Pension Schemes Bill

Debate between Baroness Sherlock and Lord Kirkhope of Harrogate

Committee stage
Monday 19th January 2026 Grand Committee

[Lord Kirkhope of Harrogate (Con)]

I am sorry to interrupt the Minister. I raised the question of safeguards. There is a lot of evidence in the industry that there is a lot of pressure. The Minister talks about the driving seat, but the actual installation of the driver into the car is at the behest of employers. It seems to me that there is likely to be some pressure here, perhaps more pressure than before. I just want to be sure that the safeguards are in place—we are perhaps going to be discussing these later—including safeguards for the trustees, who have the basic obligation of doing the best for the beneficiaries of the scheme. To what extent are they going to be protected in circumstances like that?

[Baroness Sherlock (Lab)]

I am coming on to that, but I am grateful to the noble Lord for pressing me on it. All trustees are bound by duties which will continue to apply when making decisions on sharing surplus. They have to comply with the rules of the scheme and with legal requirements, including a duty to act in the interests of beneficiaries. If trustees breach those requirements, the Pensions Regulator has powers to target individuals who intentionally or knowingly mishandle pension schemes or put workers’ pensions at risk. As the noble Lord knows, that includes powers to issue civil penalties under Section 10 of the Pensions Act 1995 or in some circumstances to prohibit a person from being a trustee.

The key is that the Pensions Regulator will in addition issue guidance on surplus sharing, which will describe how trustees may approach surplus release, and that can be readily updated. That guidance will be developed in consultation with industry, but it will follow the publication of regulations on surplus release and set out matters for trustees to consider around surplus sharing, as well as ways in which members can benefit, including benefit enhancement. That guidance will also be helpful for employers to understand the matters trustees have to take into account in the regulator’s view. I hope that that helps to reassure the noble Lord.

We will come on to some of the detail in later groups around aspects of the way this regulation works, but I hope that, on the first group, that has reassured noble Lords and they feel able not to press their amendments.