Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Report stage
Monday 23rd March 2026 Lords Chamber

Moved by

[Lord Palmer of Childs Hill]

120: After Clause 96, insert the following new Clause—
“Report on the impact of pension market consolidation(1) The Secretary of State must, within 12 months of the day on which this Act is passed, publish a report on the impact of consolidation in the occupational pensions market.(2) The report must include an assessment of—(a) the level of market concentration among pension scheme providers, including trends in the number and size of schemes;(b) the effects of consolidation on competition, innovation, and consumer choice in the pensions market;(c) the potential barriers to entry and growth for small and medium-sized pension providers;(d) the adequacy of existing regulatory and competition safeguards in preventing anti-competitive behaviour regarding—(i) exclusivity arrangements,(ii) exit charges, and (iii) pricing structures;(e) the role of The Pensions Regulator and the Competition and Markets Authority in monitoring and responding to market concentration;(f) the merits of policy or regulatory measures to support new market entrants.(3) The Secretary of State must lay a copy of the report before both Houses of Parliament.”Member’s explanatory statement
This new clause would require the Government to report on the impact of market consolidation on competition and new market entrants.

[Lord Palmer of Childs Hill (LD)]

My Lords, in leading once again on this Bill, I say that this group is bound together by a simple question: is the pensions system working as it should for its members and do we have the evidence to judge this properly? The proposed review is on consolidation, access to impartial pension advice, injustices experienced by scheme members, communications and data accuracy. It all goes to trust, fairness and whether savers can navigate the system with confidence.

From these Benches, we think these are legitimate concerns. Consolidation may bring efficiencies but could also reduce competition and choice if left unchecked. Better access to impartial advice is plainly in members’ interest, especially at key decision points. If data is inaccurate or communications unclear then even a well-designated, well-designed system can fail the people it is meant to serve.

I am pleased to have raised in my amendments the issues of competition, access to impartial pensions advice, and injustice experienced by scheme members. These are matters that I raised in Committee and I appreciate the time of, and the response from, the Minister and her colleagues in government. With all the pressures on us, I will not use any more of your Lordships’ time and bring my remarks on my amendments to an end. I beg to move.

[Baroness Altmann (Non-Afl)]

My Lords, briefly, I support Amendment 120, in the name of the noble Lord, Lord Palmer. It is important to look at the issues he rightly raised that relate to the market. Indeed, Amendment 165 is particularly important, given that the injustices, some of which we will come on to in later groups, seem to have few redress routes. For a good pensions system, it is incumbent on us to have a better system to identify and remedy occupational pension injustices.

I will briefly speak to my Amendment 160, which would require a review to ensure that data in pension schemes must be accurate. Currently, there is no legal requirement to ensure that the amounts of money being paid into pension schemes for auto-enrolment workers or anyone else—I am particularly concerned about auto-enrolment—are correct. The Pensions Regulator has to make sure that pension contributions are being paid, but there is no requirement to make sure that this money is the correct amount.

I suggest amending the Pensions Act 2008 so that the section on “quality requirements” includes something that confirms regular checking of pension contributions; the regulations in Section 33 on “deduction of contributions”

“must require employers to obtain confirmation from the trustees or managers … that the amounts … paid into a scheme … are regularly checked … recorded and corrected as quickly as possible”;

and Section 60 on “requirement to keep records” would require schemes to provide confirmation that regular data accuracy checks and contribution verification, including for tax relief and national insurance relief, are correctly reported.

I have so often seen pension scheme records riddled with errors. It is surprising that there are no requirements in the legislation to make sure that the amounts of money going in are correct. I am interested to hear the Minister’s comments on the Government’s thinking as to whether they would consider this.

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[Baroness Sherlock (Lab)]

I invite the noble Baroness to come back in at the end if she feels I have not answered that. I would say two things to her. One is that the duty is on the trustees or managers. If they become aware that the appropriate things are not being done by employers, or that an employer does not appear to be taking adequate steps to remedy a situation where things have gone wrong—for example, if there are repetitive or regular payment failures—they have a duty to report it to the regulator.

But crucially, the proposed value-for-money framework introduces an assessment of quality-of-service metrics, which directly addresses the accuracy and promptness of core administrative functions, including the secure, timely and accurate processing of contributions. Metrics related to saver engagement will be phased in at a later date, but schemes will be required to disclose how often they review and correct both common and scheme-specific data as well as the proportion of members with complete and accurate records. They also will have to report on the timeliness and accuracy of core financial transactions, such as paying in contributions.

We are currently considering the feedback received from industry on the latest VFM consultation in order to make sure that we develop a VFM regime that will drive greater transparency and higher standards around data quality and contribution accuracy. I hope that is exactly what the noble Baroness wants, and that that has encouraged her. These measures demonstrate that there is a well-established and effective framework that, together with the VFM measures, will make all the things she wants come into place.

I will not dwell on Amendment 163 from the noble Lord, Lord Palmer, about universal pension advice; we gave that a fair outing in Committee. I simply say that we completely share the view that we want to make sure that people get the appropriate advice at the time they need it. But there is already a very large amount of support out there. Being realistic, the option proposed in his amendment would probably, at the best guess on first estimates, cost around £2 billion and require us to double the size of the financial advice sector. I know he is not pushing that, but he is pushing the important underlying point: to make sure that people have access to the support they need. We believe that, between what is available at the moment and what is coming on stream—Pension Wise, stronger nudge and guidance, and targeted support and guided retirement—there is a lot out there that will do that job.

I turn to Amendment 169 from the noble Baroness, Lady Stedman-Scott. It is always faintly dispiriting when someone announces at the start that they will listen to you but they are going to vote on it anyway. But let me do my best, notwithstanding that challenge, and maybe I can persuade the noble Baroness and she will change her mind—one never knows.

This amendment relates to pension communications. I understand that its aim is to ensure that pension providers can communicate effectively with their members so that they can navigate their choices with confidence. We share that aim, which is why we are acting to reduce complexity and strengthen the support available to pension members. The Government have heard extensive feedback from firms on how targeted support may interact with the direct marketing rules contained in the privacy and electronic communications regulations.

Having considered this feedback, the Government have committed to take forward secondary legislation to amend those regulations. This change will enable workplace pension providers to send targeted support recommendations, which amount to direct marketing, to members who have not opted out of receiving it. That reflects the fact that workplace pension providers have fewer opportunities to obtain consent for direct marketing, limiting the level of engagement they have with their members. We aim to deliver this legislative change quickly to ensure that targeted support can reach as many pension members as possible, while maintaining robust protections from unwanted marketing. We will continue to engage with stakeholders and regulators throughout to ensure that we get the right balance.

In Committee, concerns were also raised around communications that may be required under guided retirement. The Government have examined this carefully in developing the policy, including engaging with the sector and the Information Commissioner’s Office. We will seek further stakeholder views through a public consultation, expected later in the year; this will cover proposed requirements on the information and communications journey for pension members, including the extent to which trustees can intervene to provide support, but that is the best way in which to consider any such interactions in a timely manner. Running a separate review to a different timescale would make it difficult to incorporate any findings in the design and implementation of the policy, but I hope that reassures the noble Baroness that the Government are taking action, and she will not feel the need to test the opinion of the House.

Finally, Amendment 165 is from the noble Lord, Lord Palmer, although he did not speak to it—my noble friend Lord Davies did. I do not want to dwell on any particular scheme but say simply that the Government recognise the importance of pension security in retirement and protections for those saving into pension schemes, and those concerns are at the heart of the Bill. We are also acting where previous Governments have not; for example, by introducing annual increases on compensation payments from the PPF and FAS relating to pensions built up before 6 April 1997, when the scheme provided for this. There are clear and established routes for members to raise concerns or complaints about their scheme when they feel that things have gone wrong. The Pensions Ombudsman provides an independent and impartial service to resolve pension-related complaints that cannot be resolved through a scheme’s internal dispute resolution process; that gives a route to settle issues fairly and ensure that members’ rights are upheld.

This has been a good chance to have a canter across the waterfront of pensions, but I hope, in the light of my responses, the noble Lord feels able to withdraw his amendment.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her reply—and she got to the crux of the matter. We are trying to make sure that there is information and advice for people who do not have easy access to that information and advice. I take her reassurances that the Government are looking to give that information and advice by whatever means available. These Benches will look at and keep abreast of what advice and information are given, and whether they are sufficient. I hope that we can come back to the Minister, even if informally, if we feel that they are not and to see whether they are what we want. I think that we are after the same thing—we are just looking at it in a different way. I kept my words brief because I want to get through things today, as much as we can, so I did not concentrate on some of those matters.

The problem with the how we deal with things in your Lordships’ House is that Amendment 169 happens to be a very high number—the highest-numbered amendment is around 170, I think, so the Division will come right at the end of the day, and that is very much in our minds when we think about it. My feeling from these Benches is that, if there is anybody left in the House, we will support it if the noble Baroness puts it to a vote. It is not at the top of my wish list, but I think it does make a point, and if it was an earlier amendment than Amendment 169 it would get a lot more support—but the practicalities mean that it will not.

In the light of all that, I beg leave to withdraw the amendment.

Amendment 120 withdrawn.

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[Viscount Thurso (LD)]

My Lords, I support Amendment 155 from the noble Baroness, Lady Altmann, and will speak briefly to my Amendment 162, which seeks to achieve exactly the same effect. Since the noble Baroness has explained it so well, I do not have to repeat the arguments in favour of it. Amendment 162 was tabled shortly after I tabled Amendment 161, when I was looking for remedies for the problem that was being created around Amendment 161. As most of the arguments for that should properly be deployed when we get to Amendment 161, I will not make them at this point, which I hope the Minister will understand to be appropriate. However, I give notice that if we get to that point and we have not had anything helpful—you can always hope—then I will seek the opinion of the House on Amendment 162.

[Lord Palmer of Childs Hill (LD)]

My Lords, people often wonder, speak and write about whether the House of Lords performs a valid function. This group of amendments justifies the House of Lords in one fell swoop. In this group, the Government are proposing 20 amendments to their own Bill, which shows that it had not been thought out properly in the beginning and we are now trying to amend it in your Lordships’ House—and amend it correctly, I add. I am not speaking against the amendments but noting that things are coming to us ill prepared; that there are 20 amendments makes that clear to see.

This group has amendments that raise an important issue of fairness for members of the Pension Protection Fund and the Financial Assistance Scheme, particularly in relation to pre-1997 service, as well as technical government amendments, to which I just referred. There are amendments probing whether members should, in some circumstances, be allowed to move to a better supported arrangement or receive more meaningful redress where historic indexation has been lacking. On these Benches, our instinct is that member protection must remain the starting point, but protection should not become an unnecessary rigidity. There is a secure and properly funded route to a better outcome for members. The Government should at least be willing to consider this, and I hope that the Minister will say some positive words on it.

On pre-1997 rights in particular, Parliament is entitled to ask whether the proposed remedy is full enough or whether fairness is justified. The noble Viscount, Lord Thurso, and the noble Baroness, Lady Altmann, referred to Amendments 155 and 162, which both seek to do a similar thing. As I said, we are going to vote on the amendments with high numbers later; which one we will vote on, or whether we will vote on both, I do not know. However, we on these Benches agree with the principle of both. We shall see later whether we have had some success in persuading the Government to support these amendments.

[Viscount Younger of Leckie (Con)]

My Lords, I start by referring to the reference the noble Lord, Lord Davies, made to “Mastermind”; I am tempted to say that I have started so I will finish. I thank the Government for bringing forward these technical amendments, which seek to protect schemes from unintended consequences arising from the Bill; to ensure that GMP equalisation is properly treated as a narrow legal correction rather than as full indexation; and to provide greater technical clarity and consistency across the relevant legislative framework. These seem very sensible and constructive changes, and I thank the Minister for her clarifications and the detail she gave.

I thank the noble Baroness, Lady Altmann, and the noble Viscount, Lord Thurso, for the points they succinctly raised on their amendments. As we have heard, Amendment 162 would require the Secretary of State to bring into force the currently uncommenced power in the Pensions Act 2004, allowing the PPF to discharge certain compensation liabilities by paying a cash lump sum. Activating this long-dormant paragraph would add a pragmatic fourth option alongside insurance policies, annuity contracts or transfers. As the noble Baroness, Lady Altmann, said, it would not cost any money to do so.

We therefore support the amendment because it would widen the PPF’s toolkit to act in the best interest of members, giving flexibility to settle appropriate cases efficiently where regulations specify the safeguards and calculation method while retaining parliamentary oversight under the negative procedure and the PPF’s core purpose of protecting members of failed schemes. I therefore say to the noble Viscount, Lord Thurso, and the House that, should he wish to seek the opinion of the House on Amendment 162, we will be minded to support him.

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I thought the noble Lord, Lord Palmer, was uncharacteristically harsh about the government amendments. They are very minor and technical and do not reflect a lack of clarity in the policy objective. We were clear as to what happens. Every now and again—and pensions law is especially complex—it turns out there is an unintended consequence in the drafting, and these amendments simply make sure that the original policy intent is followed through. I apologise to the House for the fact that they are necessary, but this does not reflect anything about the clarity of the policy that GMPs were intended to address.

[Lord Palmer of Childs Hill (LD)]

I accept the Minister’s answer.

[Baroness Sherlock (Lab)]

I am grateful to the noble Lord for his gracious response. In light of what I have said, I hope that the House feels able to support the government amendments and that the noble Viscount, Lord Thurso, and the noble Baroness, Lady Altmann, will not press theirs.

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[Baroness Sherlock (Lab)]

My Lords, I shall speak also to the other government amendments in this group. I start with the context for these amendments. The AWE pension scheme is a trust-based defined benefit—DB—pension scheme for employees and former employees of AWE plc, the Atomic Weapons Establishment. Since 2021, AWE plc has been wholly owned by the Ministry of Defence, and the pension scheme is backed by a Crown guarantee.

The new clauses will allow the Government to defund the existing scheme and establish a new central government pension scheme for its members. They apply only to the DB pension scheme; AWE’s DC contract-based scheme is not affected.

The assets held by the scheme will be sold and proceeds transferred to the Treasury. This measure was announced by the Chancellor in her 2025 Budget, but the principle was announced by the previous Government in a Written Ministerial Statement on 6 July 2022. The new scheme will be a public pension scheme. This is in accordance with wider government policy that when a financial risk sits wholly with government, as it does here, it should not hold assets to cover that liability. The taxpayer is already exposed to the risks, and the liability can be managed more efficiently in the round along with other unfunded liabilities met out of general taxation.

This measure will help to ensure that liabilities are funded in the most efficient way while ensuring the long-term security of members’ benefits. This will also support the Government’s fiscal strategy by reducing near-term borrowing, as it will reduce the amount to be raised in debt markets.

I assure the House that the amendments in this group explicitly protect the accrued rights of all members at the point of transfer. The new public scheme must make provision that is, in all material respects, at least as good as that under the AWE pension scheme. This includes any rights to discretionary benefits that may exist under that scheme at the point of transfer.

The new statutory scheme will be based on the existing rules, and the discretions exercised under the existing rules by the trustee, AWE plc and, indeed, by the Secretary of State for Defence will be codified into the rules of the new statutory scheme. The rules of the new scheme will be drafted in consultation with the trustee of the present scheme. The Government will work with the trustees and future administrator of the scheme to ensure transparency and clarity at the point of transfer. AWE will also work with the current trustee and the future administration to ensure members receive all the information they need at that time.

The new clauses in Amendments 145 and 146 provide that the new scheme should be established by regulations and set out the kind of provision that may be made by these regulations and any amending regulations. Although they are fairly standard for public schemes, I assure the House that the Government have considered carefully how they may be relevant to this scheme.

The new clause in Amendment 148 ensures that scheme rules cannot be amended unless prescribed procedures have been followed. In most cases, the requirement is to consult. However, if the proposed amendment might adversely affect members’ rights, the regulations must prescribe additional procedures to protect the interests of members, including obtaining the consent of interested persons or their representatives. This will include the employer, the members and their representatives.

AWE has already engaged with both its recognised trade unions—Unite and Prospect—and will continue to have regular contact with the unions about future changes.

The new clause in Amendment 149 will enable the Government to direct the disposal of the assets currently held by the pension scheme for the benefit of the Exchequer. We expect the bulk of the assets to be sold before the new scheme is established. Regulations under this clause must ensure that trustees’ liabilities following the sale of assets will be met by public funds, thus ensuring that pensions in payment and any other trustee expenses will not be affected.

Regulations under this clause will also ensure that the trustee and AWE plc are protected against any liability that might otherwise arise because they have complied with the Government’s direction to sell assets. This clause includes a Henry VIII power to disapply or modify specified statutory provisions. To be clear, these powers can be used only in relation to regulations made under this clause and are intended to enable protection for the trustee. For example, we expect that we will need to disapply the scheme funding regime in relation to the scheme once the sale of assets begins.

The new clause in Amendment 150 will allow the Treasury to amend tax legislation to ensure that the transfer of the AWE pension scheme to a new public scheme will be tax-neutral, meaning no additional or unexpected tax liabilities will arise for those affected by the changes. The Treasury will use these powers to modify the application of relevant tax law where it is needed, following the precedent set when the Royal Mail pension scheme was defunded. Indeed, this clause is based closely on that legislation.

The new clause in Amendment 151 provides a legal gateway to permit the sharing of information between named parties to facilitate the establishment and administration of the new scheme. It also gives the Government the power to make regulations requiring individuals or organisations to provide the information needed to establish and administer the new public scheme and transfer the accrued rights. This should not be needed, as the Government are collaborating with the relevant parties. The provision will be required only in the unlikely case that a party does not provide the necessary information upon request.

The proposed new clause in Amendment 152 ensures proper consultation and parliamentary scrutiny for regulations made under this part of the Bill, particularly those affecting the establishment and operation of the new public pension scheme and the transfer of assets. The Government are required to consult the trustee of the AWE pension scheme before making regulations to establish the new public scheme, to transfer accrued rights, or to transfer assets and liabilities. That will ensure that the interests of scheme members will be fully considered before these regulations are made.

In addition, any regulations that could adversely affect existing rights that have retrospective effect or that set financial penalties are subject to the affirmative procedure. That will ensure that significant changes are subject to parliamentary approval and scrutiny. Other regulations under this part of the Bill are subject to the negative procedure, although I note that the taxation regulations are subject only to annulment in pursuance of a resolution in the other place, as is usual for such legislation. I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, what can I do but say that I welcome these amendments? They are overdue and I hope they will pass with no dissension.

[Viscount Younger of Leckie (Con)]

My Lords, in the spirit of consensus, we had some initial concerns with the Government’s approach, which we raised in Committee, specifically whether these provisions might render the Bill hybrid. That would be a serious procedural issue, and one we felt was important to explore fully. Since then, we have engaged constructively with the Government and the Public Bill Office on this question. As the Minister will know, there were a good number of meetings and exchanges. I am grateful to both for their time and careful consideration. We have been reassured that these provisions do not, in fact, make the Bill hybrid and we are content to proceed on that basis. I place on record our thanks for that engagement.

I turn briefly to the substance of the amendments, which set out a comprehensive framework for the transfer of the AWE pension scheme into a new public sector arrangement, while seeking to preserve the accrued rights of members, ensure appropriate handling of assets and liabilities, and provide for the necessary technical matters, including tax treatment, information sharing and parliamentary oversight. I thank the Minister for setting out her approach with such detail. Given the reassurances we have received on the procedural point, we are content with the approach set out in this group.

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[Lord Lucas (Con)]

My Lords, I am delighted to see this series of requests for reviews. I support my noble friend’s Amendment 157. I support also my noble friend on the Front Bench in his Amendment 159, which he will no doubt speak to in due course. It echoes what the noble Lord, Lord Vaux of Harrowden, said on a previous day: we really need to understand the causes of the drop in investment in the UK and address them, rather than try to apply some layer of instruction on top without dealing with the foundations.

I am particularly fond of Amendment 170A. As was shown by the last Division and previous Divisions, I feel that the Government are getting themselves into some difficulty on the question of mandation. Surely it should not be the Government telling pension funds what to do—it should be their members. Their members should have a say in and influence over the question of whether more should be invested in the UK. There is also the question of whether we should invest more in protecting us from climate change—again, that should be decided by members; it should not be mandated centrally. However well-intentioned this Government may be on mandation, there is such huge potential for it going wrong under future Governments. Members are the people who have to suffer if their investments go wrong; they should be the people whose views are taken into account.

[Lord Palmer of Childs Hill (LD)]

My Lords, this group brings together a number of proposed new clauses on the wider health and fairness of the pensions system: public service pension availability; intergenerational fairness; the impact of the Act on retirement incomes; barriers to UK investment; and member engagement and rights. In addition, my amendment proposes a new clause to address the fairness of police pension survivor benefits forfeiture rules. Taken together, the amendments reflect a wider concern that major structural reform should be accompanied by a proper review, transparency and evidence.

On these Benches, we believe that there is obvious merit in asking the Government to come back to Parliament on these questions, whether the issue is long-term sustainability, actual retirement outcomes or the obstacles that may prevent productive investment. They are not hostile to reform; they are part of legislating responsibly in an area as consequential and complex as pensions. On these Benches, we are minded to support Amendment 157, moved by the noble Baroness, Lady Neville-Rolfe.

Through the amendment in my name, I am pleased to have raised the issue of police pension survivor benefits in this Chamber. I raised the matter in Committee, and I feel strongly about it. I appreciate the Government’s response to our earlier discussion, so I will not pursue the amendment further today.

[Lord Davies of Brixton (Lab)]

I welcome the comments from the noble Lord, Lord Palmer of Childs Hill, on police pensions. It is a clear injustice that my noble friend the Minister will understand. The truth is that the only objection is the classic “read-across”—the implications it has for other groups—but I do not see that as a good reason to continue with an injustice. I am therefore happy to express my support for Amendment 164.

I do not support Amendment 157, calling for a review of public service pensions. In truth, the House deserves a proper, full debate on the issue and not as a by-product of this Bill. If other Members want to take the necessary steps to have a proper debate on the issue, I would welcome that. I am confident in that because I know that when such a review takes place, it will come up with the same conclusion as the last review.

It should be of no surprise to anyone that an unfunded pension scheme is not funded—it is inherent; it is in the name. Why do we fund private sector pensions? We do so to provide members with a guarantee. There is no ideological issue involved here. For members to feel safe about receiving their pensions, they want to see the employer putting aside the members’ money into a fund that will be there to provide the pensions when they get to retirement—that is why we have a fund. If the pension is being provided by the Government, we can rely on the Government. We have always relied on the Government, and so a fund is not necessary. Calculating what the fund would be, if it were funded, is an interesting exercise—I would do it myself for a reasonable fee—but it does not tell you anything about the management of that unfunded pension scheme arrangement.

The noble Baroness, Lady Neville-Rolfe, mentioned interest rates. Interest rates make no difference whatever to the cost of an unfunded scheme, because it is not funded. They do make a difference to the figure that you calculate at the current time, but that is purely a ghost figure—that is not the cost of the scheme. The cost of the scheme is what arises when you pay the benefits, which is not affected in any way by interest rates.

I look forward to the noble Viscount, Lord Younger, introducing his amendment on member engagement. If I had seen it before this weekend, I would have been minded to add my name to it—I like the amendment. I do not know whether my noble friend the Minister will accept it, but I agree that it is time for a review of how members are engaged in their pension scheme. The system we have now dates back almost 30 years; it is post Maxwell. The Pensions Act 1995, introduced by the noble Lord, Lord Hague—as he is now—established the structure, and the operation of pension schemes has moved on so much since then.

An interesting wrinkle in the legislation comes in the light of the Goode report. Professor Goode was asked to provide advice on member involvement in the wake of the Maxwell scandal. He recommended that there should be member-nominated trustees. This was adopted by the then Conservative Government. The interesting fact is that the Goode commission recommended that there should be a majority of member-nominated trustee in defined contribution schemes, which, of course, is the majority form of provision at the moment. If we were to adopt its approach, as part of the noble Viscount’s review, we would want much greater involvement in looking after the money and taking investment decisions, which I regard as a very good thing.

There have been big changes since 1995. There has been massive growth in single corporate trustees, which precludes the possibility of member-nominated trustees—again, another good reason to support the noble Viscount’s amendment. Of course, how you have member involvement in schemes that are closed is a much more difficult issue than when they are open with active members.

There are good reason for having a review of how members are engaged in occupational pension provision. I have not discussed this with my noble friend the Minister but my guess is that she will reject the amendment, which is a bit of a pity but I will of course, as almost always, support the Whip.

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Report stage
Thursday 19th March 2026 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I also support my noble friend Lady Altmann’s amendments. Whether she chooses Amendment 49 or Amendment 50 on which to divide, I will support her by voting with her.

The important point here is that people’s lives are unpredictable. One reason why we are extending this even now is that the pensions dashboard is so late in helping to get people informed. Those are the sorts of issues that we are still dealing with. The sooner that people can be better informed, the more agile they will be able to be in consideration of contributions that might need to be made in the future. So, this is an important amendment.

I gently say to my noble friend Lord Fuller—how can I put it?—Caxton House is not as glamorous as the Treasury pitch that he sets out. I know that officials have been working carefully on aspects of this, but it is the wrong move. It was the decision of Ministers rather than civil servants to make this recommendation. That is why I am sure that we will all be in the same Lobby.

[Lord Palmer of Childs Hill (LD)]

My Lords, in a less confrontational way than the noble Lord Fuller, from these Benches, I confirm that we support Amendment 49. The Government should not fail to support this. It is in the name of noble Baroness, Lady Altmann, and it would increase the time before a pot was considered dormant in order to provide greater flexibility for savers such as mothers, those on sabbatical or mature students, who may not add to their pots for one to three years. We have no hesitation on these Benches in supporting amendment in the name of the noble Baroness, but not in quite such confrontational terms as the noble Lord, Lord Fuller.

[Baroness Stedman-Scott (Con)]

My Lords, in continuing the spirit of good grace, I wish our Deputy Chief Whip a very happy birthday today.

I will speak briefly in support of Amendment 49 in the name of the noble Baroness, Lady Altmann, which I was pleased to sign. Fundamentally, the amendment is about ensuring that we do not move too quickly to classify pension pots as dormant and, in doing so, risk making decisions on behalf of savers before they have had a fair opportunity to act for themselves.

By extending the period before a pot was treated as dormant, the amendment would delay when pots became eligible for automatic consolidation. That is important, because it would reduce the risk of pots being moved prematurely, perhaps at a point when an individual was between jobs, was taking a short break, on maternity leave or simply had not yet re-engaged with their savings. It would also give savers more time to re-engage with their pension, to make further contributions and to take an active and informed decision about what they want to do with their savings.

If we are serious about putting savers at the centre of this system, we must ensure that pots are not automatically consolidated after only a short period of inactivity. The new period proposed by the noble Baroness, Lady Altmann, seems to be eminently sensible. I therefore hope that the Minister will give it careful and serious consideration, and I hope she will adopt it. If not, we will be pleased to support the noble Baroness, Lady Altmann, if she chooses to test the opinion of the House on the amendment.

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[Baroness Altmann (Non-Afl)]

Obviously, I support Amendment 55 and a number of the other amendments in this group, but I urge the Minister to consider the dangers of trying to engineer a few large schemes while at the same time knocking out new entrants and competition. From now to 2030, if a scheme is not yet at the £25 billion scale requirement, it will find—and it is finding, such as in the case of Penfold—that it cannot get new business. The employer cannot be confident that it will reach the £25 billion in time, and knows that it could potentially have to change provider. This requirement is undermining innovation and competition in the market right now, and may continue to do so. I hope that the Minister will recognise the dangers.

I apologise to the House, as I should have declared my interests. As stated in the register, I am a non-executive director of a pensions company and an adviser to a pension master trust.

[Lord Palmer of Childs Hill (LD)]

My Lords, I think that everybody in your Lordships’ House wants good investment, whichever side of the House we are on. If you are investing, with apologies, sometimes faith is not enough—you have to see what happens in the market. It is about the choices that are made.

These amendments would allow pension schemes to demonstrate a strong investment performance or innovation in members’ services and administration to be exempt from the scale requirements set out in the Bill, and would introduce greater flexibility on how scale is assessed, including recognising assets held across multiple arrangements.

The amendments reflect concerns that the Bill places disproportionate emphasis on size rather than outcomes, risks disadvantaging smaller or newer entrants and may reduce competition and innovation in the pensions market without clear evidence that larger schemes consistently deliver better returns for members. Amendment 77 would allow exemptions to scale requirements if the regulator deemed that there was no evidence of improved outcomes for members in the case of a proposed merger to meet the scale requirements. This would make sure that members’ interests are protected. On these Benches, we support Amendment 77, and if it comes to a vote, we will support it.

[Viscount Younger of Leckie (Con)]

My Lords, I thank all noble Lords who have amendments in this group, which broadly seeks to refine the Government’s scale requirement as set out in the Bill to reflect the fundamental principle that size is not everything. We have heard a lot about that in this short debate. For the sake of brevity, I shall limit my remarks to my Amendment 77. The scale requirement as currently framed is too blunt an instrument. It risks prioritising size over quality, process over performance and structure over outcomes—in other words, it risks innovative and high performing funds merely because they are small. These remarks have been echoed by the noble Baroness, Lady Altmann.

The central question we must always ask in pensions policy is: does this improve outcomes for savers? This was the essence of my noble friend Lord Fuller’s remarks. If the answer is no, then we should think very carefully before proceeding. When this power comes into force, it will bring into scope schemes that are already delivering strong outcomes—schemes that are well run, well governed and performing effectively for their members. In such cases, forced consolidation is not just unnecessary but may be actively harmful. It risks disrupting successful investment strategies, increasing costs and ultimately undermining the very outcomes that we are seeking to improve.

This amendment would introduce a vital safeguard. It would give the regulator the discretion to recognise where consolidation would not benefit members and to treat such schemes as meeting the scale requirement. It would ensure that the policy is applied intelligently and does not run roughshod over schemes that are already doing what the Government want. Crucially, it would also reinforce fiduciary duty: trustees and managers must act in the best interests of their members, not in pursuit of arbitrary thresholds set by the Government. This amendment would ensure that they are not compelled to take actions that run counter to that duty.

Scale should be a means to an end, not an end in itself. Where scale improves outcomes, it should be encouraged, but where it does not, where schemes are already delivering for their members, we should not force change for its own sake. This amendment would simply ensure that savers remain at the centre of the policy, and therefore when this amendment is called I will seek to test the opinion of the House.

--- Later in debate ---

The trouble is that, unless our amendment is accepted, we will not see this kind of innovation in future. The 15 to 20 master trusts will rest on their laurels, without the risk of too much competition from smaller schemes. Indeed, we heard earlier that the Government are hoping to keep costs up, apparently in the interests of the health of the big schemes. This will be very bad for returns to savers and for our UK pension industry. If the Government do not keep innovation and competition in mind when they make regulations under this Act, we will have a less successful pension sector. I encourage the House to continue the good work and to vote for my noble friend Lady Noakes’s amendment, as it has done for other sensible amendments today.

[Lord Palmer of Childs Hill (LD)]

My Lords, this degrouped set of amendments is very narrow in drafting but, we believe, important in principle. Amendments 105A, 114 and 115 would require the Secretary of State and the reviews and regulations under these clauses to have regard to innovation and competition in the design and operation of pension schemes and in the treatment of non-scale default arrangements.

On these Benches, we strongly agree with the proposition that pension legislation should not inadvertently—this is the problem—freeze the market in favour of the largest existing players. Whenever the Bill pushes schemes towards fewer, larger structures, we believe that Parliament must ask what happens to specialist providers, digital entrants, more tailored propositions and competitive pressure generally. A market that is tidy—tidy is not always right—for Ministers but closed to challengers does not necessarily serve savers well.

This concern was expressed repeatedly in Committee. The critique of the Bill’s scale provisions has been not simply that small is beautiful but that innovation can come from schemes that do not yet meet an arbitrary threshold and that competition itself is one of the mechanisms by which member outcomes improve. I have spoken in this vein on earlier parts of this Bill, warning against an overemphasis on size, which may crush newer entrants and reduce competitive discipline in the market.

There is nothing radical about asking Ministers to have regard to innovation and competition. It is a modest discipline, not a veto. It would not prevent consolidation where consolidation is justified; it would simply ensure that regulations and reviews must notice what might be lost as well as what might be gained. In our view, it is an entirely reasonable request. A well-functioning pensions market should be safe, well-regulated and member-focused, but—this is important—it should also remain open to new ideas and new providers. These amendments would do something to help that balancing view, which is why we on these Benches support them.

[Viscount Younger of Leckie (Con)]

My Lords, I thank my noble friend Lady Noakes for her amendments in this group and I am grateful for the helpful remarks made by my noble friend Lady Neville-Rolfe and the noble Lord, Lord Palmer.

These amendments recognise an important point: a rigid, one-size-fits-all approach risks crowding out innovation, flexibility and ultimately better outcomes for savers. Schemes are not identical, nor are their members, and it is entirely right that providers should be able to design different default arrangements to meet different needs.

Amendment 105A is especially important in this regard. It would require regulations concerning the operation of the scale provisions in Clause 40 to have regard to innovation and competition. The Government have said time and again that they are pursuing a growth mission and that growth will underpin their ability to fund day-to-day spending. Yet what we have seen instead is very different: an ever-greater reliance on taxation to plug the gap, something that is not only economically damaging but ultimately unsustainable for the country.

The noble Lord, Lord Palmer, put it well. If the Government are serious about growth, then they must be serious about fostering innovation and competition in sectors such as pensions. Recognising and ensuring that innovation is not stifled is a practical and constructive way to support that mission.

This amendment does exactly that. It ensures that, in shaping the regulatory framework, the Government actively consider the importance of a competitive and innovative market—one that delivers for savers and contributes to wider economic growth. For those reasons, the Government should accept this amendment. Should my noble friend Lady Noakes wish to test the opinion of the House, we would be glad to support her.

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Report stage
Monday 16th March 2026 Lords Chamber

[Baroness Altmann (Non-Afl)]

My Lords, I have added my name to Amendments 2, 4 and 5, so I will speak to those. I support the noble Lord, Lord Fuller, in his Amendment 1. The addition of the Pensions Regulator, alongside the FCA, is very important. I must declare my interest as a non-executive director of a pensions administration company and as a board adviser to a pensions DC master trust.

Amendments 2 and 5 are really important in the context of the Local Government Pension Scheme. The LGPS is an unusual type of defined benefit scheme; it is not like any of the others which are funded, because it is underwritten by the Government. It does not pay a levy to the Pension Protection Fund and the Government completely underwrite all liabilities, so of course the trustees are able, perhaps, to feel that they can take more risks than a defined benefit scheme, which is supported only by an employer which may fail and the members end up in the PPF. Having said that, unless the Government wish to change the Local Government Pension Scheme into another unfunded public sector scheme and just take all the assets in—which they could do—surely it is important to ensure that the trustees can make investment decisions that they believe are best, rather than the Government suggesting they know better and telling them what to do.

Amendments 2 and 5 both address restrictions on the ways in which the Local Government Pension Scheme can invest, whereby it has to choose to belong to one asset pool and that is it—it could not participate in another pool, even if it felt that that other pool had attractive attributes. I understand the Government’s intent—they would like pension schemes to support both local and national projects, as would I—but it should not be that you can support only the local projects that happen to be part of the asset pool that you must belong to. That is bound to turn these into discrete pools, rather than diversified pools where the trustees have a much freer choice.

The Government may be muddling the idea of scale with the idea of diversification. Both are important and both can deliver better outcomes for members, but trustees have to be able to choose which managers they believe can do the best for them. Quite frankly, usually it is the case that any one pool cannot be the best at everything. There will always be the need, as the noble Lord, Lord Fuller, said, for specialist expertise to be offered to pension schemes.

Amendment 4 is in the name of the noble Baroness, Lady Noakes, and she excellently explained what she intends it to do. The idea is that the Government should not dictate specific assets that pension schemes can invest in.

Although I have no problem with the Government incentivising particular types of investment, whether by offering better returns or different tax reliefs for investing in the ways the Government might wish—they might encourage a local pension fund to invest in its local area—the idea of mandating it with no option but to follow seems a step too far. I hope the Minister will understand that there is support for the ideas the Government wish to achieve, and which lie behind the stipulations in the Bill. It is just that the powers extend so far that we have no idea what might come next on mandation.

We are not talking about incentivising. We are talking about forcing schemes to invest in ways that Ministers see fit, rather than supporting the economy in general in ways that the trustees and their managers decide would deliver the best outcomes for the scheme.

[Lord Palmer of Childs Hill (LD)]

My Lords, first, I have to declare an interest because after 28 years as a councillor in the London Borough of Barnet, I am in receipt of a modest local government pension. I sometimes forget to declare that and I do so now. We have been lucky to have incisive speeches from the noble Lord, Lord Fuller, the noble Baroness, Lady Noakes, my colleague and noble friend Lady Bowles and the noble Baroness, Lady Altmann. After them, I almost want to ask, “Is there anything else one should say?”, but as a politician, I will do so.

This has been a useful debate on the future governance of the Local Government Pension Scheme, and there is a common theme running through it: the need to protect fiduciary responsibility while ensuring that governance is modern, credible and transparent. The amendments in this group range from consultation requirements to the possibility of participation in more than one asset pool, and to the important question of whether Ministers should be able to steer investments towards particular assets and places. I hope that Amendment 4 will be moved at the end of this debate; I would certainly want to support that amendment, if the noble Baroness decides to move it.

We on these Benches recognise that pooling can bring efficiencies and expertise, and we generally welcome the provisions on the Local Government Pension Scheme in the Bill, but bigger is not always better simply because it is bigger. Flexibility matters: if one pool has genuine expertise in a special asset class, there is an argument for allowing schemes to benefit from that knowledge, rather than being locked into a single route for all purposes. Equally, if powers are to be used over asset pools, proper consultees matter. It is hard to object to hearing from bodies such as the Government Actuary’s Department and the Pensions Regulator before directions are given. These are basic disciplines of good administration; I only hope that the Local Government Pension Scheme uses those provisions.

Our wider concern remains the same one raised repeatedly in Committee: that the Bill is too ready to create broad powers first and to explain the practical boundaries later. On the Local Government Pension Scheme, that is particularly sensitive because we are dealing with very large sums, long-term liabilities and members who expect prudence—that was probably why they went into local government in the beginning—not improvisation. So our test is straightforward: does the provision strengthen scheme governance, preserve proper fiduciary decision-making and protect members from political or poorly evidenced intervention? Where it does, it deserves support; where it does not, Ministers still have work to do.

The amendments in this group are pretty modest. As we go through the Bill, we will come to other amendments that would go further. The Minister and her colleagues should think again about whether these amendments improve the Bill. They are not against the Bill or the Government; they are prudent. They would provide fiduciary powers and the power to use them. I invite Ministers to take a step back and consider giving their support to these early amendments and asking their colleagues in the other House to do so. These are reasonable amendments. As I say, later in this debate there will be other amendments that go further. I would like to hear that Ministers feel there is some credibility in the amendments in this group, particularly Amendment 4.

[Viscount Younger of Leckie (Con)]

My Lords, I want to start by thanking my noble friend Lord Fuller for commencing our discussions on this important Bill, which is now on Report. We on these Benches look forward to an effective and constructive Report and hope that we can work with noble Lords across the House to make the improvements to the Bill that, in our view and that of many in the pension sector, are desperately needed.

Towards the end of my remarks, I will speak to the important Amendment 4, in the name of my noble friend Lady Noakes, but first I will speak briefly in support of Amendment 1, in the name of my noble friend Lord Fuller, and Amendments 2 and 5, in the names of my noble friend Lord Fuller and the noble Baroness, Lady Altmann. Taken together, these amendments would make constructive improvements to the Bill.

Amendment 1 would ensure that both the Government Actuary’s Department and the Pensions Regulator are formally consulted before directions are given in relation to asset pool companies. This seems an eminently sensible and proportionate safeguard. The provisions in the Bill give the Government significant powers to direct changes relating to LGPS pooling arrangements—changes that, in practice, may reshape the investment structures of some of the largest pension funds in the country.

Decisions of that magnitude should not be taken without the benefit of the best available expertise. Requiring consultation with the Government Actuary’s Department and the Pensions Regulator would ensure precisely that: actuarial and regulatory oversight would be brought to bear before such directions are issued. This would help to ensure that decisions that could materially affect the funding, governance and investment strategy of the LGPS are taken with expert input. That seems an entirely reasonable expectation when we are dealing with funds that collectively safeguard the retirement incomes—we must not forget this—of millions of public servants.

Amendment 2 addresses another important point. As the Bill stands, regulations may prohibit a scheme manager from participating in more than one asset pool company at the same time. This amendment would remove that provision. Doing so would give scheme managers greater independence in determining how best to structure their investments. If, as was mentioned earlier, one asset pool develops particular expertise in, say, infrastructure, private markets or another specialist asset class—akin to a centre of excellence, perhaps—there may well be circumstances in which it is entirely sensible for multiple schemes to participate in that pool for that purpose.

The noble Baronesses, Lady Bowles and Lady Altmann, put it very eloquently. Preventing scheme managers accessing such expertise simply because they already participate in another pool risks imposing unnecessary rigidity on the system and is unnecessarily prescriptive and inflexible. By removing that restriction, this amendment would allow scheme managers greater freedom to act in the interests of their members—which, as the Government sometimes forget, must remain the central principle guiding all decisions in the management of pension assets.

Amendment 5 follows a similar logic. It would remove wording that restricts how asset pool companies can undertake investment management activities, thereby allowing investment opportunities created within one pool or by one scheme manager to be accessed more widely across the LGPS. In practical terms, this would facilitate cross-pool collaboration within the scheme. Rather than forcing each pool to operate in isolation, it would allow expertise and opportunities to be shared, broadening the menu of options open to scheme managers when determining how to allocate assets and pursue long-term returns. At a time when the Government are encouraging greater scale and collaboration within pension investment, it seems entirely sensible that the legislative framework should not inadvertently constrain that collaboration if that is the choice of the scheme manager, to the ultimate benefit of members of that scheme.

More broadly, these amendments recognise an important principle. As structural changes are made to the way that LGPS operates that could significantly reshape the pensions landscape as a “coherent system”—as the noble Baroness, Lady Bowles, well put it—it is essential that those responsible for managing pension funds retain the flexibility to exercise their judgment in the interests of their members. Pooling can bring benefits, but it should not come at the expense of professional discretion or fiduciary responsibility. These amendments strike a reasonable balance: they would strengthen oversight where central powers were exercised, while preserving the ability of scheme managers to make decisions that best served the members whose pensions they are entrusted to protect.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, this group asks for greater transparency around Local Government Pension Scheme valuations by requiring benchmarking against insurer pricing and gilt-based discount rates, with clearer explanations where more prudent assumptions are used. There is value in greater openness and comparability, but there is also a risk in appearing to imply that one benchmark can neatly settle what is, in practice, a complex actuarial judgment.

I was taken by the contribution from the noble Lord, Lord Davies. He really killed off the amendment by saying that it would give more work for actuaries. The tendency is for the actuary then to say, “On the one hand this and on the other hand that”. Very often, the advice is not even that definite anyway, which is why actuaries are there to confuse the issue altogether.

We should be honest about two things at once. First, employers and scheme participants need clearer information. If valuation choices materially affect contribution rates, local authority budgets and, ultimately, local services then those choices should be explained in language that non-specialists can understand. Secondly, the Local Government Pension Scheme is not simply an insurer in another form; it is a long-term, open, public sector scheme with characteristics that very much differ from closed private arrangements. Although comparison can illuminate, it must not mislead, as is the danger. A benchmark should be a tool for understanding, not a back-door instruction about how every valuation ought to be done.

That is why we on these Benches are cautious. We are sympathetic to calls for clearer publication, accessible material and meaningful consultation. Sadly, we are less persuaded by any suggestion that the right answer can be derived by mechanically comparing one prudence basis with another. The real issue is whether assumptions are evidence-based, proportionate and properly explained. If the Government believe that the present system already secures that then they should show it—I hope the Minister will do that when he responds. If not, there is merit in considering reforms that improve transparency without oversimplifying a technical process.

On that basis, we on these Benches do not oppose the spirit of scrutiny here, but we are not convinced that the amendment, as drafted, is the full answer. Therefore, we are not against what the amendment says, but we would not support it if it were moved to a vote.

[Lord Katz (Lab)]

I thank the noble Viscount, Lord Younger of Leckie, for the amendment, moved very ably by the noble Baroness, Lady Stedman-Scott. It seeks to improve the transparency of the assumptions and level of prudence applied in LGPS actuarial variations, including through the introduction of additional benchmarks.

The 2025 triennial valuation will conclude on 1 April, and at present we do not have a complete picture of its outcomes across the 87 different funds and more than 20,000 employers in the scheme. The amendment seeks to prescribe remedies before any diagnosis has been made or, indeed, any maladies have been fully understood.

Many of the matters raised will be covered by the Government Actuary’s Department report under Section 13 of the Public Service Pensions Act 2013. The report will assess whether employer contributions have been set at levels appropriate to ensure solvency and long-term cost efficiency, whether funds’ valuations comply with the regulations and the degree of consistency between them. Recommendations will then be taken forward by the Ministry of Housing, Communities and Local Government and the scheme advisory board.

Officials are already engaging with the Government Actuary’s Department, which is targeting a publication date of spring 2027 for its report and recommendations. Your Lordships’ House will be pleased to hear that this is earlier than previous valuations, which I hope demonstrates the seriousness with which we are taking the issues raised by noble Lords in Committee. The Government Actuary’s Department will engage widely with funds, actuaries and advisers to develop a comprehensive understanding of the 2025 valuation.

It is appropriate for different funds and their advisers to use different discount rates, reflecting variations in risk appetite, employer profile and investment mix. It is helpful to understand how these approaches compare across the sector. The Section 13 review uses benchmarks to place local valuations on a comparable footing and may, in the first instance, provide useful insight into funds’ decision-making. There is a delicate balance to be struck. Members’ benefits are guaranteed in statute, but funds must ensure that they hold sufficient resources to pay those benefits over the long term through investment income and contributions.

My noble friend Lord Davies is right in his assertion that actuaries advise and funds decide. I salute, in making these contributions, his forbearance in not arguing for the interests of the national union of actuaries, of which I am sure is a founder member—at least he ought to be, if it does not exist.

We heard a fair amount on prudence, as we did in Committee, from the noble Lord, Lord Fuller, using his experience. In a locally managed scheme, it is for funds to work with their actuarial advisers and employers to set a contribution rate that supports the long-term viability of employers and the fund. The Section 13 report prepared by the GAD will consider questions of prudence—that is, how the discount rate is set and how stability is applied to contribution rates. Were the Government to set correct valuation assumptions, they would risk undermining the principle that funds and expert actuarial advisers are responsible for ensuring the long-term sustainability.

A push for greater intervention at the valuation risks moving from a locally managed scheme to a centrally managed scheme. We heard much about that in the discussion on the previous group of amendments. The implications are real and far reaching, decreasing rather than increasing the role for locally elected representatives.

On transparency, the amendment would require additional detail on assumptions and benchmarks in the funding strategy statements and these to be communicated in a more user-friendly way. I believe we are broadly aligned on the value of valuation reports and supporting material, such as funding strategy statements, being easier to understand for the lay reader. There is already transparency in the process. Administering authorities should consult all employers in the fund on their funding strategy statement. This statement should outline how surpluses and deficits will be managed, outline the approach to contribution stability and summarise the main actuarial assumptions used at the valuation.

To respond to the noble Lord, Lord Fuller, the funding strategy statement is consulted on, and the SAB guidance already says that the purpose of the FSS is to establish a “clear and transparent” strategy that explains how liabilities will be met and

“how the fund balances the interests of different employers”.

We must not jump to conclusions about how the valuation has played out for every fund and employer. There are already examples of good practice, including meaningful employer consultation and capable pension committees with the confidence to interrogate their actuary’s advice to fully understand the proposed contribution rates.

In his evidence to the Committee on the Bill in the other place, Roger Phillips, chair of the LGPS advisory board, said about the treatment of surplus that

“we live in a very volatile situation, and circumstances can change. You have to be careful, because if you reduce contribution rates considerably, that is a great benefit at this moment in time, but if you then turn around and start to increase them again, that can be very difficult for all employers to deal with, including local government”.—[Official Report, Commons, Pension Schemes Bill Committee, 2/9/25; col. 41.]

Until the valuation has concluded, we cannot reach a definitive view on how the interpretation of regulations and guidance and the quality of employer consultation have shaped the results that will apply from 1 April. As part of their review, the Government will ask the Government Actuary’s Department to focus on methods for managing risk and reflecting the long-term funding objectives of the scheme including discount rates, application of stability mechanisms and buffers and the effectiveness of employer engagement. I have committed to additional work with the GAD on how discount rates and the application of stability mechanisms affect contribution rates and whether employer engagement processes are operating effectively.

Following the publication of the Section 13 report, the Ministry of Housing, Communities and Local Government will undertake a review of the regulations and guidance governing the triennial valuation ahead of the 2028 valuation. I appreciate that your Lordships’ House may wish for more immediate action, but we must ensure that we are in possession of the valuation results before we determine the right course of action. I therefore ask the noble Viscount, Lord Younger, or the noble Baroness, Lady Stedman-Scott, to withdraw the amendment.

Universal Credit (Removal of Two Child Limit) Bill

Lord Palmer of Childs Hill Excerpts

2nd reading & Committee negatived & 3rd reading
Thursday 12th March 2026 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I compliment the maiden speeches of my noble friend Lady Teather, the noble Lord, Lord Walker, and the noble Baroness, Lady Antrobus. They were a credit to this House and we look forward to further contributions, which I am sure will come from all three noble Peers. I thank the Minister for her excellent summing up of what is happening and what we hope to happen.

These Benches support the Bill and I am very much disappointed with the Conservative Benches for opposing it. It is an improvement on an overdue measure that I have long spoken in favour of. It removes one of the ugliest features of the social security system—the two-child limit in universal credit. My noble friend Lady Teather spoke eloquently on this when she said that more than 1.5 million children are affected and denied the essentials they need to thrive. For my party, this change goes very much to the heart of who we are. We exist to build and safeguard a society that is free, open and fair. We want a society in which no one is enslaved by poverty, ignorance or conformity. That is why opposition to the two-child limit is not a new or convenient position for us. I say this as a chartered accountant who would love to balance all the books, but a fair society does not balance the books on the backs of the children.

There is a moral case for this change. The two-child limit has always rested on a deeply flawed premise. It effectively says that a third or fourth child is somehow less deserving of support than older siblings. But children do not choose the circumstances of their birth. We should know that. They do not choose whether their parents face illness, bereavement, separation, disability, insecure work or rising living costs. They do not have much say in being born, either. Yet this policy has punished children for circumstances entirely beyond their control.

On the scale of the problem and why it matters, we are debating this against the background of child poverty. About 4.5 million children in the UK are living in poverty—nearly one in three. Child poverty is not an abstract statistic; it is hunger, cold homes, anxiety, missed opportunities and diminished life chances. It is also increasingly deep poverty. Millions of children are now living well below the poverty line. The burden falls disproportionately on larger families, lone parent households, households with disabled people and many ethnic minority families. The Bill matters because it begins—only begins—to unwind a policy that is one of the major drivers of rising deep child poverty.

On what the Bill does and why the Liberal Democrats support it, the Bill removes the two-child limit in universal credit so that support is available for all eligible children in a household, not only the first two. It applies across Great Britain and Northern Ireland, with commencement from assessment periods starting in a few weeks’ time on 6 April 2026. We on these Benches support the Bill because it is the right thing to do for children and families. It is targeted and effective. It is good value in public policy terms. The Government’s own assessment and the evidence cited in various briefings make it clear that removing the limit is among the quickest and most cost-effective ways in which to reduce child poverty.

There is a practical case. This is not only social policy but economic policy. Children who grow up in poverty are more likely to experience worse educational outcomes, poorer physical and mental health, and fewer opportunities in adulthood. That means that child poverty stores up pressure for the NHS, schools, local services and the welfare system itself. It also means lost productivity, lost skills and lost tax revenues. In other words, child poverty is not only a moral failure but an act of economic self-harm. If the policy is removed, there will be gains in household income and significant reductions in relative poverty and deep material poverty. The Bill is a down payment on healthier families, better outcomes and a stronger country.

I state, because of some of the comments from the Conservative Benches, that between 2010 and 2015, the proportion of children in absolute poverty before housing costs dropped from 18% to 17%. Under the Conservative Governments between 2015 to 2023, this proportionately increased back to 18%. That is their policy, and the Conservatives are putting that forward again.

The Bill asks a basic question: do we value each child equally? The Liberal Democrats believe that the answer must be yes. Children are not an afterthought to public policy. They are not a line in a spreadsheet—and I am all for spreadsheets. They are, as has been said, 20% of our population but 100% of our future. By removing the two-child limit, we will take a meaningful step towards a country that is fairer, healthier and more hopeful. We on these Benches support the Bill and will work constructively to build on it. For those reasons, these Benches support the Bill’s Second Reading and are disappointed with the Conservatives’ refusal to support it.

Access to Work Fund

Lord Palmer of Childs Hill Excerpts

Thursday 5th March 2026 Lords Chamber

[Baroness Sherlock (Lab)]

I thank the noble Lord for his question and for his kind words. He raises a really important point. One of the things we have discovered, both through our general work with employers but also through the report we have done in this area, is that many employers really want to help, but some small and medium-sized businesses do not know how. They are nervous, and they worry about having the right conversations and how to help. We have a special service, developed with SME employers, called SEND, where we can work with employers and bridge conversations between employer and employee to help them work out what they should do and what help they can get elsewhere.

At the same time, we need to make sure that really big employers step up to the plate. We should not be in a situation where very large employers use Access to Work for small pieces of equipment, such as buying keyboards or chairs, which one would hope they could have managed in the normal run of things. Our job is to help employers to do the right thing, because most of them want to, but the noble Lord knows very much from his experience that this can be challenging. Yet, the rewards of having a really good workforce can make all the difference in the end.

[Lord Palmer of Childs Hill (LD)]

My Lords, I compliment the Minister on the work that is being done in this area. In my view, the aim of the Access to Work fund is to get people out of the house and into work. The fund also pays for improvements and developments in the home when people are working from home. I am sure it would be of great interest to the House to know what proportion of the fund is going to support people working from home rather than working in a place of employment, which is not quite the same in what it achieves for mobility.

[Baroness Sherlock (Lab)]

My Lords, the noble Lord makes an important point: the scheme helps people to get into and stay in work. It is incredibly wide-ranging, covering anything from a customer applying for a single one-off grant of £100 to buy a piece of equipment, which they might keep for the duration of their work in that particular role, through to the other end, of a cap of £69,260 for someone who needs large levels of personal support. There are people who buy a single piece of equipment, or have British Sign Language support to do a job, and right across the piece. I do not have the figures about location, but if we have them I would be very happy to write to the noble Lord.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026

Lord Palmer of Childs Hill Excerpts

Monday 2nd March 2026 Grand Committee

[Lord Mann (Lab)]

My Lords, I wish to make a couple of remarks in relation to these statutory instruments. It is a long time since the pneumoconiosis compensation schemes were brought in—so long that a photo that I was shown on Friday of a very youthful now Minister was remarkably recognisable, but not because of the length of time that has transpired. In my very first case as a Member of Parliament, at 10 in the evening on my very first day, I went to meet someone who was dying that night of mesothelioma. It was, I suppose, rewarding to be able to help push through the changes and improvements that were made a few years later.

I have two points to make. The first is that we call these social security payments, but they are social society—industrial disease—payments. Governments—and, therefore, this Government—are missing a trick. When we talk about the benefits bill, we should extract compensation for industrial disease as a separate element. That is not a benefit; it is something that pays people for the difficulties—with mesothelioma leading to death— caused by exposure that should never have happened. The fact is that there are still cases. Agriculture is a good example of where not all asbestos has been cleared out. Some industries were quicker and better organised than others. There are still schools with asbestos tucked away in all corners.

The people who were working in the collieries, shipbuilding, foundries, the baking industry and others were having to breathe in this stuff. There were sometimes asbestos gloves that they were using routinely as part of their work—then they struggled to breathe in later life. Compensation is not a benefit; it is a right. That should be extracted out and separately categorised in the statistics, so the taxpayer can see the cost of negligence by multiple employers, including—and often particularly—government over many decades.

The second point is more practical. I have been in Parliament since 2001, in one House or other, and we have had Government after Government all repeatedly talking about saving red tape and bureaucracy. I have a proposal on red tape on bureaucracy. Why are we wasting taxpayers’ money every year—on the time, involvement and work—to update something that could be updated by a little change to legislation automatically? There is no controversy in the idea that there is more accountability for diseases that are now recognised across the House as a problem, a danger and a legacy that needs to be addressed. Why are we wasting any money and time, rather than having an automatic annual increase? I put to the Minister that this would be a small but appropriate removal of red tape and bureaucracy. While it is a minor saving to the taxpayer, the principle of it seems nevertheless to be an appropriate one. I see no sufferer from these scourges objecting to an automatic increase every year.

[Lord Palmer of Childs Hill (LD)]

I thank the noble Lord, Lord Mann, for that personal information. I obviously agree with these statutory instruments; it would be strange if we did not—but it is industrial compensation rather than a benefit, and it ought to be recognised as such. Could the Minister quantify the 3.8%? I am not very happy with us just being quoted figures in terms of percentages. What is the general amount being paid, and how much does 3.8% thereof amount to? Percentages mean 3.8% of zero is zero, to take it to the very level.

Could the Minister also talk about the current occupations that give rise to these two dreadful—let us call them—diseases? They are dust related. Many industries have in many ways stopped the dust coming from their products. To deal with the point rightly raised by the noble Lord, Lord Mann, in terms of it being annual rather than just having a continuation, I speak against that, because I would rather that we increased the amount each year or considered and put forward an increase, rather than just have an automatic, modest increase, which might take no account of real values.

I agree with the 3.8%, but ask what it means in practice and whether the Minister could tell us what industries and occupations are giving rise to these dreadful diseases.

[Lord Jones (Lab)]

I thank the Minister for her masterly summation of these most welcome regulations, yet again—some of us here are the usual suspects in debate—for having some little insight as to what they mean for our communities and from whence they came as legislative devices.

In a long Westminster stay in both Houses, I have not encountered such mastery, sincerity, persuasiveness and enthusiasm from a ministerial, oppositional or advisory role in any of many committees on which I have served greater than that of the Minister. It has always been expert, committed and long-standing, from a parliamentary servant who has been at the elbow of a Prime Minister and a Chancellor of the Exchequer. It is a wonderful record of duty and expertise. The standing of this Mother of Parliaments has fallen low, but my noble friend Lady Sherlock still reaches the heights.

Primarily, these regulations centre on two great industries—and there are others. I have in mind slate and coal, quarrying and mining, both of which are in steep decline with minimal activity nowadays, but they are important to many individuals and for families. They represent great humanity, suffering and anxiety about what we know of as the dust. We debate it here, of necessity, each year in Grand Committee. Could we not just once debate on the Floor of your Lordships’ House? That would indicate an understanding of the impact of these diseases on our major communities and far-flung settlements. I recollect watching an aged former Prime Minister, Harold Macmillan, the Earl of Stockton, in your Lordships’ House making a spirited and critical speech to his own Government’s Benches. He paid moving tribute to the miners and steelmen who he said had made the difference in two World Wars, defeating first the Kaiser and secondly Adolf Hitler.

All industries come with health challenges. In these regulations, the department gives much detail, which is always welcome. Do we know how many individuals are receiving payments for both mesothelioma and pneumoconiosis? I think for certain that the increases in all payments will be welcomed when the cost of living is increasingly an issue.

Finally, I observed in the other place the distant origin of these health and safety matters. There were two great Acts in Prime Minister Harold Wilson’s third Administration. It was in 1975, I think. One was employment law, and the other was health and safety. The Secretary of State for Employment was one Michael Foot, then Member for Ebbw Vale. These legislative activities were all-night sittings, time and again. As he piloted his measures through, I recollect sitting alongside him alone at 3 am on the Front Bench in a near-empty Chamber. It was hard going. He prevailed, and the measures are social history, historic in themselves. Later, in Mr Callaghan’s Administration, the Government were without a majority and with their life ebbing away amid a winter of discontent, but plans were made to cover these terrible diseases of industrial life. I recollect the noble Lord, Lord Wigley, and the late Lord Ells-Thomas being very active on the subject of quarrying in their homeland as Members of Parliament, along with Cledwyn Hughes, then the Parliamentary Labour Party chair and later Lord Cledwyn of Penhros and Leader of the House of Lords. Another MP, a Minister like me, was Harold Walker, who was soon to be Lord Walker of Doncaster.

My own role included visiting two key players for the quarrymen and their needs. One was Mr Tom Jones, an officer of the Transport and General Workers’ Union, and the other a retired solicitor and former Member of Parliament, whose name was Jones, too. These two were detail men, and they formed the details that led to the legislation that has led to regulations such as these. I recommended solicitor Jones to Lord Cledwyn for an honour, and it happened—a knighthood, indeed.

Child Poverty Strategy

Lord Palmer of Childs Hill Excerpts

Monday 2nd March 2026 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, the noble Lord is absolutely right about the importance of family stability; it is extremely important for children to grow up in a stable family wherever possible. He is right that poverty is both a driver and a consequence. We know that poverty puts huge pressures on families. Lifting the two-child limit and giving families higher rewards than those that they have now will lift over half a million families out of poverty and help to take the pressure off.

The noble Lord mentioned the better futures fund. That will be a 10-year programme focused on a range of long-term measurable outcomes, including family stability. He asked about how it will be measured. It is currently in the design phase, but the funding will primarily be used for social outcome partnerships, and those bidding will be expected to show the sustainability of their proposed ideas. We absolutely take seriously the importance of family stability. We are going to address the questions of poverty that drive problems, but we also want to do what we can to support families.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her normal diligence on this subject. Alongside new measures

“to increase incomes, reduce essential costs and strengthen local services”—

I take those words from the Government’s own document—between 2025 and 2026 there have been 11 strategy documents. They are very good reading, but they do not help the people with the problems that I have just outlined. Can we speed this up? Let us stop talking about 10 years and instead talk about what is happening this year and next year.

[Baroness Sherlock (Lab)]

I will say two things. Children did not fall into poverty overnight and they will not all come out of it overnight. Poverty has a range of drivers. We are determined not simply to address this problem now but to find a way of tackling it in the long term. However, since the noble Lord wants examples of action, I will give him some. What have we already done? As we have made clear, we are going to put £39 billion into social and affordable housing. We are expanding free school meals to all families on universal credit, putting £600 million into the holiday activities and food programme, extending the warm home discount scheme to an extra 2.7 million people, and removing the two-child limit to lift 450,000 children out of poverty in this Parliament. That is action, and this Government are taking it.

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Monday 23rd February 2026 Grand Committee

I jumped in ahead of the noble Lord, Lord Palmer of Childs Hill—I shall reply to his speech before he gives it.

[Lord Palmer of Childs Hill (LD)]

That is always best.

[Lord Davies of Brixton (Lab)]

This is about impartial pensions advice. Had I heard the noble Lord’s speech, I would have said that I did not accept his arguments. What I want is a pensions system that works without people needing advice. Proper pensions advice is extremely expensive, and on the idea that everyone will get at least twice during their working life full and adequate pensions advice—no, we do not want to encourage that. I would encourage a pensions system that works properly.

Then we have the Police Pension Scheme. I have talked to those campaigning on the issue on a number of occasions and I totally agree that it is entirely unfair that the spouses of some members of the scheme, when those members retire and die, will receive a pension—until they are accused of cohabiting or decide to get married. That happens only in the public sector; virtually no private sector schemes do that sort of thing, and the only ones that do are those that have carried over those rules from the public sector. To be honest, that is nasty. People naturally resent losing the money, and then become open to tittle-tattle and intrusive investigations; that is just wrong. Clearly, there is a cost involved, because there is a carryover to other public service schemes—but it is just wrong; it is treating people badly for no good reason other than history.

I hope that the Government will be able to make a positive response on Amendment 215. I do not have a lot of hope, but I am eternally hopeful. I apologise for jumping in ahead of the noble Lord, Lord Palmer.

[Lord Palmer of Childs Hill (LD)]

My Lords, I say to the noble Lord, Lord Davies, that no apology is needed.

This is a wide-ranging set of review and process amendments. The noble Viscount, Lord Younger, explained what I think he described as his “modest” amendments—indeed, they are. The noble Lord, Lord Kirkhope, said that this was all set up for secondary legislation; we ought to take that point into account.

These amendments are linked by a common theme: whether the Government are willing to build a stronger evidence base for future pensions policy and to improve the basic safeguards for savers. Several of these amendments ask Ministers to review pension adequacy, contribution rules, labour market impacts and public understanding, while others seek an independent look at specific injustices or practical improvements to data accuracy.

These amendments are probing, but they raise real policy gaps. Taken together, they test whether Ministers are prepared to move beyond structural reform and address the practical foundations of trust in pensions, adequate incomes, fair treatment, accessible information and correct records. I hope that, in replying, the Minister will explain which of these issues the Government accept in principle and whether they believe that the existing powers, regulators and reviews are already sufficient. I expect that to happen. The Bill changes structures and powers, but savers also need fairness, clarity and accurate data. When Ministers resist new duties, they should set out a clear alternative route and timetable. I hope that the Minister will do so.

The noble Lord, Lord Davies of Brixton, made important points. We will disagree, but I shall pursue the amendments in my name. Amendment 214 in my name would establish a universal entitlement to free and impartial pension advice at key stages of life. It would ensure that everyone, not just the financially literate or well advised, can make informed decisions about retirement. Such advice would, I hope, be offered around the age of 40—a critical moment for mid-life planning and pension consolidation—and again within six years of expected retirement to support decisions on drawdown, annuities and retirement income options, which are a mystery to many people at that or any stage of life.

The advice would include essentials such as pension types—DB or DC schemes—investment strategies, charges and fees, consolidating multiple pension pots and retirement income choices, and would be practical, comprehensive and relevant. The advice would have to be qualified, independent and impartial. Trustees, managers and providers would have a role in facilitating access. Data sharing would be permitted, but with strong data protection safeguards.

This amendment in my name would also offer flexibility, in that responsibility could be placed with established bodies such as the Pensions Regulator, the Financial Conduct Authority and the Money and Pensions Service. It would be funded from prescribed sources to ensure sustainability. The regulations will be subject to the affirmative procedure, ensuring proper parliamentary scrutiny. Amendment 214 is designed to ensure that people have confidence in and clarity on their pensions, which, I assure noble Lords, many people do not have; to avoid poor decisions that undermine pension security, which many people make; and to make sure that everyone, not just those who can pay for private advice, gets the help they need.

The purpose of my Amendment 215 is to require the Secretary of State to commission an independent review into provisions in police pension schemes that result in the forfeiture, reduction or suspension of survivor pensions. It focuses on cases where survivor pensions are affected by remarriage—as mentioned by the noble Lord, Lord Davies—civil partnership or cohabitation.

Why is this review needed? These provisions can have significant financial, social and emotional impacts on survivors and their families. This would ensure fairness and consistency with other public sector pension schemes—the Armed Forces, the NHS and the Civil Service—and would address potential inequities or outdated rules that disproportionately affect survivors. This review would ensure an independent—that is the point—and transparent process, as well as stakeholder consultation, reporting and accountability. The review panel must publish its findings and recommendations within 12 months. The report must be laid before both Houses of Parliament, ensuring transparency and parliamentary oversight.

This amendment is designed to act to assess the fairness and impact of current survivor pension rules in police schemes and to identify practical reforms that protect survivors’ rights while maintaining scheme integrity, to ensure that the system is consistent, equitable and transparent. I look forward to hearing whether the Minister addresses my points about these amendments.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

I am grateful to all noble Lords who introduced and spoke to these varied amendments. The range of subjects covered here shows the interest across the whole pensions landscape, but at heart is the objective that we all share of putting members first.

There was a theme around adequacy in Amendments 207 and 213 from the noble Viscount, Lord Younger of Leckie. Amendment 207 seeks to introduce a statutory requirement for the Secretary of State to conduct a review of the Bill’s impact on retirement incomes five years after it is passed, and to have subsequent reviews at intervals not exceeding five years from the first assessment. Amendment 213 wants a statutory requirement for the Secretary of State to conduct a review of the relationship between employment rates, earnings patterns and pension adequacy. Although both amendments raise key issues around pension adequacy and proper monitoring, the Government’s view is that the proposals risk the duplication of work already being undertaken. I shall explain why.

There are many different strands to this Bill, which will be implemented in phases over the next several years. For example, the first small-pots consolidation will not take place before 2030, so obviously any review in the next five years will not have allowed many of the reforms any time to take effect. It is for that reason that a comprehensive impact assessment was produced, setting out not only the potential impacts but also plans to evaluate the Bill in further detail, including developing new research projects to address evidence gaps.

The Government already carry out and publish analysis of projected future retirement incomes, which provides estimates of the number and proportion of working-age individuals aged 22 to state pension age who are undersaving for their retirement. The modelling that underpins that analysis uses a number of economic factors, including employment levels based on the OBR long-term forecasts, which are regularly reviewed and updated.

Separately, the Government have revived the Pensions Commission. I say to the noble Viscount, Lord Younger, that adequacy is absolutely not a secondary issue. As I have explained repeatedly in Committee, we are doing these things in the order that is appropriate to the matters. The Bill makes sure that steps are taken so that the market works well to make sure that increased savings will get appropriate returns for the savers.

The Pensions Commission’s legacy under the last Labour Government was of course to create a system of workplace pension saving via automatic enrolment, which has transformed workplace pension saving for millions of workers. There was cross-party support for this. But the Government recognise that millions are still not saving enough for their retirement, which is exactly why we revived the Pensions Commission to finish the job we started 20 years ago.

I will respond to the noble Viscount, Lord Younger. As indicated previously in Committee, the commission will produce an interim report this spring, setting out the evidence base and strategic direction for its work on assessing the UK’s pension system. It will set a direction based on the purpose that the Government have given it to identify remedies to address pension adequacy, fairness and risk before preparing its final recommendations in early 2027 for the Government to consider.

--- Later in debate ---

In each of these cases, Parliament has endorsed reforms designed to improve pensions outcomes. At the same time, the interaction between PECR, data protection law and financial promotion rules may constrain the very communications that are required to make those reforms effective. So a structured review of pensions communications and financial promotion rules is both timely and necessary. I hope that the Committee will forgive me for quite a lot of the technicalities and explanation, but I hope that I have been clear and that the Minister will give serious consideration to what I have said. In the meantime, I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I forgive the technicalities. This group—I will not speak at length on it—focuses on employer communications and decision-making. These are not peripheral issues. Poor communications, which there often are, and unclear boundaries between information, guidance and advice, can directly affect member outcomes. Amendment 208 asks for a review of the legislation and regulatory rules on marketing, financial promotion and member communications, while Amendment 210 would support employers through guidance and tools when choosing and operating workplace pension arrangements.

There is a legitimate policy question here around whether the current rules strike the right balance between consumer protection and practical communication that helps people make informed choices. I hope that the Minister will clarify whether the Government believe that there are avoidable barriers that prevent providers and employers from communicating useful non-advisory information to members and workers. They should be able to give that information easily and freely. Good pension outcomes depend on not only product design, on which we tend to focus, but understandable communications and workable employer support.

I hope that these amendments will try to improve the communications part of the scenario. I do not think that they are mind-bogglingly important, but they would, I believe, improve the system for pensioners, which is what we all, I hope, want to do.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to noble Lords who have spoken. I absolutely agree with the noble Lord, Lord Palmer, that these are important issues. I hope to persuade him that the right action either has been taken or is being taken.

I appreciate the purpose behind the new clause proposed in Amendment 208 from the noble Viscount, Lord Younger. It aims to ensure that pension providers can communicate effectively with their members and provide appropriate guidance. The new clause would require the Government to review legislation and rules that might restrict pension providers from communicating with their members about a range of topics. I should say at the start that there is good reason to protect people from unsolicited marketing in many circumstances. Not only can irrelevant marketing be a nuisance but of course there are people who would exploit an increase in legitimate marketing as an opportunity for fraud or scams. In 2019, the last Government banned companies from making unwanted and unsolicited phone calls to people about their pensions.

At the same time, I recognise the need for clarity to help pension providers navigate the regulatory framework when communicating with their members. That is particularly important given the increased emphasis on pension providers supporting members directly through both guided retirement and, as raised by the noble Viscount, Lord Younger, the targeted support regime. The targeted support, as I have explained previously, could include helping people to make decisions about their pension.

The FCA and the Information Commissioner’s Office published a statement in December to provide clarity on the interaction between direct marketing rules and targeted support. That statement details how firms can promote their targeted support service to those who have opted out of direct marketing, while still complying with the relevant regulations. The statement also emphasises that financial services providers can send neutral, non-promotional and factual messages about important financial matters to all customers, even if they have opted out of marketing communications. That includes warning a pension member that they are undersaving for retirement or drawing down on their pension unsustainably.

However, in developing targeted support, the Government identified some specific issues in how the direct marketing rules in place for workplace pensions would interact with the new regime. The Government will be taking forward secondary legislation to address this, enabling these providers to deliver targeted support communications which amount to direct marketing to members who have not opted out of receiving it. This reflects that workplace pension providers have fewer opportunities to obtain consent for direct marketing, limiting the level of engagement they have with their members.

Turning to value for money communications, I am confident that the Bill already empowers us to achieve these aims. The Government have carefully considered the necessary requirements under the VFM framework. Clause 14 enables the provision of detailed requirements for member communications and interaction, including ensuring that guidance can be tailored to meet the needs of all members. The Government have already engaged in the process of reviewing the legislation and the rules identified in the amendment where appropriate and will continue to do so in a transparent manner.

Amendment 210, which is also from the noble Viscount, Lord Younger, seeks to require the Secretary of State to consider what steps are needed to help employers make the decisions they must make in relation to workplace pensions. While this is a positive aim, I do not think the proposal is necessary. Reasonably extensive guidance is already available to employers to support them to fulfil their pension duties. New statutory requirements are not needed in order to maintain or improve that information as the market evolves.

The Pensions Regulator has published guidance on workplace pension scheme selection, with supporting resources on what to look for in a scheme, including matters such as cost, tax treatment and different ways of making contributions. The FCA has also made guidance available to employers about providing support for employees, which includes pensions among other relevant areas. The DWP has guidance on default fund investment options, which sets out best practice concerning scheme design, governance and member communications. In response to the comment from the noble Viscount, Lord Younger, about smaller employers, that was developed particularly with those employers, including SMEs, which have been newly brought into the pensions world following the rollout of automatic enrolment.

Pensions UK also has its own independent guidance for employers, including its pension quality mark accreditation for high-quality schemes. These sources provide a wealth of information for employers and are regularly supplemented as the market evolves. There is not a need for new statutory requirements.

Once again, I highlight the VFM proposals in the Bill, which will enable the Secretary of State to place duties on trustees and managers to publish standardised performance information. This will help members and employers make informed decisions when choosing a scheme. It will also increase competition across different schemes on quality, not just cost, and could remove poor performing schemes from the market entirely, helping employers avoid low-quality options automatically.

The Government are committed to supporting members and employers to make the best decisions about pensions, but this amendment is not needed to allow the Government to continue to do that, and it does not in fact require the Secretary of State to take any steps if they do not consider them necessary. Overall, we believe there are some cases where more advice and support are needed for members, which is why we are introducing guided retirement and targeted support. We will always consider the interaction of new policies with a wider regulatory framework, but equally it is important to keep guardrails against unsolicited marketing and scams. We also believe that sufficient support is already available for employers in their decision-making, and powers are already available should more be needed. I hope that has reassured the noble Viscount and that he can therefore withdraw his amendment.

--- Later in debate ---

Moved by

[Lord Palmer of Childs Hill]

216: After Clause 117, insert the following new Clause—
“Independent review into injustices in occupational pension schemes(1) The Secretary of State must, within three months of the day on which this Act is passed, commission an independent review into injustices experienced by members of occupational pension schemes as a result of the actions or omissions of employers, scheme sponsors, or scheme administrators.(2) The review must examine, in particular—(a) cases where employers or scheme sponsors failed to adequately support, inform, or protect members in relation to their pension rights or entitlements;(b) the adequacy, accuracy, and timeliness of information provided to scheme members, including information relating to—(i) scheme changes,(ii) benefit reductions or losses,(iii) transfers, mergers, or scheme restructurings, and(iv) risks to accrued pension benefits;(c) the extent to which regulatory oversight, governance arrangements, or fiduciary duties failed to prevent detriment to members;(d) the impact of such failures on affected members, including financial loss, inequality, and hardship in retirement;(e) whether particular groups of members were disproportionately affected, including—(i) lower-paid workers,(ii) women,(iii) disabled people, and(iv) those with non-standard or interrupted working patterns;(f) the effectiveness of existing routes to redress, including complaints procedures, the Pensions Ombudsman, and the courts;(g) potential options for remedy or redress, including—(i) changes to legislation or regulation,(ii) improvements to governance or communication standards, and(iii) mechanisms for compensation or restoration of benefits, together with an assessment of the likely financial implications.(3) The review must be conducted by an independent person or panel appointed by the Secretary of State with relevant expertise in—(a) pensions law and administration,(b) public policy and regulation, and(c) administrative justice and consumer protection. (4) In conducting the review, the person or panel must—(a) consult with affected scheme members and pensioner groups;(b) invite and consider written and oral evidence from stakeholders, including—(i) trade unions,(ii) employer and industry bodies,(iii) pensions experts, and(iv) relevant regulatory and advisory bodies;(c) have regard to relevant findings of Parliamentary committees and public bodies.(5) The person or panel appointed under subsection (3) must submit a report of its findings and recommendations to the Secretary of State within 12 months of the date on which the review is commissioned.(6) The Secretary of State must—(a) lay the report before both Houses of Parliament as soon as reasonably practicable after receiving it;(b) within six months of laying the report, publish a statement setting out the Government’s response to the review and any actions it proposes to take.”Member’s explanatory statement
This new clause would require the Secretary of State to commission an independent review into injustices experienced by members of occupational pension schemes where employers or scheme sponsors have failed to properly support, inform, or protect members, and to consider options for reform or redress.

[Lord Palmer of Childs Hill (LD)]

My Lords, this group concerns defined benefits, fairness and redress. Amendment 216 in my name asks for independent reviews into serious, alleged injustices affecting scheme members. It is broad and seeks an independent review into injustices in occupational pension schemes caused by actions or omissions of employers, sponsors or administrators, including failures of communication, governance and redress mechanisms. A number of campaigners and victims of injustices have reached out to share their stories; we hope that the Government will take this amendment forward in order to send a clear message to those campaigners that the Government will listen to them and rectify any wrongs that exist.

I turn to Amendment 218 in my name. I have had lots of information from the noble Baroness, Lady Altmann, who cannot be with us today; I will try to incorporate that into what I say, so noble Lords will get two speeches for one here. In our earlier debate in Committee on the amendment designed to assist members of the AEAT pension scheme’s closed section, who were advised to transfer all of their accrued pre-1997 pension rights into a new private sector pension scheme on the privatisation of part of the UK Atomic Energy Authority, the Minister stated in her response—she will remember this—that the case around AEAT pensions “has been fully considered”. She specified that there had been

“reviews by three relevant ombudsmen, debates in the Commons in 2015 and 2016 and a report by the NAO in 2023. This matter has also been considered by previous Governments in the period since AEAT went into the PPF, all of whom reached the same conclusion”.—[Official Report, 5/2/26; col. GC 668.]

It is clear that the Minister and the Committee were being told that thorough investigations had found that there was no case for remedying the loss of promised government protection of these pension rights. That is just not correct, I am afraid. It is important to set the record straight today; I hope to do so, guided by the noble Baroness, Lady Altmann, who has given me some notes on this as well.

There has been no ombudsman investigation of the core issue, which is the closed-section AEAT pensioners, now mainly in their 70s to 90s, who were misled on privatisation in 1996 by a GAD document to transfer the historic Treasury-backed—that is the point; they were Treasury-backed—public sector UKAEA benefits into the new privatised-company AEAT scheme. They were not informed that the new scheme did not have the same security, despite reassurances in both Houses of Parliament that their pensions were safe.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her customary comprehensive reply, but I do think the Government have to think outside the box. The idea that “It’s not me, guv” is not really good enough. Yes, it is long and complex, but an elegant redress could be affordable, and virtually cost-neutral, for the Government. Precedence exists and a solution to right what I still think is a wrong must be explored by the Government.

Let us not forget that those employees were promised protection by the Government and, despite assurances, I do not think they have got it. Instead, they have found that government protection was worse than no protection at all. I had hoped that the Government today could provide sufficient assurances to the victims of what I see as an injustice, and specifically answer whether they are planning to right the wrongs outlined in the NAO and PAC reports. I have not received those assurances.

I hope, trying to further this in a positive manner, that the Minister might meet with me and representatives of AEAT, who are more on the ball than I am on this subject, to discuss the issue. I see this as quite probably coming back on Report. It is not going to die here today. On that basis, I beg leave to withdraw the amendment.

Amendment 216 withdrawn.

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Thursday 5th February 2026 Grand Committee

Moved by

[Lord Palmer of Childs Hill]

184: After Clause 96, insert the following new Clause—
“Report on the impact of pension market consolidation(1) The Secretary of State must, within 12 months of the day on which this Act is passed, publish a report on the impact of consolidation in the occupational pensions market.(2) The report must include an assessment of—(a) the level of market concentration among pension scheme providers, including trends in the number and size of schemes;(b) the effects of consolidation on competition, innovation, and consumer choice in the pensions market;(c) the potential barriers to entry and growth for small and medium-sized pension providers;(d) the adequacy of existing regulatory and competition safeguards in preventing anti-competitive behaviour regarding—(i) exclusivity arrangements,(ii) exit charges, and(iii) pricing structures;(e) the role of The Pensions Regulator and the Competition and Markets Authority in monitoring and responding to market concentration;(f) the merits of policy or regulatory measures to support new market entrants.(3) The Secretary of State must lay a copy of the report before both Houses of Parliament.”Member’s explanatory statement
This new clause would require the Government to report on the impact of market consolidation on competition and new market entrants.

[Lord Palmer of Childs Hill (LD)]

My Lords, this amendment has the distinction of being in a grouping all of its own, which obviously shows how important it is. The proposed new clause in it would require the Secretary of State to publish a report within 12 months on

“the impact of consolidation in the occupational pensions market”.

It would ensure, I hope, that Parliament and the public have transparency on how consolidation is reshaping the sector. We know that consolidation is accelerating in the pensions market and, although scale can deliver benefits—I hope—it can also raise risks: reduced competition, fewer choices for savers and further barriers for new entrants. A clear evidence base is an essential part of the solution to strike the right balance.

The report referenced in this amendment calls for information on a number of things. The first is market concentration—for instance, trends in the number and size of schemes and the level of provider dominance. The second is effects on competition and innovation: whether consolidation is driving efficiency or stifling creativity and diversity. The third is consumer choice: how member options are being affected. The fourth is barriers to entry: challenges faced by small and medium-sized providers in entering or growing in the market. The last is an assessment of whether current competition and regulatory safeguards are sufficient.

The report would also have a particular focus on exclusivity arrangements, exit charges and pricing structures that may distort the market. Furthermore, the Pensions Regulator and the Competition and Markets Authority would have a role in overseeing these risks. The review would also examine potential policies or regulations to support new entrants and maintain a healthy and competitive pensions market.

To summarise, we know that consolidation must serve savers’ interests, not just the interests of the largest providers. This proposed new clause would ensure that Parliament is properly informed—it should be informed on all things, whether on this or on the noble Lord, Lord Mandelson—that regulators are held to account and that future policy is based on evidence. From a Liberal Democrat perspective, well-functioning markets matter. Competition, diversity of approach and the ability for new entrants to challenge incumbents are essential if savers are to benefit over the long term. Ministers need to explain why a formal review of consolidation is resisted, given the scale of structural change this will accelerate. We are asking just for a review, and we hope the Government will not think this too much to ask for before we enter this new realm. I beg to move.

[Baroness Stedman-Scott (Con)]

My Lords, it is a pleasure to close this debate and respond to the remarks of the noble Lord, Lord Palmer, on his Amendment 184. I am grateful to him for raising this issue, because it goes to the heart of how we ensure that pension reform delivers better outcomes for savers rather than simply neater market structures on paper. I think there is reasonably wide backing across the pensions industry for the Government’s broad objective of greater consolidation and efficiency within the defined contribution market. Many stakeholders accept, and indeed support, the proposition that increased scale, when combined with robust governance, strong investment capability and appropriate oversight, has the potential to deliver stronger long-term outcomes for members. Few would argue for fragmentation for its own sake.

However, support for consolidation is not the same as support for consolidation at any cost, or consolidation pursued without sufficient regard to its secondary effects. Well-founded concerns remain that the current design of the scale test risks it being too blunt an instrument. In particular, it does not distinguish adequately between schemes that are genuinely underperforming and those smaller or mid-sized providers that, despite operating below the proposed thresholds, none the less deliver consistently high-quality, well-governed and, in some cases, market-leading outcomes for savers. Indeed, the Government’s own analysis underlines this risk. The chart contained in paragraph 70 of the Government’s 2024 report shows no clear or consistent correlation between assets under management and gross five-year performance across large parts of the master trust and group personal pension market.

The principal scale-related concern identified appears to relate not to well-run schemes operating below the threshold but to the very smallest arrangements, in particular certain single-employer schemes where governance capacity and resilience can be more limited. That matters because consolidation in a pensions market is not a neutral process. This is not a typical consumer market. Savers are largely captive, choice is constrained, switching is rare and inertia is high. In such an environment, reductions in the number of providers can weaken competitive pressure long before anything resembling a monopoly appears. The risk is not always higher charges tomorrow but slower innovation, less responsiveness and poorer outcomes over time.

That is why this amendment is important. It would ensure that consolidation serves savers and that Parliament retains a clear grip on how the market is evolving. Small distortions in competition today—barely visible in the short term—can compound into materially worse outcomes over 30 or 40 years of saving. In a system built on long horizons, early and structured scrutiny is essential.

There is also the question of innovation. Smaller and newer providers have often been the source of advances in member engagement, digital capability, decumulation options and investment design. If consolidation raises barriers to entry through disproportionate compliance costs, restrictive exit charges or exclusivity arrangements, innovation risks being squeezed out, even where headline charges appear to fall. Efficiency gains that come at the expense of progress are a poor bargain for future retirees.

The report required by this amendment would not obstruct sensible consolidation; nor would it second-guess the direction of travel. Rather, it would provide Parliament with the evidence needed to ensure that consolidation is proportionate, targeted and genuinely in the interest of savers. It would help ensure that regulatory and competition safeguards remain fit for purpose as market structures change, and that opportunities for new high-quality entrants are not inadvertently closed off.

For these reasons, I believe that this amendment strikes the right balance. It is supportive of reform, alert to risk and grounded firmly in the long-term interests of those whose retirement security depends on the decisions we take today.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I thank the noble Lord, Lord Palmer, for introducing his amendment, which would require the Government to conduct a report on the impact of consolidation in the occupational pensions sector within 12 months of the Act being passed. I am grateful to the noble Baroness, Lady Stedman-Scott, for her remarks and her acknowledgement of the benefits of consolidation and the widespread support for it.

The fact is that consolidation is already happening across the pension landscape. The number of DC pension providers has reduced from roughly 3,700 in 2012 to about 950 schemes today. On the DB side, the number of schemes is similarly down from about 6,500 in 2012 to 4,800 in 2026, with a record number of transactions currently estimated in the buyout market. Our aim is to accelerate this trend of consolidation through the DC scale measures and DP superfunds. As I have said before, scale brings numerous benefits directed at improving member outcomes, including better governance, greater efficiency, in-house expertise and access to investment in productive markets.

I am not going to respond in detail to the comments from the noble Baroness, Lady Stedman-Scott, on innovation and other things, because we have given them a decent canter in previous meetings in Committee, but it is absolutely essential that pension schemes remain competitive post-scale. We expect that schemes with scale will innovate and drive competition, especially, for example, in consolidating single-employer trusts. The market will evolve, as will the needs of members, and we expect that the schemes and the industry will be able to align with this.

It is absolutely right that the Bill will lead to major change in the occupational pensions market. Although I do not agree with this particular proposal, I absolutely agree with the noble Lord, Lord Palmer, that we must understand and monitor the impact of these reforms, because the impacts of consolidation really matter. That is why a comprehensive impact assessment was produced, analysing the potential impacts of the Bill, with plans to evaluate the impact in further detail. An updated version of the impact assessment was published as the Bill entered this House; crucially, it included further details of our ongoing monitoring and evaluation plans, including critical success factors and collaboration across departments and regulators.

We have provided the market with clarity on our approach so that changes can be put into effect, but we need to allow time to assess and evaluate the impacts following full implementation. We will assess the overall impacts over an appropriate timeframe, given that the full effects of consolidation will be after the Bill has been implemented.

As I have mentioned before, we published a pensions road map, which clearly sets out when we aim for each measure to come into force. The fact is that many of the regulations to be made under the Bill will not have been made or brought into force within a year of the Bill becoming an Act. Any review at that point could be only very partial. However, the Government are committed to strong monitoring and evaluation of this policy, especially of its impact on members. The noble Lord, Lord Palmer, is absolutely right to point to the crucial role of the Pensions Regulator and the CMA. They are best placed, in the first instance, to monitor the impacts of consolidation as part of their respective statutory functions, including an analysis of emerging trends. The Pensions Regulator, for example, will play a key role in monitoring the impact of consolidation on the trust-based DC pensions market via its value-for-money framework.

I can therefore assure the Committee that we will keep this area under review, consistent with our stated policy aims for the sector and for good member outcomes. We will also continue to monitor our working arrangements with the regulators; this includes their ongoing monitoring of the pensions industry. We will submit a memorandum to the Work and Pensions Select Committee with a preliminary analysis of how the Act has worked three to five years following Royal Assent. The committee may then decide to conduct a fuller inquiry into the Act, consistent with standard practice, as set out in the Cabinet Office’s Guide to Making Legislation.

Given the above, a separate government report risks duplicating work while putting an undue burden on all those involved. If issues are identified by regulators before the Government submit a post-legislative memorandum, and there is a need for government action, then an evidence-based response can be taken. I completely agree with the noble Lord about the importance of this and I thank him for raising this debate. However, I hope that he feels reassured and able to withdraw his amendment.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for that; it gives me some reassurance, and I am always happy to say when that happens. The aim of the amendment is to improve the Bill, not to undermine it. Some of the things that the Minister has suggested may happen are already happening. When figures are quoted quickly—such as 950 schemes of one sort and 4,826 of the other—the numbers do not seem so large, but they are pretty substantial in terms of those impacted.

We are worried about the impact of consolidation. I rather get the impression that the Minister is aware that there could be problems that need to be reviewed as we go along, and we will need time to assess what is happening. I take cognisance of the Minister’s reassurances: they take us along the same path as I am suggesting. We will have time, obviously, to review what is happening as time progresses. In the light of that, I beg to withdraw my amendment.

Amendment 184 withdrawn.

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[Baroness Altmann (Non-Afl)]

My Lords, I support and have added my name to the amendment from the noble Lord, Lord Davies. I support all his remarks, especially on the only excuse for not recognising that people need pre-1997 indexation going forward. There is a wrong that is being corrected; therefore, that wrong probably applies even more to benefits from the past. One of the reasons why I say “even more so” is because the members who have the most pre-1997 accrual are the oldest—by definition, they must be. They have much less time left to live and many of them have, sadly, already passed away. Therefore, to right this wrong by promising people money in future that they may never see, or will see almost none of, does not seem a solid way of righting a wrong.

I understand—I will go through this in more detail in the next group—that the Financial Assistance Scheme, for example, is supposedly funded by public money, while the PPF itself and employer contributions, in the form of the levy, provides the money for PPF compensation, but £2 billion from the scheme was transferred to the public purse. Thankfully, when we were trying to improve the Financial Assistance Scheme in 2005, Andrew Young recommended stopping annuity purchase, which had been happening and, unfortunately, transferred much of the money to insurers rather than putting it towards the Government to pay out over time. Nevertheless, the Financial Assistance Scheme itself represents some of the biggest losers and the ones with the most pre-1997 accrual.

Therefore, I urge the Government to recognise that the cost of the requirements in the amendment from the noble Lord, Lord Davies, are easily affordable from the PPF reserve—£14.5 billion is available. The cost estimate for this retrospective addition to the pre-1997 accruals that were not paid in terms of inflation uplifts could be around £500 million out of the £14.5 billion, depending on how the arrears are paid. I would be grateful to the Minister if she could confirm some of the Government’s estimates for what this would be; I have looked at the PPF’s estimates.

I add that the Financial Assistance Scheme does not only help those who affected by insolvency. The European court case was about insolvency, but the MFR protected employers who just wanted to walk away from their schemes before the law changed. Paying in only the MFR was hopelessly inadequate to afford the pensions. There was a brilliant campaign by the unions that went to the European court, and the Government had a great fear that they would lose that. Prior to that, we had an appeal by the workers of Allied Steel and Wire and many of the other schemes to the Pensions Ombudsman, who found in their favour and against the Government, and to the Public Accounts Select Committee. Then we had to go to the High Court, taking a case against the Government, and we won. We also went to the Court of Appeal, taking a case against the Government, and we won on behalf of those whose schemes had failed, whether the employers were insolvent or not, which means that they are all now included.

Even so, the Financial Assistance Scheme and the PPF have not recognised the pre-1997 inflation losses that have left many of these members with half their pension, or even less in some cases. I hope that the Government will look favourably on the amendment. I welcome it, and I am very grateful to the Minister for the recognition that we need to do something—there may be further consideration of that; we will come back to it in subsequent groups—to recompense for the losses of the past.

[Lord Palmer of Childs Hill (LD)]

My Lords, I wish only to say that I agree with the comments from the noble Baroness, Lady Altmann, and the lengthy exposition from the noble Lord, Lord Davies. I give them my support.

This group deals with technical amendments in the main, but they go to a question of basic fairness for pensioners whose schemes have failed. There are eight amendments in the Minister’s name, which shows that Bills can be amended, because the Government are amending their own Bill. Their amendments are no less important than those proposed on this side of the Room or those proposed by the noble Lord, Lord Davies, on the other.

The Government have accepted the principle of restoring inflation protection for pre-1997 service in the PPF and the FAS. These amendments ensure that the policy operates as intended, covering cases where the schemes technically add indexation rules that did not apply to all pre-1997 service.

The concern here is consistency and completeness. As has been said by other speakers, without these clarifications, some pensions will fall through the cracks due to historic scheme design quirks, rather than any distinction of principle. Any schemes that were and will be proposed will have quirks that are going to be found out in due course. I ask the Minister to confirm that the Government’s intention is to deliver equal treatment for those with equivalent service histories and that no group will be excluded because of technical anomalies.

[Viscount Younger of Leckie (Con)]

My Lords, I will mainly speak to and concentre on the government amendments in this group. I start by thanking the Minister for setting them out so clearly. We welcome the additional clarity that they provide.

In particular, these amendments ensure that the Financial Assistance Scheme and the PPF payments are treated consistently where a pension scheme formally required pre-1997 indexation but where that requirement did not in fact apply to the specific pre-1997 service for which financial assistance is being paid. Put simply, this is a technical clarification to ensure that indexation under the FAS reflects a member’s actual scheme entitlement, even where a scheme nominally provided for pre-1997 indexation but did not apply it to the service being compensated. We believe that this is a useful and sensible point of clarification—one that helps to ensure that the system operates as it should do.

However, I would be grateful if, when she closes, the Minister could confirm that it is now the Government’s view that these amendments are sufficient to close what may previously have been a gap in the original drafting. In particular, can she confirm that the Government are satisfied that these changes are enough to avoid confusion, to avoid the risk of legal challenge and to ensure that the Financial Assistance Scheme remains, in essence, what it should be—a safety net—rather than becoming an unintended upgrade?

I want also to make a broader process point, because these changes emerged relatively late in proceedings in the other place. I would welcome assurances from the Minister that the relevant stakeholders have been properly consulted and that the Government do not anticipate the need for further amendments on this issue in the Commons—or, indeed, as the Bill continues to go through Parliament. The Minister for Pensions, Torsten Bell, has previously stated that this change will affect around 250,000 members of the PPF, increasing their pension payments by an average of around £400 a year. The Minister cited that figure in her opening remarks, but is that still the Government’s firm and final assessment of the scale and impact of this measure? Perhaps the Minister could clarify that for us.

I also note the comments made by Sara Protheroe, the PPF’s chief customer officer, who said:

“While implementing this change will be no small task”—


that is probably an understatement—the PPF is

“fully committed to delivering this at the earliest opportunity if and when it becomes law”.

That welcome commitment raises an important practical question for the Government, does it not? What assessment has the Minister made of the extra resources that might be required? What support will be provided to the PPF to ensure that delivery can take place smoothly and without delay? Have the Government assessed whether additional resources, which could come via capacity or funding, will be required to implement this change effectively? If so, how do they intend to provide that support?

Regarding Amendment 203ZB, in the name of the noble Lord, Lord Davies, I will have more to say in subsequent groups. As the noble Lord said, there are amendments on the FAS and PPF in three different groups today. I hope that the Committee will forgive me if I delay my brief comments. I also listened carefully to the remarks from the noble Lord, Lord Palmer, and the noble Baroness, Lady Altmann. It is best that I make comments in later groups.

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[Lord Davies of Brixton (Lab)]

I offer my support for the amendment moved and the other amendments proposed by the noble Baroness, Lady Altmann. She suggested that, in some ways, her amendments are more important than mine. I agree and I will come on to why that is so in a moment. I recognise the importance of the government amendments but, in the words of my noble friend the Minister, we have to recognise the impact of the lack of past increases on those affected.

Retrospection has been mentioned. It is a complete red herring. By its nature, any form of compensation will be retrospective. We are not going to compensate people for what happens in the future. The compensation being paid all too slowly to the Post Office managers is retrospective. The money being paid to the infected blood victims is retrospective, but we still have to pay. “Retrospection” is not a relevant word in this context. We are clear, and we all agree, that these people have lost out, to use the words of my noble friend the Minister, so retrospection is a red herring.

My noble friend the Minister also mentioned the significant impact on public finances. That is true because it has been defined in that way, but we are setting the rules. We are not being subjected to rules imposed by outside interests. If the Treasury does not have the wit or ingenuity to adjust the rules in a way that would allow for these payments from the PPF, which, in reality, would have no impact whatsoever on public expenditure, those who have been affected by the lack of increases will draw their own conclusions as to what the Government really want to do. My noble friend also said that this is a compensation scheme and that it was never designed to offer full redress. Well, that is what we are debating; it is exactly what we are saying is wrong and should be rectified.

The point that I wish to emphasise in this section is the need for urgency. That is why this amendment is the important one. To be brutal, we are dealing with a declining population. It has been estimated that more than 5,000 pensioners with pre-1997 rights are dying each year. We have to take action. Even my amendment, which I proposed to bring the pension up to its current real value, does not address the issue for these people because many of them will not be here. Compensation via lump-sum payments, along the lines suggested in these amendments, are, I believe, the way in which this problem should be addressed. I strongly support these amendments.

[Lord Palmer of Childs Hill (LD)]

My Lords, I will briefly speak in support of the amendments. I emphasise that they look at how to do this by lump-sum payments, rather than by increasing pensions. That is important. It is what we in my profession used to call “creative accountancy”. It seeks to achieve a result by lump sums, more or less off the Government’s balance sheet. There has been some blending of the funds in the past. It is a way of doing it in a creative accountancy way, largely getting rid of the problem by lump-sum payments. I hope that the Government will look at this in a creative way in order to provide some justice without incurring an ongoing debt.

[Viscount Younger of Leckie (Con)]

My Lords, I will speak to Amendments 187A, 188A, 189A and 203ZA tabled by the noble Baroness, Lady Altmann. She has long been a formidable and principled advocate for pension savers and much of the Committee will be sympathetic to the underlying concerns that she raised in her remarks. In particular, her consistent focus on member protection, governance and long-term security has materially shaped the debate on pensions policy over many years—and rightly so.

However—the Committee might expect me to say this—while I share the noble Baroness’s objectives, I am not persuaded that the amendments, as drafted, strike the right balance in this instance. I listened carefully to her remarks and her constructive suggestions as to how such payments could be made in the form of lump sums, whether through several lump sums or another way. As ever, she is constructive and positive, and I accept that. These amendments would use the Pension Protection Fund and the Financial Assistance Scheme to make retrospective lump-sum payments to compensate for unpaid historical indexation. We think that that would represent a significant shift in principle.

I listened carefully, as I always do, to the remarks from the noble Lord, Lord Davies of Brixton, who called retrospection a red herring. I was not absolutely sure what he meant by that. As I see it, retrospection is just that: retrospection. I think that it describes the payments in the way that it is meant to do. However, the PPF was designed as a forward-looking safety net, not as a mechanism for reopening past outcomes or making retrospective compensation payments. The Minister, to be fair to her, made this clear in her closing remarks in previous groups.

Such an approach would raise serious concerns about cost, complexity and consistency. Although we are somewhat clearer about costs from the helpful remarks from the Minister in the previous group, I am still uncertain—as, I think, other Members of the Committee are—about what the overall costs would be and what the impact would be on the levy and on other contributors. That uncertainty makes me cautious about supporting these amendments, which risk turning a clearly defined insurance mechanism into an open-ended compensation scheme. I suspect that the Minister—without wanting to steal her thunder—may take a similar view in her response, judging from her remarks in the previous group.

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[Baroness Bowles of Berkhamsted (LD)]

I welcome the noble Lord, Lord Pitt-Watson, to the Committee. His comments have inspired me to make a very small intervention. It is true that there is a lot of index investment, and inevitably that will capture things inadvertently, but there are now many more indices that will be socially responsible or environmentally responsible, and trustees can choose to use them.

If pension trustees collectively and pension funds made a little more noise and made more approaches to the index providers, we may well get indices that are more pushy in what they do for social and environmental protection. Ultimately, most of the time they are paid to invent an index or they are doing it for their own platforms, but I see an open door there to apply pressure.

[Lord Palmer of Childs Hill (LD)]

My Lords, I welcome the contribution of the noble Lord, Lord Pitt-Watson—may there be many in the future. In coming to the Moses Room for the pensions Bill debate, I never thought that I would have to declare an interest, but according to the Companion I need to say that I am the president of the Liberal Democrat Friends of Israel. I need to put that on the record because of what has been said.

I understand where we are coming from, but the trouble is that in the modern world, investments are global. You do not necessarily have one cup being manufactured in the UK or in the countries mentioned by noble Lords. Very often, you have bits of equipment manufactured here, in Israel, in America and elsewhere. I give the F35 aircraft as an example: the parts are assembled from all parts of the world. It becomes a global thing, and it is difficult in the global economy to identify where something is manufactured or whatever.

The point at issue—it is a good point—is that trustees have to make the decision. They will take into account all the points made by the noble Lord, Lord Hendy, and my noble friend Lady Janke, but at the end of the day they have a fiduciary responsibility to their members. This is not the first time this has happened. Hertfordshire very recently had an amendment to divest from one country. It was passed on the chairman’s vote. What happened? It went back to the pensions committee of Hertfordshire County Council, which decided that its fiduciary duty was not to make political statements but to look after the investments under its control. Whether it is Myanmar, Israel, China or Russia, it is a very slippery slope when you do that. So, as people involved in pensions, we have to leave it to the trustees to use their judgment, taking into account all the factors that the noble Lord, Lord Hendy, and others mentioned. It is a fiduciary judgment. Our view is that the fiduciary duty should be robust, not restrictive, focused on long-term member outcomes, informed by real-world risks and clear enough to avoid defensive or overly narrow decision-making. I do not support this amendment.

[Baroness Janke (LD)]

I belatedly state my interest: I am a member of the LGPS. I apologise; I should have said that at the beginning of my speech, so I just put it on the record.

Youth Unemployment

Lord Palmer of Childs Hill Excerpts

Thursday 5th February 2026 Lords Chamber

[Baroness Smith of Malvern (Lab)]

My noble friend raises an interesting point. There seems to be some evidence that young people are doing less of that type of work. This is part of what Alan Milburn will look at in his review, which will consider the causes of the growing numbers of young people who are neither earning nor learning. That is of course why being able to provide placements through some of the courses that young people take and the work experience that will be part of the youth guarantee gateway will be important for those young people who have not otherwise had the opportunity to understand what it is like to be in a workplace.

[Lord Palmer of Childs Hill (LD)]

My Lords—

[The Earl of Clancarty (CB)]

My Lords—

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[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

My Lords, we have plenty of time. It is the Lib Dem Benches next, then the Cross Benches.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for that information, but can she say what assessment has been made of the impact of poor mental health on young people’s ability to gain work? What is the connection between the Department for Work and Pensions and the NHS in dealing with this problem?