Pension Review: Phase 2

Lord Davies of Brixton Excerpts

Wednesday 18th December 2024 Lords Chamber

Asked by

[Lord Davies of Brixton]

To ask His Majesty’s Government whether they have paused phase 2 of their pension review, and if so, why.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, this Government are committed to enabling tomorrow’s pensioners to have security in retirement, which is why we announced the landmark pensions review days after coming into office in July. The first phase will boost investment and economic growth, with two consultations live since November, and we are committed to a second phase focused on retirement adequacy, of which we will provide further details in due course.

[Lord Davies of Brixton (Lab)]

I very much welcome my noble friend the Minister’s reply, but of course she will be aware of how this works. Last weekend there was a series of stories in the national press, from the FT to the Sun, suggesting that the second phase had been put on hold, presumably to provide some assurance to those who are concerned about the high costs of employment. The problem is that without an urgent definition of an adequate pension on a clear and evidence-based basis, much of the debate that we can have on pensions is facile and empty of content. You cannot know which way to go unless you know where you are going. Does the Minister agree?

[Baroness Sherlock (Lab)]

I think I can agree with the last statement firmly. I will try to avoid being facile and empty of content; I cannot make permanent promises, but I will do my best. I understand the point my noble friend is making, but I can perhaps offer him some reassurance. The pensions review is going to be conducted in two phases, and it matters that they are structured in the right way. The first phase, which was launched by the Chancellor in July, is aiming to boost investment, so it offers a win-win. It will boost investment for the country and provide better saver outcomes, alongside economic growth.

Phase 1 launched two significant consultations: one about DC schemes and the other about the Local Government Pension Scheme. It is right that we focus on delivering the first phase before moving on to phase 2. But the second phase, my noble friend will be glad to know, will focus on pensions adequacy and further measures to improve outcomes for pensioners. I take his point about the need to be clear about what adequacy means, and I will take that back. The scope of the second phase will be announced in due course, but I will take that comment back to my colleagues as that is being developed.