Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2021

Lord Davies of Brixton Excerpts

Thursday 25th February 2021 Lords Chamber

[Lord Davies of Brixton (Lab) [V]]

My Lords, I thank the Minister for her detailed introduction. It is a pleasure to follow the noble Baroness, Lady Gardner of Parkes, because, back in the day, we were both members of the Greater London Council—long lamented by me.

Everyone has pointed out that auto-enrolment has been a success, but it is important to understand that it is still a work in process. A series of well-recognised problems need to be addressed: the exclusions, low contribution rates—there is universal agreement that they should be higher; the only issue is when—and small pots, which is relevant here. Unfortunately, there is nothing in the supporting analysis to say what the impact of changing the earnings limits will be on the number of small pots. We know that there will be millions of them; what is the impact of changing the earnings limits on the future number of small pots? This is germane to the future of the scheme.

There are also some interesting figures in the supporting analysis. I found it a bit counterintuitive that the 8,000 people being brought in by freezing the trigger helps older people, more of whom are brought in by this change than younger people. This points out that we are running out of time: it is important to get the future of the scheme sorted out because these people do not have any time. We are not planning a scheme for people entering the workforce; this is a scheme for people approaching to retirement. The fact that freezing the limit helps older rather than younger people emphasises that point. Deferring it means that they have even less time to sort out their inadequate pensions.

Thirdly, I ask the Minister about the implications of the judgment in the Uber case, the key point in which was that these people are eligible workers and, hence, will be covered by the auto-enrolment requirement. Have the Government explored the implications of the judgment for pensions and, in particular, issues such as back claims for contributions that should have been paid and the fact that people in the area of employment covered by the Uber judgment have fluctuating earnings, almost by definition? Again, this has important implications for small pots and people moving in and out of the earnings limits. Have the Government considered the implications here?

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, I am not able to call the noble Lord, Lord Bhatia, because he was not on the call when the Minister made her opening speech.

Social Security Benefits Up-rating Order 2021

Lord Davies of Brixton Excerpts

Wednesday 10th February 2021 Grand Committee

[Lord Davies of Brixton (Lab) [V]]

My Lords, I associate myself totally with the remarks of the noble Lord, Lord Dodds, about universal credit and legacy benefits, but I want to say a bit more about the triple lock. I welcome the Government’s continued commitment to the triple lock and, without trying to pre-empt what will be in the Budget, it would be good to have an assurance that the triple lock will work again in the coming year. Can we have a firm commitment?

It is worth pointing out, as always when we talk about the triple lock, that it applies only to the basic state pension and the new state pension. It does not apply to the additional pensions, which some of us still think of as SERPS, it does not apply to deferred retirement additions and it does not apply to the graduated state pension. It would be interesting to have some idea of what proportion of the state pension actually gets the full triple lock and what proportion has had to make do with the very low figure of the CPI this year.

I have a further question about the TV licence. The Government’s approach on this has, of course, been shameful. However, I have heard some suggestion that what has happened to the TV licence has had the perverse effect, as some of us have said, of increasing government expenditure because it has encouraged a noticeable uptake of pension credit. Perhaps the Minister could indicate what net effect it is now having. I am very much in favour of anyone entitled to pension credit claiming it, but if the Government’s idea was to restrain expenditure, how successful have they been?

Pension Schemes Bill [HL]

Lord Davies of Brixton Excerpts

Consideration of Commons amendments & Ping Pong (Hansard) & Ping Pong (Hansard): House of Lords
Tuesday 19th January 2021 Lords Chamber

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

I call the noble Lord, Lord Davies of Brixton.

[Lord Davies of Brixton (Lab)]

My Lords, I draw the attention of the House to my entry in the register of interests.

I need to ask the indulgence of the House because I accept that it is unusual for a Member who has not contributed at any previous stage of a Bill to intervene at this stage. However, I was not a Member of the House then, and so I was unable to take part. It will be recalled that the Bill was introduced almost exactly a year ago, and it is almost exactly a year ago that I was first aware that I would be joining your Lordships. I watched the entire progress of the Pensions Bill—with only slight exaggeration—like a child locked out of a sweet shop. I so much wanted to take part in the debate and discussions. I am not suggesting for one moment that the incredible work by my noble friends on the Bill has not been effective; I just would have liked to have been with them.

It is also worth mentioning, since the House places some stress on being a repository of expertise, that on Clause 123 I can claim considerable expertise because I am a fellow of the Institute and Faculty of Actuaries. In the course of my actuarial work I was a scheme actuary and I produced valuations, and that is what this clause is about. Since this is the first time that I have had a chance to speak when I have not been subject to a three-minute time limit, I am tempted to speak for a long time about scheme valuations, but I will spare your Lordships that.

Before I get to the substance, I thank the Minister. As I say, I have watched the debates, and I pay tribute to the way in which the Bill has been handled. I highlight that the introduction of what I still think of as collective DC is an excellent move forward and of considerable importance, as is—although of course there is more to be done—the work that has been done on the dashboard.

Turning to the amendments, I strongly support what is proposed here. The issue is the valuation of open defined benefit pension schemes. Real concern has been expressed by employers and trade unions representing their members about such schemes that the changes foreshadowed in the regulatory regime by the legislation will not work for such schemes, and the result will be higher costs and lower benefits. I am glad to see that a response has been made on the behalf of the Pensions Regulator, assuring us that it is not saying, “Don’t worry, just trust us with it all”, and making various commitments about how open defined benefit schemes will be handled. Well, why not put such assurances into the legislation? I certainly hope they will be included in the regulations.

At this point, it is worth acquainting the House with some evidence that the Institute and Faculty of Actuaries has presented on this clause. It said:

“Any employer that has left their DB scheme open to new entrants to date is highly likely to have done so as a conscious choice, and usually with strong support from members and associated trade unions. The risks inherent in DB are typically well understood not only by the employers but also by the scheme’s members, and their trade union representatives. These schemes should therefore not necessarily be treated the same, or need the same level of security, as closed schemes. In our view it is critically important that viable and successful open schemes are not caused to close through adverse legislative change or guidance from The Pensions Regulator.”


I fully endorse what the institute says there and what has been said by previous speakers, with which I concur. What is notable about what the institute said in that statement is that it emphasises how pension schemes emerged from the employment relationship. One thing that really worries me about leaving it to the regulator is that there is not a single person on the board of the Pensions Regulator who has any experience of employment or industrial relations, or at least not significant enough for them to put it in their biographical details.

I have one final point. This debate is about open schemes, as others have mentioned. I do not want anyone to think that the situation is that there is no more debate to be had about closed schemes. The noble Baroness, Lady Altmann, mentioned the issue of closed schemes. I concur with what has been said there, and that we have to get that right as well; there is more debate to be had on that issue. It is not just about open schemes. So there will be a continuing debate, but I hope the Minister will be able to give us some reassurance about the treatment of open schemes.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

I call the noble Baroness, Lady Janke, whose name was left off the list inadvertently.

Arcadia Pension Fund

Lord Davies of Brixton Excerpts

Tuesday 8th December 2020 Lords Chamber

[Baroness Stedman-Scott (Con)]

There is no government liability, as the Pension Protection Fund is funded by the assets taken into it from schemes, topped up by a levy on eligible schemes. The PPF plans for the long term and, as at 31 March 2020, it had a healthy reserve of more than £6 billion.

[Lord Davies of Brixton (Lab)]

The Minister correctly highlights the role of the Pension Protection Fund, and the employees of Arcadia can take some comfort from that. The problem is that the protection afforded by the fund is incomplete. To lose your job is bad enough; to lose part of your pension as well piles injury on injury. Can the Minister tell us what consideration is being given to improving the level of protection provided by the PPF?

[Baroness Stedman-Scott (Con)]

First, the noble Lord makes a good point about people losing their jobs, and I want to give absolute comfort to the whole House that the Department for Work and Pensions, through the rapid response team, stands ready to do all it can to help people in this very difficult time. On the second part of his question, we are doing as much as we can at the moment to help companies—through the Pensions Regulator and the Pension Protection Fund—to protect their assets and ensure that trustees act honourably in their duties.