untroubled by the potential for market disruption. Mature markets can still be competitive and there would be incentives to innovation within a mature market, but that innovation tends to focus on incremental and often process-based improvement. The plain fact is that factors such as incumbent inertia and investment in legacy systems act as counterweights. Disruptive innovation is typically associated with new entrants that spot underserved markets, structural rigidities and the opportunities to harness technological breakthroughs. They do not all succeed but often end up reshaping mature markets, such as is happening with fintechs.

The rules that the Bill sets out for pension schemes must ensure that the benefits of competition and innovation, which ultimately deliver better returns for pension savers, are kept alive and well in the new pension scheme universe that the Bill will deliver. My Amendments 105A and 115 focus on the regulation-making powers surrounding the new scale requirements in Clause 40, and the new entrant and consolidation powers in Clauses 42 and 44. They would both require those making the regulations to have regard to

“the encouragement of innovation in the design and operation of pension schemes, and … the benefits of competition among providers of pension schemes”.

These regulation-making powers will be operated in part by the Secretary of State and in part by the FCA and the Pensions Regulator. The important thing is that, when deciding on the regulations, the person making them must keep competition and innovation in mind as relevant factors for shaping how the detailed rules are framed and will affect how the market develops over time. This is especially important in relation to the Pensions Regulator, whose statutory responsibilities are very narrowly drawn and do not extend to the pension provision market as such.

My other amendment in this group, Amendment 114, would add competition and innovation to the matters to be addressed by the review of non-scale default arrangements as required by Clause 43. I am currently minded to test the opinion of the House on the two amendments seeking to affect the regulation-making powers—Amendments 105A and 115. I beg to move.