Work and Pensions

Guy Opperman Excerpts

Thursday 17th June 2021 Ministerial Corrections

The following is an extract from proceedings in the second sitting of the Compensation (London Capital & Finance plc and Fraud Compensation Fund) Public Bill Committee on 15 June.

[Guy Opperman]

I already meet NEST and the People’s Pension regularly, and they have made a very good pitch for a reduced levy. It is already a reduced levy, as I am sure the hon. Gentleman is aware, and there is already a 0.75% cap, but of course I am looking forward to meeting them as part of the ongoing consultation.

[Official Report, Compensation (London Capital & Finance plc and Fraud Compensation Fund) Public Bill Committee, 15 June 2021, c. 60.]

Letter of correction from the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman):

An error has been identified in my intervention on the hon. Member for Reading East (Matt Rodda).

The correct contribution should have been:

[Guy Opperman]

I already meet NEST and the People’s Pension regularly, and they have made a very good pitch for a reduced levy. It is already a reduced levy, as I am sure the hon. Gentleman is aware, and there is already a 30p cap, but of course I am looking forward to meeting them as part of the ongoing consultation.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (First sitting)

Guy Opperman Excerpts

Committee stage
Tuesday 15th June 2021 Public Bill Committees

[The Chair]

Ms Howard, you responded to Mr Thomas’s first question by saying that you would write to us. May I point out to you that you must write your response to both questions today? Minister Opperman, do you have any questions?

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

You are very kind, Chair, but I do not.

[The Chair]

Very good. Minister Glen?

--- Later in debate ---

[The Chair]

No problem. I now come to Minister Opperman.

[Guy Opperman]

Q I will ask a few limited questions of Mr Taylor. When the Pension Protection Fund and the Fraud Compensation Fund were created in 2004, am I right to say that the levy was an industry-funded system that was not envisaged to include these types of cases?

David Taylor: That is right. The types of cases that we were dealing with in the early years of the Fraud Compensation Fund were different. They did not involve schemes that had been set up specifically for the purpose of pensions liberation. They were more to do with, for example, employers who had failed to pay over into a scheme the moneys that they had deducted from their employers or conceptually straightforward fraud by which money was taken out of existing defined contribution or DB pension schemes.

[Guy Opperman]

Q Can we clarify the difference between what was called pension freedom and pension liberation? You have been aked two questions about pension freedoms. I think I am right—please correct me if I am wrong—in saying that the vast majority of schemes that are affected by the claims being made predate pension freedoms in 2015. Is that correct or wrong?

David Taylor: That is correct.

[Guy Opperman]

Q Secondly, the levy was created. Am I right to say that it has had a series of amendments between 2004 and 2021 and in the future consultation through which Governments of the day address particular issues and either raise or adjust the levy as it goes forward?

David Taylor: That is right. There have been a couple of changes over the years.

[Guy Opperman]

Q Your expectation, as I understand it, is that there will be a consultation on the levy in the autumn to assist in the payment of the disparity in the funding of the FCF?

David Taylor: That is right, yes.

[Guy Opperman]

Q Finally, am I right that the Pension Protection Fund produces an annual report?

David Taylor: Yes, we do. We are just about to publish our report for the year finishing 31 March 2021. It is quite comprehensive and is audited by the National Audit Office.

[Guy Opperman]

Q This relates to amendment 6, which will be moved later, but does the annual report include an assessment of the operation of the Fraud Compensation Fund?

David Taylor: It does, and I anticipate that there will be far more activity on the Fraud Compensation Fund in the year to come than there has been in previous years.

[The Chair]

If there are no further questions from Members, I shall thank the witness for his evidence. We now move on to the next panel.

We seem to be struggling to get all the witnesses on Zoom, so I will suspend the sitting until 10.45 am.

--- Later in debate ---

[The Chair]

Thank you. Minister Opperman, we have four minutes.

[Guy Opperman]

Nothing from me, but thank you very much, Ms Ghani.

[The Chair]

Minister Glen?

Office for Nuclear Regulation: Corporate Plan 2021-22

Guy Opperman Excerpts

Tuesday 8th June 2021 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

My noble Friend the Under-Secretary of State for Work and Pensions (Baroness Stedman-Scott) has made the following written statement.

Today I will lay before this House the Office for Nuclear Regulation Corporate Plan 2021-2022. This document will also be published on the ONR website.

I can confirm, in accordance with Schedule 7, Section 25(3) of the Energy Act 2013, that there have been no exclusions to the published documents on the grounds of national security.

[HCWS76]

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

Guy Opperman Excerpts

2nd reading
Tuesday 8th June 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I beg to move, That the Bill be read a Second time.

In the United Kingdom there are a wide range of opportunities for people to invest. The Government’s role is to try to ensure that the system of regulation and financial investment is suitably robust, so that individuals are treated fairly and have confidence in the financial system in which they invest. Unfortunately, no system of regulation can completely eradicate the risk that firms fail, or that there are bad actors intent on committing fraud. This short Bill is aimed at two areas where it is necessary for the Government to step in.

Clause 1 relates to a new Government scheme to compensate London Capital & Finance bond holders who lost money after the firm entered administration in 2019. Clause 2 will arrange a loan to the board of the pension protection fund to pay compensation to occupational pension scheme members who have been victims of pension fraud, following the recent High Court judgment in the case of PPF v. Dalriada. I will now expand briefly on those measures in detail.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The Minister will understand that part of the reason why we are here today is because of Dame Elizabeth Gloster’s excoriating report into the capacity of the Financial Conduct Authority. Is he certain that the FCA now has the powers and, crucially, the capacity it needs to ensure that consumers of financial services businesses are properly protected?

[Guy Opperman]

Yes, I believe that is the case. The Treasury and the FCA are working together. The FCA is under new management, as the hon. Gentleman will be aware, and there is an acceptance by the FCA of all the findings in Dame Elizabeth Gloster’s report. More particularly there is fresh thinking, one hopes, that will be applied going forward.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will the Minister give way on that point?

[Guy Opperman]

For the last time, and very briefly.

[Kevin Hollinrake]

Powers are one thing, willingness is another. The FCA has shown a remarkable reluctance to hold people to account for incompetence or bad actors, as the Minister said. Will not those failings simply continue unless the FCA starts identifying individuals, within its own ranks or within the banks, for those failings, and holds them to account?

--- Later in debate ---

[Guy Opperman]

Clearly, it is not possible to comment on specific future events, but Ministers are liable for the actions of civil servants, through vicarious liability, and we would expect regulators to take a similar approach and, putting it simply, to own the problems they are trying to solve. If that is a lesson learned from this sorry saga, in my humble opinion that would be a good thing. Clearly, it is for the FCA to take a good long, hard, look at itself, and other regulatory bodies, and decide how it will run itself going forward, with suitable input from Government.

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

Will the Minister give way?

[Guy Opperman]

I will not give way any more. I apologise, but we are trying to do this whole debate in 58 minutes. Please bear with me.

As the House will be aware, on 19 April the Economic Secretary to the Treasury provided a written ministerial statement on the Government’s approach to setting up a compensation scheme for London Capital & Finance bond holders who lost money following the firm’s collapse in 2019. LCF was an FCA authorised firm, which sold unregulated non-transferrable debt securities, commonly known as mini-bonds, to investors. Sadly, 11,600 bond holders lost around £237 million when LCF went into administration. For some investors that will have formed part of an investment portfolio, but for others it will have represented a significant proportion of their savings.

Following LCF’s collapse, the Economic Secretary to the Treasury directed the FCA to launch an independent investigation into its regulation and supervision of LCF. As we have discussed, Dame Elizabeth Gloster led the investigation and concluded that the FCA did not effectively supervise and regulate LCF. The LCF business model was, it is accepted, highly unusual in both its scale and structure. In particular, the firm was authorised by the FCA, despite generating no income from regulated activities. That allowed LCF’s unregulated activity of selling non-transferrable debt securities, known as mini-bonds, to benefit from the impact of being issued by an authorised firm. While other mini-bond firms have failed, LCF is the only mini-bond firm that was authorised by the FCA and sold bonds in order to on-lend to other companies.

In response to the regulatory failings detailed in Dame Elizabeth’s report and the range of interconnected factors that led to losses for bondholders, the Government announced two things: first, they would establish a compensation scheme, and secondly, they would accept all of Dame Elizabeth’s report, as did the FCA. It is, however, important to emphasise that the circumstances surrounding LCF are unique and exceptional, and the Government cannot and should not be expected to stand behind every failed investment firm. That would, with respect, create the wrong incentives for individuals and an unacceptable burden on the taxpayer.

Clause 1 of the Bill, which is the LCF measure, covers two key elements. First, it provides parliamentary authority for the Treasury to incur expenditure in relation to the scheme. Secondly, it makes a minor technical change that disapplies the FCA’s rule-making processes for the purpose of the LCF compensation scheme. The Treasury intends to use part 15A of the Financial Services and Markets Act 2000 to require the Financial Services Compensation Scheme to administer the scheme at speed on the Treasury’s behalf. The scheme will be available to all LCF bondholders who have not already received compensation from the FSCS and represents 80% of the compensation that they would have received had they been eligible for FSCS protection.

Around 97% of LCF bondholders invested less than £85,000 and will not reach the compensation cap under either the Government’s scheme or the FSCS. The Government expect to pay out around £120 million in compensation to around 8,800 bondholders in total and are committed to ensuring that the scheme has made all payments within six months of this Bill securing Royal Assent.

As colleagues will be aware, this is a two-measure Bill, the second clause of which concerns the Department for Work and Pensions and involves loans to the board of the Pension Protection Fund. Clause 2 amends the Pensions Act 2004 by inserting a new section that will give the Secretary of State a power to lend money to the board of the Pension Protection Fund.

The Pension Protection Fund manages the Fraud Compensation Fund, which pays compensation to occupational pension schemes that have lost out financially due to dishonesty. When set up in 2004 by the Blair Government, the PPF and the FCF did not envisage that pension liberation schemes were in scope for FCF payments. This clause will allow compensation to an estimated 8,806 individuals who have been defrauded following the pronouncement of the recent Court judgment in the Dalriada case.

Pension liberation fraud involves members being persuaded to transfer their pension savings from legitimate schemes to fraudulent schemes, with promises of high investment returns or access to a loan from their pension scheme before the age of 55 without incurring a tax charge. The Pensions Regulator has now placed professional pensions trustees in charge of the affected schemes. Those trustees are seeking compensation on behalf of scheme members through the Fraud Compensation Fund.

Following receipt of a significant number of applications, the Pension Protection Fund sought guidance from the High Court in a test case on which schemes should be eligible for the Fraud Compensation Fund. The Court judgment in the case of the Pension Protection Fund vs. Dalriada was pronounced on 6 November 2020, and the High Court concluded that such pension liberation schemes would be eligible, subject to meeting eligibility criteria. The Government have decided to fully accept the Court’s judgment on this and are committed to ensuring that all those who have been victims of pension liberation schemes are able to claim through the Fraud Compensation Fund. However, it is estimated that claims will exceed £350 million, which is far greater than the £26.2 million of assets currently held in the Fraud Compensation Fund, hence the requirement for clause 2 of the Bill and the action that the DWP and the Government are taking.

This is a necessary, urgent and important Bill which will ensure financial protection and fair outcomes for those falling victim in these particular circumstances. My hope and expectation is that the Bill will receive widespread support, and I commend its contents to the House.

Action on Climate Change: Pension Schemes

Guy Opperman Excerpts

Tuesday 8th June 2021 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The UK was the first G7 country to legislate for net zero and it will be the first to legislate for the Task Force on Climate-related Financial Disclosures—ensuring we tackle climate change and deliver safer, better and greener pensions.

Today I have laid the draft Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021. These regulations are world-leading and will embed the recommendations of the Task Force on Climate-related Financial Disclosures into UK law.

Climate change is an existential challenge to our environment, but not only that: it poses a systematic financial risk and threat to the long-term sustainability of UK pensions. With almost £2 trillion in assets under management, all occupational pension schemes are exposed to climate-related risks—which could have a detrimental impact on their members’ future retirement income. Pushing forward our drive for greener pensions, I consulted on detailed requirements to allow more effective governance of climate risks and disclosure in line with the Task Force on Climate-related Financial Disclosures’ recommendations in August last year. Further consultation on draft regulations took place earlier this year. We have worked directly with industry throughout this process, recognising widespread acceptance across the sector for the principle of more effective action on climate risk. The Government laid the legislative groundwork for these regulations in the Pension Schemes Act 2021.

These regulations will deliver world-leading change to the pensions industry, ensuring trustees identify, assess and manage climate-related risks and opportunities relevant to their pension scheme. As a result of our work, the vast majority of pension schemes members’ savings will be invested in schemes whose trustees have a specific legal duty to actively consider the risks and opportunities a transition to a low carbon economy brings.

I have taken the decision not to include a review clause in the regulations, invoking section 28(2)(b) of the Small Business, Enterprise and Employment Act 2015. I recognise the importance of monitoring and evaluating the initial impact of our regulations, which is why I have committed publicly in our consultation response to undertake a review in 2023. This will cover all the aspects normally required by a statutory review clause.

[HCWS74]

Oral Answers to Questions

Guy Opperman Excerpts

Monday 17th May 2021 Commons Chamber

[Robbie Moore (Keighley) (Con)]

As the Pensions Minister knows from when we visited Airedale Springs together last September, climate change is a major concern for many constituents of mine across Keighley and Ilkley. With COP26 now less than six months away, will my hon. Friend update the House on the progress the Government are making to ensure that pensions play their part in tackling climate change so that we can build back greener from the pandemic?

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

We are the first G7 country to legislate for net zero and lead the world in sustainable environmental investment, with the Task Force on Climate-related Financial Disclosures and more, all of which address climate change. It was a pleasure to visit Airedale Springs, which is a great company that is doing good business but with due regard to climate change. That is our approach to UK pensions as we build back greener.

[Matt Rodda (Reading East) (Lab)]

Some 200,000 women who worked hard and paid their taxes all their lives have been underpaid their state pensions. It is an absolute scandal. I welcome the announcement that the DWP is trying to repay the money owed to these women, who have been so badly let down, but the repayments are being made far too slowly. Will the Minister confirm how many repayments were made last month and when the Department will finally speed up the process?

[Guy Opperman]

It is good to see that the hon. Gentleman survived the deputy leadership reshuffle.

The simple point is that the DWP formally commenced correction activity on 11 January this year, and I published a written ministerial statement on 4 February this year. We are clearing up a mess, the responsibility for much of which goes back to the changes made under the Labour Government in 2008, as the hon. Gentleman will be aware. Where underpayments are identified, the Department will contact the individual to inform them of the changes to their state pension amount and of any arrears payments that they will receive in accordance with the law.

[Peter Aldous (Waveney) (Con) [V]]

My constituent Martin Burnell is living with motor neurone disease, which is a progressive terminal illness for which there is no effective treatment or cure. Earlier this year, he was told to reapply for his benefits or risk having them stopped. Will my hon. Friend commit to removing the burdensome and unacceptable requirement under the special rules that people with a terminal illness have to reapply for their benefits after three years?

State Pension Underpayments

Guy Opperman Excerpts

Wednesday 21st April 2021 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I wish to update the House on the state pension correction activity that is addressing historical errors, that were unaddressed by successive Governments, following on from my statement on 4 March.

We are fully committed to ensuring that any historical errors are addressed as quickly as possible to ensure that individuals receive the state pension they are rightfully due in law. While I am pleased to report that good progress has been made in the examination of cases, this is a complex and resource intensive process requiring the clerical examination of many thousands of state pension records.

The Department already has a dedicated team of over 150 people working on the correction activity. Throughout 2021-22 we intend to increase significantly the capacity of the team with the recruitment of an additional 360 staff. We expect this additional resource will speed up the correction activity, with the aim to complete the exercise by the end of 2023.

However, it is important to note that estimates on the numbers affected, and costs, are currently based on highly complex scans of the computer system, analysis of DWP administrative data and very small samples of cases randomly selected and reviewed. They are highly uncertain and will be further refined by our analysts as the correction activity progresses and we are able to base estimates on management information gathered from cases actually reviewed and corrected.

Individuals who are in the affected groups do not need to contact the Department. We are in the process of issuing letters to all those found to be underpaid in accordance with the law, explaining how much they will be receiving in arrears and the reasons for the change to their state pension rate.

The Department will publish further information on the progress of the state pension correction activity around the time of the next fiscal event.

[HCWS933]

Gender Pension Gap

Guy Opperman Excerpts

Monday 19th April 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is my mission as pensions Minister to make the UK pensions system safer, better and greener. We are doing that in a variety of ways, ranging from our world-leading climate change and environmental, social and governance reforms, which positively impact pension investments, to taking tough action on scams and unscrupulous bosses, and through our work to make pensions simpler and more easily understood with dashboards, and to tackle inequality.

I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this important debate. This Government, like previous Governments, recognise that this is an important issue—one that we remain committed to addressing. It is one of the key drivers of the automatic enrolment reforms and the 2016 new state pension reforms, both of which help to address the issue raised. Through automatic enrolment and the new state pension, we are enabling more women to build up pension provision in their own right, reducing historical inequalities in the pension system.

With respect to the hon. Lady, I submit that automatic enrolment has been a genuine game changer in workplace savings. It has happened over the past nine years, but the work has been done by successive Governments, including a Labour Government, who set up the Turner commission. Automatic enrolment was commenced by the coalition Government in 2012, before the original blueprint was fully rolled out by this Conservative Government in 2018-19. Savings of 8% are now the norm, and 10.5 million employees have been automatically enrolled by more than 1 million employers.

Overall workplace pension participation for eligible employees has increased by 44 percentage points since 2012, reaching 86% in 2019. It has been especially transformative for women, low earners and young people, who have historically been poorly served by or excluded from workplace pensions. The proportion of women participating in a workplace pension reached 86% in 2019, which is double what it was in 2012. Some 79% of low earners now save into a workplace pension, which is more than double what it was in 2012. Finally, 85% of young people now save into a workplace pension, which, again, is well over double what it was in 2012.

[David Linden]

I do not think anybody in this House would quibble with the fact that automatic enrolment has been a success story, but the point outlined by my hon. Friend the Member for North Ayrshire and Arran is that the £10,000 trigger in place discriminates against women. Why do the Government have such an objection to making sure that the trigger kicks in at the first pound, rather than waiting until £10,000, which is so disadvantageous to women?

[Guy Opperman]

I am grateful to the hon. Gentleman for raising that point, because I am coming to that specific issue. He will be aware that we conducted a review of automatic enrolment and that we are committed to implementing its findings by the mid-2020s. We intend to remove the lower earnings limit, which will benefit low earners, and for the first time everyone will get an employer contribution from their very first pound of earnings if they are enrolled or opt in. That will improve the incentive to save, especially for women and those individuals working part-time in multiple jobs. In addition, the review also proposed extending eligibility to those aged 18, which will support younger people with the opportunity to start saving earlier for a more secure retirement. Clearly, there is a benefit in the hon. Gentleman’s constituency. In the constituency of the hon. Member for Strangford (Jim Shannon), for example, 7,000 people are currently automatically enrolled, and thanks are due to the thousands of employers who are supporting them in that process.

[Patricia Gibson]

While the Minister is talking about auto-enrolment, will he say whether he has any concerns about the issue I outlined about the employer using the net pay basis, instead of the relief at source scheme, so that tax relief can be earned?

[Guy Opperman]

The hon. Lady raised the RAS—relief at source—issue, which is a legitimate one. It is a matter governed by the Treasury. Obviously, I speak for all the Government, so I can try to address that point. She may have missed it, but in the Budget the Government announced a call for evidence on pensions tax relief administration, in line with the Conservative Government’s manifesto commitment to review comprehensively relief at source tax arrangements. The call for evidence is now closed and the Treasury is continuing to analyse the responses to it. The Treasury will, in the usual way, respond and publish its response shortly. Although the hon. Lady legitimately and rightly raises a matter that, to be fair, is also in the Conservative party manifesto as an issue to be addressed, the Treasury is addressing and has the matter in hand.

I will briefly touch on the very important issue of the self-employed. We remain committed to developing effective, durable retirement solutions for the self-employed. We commenced trialling a research programme in 2019-20 to test differing approaches aimed at improving retirement savings for self-employed people, looking at the role of behavioural messages and saving mechanisms using financial digital platforms. Some of those trials were paused during the covid pandemic for obvious reasons, but the work is done such that we hope to recommence trials this summer. We are also specifically working with Her Majesty’s Revenue and Customs to incorporate self-employed pension solutions into the Making Tax Digital programme that HMRC is rolling out, which I believe will genuinely assist the issue in relation to the self-employed.

Turning to the desire to make pensions simpler, more understandable and more practical, we are taking several measures to address that. In particular, the House will be aware of the pensions dashboard, which we took through in the Pension Schemes Act 2021. We are also driving forward the two-page annual pensions benefit statement, which will take the dozens of pages that were very hard to comprehend and make them into a simple two-page statement. We believe simplicity is key. We want all savers to be easily able to understand their pensions savings, so they can plan for the retirement they want. We believe that communications should be designed with savers’ needs in mind to encourage such engagement. Effective engagement will require a continued partnership between the various providers—the Government, the advisory community and the savers in the longer term.

I also want to outline to the House—I believe it is relevant to this debate—the pilot projects that we are conducting up and down the country on the midlife MOT. This builds on the work of the private sector, in particular Aviva and others, looking particularly at interventions between the ages of 45 to 50. Effectively, it is looking at wealth, work and wellbeing. We have committed several hundred thousand pounds to a number of pilot projects from Cornwall to the north-east and all across the country to ensure that there is a piloting of particular interventions to try to get people engaged with their pensions at an earlier stage and to see whether real differences can be made. I thank the Financial Conduct Authority for meeting me on this issue today as we try to drive forward this innovative change.

The hon. Lady also raised the state pension and a number of issues in respect of it. She will be aware that the state pension has never been higher in this country. When we came into government, it was barely £66 billion in 2009-10. It is now approximately £100 billion-plus. There is a well over £1,000 real-terms increase by reason of the triple lock. Clearly, pension credit has increased as well. She will also be aware that our reforms have seen the gap reduced between the state pensions of men and women. The new state pension system, introduced by one of my predecessors, corrects some of the historic inequalities of the previous system. Over 3 million women stand to receive an average of £550 more per year by 2030. The state pension outcomes are expected to equalise more than a decade earlier than they would have under the old system. We believe that the new state pension, introduced from 2016, gives equal value to national insurance contributions and credits, providing access to the same level of entitlement for all. There is also a comprehensive framework of credits available when people are out of the workforce, for example caring for children or elderly relatives. This will protect people’s state pension position for those periods.

We have introduced the “Check your state pension forecast” service, which I strongly recommend. There is also a desire for everyone to find out whether filling any gaps will increase their payments when they reach state pension age. In particular, that should be done in respect of gaps since 2016, because filling in the gaps, by either receiving credits or making voluntary national insurance contributions, could increase state pension.

The hon. Lady raised a number of additional points that I want to try to address. She raised the campaign on the women’s state pension age increase. Clearly, these were decisions made in the early 1990s and then legislated for, fundamentally on grounds of equality, in 1995. The notice period, I suggest, was several decades. Whatever the hon. Lady’s views or mine, this matter was then taken to the courts, and both the High Court and the Court of Appeal rejected all legal claims of the state pension age campaigners comprehensively, in highly detailed judgments.

This Government, at the same time, have raised the living wage, increased the personal allowance to £12,570, introduced free childcare, introduced the returners programme and addressed shared parental leave, and spent record sums already on universal credit, disability support and, as I say, state pension.

I thank all hon. Members for participating in this debate and showing a clear passion for improving pension outcomes for women. I believe that this Government and previous Governments have made progress. I accept that there is more to do and that closing the gender pension gap remains a priority for all.

Question put and agreed to.

State Pension Correction Exercise

Guy Opperman Excerpts

Thursday 4th March 2021 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

This statement provides an update to the House on uplifts to the state pension, which has been a matter of parliamentary interest since 2020.

We are committed to making sure that those people found to have been underpaid state pension receive the money they are rightly entitled to.

We became aware of issues with state pension under-payments in 2020 and we took immediate action to investigate the extent of the problem. This is an issue that dates back many years across successive Governments.

Rectifying these cases is a priority for the Department and we will do it as quickly as possible.

From August 2020 to January 2021 the Department carried out a number of complex scans of legacy computer systems that analysed many millions of state pension records. The scans identified cases requiring further investigation.

These cases can be categorised into the following groups:

People who are married or in a civil partnership who reached state pension age before 6 April 2016 and may be entitled to a category BL uplift based on their partner’s national insurance contributions.

Following a change in the law in 2008, when their spouse became entitled to a state pension, some people should have had their basic state pension automatically reviewed and uplifted. Underpayments occurred in cases when this did not happen.

People who have been widowed and their state pension was not uplifted to include amounts they are entitled to inherit from their late husband, wife or civil partner.

People who have not been paid category D state pension uplift as they should have been from age 80.

For each group of individuals affected, DWP IT systems produce an electronic prompt to consider if an individual’s state pension amount should be increased. The prompt requires DWP staff to take further manual action and, in some cases, this did not take place.

Following the scan activity, the Department formally commenced a correction exercise on 11 January 2021, clerically examining each of the cases identified through the scans. We have already reallocated a number of staff onto this work and are exploring urgently what else we can do to speed up the process.

Given the complexity of the work, it can take time to assess the most complex cases. This work involves a thorough examination of the state pension payments, and consideration of any changes to the individual’s circumstances since the original state pension award was made, to establish if an underpayment has occurred.

Where underpayments are identified, the Department will contact the individual to inform them of the changes to their state pension amount and of any arrears payment they will receive in accordance with the law.

The Department’s current estimate of the total costs of repaying these arrears is £2.7 billion. There will also be increased expenditure on corrected live cases of around £90 million per year on average in the coming years. This estimate is based on the system scans and analysis of DWP administrative data. As more information becomes available from the correction exercise, we will refine our estimates.

In addition to the formal correction exercise, the Department is continuing to review thoroughly all state pension records where an individual has contacted the Pension Service.

The Government are fully committed to ensuring that any historical errors, unaddressed by previous Governments, are put right as quickly as possible.

I will update Parliament as the correction exercise progresses.

[HCWS824]

Pension Schemes Act

Guy Opperman Excerpts

Tuesday 2nd March 2021 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Pension Schemes Act 2021 received Royal Assent on 11 February. We are now setting out next steps, delivering on the commitment made during the passage of the Pension Schemes Bill and following extensive engagement since report stage in the House of Commons. The Act will introduce:

Three new criminal offences, including a sentence of up to seven years in jail for bosses who plunder or run pension schemes into the ground.

The legislative framework needed to usher in pensions dashboards that will give savers greater control over, and awareness of, their pensions.

The legislative framework to allow collective money purchase pension schemes to operate.

Powers to require pension schemes to take the Paris agreement temperature goal into account, and other climate change goals set by the Government.

Strengthened rules around pension transfers to prevent members being misled in relation to transferring their pensions pots.

Measures to support trustees and employers to improve the way they plan and manage scheme funding over the longer term and enable the Pensions Regulator to take action more effectively to protect members’ pensions.

We are now progressing the secondary legislation to ensure the UK’s pension system is safer, better and greener. The sequencing of the subsequent legislation will allow for proper consultation, engagement with key stakeholders and further parliamentary debate, through affirmative procedure where required.

Following our consultation in January 2021 on climate change, we will lay these world-leading regulations this summer to come into force ahead of COP26. This will make the UK the first major economy in the world to legislate for, and bring into practice, the recommendations of the Taskforce on Climate-related Financial Disclosures, ensuring climate change is at the heart of the pensions system.

On the Pensions Regulator’s powers, we will consult on the majority of draft regulations this spring, and will commence these powers and the criminal offences measures in the autumn. For the duty to give notices and statements to the regulator in respect of certain events, we will consult on the draft regulations later this year, for commencement as soon as practical thereafter.

In early summer we plan to consult on draft regulations for scams and collective defined contribution schemes, with commencement on the scams measures from early autumn 2021.

We aim to consult on proposed regulations for the pensions dashboard later this year and lay draft regulations before Parliament for debate in 2022. Delivery remains on track for 2023 in line with the plans published by the pensions dashboards programme.

On defined benefit scheme funding, later this year we will consult on draft regulations, following promised engagement with key interested parties, working closely with colleagues at the Pensions Regulator as they develop the revised funding code, which will also be subject to a full public consultation.

Both Ministers and regulators will continue to engage with both Houses of Parliament as these measures progress.

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