Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2013

Debate between Lord Colwyn and Baroness Stowell of Beeston

Wednesday 24th July 2013 Grand Committee

[Baroness Stowell of Beeston]

My Lords, I first thank the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, for their support for these regulations. I am grateful to them for that.

In response to the comments of the noble Baroness, Lady Drake, in particular, I will say a little more about the market study into workplace pensions that the Office of Fair Trading launched in January. The aim of the study is to examine whether DC pensions are set up to deliver the best value for money for savers and to take a forward look at the impact of auto-enrolment. On 11 July, the OFT published an update on its progress. This included several areas it wishes to explore further, including the current level of governance over the performance of some schemes, which the noble Lord, Lord McKenzie, raised; schemes with two-tier charging structures in which deferred members pay higher charges; and schemes that do not have a realistic prospect of reaching sufficient scale to generate value for their members. The OFT is also concerned about the way that charges are currently presented and about charges in older schemes that may not represent value for money.

The Government intend to publish a consultation in the autumn, following the publication of the OFT’s report and recommendations. Our consultation will cover a number of issues including a charge cap, active member discounts and extending the prohibition on consultancy charges to all qualifying schemes. These regulations are a first step in a wider move towards addressing the whole area of consultancy charges and their potential effect.

The noble Baroness, Lady Drake, stressed the importance of the FCA and TPR working together. The regulators have already set out how they will co-ordinate and exchange information. The FCA and TPR will jointly publish a document which sets out how regulation of work-based pensions operates in the autumn. This will better articulate the existing regulatory framework. The FCA is updating its pensions strategy and this will inform its business plan, to be published in the spring of 2014.

[The Deputy Chairman of Committees]

My feeling is that the noble Baroness wishes to go on a bit longer. If she could finish in 60 seconds—

[Baroness Stowell of Beeston]

I do not think that I can.