Pension Schemes Bill

Viscount Trenchard Excerpts

Committee stage
Tuesday 3rd February 2026 Grand Committee

[Baroness Noakes (Con)]

My Lords, in moving Amendment 168, I shall speak also to Amendments 169 to 171 in my name; I thank my noble friend Lady Neville-Rolfe for adding her name to three of those four amendments.

Last week, I promised the Minister that we would return to the issues of new entrants, competition and innovation. I make no apology for returning to these themes, because they are fundamental to a healthy pension provision market. The Government have decided that they wish to accelerate the consolidation of pension providers into a smaller number of larger players because they believe that this will enhance the returns that pension savers will get. I think that that is arguable, but I am not going to relitigate that case today; some of us tried to make it last week, and I know that we will return to it on Report.

Instead, I want to focus on how that market can be future-proofed so that it will deliver for savers in the long term. The Government should be interested in this because I am fairly sure that they will not want to contemplate a further significant market intervention, such as the one in this Bill, a few years down the line when they find that the performance of the oligopolists they have created starts to disappoint.

I know that the value-for-money regime in the Bill might well deal with the worst performers, but getting rid of poor performers will not be good enough to make the pension provision market develop in a positive direction. For several reasons, the pension provision market is one where customer choice is not a force for significant change, so we have to look elsewhere. Healthy markets are those in which innovation can challenge existing market norms, often by identifying underserved or badly served customers and by using technology to transform cost bases. Competition within established markets is rarely enough to achieve disruption, which is why the focus has to be on new entrants. This is the story of practically every business sector. It certainly encompasses all aspects of financial services, and pension provision is no exception; for example, cloud-native pension platforms are potential current disruptors in the DC pensions space.

We have already had some conversations about new entrants in the context of the new entrant pathway and the transitional pathway. The noble Baroness, Lady Altmann, and I have tried to argue that new entrants are going to struggle to survive because of the rules of the two pathways, because of the timescales involved in getting from innovation to significant size, and because of the interaction between the financing of growth and the requirements of the scale provisions. I still live in hope that we will be able to persuade the Minister about that.

Three amendments in this group are aimed at the provisions in Clause 42, which concern default arrangements. The aim of my amendments is to ensure both that new entrants are encouraged and that competition and innovation can thrive. Clause 42 is, astonishingly, headed “Regulations restricting creation of new non-scale default arrangements”. Unsurprisingly, my Amendment 168 takes aim at this notion of restricting new non-scale default arrangements. It would replace the purpose of the regulation-making power, which is to restrict the ability of a pension scheme provider to begin operating a non-scale default arrangement, with the more neutral “in connection with”. I could have gone further—indeed, I probably should have gone further—and replaced “restricting” with “encouraging”, or at least something more positive.

My central proposition is that new pension providers should be welcomed with open arms and not be assumed to be something to be squashed. It may well be that not all new entrants are successful—the Bill has provisions that will allow them to be consolidated if they are not—but starting with the presumption that they are bad news and need to be controlled and restricted is completely wrong. Amendment 169 would add some words to Clause 42(2)(f) so that the regulations on new non-scale default arrangements can confer a function of encouraging competition on regulators. The wording is almost certainly not quite right but, for the purposes of Committee, I am trying to ensure that the regulators can be given a role in creating and developing competition in the markets in which pension providers operate.

It gets a bit complicated here. As I read it, the Pensions Regulator has no function, power or objective in relation to pension provision markets, including competition. This is in stark contrast to the FCA, which has a strategic objective to ensure that the markets it regulates function well. It also has an operational competition objective and a secondary objective to promote competitiveness and growth. It is quite possible that the FCA’s statutory objectives will, in effect, ensure that they act in a pro-competition way when exercising powers granted under the regulations in Clause 42. I hope the Minister can tell the Committee how the Government see Clause 42 of this Bill interacting with the FCA’s existing statutory framework.

It is, however, clear that TPR operates in a wholly different statutory framework, which is undesirable, as later amendments will explore, and could lead to different outcomes under this Bill in the different pension provision markets that they regulate. I ask the Minister how the Government can justify one regulator having quite clear competition and pro-market powers while the other regulator does not. Will this produce different outcomes in the exercise of the powers?

Amendment 170 would add a new subsection (2A) to Clause 42 so that the regulators

“must have regard to the desirability of encouraging innovation”

in pension provision. While the FCA’s legislation does not specifically reference innovation, as I have explained, it has several references to competition and competitiveness, which are generally interpreted to include innovation as a key driver. TPR’s legislation has nothing about innovation. I believe that, as a minimum, the regulator should have something like a statutory “have regard” duty to innovation to ensure that it keeps that in sharp focus as it carries out its regulatory functions in relation to new providers.

Lastly, Amendment 173 would require the review of non-scale default arrangements, which Clause 43 requires, to consider the extent to which non-scale default arrangements contribute to competition, which I hope is self-explanatory. I hope the Minister can also explain the timetable for the Clause 43 review, since no timing appears in the Bill, which itself is a rather extraordinary way to legislate.

The contrast between the type of regulation that this Bill is trying to create and that in the FCA and Prudential Regulation Authority more widely is stark. For some time, both the PRA and the FCA have had a special focus on fostering start-ups. They have regulatory sandboxes to allow innovative ideas to be tested outside the normal regulatory framework. Just today, they have announced new arrangements to help scale-ups to achieve their potential. This Bill feels positively prehistoric in its approach to squashing new entrants into the market and I hope that the Government will think again. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I would like to add my voice in support of Amendment 168 and the other amendments to which my noble friend Lady Noakes has spoken.

It seems quite counterproductive for legislation to discourage innovation and the introduction of new types of investment based on different strategies in order to widen the choice available to the trustees of our pension funds. Anything that seeks to restrict new entrants is by definition counter competitive and likely to lead ultimately to worse, not better, outcomes.

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I just want to stress why we are here and why all these measures have had to be taken to reach a system that works for individuals and delivers the sort of pensions that people expect to receive. What people really want is a pension that just works. Personal pensions were conceived with the idea that people would be engaged and take all the decisions. That has just failed, and this section of the Bill is about ensuring that pensions just work, without the imagination of personal pensions introduced 40 years ago.

[Viscount Trenchard (Con)]

My Lords, I want briefly to say how strongly I support Amendment 176, so eloquently proposed by my noble friend Lord Younger. The noble Lord, Lord Davies, ignores the fact that the pension reforms of the last 15 years have led to a massive increase in the number of employees saving for retirement. I entirely agree with him that we are not there yet—not by a long chalk. There is much more to do. But for him to say that we are here to discuss this Bill as a result of the failure of the last Government to manage a proper pension scheme is unfair.

The point is made by my noble friend Lady Noakes in her Amendment 177, where she seeks to omit paragraph (b) because it assumes that all retirees are in the same boat with the same needs—just a guaranteed income for the rest of their life. She is absolutely right that different pensioners need different default schemes according to their needs—depending on whether they have debt or no debt, and whether they have heirs and successors to whom they are going to leave their assets. All these things are different, and personal choice plays a big part in that.

It is also important to consider, as my noble friend mentioned, the necessity for the regulators to be aligned. The Pensions Regulator has no objective to drive competitiveness and growth, compared with the FCA, which has such an objective. This difference is quite a problem. Without alignment of objectives, trust-based and contract-based schemes could be subject to different expectations. Savers could face inconsistent retirement experiences depending on the type of scheme and competitive distortions could arise between regulatory regimes. Clarity on timing, standards and supervisory approaches is critical. I look forward very much to hearing what the Minister has to say.

[Baroness Neville-Rolfe (Con)]

My Lords, I have three very simple questions. First, why in some areas is the delegated legislation by negative resolution and in some cases by affirmative resolution? In Clause 49, regulations under subsections (1)(b) and (6)(a) are by negative resolution, as are some in Clause 50. I would just like to understand why.

Secondly, I am very aware that people will differ, as has been said. Some will want to take their money earlier than others, perhaps because they are using their pension as some sort of early day fund, or perhaps because they have a serious illness and do not expect to last long. Is that variation provided for? I would like that assurance.

Thirdly, if somebody has two pensions—perhaps one saved under auto-enrolment, which is what we are talking about, and another, perhaps because they worked in the public sector, a defined benefit scheme—how is the pension provider covered by these clauses going to allow for that difference of need?

Pension Schemes Bill

Viscount Trenchard Excerpts

Committee stage
Monday 26th January 2026 Grand Committee

Even if that was to happen, £25 billion is not large enough for an individual scheme because no scheme would sensibly invest more than 10% in infrastructure. That is only £2.5 billion in each scheme. It is just not enough. It is not going to touch the sides. They need to bulk up into bigger schemes, but the Bill prevents the LGPS in particular, and by extension the other schemes, participating in more than one pool. We know what the Government are trying to achieve, but this is not the way to deliver it.

[Viscount Trenchard (Con)]

My Lords, I will not go into too much detail. I should, because I was not here last week, declare an interest, in that I am a director of a Guernsey-based, open-ended protected cell company and a London-listed, closed-ended investment company. Neither of them begins to approach the necessary size to qualify under the scale criteria that this Bill introduces.

I agree entirely with the points made by my noble friends Lady Noakes, Lady Neville-Rolfe and Lord Fuller and the noble Baroness, Lady Altmann. Scale is nothing to do with this. I find it quite extraordinary that the Government assume that big is good and small is bad. All big funds were once small: they started with nothing and built up. There is also some evidence that, if you get really big, you become a big complacent and do not have to be quite as sharp as you do when you are making a small fund bigger and more successful and establishing its reputation.

Interfering with the fiduciary duties of pension fund trustees in this way is risky, bad, potentially dangerous and unlikely to be in the interests of the pension beneficiaries, so I strongly support all the amendments in this group. I do not think that the minimum size of a master trust should be specified in the Bill. Trustees will have their own criteria for the maximum proportion of funds that they may own in any one fund, and for the maximum percentage of their funds’ assets that may be invested in any one fund. I think these are better ways to achieve the obvious need to reduce risk, and pension fund trustees are the right people to deliver them.

[Lord Ashcombe (Con)]

My Lords, I remind the Committee of my interest as an employee of Marsh, which owns Mercer, a pension and investment advisory management company.

I did not intend to speak on this group but I do not believe that financial size is the be-all and end-all. In my world, working for a very large insurance broker, we think we have advantages in the marketplace. However, it would be remiss of me to ignore not only the smaller operations but the many small boutique entities that are experts in a very narrow and small field. It is very unlikely that they will ever become one of the large operations. Although size can be useful, the smaller experts are essential to the marketplace and, you might argue, keep the larger operations honest.

I do not believe this picture is anything different from that of the pensions industry. These amendments address the benefits of the new and smaller entities being a necessary part of the market, and should be welcomed.

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[Lord Remnant (Con)]

My Lords, I will comment briefly on the amendments in this group, tabled by several noble Lords, relating to the suitability of private markets and a potential cap on the allocation of funds to those markets. Equity and debt markets often now tend to be positively correlated; in other words, they move in the same direction. That was not normally the case in the past, when negative correlation brought better balance to a portfolio and to its risk and reward characteristics. So-called alternative investments—of which private markets form a part—that fall outside the traditional investments of stocks, bonds and cash can offer a sensible diversification.

The Mansion House Accord refers to the higher potential net returns that can arise from investment in private markets, but that comes with higher risks, less liquidity and, typically, less regulation. Given the disadvantages of the open-ended nature of the vehicle that would deliver such investments, to which I referred on an earlier group—and given that private markets, however defined, should be part only of a portfolio’s allocation to the alternatives class—I would certainly be in favour, as a matter of principle and practice, of a cap not exceeding the 10% mooted by my noble friends Lady Coffey and Lady McIntosh of Pickering. I cannot envisage any well-run, prudently managed and appropriately diversified pension fund wishing to exceed such a percentage in normal circumstances.

[Viscount Trenchard (Con)]

My Lords, briefly, it is not appropriate for legislation to tell the trustees of pension funds, in any case, that they can make investments in some types of structure but not in others. It should be entirely up to the trustees, in exercising their fiduciary duties, to determine what investments they make and the structures through which they make them to deliver a maximum level of risk that they are happy to accept.

The Government will succeed in realising their target of increasing pension fund investment in UK infrastructure by adopting fiscal and economic policies that encourage growth. We will then see a natural return to the much higher levels of UK equity investment by pension funds that used to obtain many years ago. If the Government require, nevertheless, some potential or possible mandation, it is right that there should be a cap. But, as my noble friend Lord Remnant said, it is inconceivable that any pension fund manager would be likely to invest more than 10%—I would say considerably less than that—in asset classes traditionally defined as alternative assets.

[Viscount Younger of Leckie (Con)]

My Lords, briefly, this group again underlines a central point that we have been making: mandation should not be in the Bill. Time and again, we have heard concerns about the risks of picking winners and the unintended consequences that inevitably follow. I raised these issues on the previous group, and the noble Baronesses, Lady Bowles and Lady Altmann, have today and previously put those concerns firmly on record.

However, I am grateful to noble Lords for their thoughtful efforts to limit or mitigate the impact of the mandation power. I thank my friend, the noble Baroness, Lady Altmann, supported by my noble friends Lady McIntosh of Pickering and Lady Penn in particular, for their remarks on these issues. However, our view remains unchanged and, for reasons already rehearsed at length, asset allocation mandates have no place in this legislation. There is no compelling evidence that they are either necessary or effective in increasing productive investment in the UK.

If we are serious about addressing the barriers to UK investment, we must be honest about where those barriers lie. They include governance and regulatory burdens; risk-weighting and capital requirements; liquidity constraints and scheme-specific funding; and maturity considerations. None of these challenges is addressed, let alone solved, by mandation. If, notwithstanding these concerns, the reserve power is to be retained, significantly stronger safeguards are essential: a clear cap on the proportion of assets that may be mandated; more robust reporting and evidential requirements before regulations are made; explicit conditions for access to any transition pathway relief; a strengthened savers’ interest test; and rigorous post-implementation review. The question of when and on what basis the power should be sunsetted is one that we will return to on the next group, but the fundamental point must be clear: mandation is the wrong tool and the Bill risks embedding unjustified and anti-competitive discrimination between equivalent investment vehicles, driven not by evidence or public interest but by a narrow and self-interested approach. I will address those issues in more detail in a later group but, for now, I look forward to hearing the Minister’s response to the specific amendments raised.

However—before she gets up—I wish to turn to Amendment 118 in my name. It probes the power that allows regulations made under new Section 28C to include assets of various classes under the broad heading of private assets and to permit the future inclusion of additional asset classes. I appreciate the support of the noble Baroness, Lady Altmann, on this part.

I touched on this matter in some detail in the previous groups, so I will not repeat those arguments here. However, this amendment once again draws attention to our concern about the specific types of asset that the Government have chosen to list on page 46 of the Bill. It remains an issue about which we are deeply concerned, and one on which we will continue to work closely with other noble Lords though to Report.

Pension Schemes Bill

Viscount Trenchard Excerpts

Committee stage
Monday 12th January 2026 Grand Committee

[Viscount Trenchard (Con)]

My Lords, I support this amendment, which was so well introduced by my noble friend Lord Younger and so well spoken to by the noble Baroness, Lady Bowles of Berkhamsted. The Bill is very complicated. It is not absolutely clear to me what it means. It is also, as my noble friend Lord Younger explained, a skeletal Bill without a clear purpose to improve the outcomes for savers. In particular, looking at the value-for-money part of the Bill, it is not clear how this is going to work, what the metrics will be and how they will be assessed.

I think it is right to table this amendment in order to understand the purpose of the Bill. I am not clear that the Bill is primarily intended to improve the outcomes for pensioners or to find ways to fund government initiatives to make certain investments with pension savings that the trustees and managers might not have decided to make, which may require them to compromise on what should be their complete and clear duty to exercise their fiduciary responsibilities.

Can the Minister tell the Committee how the Bill is certain to improve outcomes for pensioners beyond what they would have been without government interference in the management of these funds? The Bill interferes with the trustees’ fiduciary duties not only with the mandation powers to direct investments, which apply only to very large DC schemes—the kind to which less well-off pensioners have contributed—but with the powers to require the 93 local government pension schemes to pool their funds together. How is this going to work if, at the same time, the Government are forcing many local authorities to merge or demerge under local government reorganisation?

I look forward to hearing the Minister’s response and approach to this amendment.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank everyone for their contributions. I do not intend to go on at length.

It is a novel view, is it not, that a Bill should have a purpose? This ought to be applied to many other Bills to show what their purposes are. This Bill has a wide range of powers affecting consolidation, investment, surplus extraction, defaults and retirement outcomes, but nowhere is a clear statement of purpose listed. I do not think that is symbolic; it is very useful. I have a simple question for the Minister: what is lost by clarity? We are looking here for a piece of clarity that does not undermine the Bill in any way but sets out what people are meant to see and expect from the Bill. It would set a pathway for other Bills to set out their purposes. From these Benches, I support this amendment.

Pension Schemes Bill

Viscount Trenchard Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I too congratulate the noble Baroness, Lady White of Tufnell Park, who is not in her place, on her excellent and well-informed contribution. It is a great pleasure to follow the noble Baroness, Lady Hayman, who just made a most interesting and informative speech.

I thank the Minister for introducing the Bill today. Reforms to the structure of the pension schemes market introduced over the last 14 years have been generally beneficial. In particular, I am sure the Minister will agree that introduction of auto-enrolment into a pension scheme is the principal reason why the number of people saving into such a scheme has increased from 42% of the workforce back in 2011 to 88% today. That is a huge change and one of which the last Government can feel proud. Of course, the 8% of income invested into these schemes is not enough, but it is a start on which we can build.

While current economic conditions necessitate a review of the triple lock, it has been successful in restoring the relative position of pensioners in our society and has lifted 200,000 pensioners out of poverty. As my honourable friend Mark Garnier said at Second Reading in another place,

“the previous Government had turned their attention to two central issues: first, getting the best value for money out of our pension schemes and, secondly, pensions adequacy”.—[Official Report, Commons, 7/7/25; col. 722.]

There are some positive measures in the Bill which I welcome, but I want first to remind the House that it was a Labour Government who did enormous damage to our defined benefit pension system, which was previously a jewel in our financial services crown and the envy of the world.

Shortly after his appointment as Chancellor in 1997, Gordon Brown launched a stealth tax raid on our pensions by abolishing dividend tax credits. The removal of the dividend tax credit has been estimated to have cost occupational pension schemes over £3 billion annually. This led to increased contributions required from employers and employees to maintain pension levels. The consequences of the change were, first, reduced investment in UK companies. Following the abolition, pension funds have been less incentivised to invest in British companies, with their ownership of UK-quoted shares dropping from about 50% in 1997 to just 4% in recent years. This shift is one of the main reasons for the failure of the London Stock Exchange to value new listed companies competitively or to provide the necessary investment to support economic growth.

Secondly, the abolition of the dividend tax credit resulted in the double taxation of corporate earnings, since dividends are paid out of post-tax income whereas loan interest is deductible from corporate tax. This harmful move effectively destroyed many final salary-linked pension schemes by making them too expensive for companies to run. It has been estimated that the tax rate destroyed around £200 billion of the value of the nation’s pensions. Besides the abolition of the dividend tax credit, which was a fatal blow to DB pensions, the continuing restriction of the tax-free allowance for dividends provides an additional disincentive to investment in equities. The dividend allowance was £5,000 per annum in 2016-17 but was reduced to only £500 in 2024-25. Besides that, the income tax rate applied to dividend income has been increased by 2%. A higher rate taxpayer now pays 35.75%.

Take the example of an entrepreneur who has established a successful small business. He does not take a salary but pays himself through dividends when his company can afford it. The company has paid 20% corporation tax, and the 35.75% dividend tax means that the income that the business owner takes out of the business that he has built is now taxed at a rate of 55.75%. Leaving the entrepreneur aside, for years, dividend tax has been a second-tier concern—something that mainly affected company directors and high net-worth investors. That is no longer the case. Dividend tax is now a mainstream issue and hits ordinary people with modest portfolios who have never thought of themselves as investors in the past. If you hold shares outside an ISA, receive dividends from your own company or invest through funds and ETFs, dividend tax now matters.

There have been ongoing discussions about the potential reinstatement of the dividend tax credit to stimulate investment by pension funds into listed equities. That would encourage more domestic investment and help to restore London’s previous status as the best stock market for innovative new technology and other companies to list on. In Australia, as I am sure that the Minister is aware, dividend tax credits have been reintroduced as part of the dividend imputation system. This is designed to prevent double taxation of company profits.

Does the Minister recognise that it is a missed opportunity not to introduce a measure which would be warmly welcomed by the City and would certainly help the London Stock Exchange recover its lost position? Have the Government considered reintroducing dividend tax relief, and if not, why not? Surely this kind of radical measure is exactly what our financial services industry needs. Reintroducing tax credits on dividend payments and cutting stamp duty on UK share purchases are among the 10 recommendations that the Pensions and Lifetime Savings Association has made for using investment and fiscal incentives to encourage pension schemes to allocate more of the nation’s savings to British assets.

I welcome the measures in the Bill which seek to consolidate and build on auto-enrolment and the encouraging progress towards the pensions dashboard, which will greatly assist people’s access to their pension information and help them plan more effectively for their financial future. As the noble Baroness said, larger schemes generally perform better than smaller ones. I believe that the measures enabling the consolidation of small pots and the creation of superfunds are sensible, although regulations must ensure that protection for scheme members is not weakened.

The Association of British Insurers, the Society of Pension Professionals and other industry groups in the main support many of the measures contained in the Bill, including the value for money framework. Will the Minister introduce a requirement that it will be regularly reviewed to ensure that it operates as intended? Referring to the point on the consolidation of small pots, I suggest that the definition of small pots should be revised to £5,000 rather than £1,000, because the latter is too small.

The biggest problem with the Bill, as well explained by my noble friend Lady Stedman-Scott and others, is the proposal to empower the Government to mandate asset allocation within large multi-employer defined contribution schemes. I am not aware that the Government is a well-qualified fund manager with a spectacular track record, and it is absolutely not right to interfere with trustees’ fiduciary duties. It is all the more unacceptable because it applies only to those very large schemes and will therefore affect only pensioners of relatively modest means. This is unfair. This Government are pickpocketing the pensions of poorer people. Fund managers and the trustees who appoint them are under a legal duty to prioritise the financial well-being of savers. Their job is not to obey political whims but to invest prudently, grow pension pots and uphold the trust placed in them by millions of ordinary people. While I hold the noble Lord, Lord Wood of Anfield, in the highest regard, I am afraid I do not agree with his view on this matter. It may be that many pensioners would like to invest in UK assets, even if the returns are low, but they should take action separately to achieve that end.

The fiduciary duty is not a technicality; it is the bedrock of confidence that the entire pension system rests on. Rather than impose new regulations and take powers to do things that they are not qualified to do, I would like to see the Government free up insurers from solvency rules which prevent them owning equity in productive assets. Indeed, following the Mansion House Accord, the pension sector is already moving towards greater investment in productive assets. Seventeen of our largest workplace pension providers have already committed to invest 10% of their main default funds in private assets by 2030. Mandation is not required to achieve this trajectory. To attempt to define and enforce allocation thresholds risks concentrating activity too narrowly, crowding investment into specific asset classes and inadvertently restricting investment in broader activities.

The Government seek to take a power that is unnecessary. Their possible intervention in the market creates operational ambiguity. How schemes and pension providers will prove compliance with requirements lacks clear thresholds and enforcement logic, and creates reputational risk for pension schemes. The clause offering opt-out in cases of material financial detriment is too vague. The best solution to the problem is for the Government to drop this reserve power from the Bill entirely. If the Minister will agree today to do this, it will save us all a lot of time and trouble. I look forward to hearing what the Minister has to say about this.

Concerning local government pension schemes, I welcome the proposal to consolidate the pensions of 86 different authorities, which should contribute to enhanced performance. But, as my noble friend Lady Stedman-Scott explained, surpluses should be used to reduce the burden of contributions going forward, particularly as councils are faced to go through deeply damaging and expensive reorganisation.

Lastly, I am happy that the Bill attempts to find a solution to the problem of defined benefit surpluses. As drafted, it does not provide sufficient safeguards. In this area and others, I look forward to working with noble Lords to improve the Bill in the months ahead. I entirely agree with what my noble friend Lady Noakes had to say on this matter. I look forward especially to hearing the Minister’s winding-up speech.

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020

Viscount Trenchard Excerpts

Wednesday 21st October 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend for introducing this debate on this corrected statutory instrument, which puts right a defect in its predecessor. It is important that there should be no risk that the Pension Protection Fund might be unable to intervene and protect its rights as a creditor in the event of a co-operative and community benefit society obtaining a moratorium under the Corporate Insolvency and Governance Act.

Since we started to debate the new measures introduced by the CIGA, my noble friend Lady Altmann and others have been assiduous in arguing for the strengthening of the powers and rights of the PPF. I agree that this is highly desirable, so I welcome the Government’s action in closing this loophole. Since entering into a moratorium under the Act is not in itself an insolvency event, without these regulations the PPF would be unable to exercise its rights as a creditor of a defined benefit pension scheme. The trustees might be placed under pressure to agree to the sale of an asset pledged to the pension fund in the knowledge that the PPF would be required to step in without taking account of the wider interests of the members of the scheme or, indeed, the payers of the levy which funds the PPF.

These regulations have been introduced without consultation in the context of the Covid-19 pandemic, so it is welcome that we have the opportunity to discuss them today. While it is not directly the subject of today’s debate, I think it would be appropriate to hear a little more from the Minister on how the new provisions of CIGA are bedding down. My noble friend Lord Leigh of Hurley and others were concerned that a moratorium under the Act could not be applied for in order to rescue a company’s business, rather than the company itself. Further, I think it was unduly restrictive to exclude companies that have issued bonds in the amount of £10 million or more. As of 29 July, my noble friend Lord Callanan told your Lordships’ House that only one company had successfully entered into a moratorium. How many companies and other entities have now used the new moratorium process? I look forward to the contributions of other noble Lords and to the Minister’s reply to the debate.

Social Security (Up-rating of Benefits) Bill

Viscount Trenchard Excerpts

2nd reading
Tuesday 13th October 2020 Grand Committee

[Viscount Trenchard (Con)]

My Lords, I too offer my congratulations to the noble Lord, Lord Field of Birkenhead, on his excellent and thought-provoking maiden speech. As your Lordships know well, he has made a huge contribution to pensions and benefits matters over the years and comes highly regarded on all sides of the House.

I was particularly struck by what the noble Lord said about the importance of education and apprentices. In an age when statues wobble on their plinths, I thought I would mention to your Lordships that I have been invited to Royal Air Force College Cranwell on Friday to attend the installation ceremony of a statute of my grandfather, about which I am most honoured and proud. One hundred years ago, my grandfather devised the Halton apprentice scheme, which was approved by Winston Churchill. It started in 1920 and provided a technical education to many who joined the Royal Air Force from poorer homes. Many subsequently became air marshals or industrial leaders. Through this and other means, the Royal Air Force became an agent for social mobility throughout the interwar years and later. I am well aware of the huge importance of providing apprentice schemes, especially in technical subjects.

I also congratulate the noble Baroness, Lady Stuart of Edgbaston, on her most impressive and interesting maiden speech. She, too, has had a distinguished political career and has made a great contribution to social security issues. Those of us who supported the decision to leave the European Union are hugely encouraged that there is a highly regarded new noble Baroness and new noble Lord who can help explain to other noble Lords what the upside is for an independent Britain after Brexit and help your Lordships’ House to send out a more optimistic and outward-looking message to the public.

I thank my noble friend the Minister for introducing this very necessary Bill today. The triple lock, a clear and widely publicised manifesto commitment, promised that the state pension and certain other benefits would be uprated by a minimum of 2.5% each year, whatever happened to wages or inflation. The Bill demonstrates the Government’s action in doing what they said they would do, and I welcome it.

The coronavirus has caused untold damage to many sectors of the economy, especially the hospitality and leisure sector. The Government have done much to help those businesses stricken by the pandemic but there remains much more that they must do. In particular, the arbitrary nature of the allocation of grants under the Arts Council’s cultural recovery fund raises questions of fairness and would seem to conflict with the need to maintain a fair, competitive playing field between similar music festival businesses which have lost 100% of their income this year. I declare my interest as a director of such a business. However, that is not a subject for debate today.

I welcome the support given by the Bill to pensioners. It will give this large section of our community peace of mind as we move into winter against the background of an increasing rate of Covid-19 infection. A consequence of rising longevity, which is to be celebrated, is that more pensioners wish to work either full or part time. The more secure financial platform that this measure creates for them will encourage them to engage in economic activity after retirement, and that will assist the recovery of the economy from its current parlous state.

Do the Government intend to introduce a similar Bill next year? Could they not have taken the power to do the same thing next year in the unfortunate event that wages do not bounce back from the current levels and we do not see the creation of new jobs as people change their working patterns and new types of businesses emerge to replace those whose survival is now compromised? Of course, we all hope that wages will bounce back strongly in 2021, and I ask the Minister to tell the Grand Committee what the Government’s plans in relation to the triple lock will be in those circumstances.

Several noble Lords mentioned the problem of the very low take-up of pension benefit. Apparently more than 1 million people are entitled to this benefit but do not take it up, against the background of 2 million living in poverty or on wages lower than the living wage, according to the Joseph Rowntree Foundation. What steps are the Government taking to increase awareness of this benefit and to assist those who should be taking it up but need help in doing so?

Lastly, why have the Government not chosen the Bill as the means of correcting the anomaly that the pension payments of 510,000 pensioners have been frozen simply because they have moved to a country with which the UK does not have a reciprocal agreement requiring an uprating of benefit? It is shocking that Australia and Canada are among those countries, given our historical and kinship ties with them. This is especially regrettable against the background of our anticipated accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which should increase trade and investment involvement with those countries. I commend the activities of the End Frozen Pensions pressure group for bringing this unfortunate anomaly to your Lordships’ attention.

I look forward to the wind-up speeches and the Minister’s reply.

Pension Schemes Bill [HL]

Viscount Trenchard Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, while the Bill has generally been welcomed by the pensions industry and members of pension schemes, I worry that it may give the Pensions Regulator too much power. The new criminal offences contained in Clause 107 affect not only employers and senior associates of pension schemes. They could apply to anyone involved in such schemes: for example, trustees, banks and insurers. I therefore support Amendments 46 to 49, proposed by my noble friend Lady Noakes so eloquently and so well supported by my noble friends Lady Altmann and Lady Neville-Rolfe, which confine the new criminal offences to the employer and persons connected with the employer. It is absolutely right that the Government have acted to ensure that failures such as that of Carillion and BHS will no longer have a negative effect on members of pension schemes.

The offences created in Clause 107 are serious. They carry a potential seven years’ imprisonment and a civil penalty up to a maximum of £1 million. It is therefore right that these offences should apply as broadly as they do, but they should be limited in effect to the employer and the trustees of the pension scheme concerned. These penalties seem proportionate to the gravity of the crimes in certain cases, but both offences apply very broadly to “persons”, with no requirement for association with the pension scheme. The Government’s intention may be that the measures are there to catch wilful and reckless behaviour, but the problem is that their potential ambit is wider—much wider—than just the reckless.

As currently drafted, the criminal offences could impact ordinary pensions and business activity, and, in distressed situations, they might act as a disincentive to corporate or business rescue—for example, by encouraging directors to file for insolvency to avoid the risk of criminal liability that might arise through seeking a turnaround plan or a pension scheme compromise. So far, attempts at making the measures clearer and more targeted have not succeeded. Regulator guidance on how the new powers will be used has been promised, but this has no special status in law.

The Pensions Regulator is not the only possible prosecutor in Clause 107 offences, as the noble Lord, Lord Hutton, eloquently pointed out in Committee. My noble friend Lord Howe explained that the Secretary of State would prosecute only as a last resort, such as if the regulator ceased to exist or changed. I find it hard to envisage that in such circumstances the whole of the current pensions legislation would not be changed.

I think that it is necessary to confine those who might commit these two new offences to connected parties; otherwise, many other persons might unwittingly, or unintentionally, become exposed to prosecution. For example, the fund manager of a pension scheme, in handling investments entrusted to him by the trustees of the scheme, might make investments or realise sales that negatively affect the value of a pension fund’s assets.

I think that these amendments are very sensible and I look forward to hearing the Minister’s reply.

[The Deputy Speaker]

The noble Baroness, Lady Sherlock, has withdrawn. Have we had any success in finding the noble Lord, Lord Blencathra? Alas, no, in which case I call the Minister, the noble Earl, Lord Howe.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I understand the motives of the noble Lord, Lord Sharkey, and other noble Lords in seeking to introduce a consumer protection function to the Bill. However, I believe that it places too broad and onerous a responsibility on the single financial guidance body. If noble Lords look at the functions already included in the Bill, the first three are specific. The fourth, the strategic function, seeks to improve the financial capability of members of the public by supporting the provision of financial education to children and young people—although I think that should perhaps be widened. I believe that the strategic function enables consumers to protect themselves better than they would be able to do without it.

Proposed new subsection (3E) would define cold calling as,

“unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise”.

This is too all-encompassing. I would be delighted if cold calling by direct telephone and text were banned, but I am not sure that banning all unsolicited approaches is a good idea. If all unsolicited approaches were made illegal, including those by letter or email, how would a business market its services to new potential customers? Would such a draconian measure not result in severe restriction of choice for consumers? How would they know what products and services were available in the marketplace?

I suspect that the 2.6 million nuisance calls made every week—or 9 million a month; I am not sure what the figure referred to in the debate was—is a serious underestimation. What do the Government intend to do to protect the consumer from unsolicited telephone and text approaches?

[Baroness Kramer (LD)]

My Lords, perhaps I can be helpful on a couple of the points just raised by the noble Viscount, Lord Trenchard. These amendments ban solicitations in real time, as he will have noticed. That obviously excludes letters. It means that you can send information through the post; no one would wish to prohibit proper kinds of marketing. It is the nuisance and intrusion and the element of pressure that comes from that real-time activity that is the pernicious side of solicitation. That, essentially, is cold calling and is exactly what this is intended to deal with.

The noble Viscount suggested that financial education and capability are the way to go; indeed, many in the Government feel that that is the route to deal with cold calling, so that people know to hang up. However, the noble Viscount, Lord Brookeborough, was very clear in illustrating that, while we all get cold calls, we are merely the tip of an iceberg. For those who pursue this, the real focus is on people who are absolutely the most vulnerable. Being realistic, financial education and capability, even on the most extraordinary scale, would be very unlikely to provide adequate protection to that group of people who are now constantly being abused.

On the point made by the noble Lord, Lord Faulks, if this body is not associated with consumer protection, quite frankly I wonder what this body is for. That is the underlying premise that sits behind both the predecessor groups that are now being put into the single financial guidance and advice body. It is essential to bring this on to the face of the Bill in a very clear way, as it is the underlying motivation and characterisation of this body, and certainly it is a responsibility.

The noble Lord, Lord Faulks, also suggested that the Government do intend to move in this area. We have been hearing that for an incredibly long period of time and, with constant pressure, perhaps one day the Government will move. The problem is that we need protection now. We need protection in the near term because, as my noble friend Lord Sharkey, the noble Earl, Lord Kinnoull, and others have illustrated, this has grown in such scale and momentum that there are daily victims. Every day that we wait there are more victims. Since it is completely unnecessary to wait because the language in this Bill serves the purpose, then in a sense it would be extraordinary to say we will sit back and wait 18 months or two years or whatever else, allowing people to be abused. We can bring a stop to it now in a very simple and straightforward way.

If I understand the Government correctly, they are willing to look at certain targeted areas in which to stop cold calling but not to provide a stop to cold calling in each area where there is clear detriment, which is what the amendment allows through use of this new single body to identify and communicate that detriment. These organisations are so slick and quick they can move from one topic to another very rapidly—you close one door and another door gets opened. For example, we stopped cold calling on mortgages. That is an excellent example that tells you we can do it. It is straightforward. The dimensions are understood. The complexities are well-considered and we have plenty of track record to look back at to make sure that it is done well. We have all of that in place. However when cold calling on mortgages was banned, it shifted on to the next issue—currently, it is pensions, claims management and holiday sickness. Everybody can be absolutely sure there will be something new, provided loopholes are left, by simply attacking one issue here and one issue there. That is the beauty of this particular amendment: it gives us the power to deal with this whole industry, the same people and the same players.

I shall make one last remark and then sit down. I want particularly to congratulate the four noble Lords whose names are on this amendment, all of whom have been working so hard in this area. Three of them are here today, able to speak for themselves, but one of them cannot. The noble Baroness, Lady Altmann, as we know, has been a real mover and shaker on these issues, not just over cold calling for pensions—pensions are her area of real expertise and we have heard her on that—but we have also heard her in this House speaking around the much broader issue as well, which is why she has put her name to the amendment. She had a speaking engagement at lunchtime in the Midlands which she felt she could not cancel. She has not eaten lunch but run to the train station. She is on the train which pulls in to the station at 4.30 and had been greatly hoping there would be a Statement today that would delay this long enough that she could be here to join in with this particular section of the debate. I am sure she will speak in later parts of this Report.

The noble Baroness should not be left out when we recognise that the movers and shakers on this are from every side of the House. This is not a partisan or party-political set of amendments. This is a set of amendments by Members of this House who recognise their responsibility to protect those who are most vulnerable now, before more damage is done, and I hope the Government will see it that way.

--- Later in debate ---

[Baroness Kramer]

My Lords, I was glad to add my name to Amendment 8, moved by the noble Lord, Lord McKenzie of Luton. Amendment 17 is almost the other side of the coin.

I think that most Members of this House, including those in the Government, feel that financial inclusion is sufficiently important that it should be expressed through most of the financial bodies that we create. The noble Lord laid out very well the depth of the problem; others on the committee may speak to that in a moment.

It would be helpful to have clarification under the Bill, in part because we have genuine confusion. I am pretty sure that Ministers have all been under the impression that this matter is wrapped up and dealt with in the context of the powers, responsibilities and objectives of the FCA but, having talked to the FCA, they will now be aware that it has a very constrained role in this area and does not provide capacity to deal with the problem—for example, filling in gaps—that most people assume that it has.

Part of our problem, of course, is that we never consolidate financial legislation, so there is genuine confusion over who does what and assumptions that particular issues are taken care of when they are not. Financial inclusion is one of those that has fallen right through the holes, due to the mismatch of a whole variety of different pieces of legislation. This is an opportunity to provide for a body to consider these issues centrally to everything that it does. What it does is very relevant to that process. That is obviously not a complete answer to the problem of financial inclusion—that involves many others—but we have to make a start somewhere. It should now become a regular habit for financial inclusion to be addressed in each piece of financial legislation.

[Viscount Trenchard]

My Lords, nobody in this House would disagree with the idea that we must do as much as possible to reduce financial exclusion and promote financial inclusion, but, again, I am not sure that the amendments are practical. Normally, anything proposed by the noble Lord, Lord McKenzie, and the noble Baroness, Lady Kramer, is of the very greatest sense; I know that from experience going back many years.

However, I worry that to amend the strategic function as proposed to strengthen further the obligation on the new body may be just a bit too much of a burden, too onerous, too open-ended and not properly defined. It is very hard to define exactly what is financial inclusion and what is financial exclusion. Obviously, the former is a good thing and the latter a bad thing, but if the strategic function is already there to support improvement in financial capability, the ability of the public to manage debt and the provision of financial education to children and young people—although I think that should probably be to everybody—the amendment duplicates that, makes it too vague, too hard to define and, potentially, too onerous.

Furthermore, I also worry about enshrining in statute the terms,

“vulnerable individuals, families and communities”,

because there is nobody in your Lordships’ House who does not recognise that vulnerable individuals need more help and support than those who are not so vulnerable. Nevertheless, it is very hard to define, and to create a different obligation for an ill-defined set of individuals and communities from the general obligation to all members of the public may be confusing and make the legislation less clear and less effective. For those reasons, although I understand the noble Lords’ objectives, I cannot support their amendments.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Monday 11th September 2017 Lords Chamber

[Lord Sharkey (LD)]

My Lords, I will speak very briefly to Amendments 58, 60 and 61, tabled by my noble friend Lady Kramer and me. We agree with the Bill’s requirement in Clause 7(1) that the SFGB must monitor its own compliance with standards and that of its delivery partners. However, we feel that the results of this monitoring should be in the public domain; in fact, it would be extraordinary if they were not. Our Amendment 58 would rectify what seems to be an omission. It says simply that the SFGB must produce and place in the public domain an annual report of its assessment of its own, and its delivery partners’, compliance with the standards. We hope that this is completely uncontroversial and the Minister will feel able to accept the amendment.

Amendment 60 is equally simple and straightforward. In Clause 7, dealing with the monitoring and enforcement of standards, and in subsection (3), the Bill lists those to whom the FCA must provide a report on its review of whether the standards continue to be appropriate and how the SFGB is monitoring and enforcing those standards.

The Bill specifies that the FCA must provide its report to the SFGB and to the Secretary of State, but there is no mention of Parliament and we think there should be. Parliament will have set up the SFGB. It is a matter of transparency and accountability that Parliament should also have sight of the FCA’s report. Our amendment simply adds Parliament to the list of those to whom the FCA must provide its report.

In Clause 7(4), the Bill provides that the FCA’s report may contain recommendations to the SFGB. But that is it—the Bill does not say what should happen when the SFGB is in receipt of these recommendations. Clearly, something should happen and it should happen in public. Our Amendment 61 provides for this. It simply says that when the SFGB is in receipt of recommendations in an FCA report on its review, the SFGB must then publish a substantive response within three months to any recommendations made by the FCA.

The changes proposed, I hope, in all three amendments are completely uncontroversial. They are nothing more than an application of the principles of transparency and accountability to this new public body. We hope that the Minister will see their merits and feel able to accept them.

[Viscount Trenchard (Con)]

My Lords, I have some sympathy with the amendment moved by the noble Lord, Lord Stevenson, which reflects the concerns expressed by StepChange. I understand that the SFGB is to carry out its commissioning function by setting standards for advice, whereas I think the Bill casts the body in the role of a kind of second regulator. That is also made clear by the amendments of the noble Lord, Lord Sharkey, which deal with the same thing. I worry whether the SFGB will become too like the FCA in terms of its culture. I had understood that it would set the standards which would enable the right partners to be commissioned, but if it has too many powers to act as a regulator, I am concerned that it will become more like the FCA and less sympathetic to consumer concerns.

[Baroness Meacher (CB)]

My Lords, I have added my name to this amendment; I simply want to express my strong support for it, and to endorse the comments made by the noble Lord, Lord Stevenson. I apologise to the Committee because I was unable to be in the Chamber for the debate on the previous group of amendments where again, I had added my name. The debate was important and I hope that we will come back to it on Report.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Baroness Hollins (CB)]

I add my support, but I wish to take this a little further. Older people are not the only members of the public who rely on easy access to cash in order to manage their daily budgets. People are now being required to use chip and pin instead of a cheque to obtain cash in a bank, which is not possible in a post office. The risk of chip and pin for many vulnerable people who have limited capacity is that it opens them to exploitation. They are more at risk of scams and other kinds of financial exploitation. It is just putting some more vulnerable people at risk. This is a wonderful opportunity to address the risk that many people now being encouraged and empowered to live more independently in the community could lose some of that independence.

[Viscount Trenchard (Con)]

My Lords, I well understand the objectives of the noble Lord, Lord McKenzie, and I have the greatest respect for what he is trying to achieve and for other noble Lords who have supported these amendments. However, we need to be careful not to make the legislation too complicated. I am not quite sure that I really understand the difference. The noble Lord is trying to include the need to provide information on financial capability. He is talking about financial inclusion and financial exclusion. The Bill already includes the need to have regard to financial capability. I am not quite sure that financial capability is the best way to describe what is meant. I think it is intended to mean financial literacy or financial awareness. Financial capability implies having financial assets. I therefore find it a little confusing. We have financial capability in the Bill anyway, which I do not think is perfect, and are now talking about adding financial inclusion and financial exclusion. The noble Lord’s definition of financial exclusion in Amendment 39 includes reluctance to seek appropriate advice. I do not fully understand why, if somebody is reluctant to seek the advice or guidance that sensible people tell him he should seek, that means he should be regarded as being financially excluded.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am happy to follow the noble Viscount, Lord Trenchard. His point is understandable but it is more easily understood in the context of the ad hoc committee’s report on financial exclusion. We have had some response to that, already adverted to by the noble Baroness, Lady Coussins, and it is a great leap forward to have a Minister to whom we can now address some of these issues. But as the noble Lord, Lord McKenzie, was saying, what is missing is an overall strategy into which the differences he was trying to analyse can fit more comfortably. Absent a strategy, the Committee is perfectly entitled to try to make what it can of this important Bill—which is an important part, although not the whole, of the strategy—in order to expand the envelope as much as we can. These amendments do that. The speeches we have heard so far from colleagues support that, and I support these amendments.