Pension Schemes Bill [Lords]

Aaron Bell Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

[Nigel Mills]

I was coming on to say that there are better ways we could do this. I accept that we should encourage funds as strongly as we can to use the vast sums at their disposal to support investment in climate goals and other socially positive activities, but that should be done in part through member choice. There should be eco-friendly pension schemes and socially responsible ones, but they should allow their members to choose to opt into those schemes, and not have them as the default, if they are going to have a lower pension at the end of it.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

Does my hon. Friend agree that an unintended effect of amendment 16 might be that pension funds feel they have to divest themselves from oil giants and so on? Those are the companies we need to address climate change—we cannot get to net zero without working with them—and divestment is not the right approach.

[Nigel Mills]

I agree, and I was coming on to that argument. I am not sure that achieving net zero can be pushed down to individual pension schemes and individual investment advisers. I suspect we will have to accept that between now and 2050, there will be some businesses out there that are bad for the environment but we are still going to need their products and services. We will need some of those even after 2050. We will achieve net zero by having other businesses that are more positive for the environment, with some still being bad for it. I am not sure that we can require every individual pension scheme to be a net zero investor. Otherwise, there will be a load of things that they just cannot invest in, as they cannot achieve that strategy.

I fully agree with the sentiment and agree that the industry needs to do more. I said on Second Reading that what we do not need are posh written documents that sit there with nice-sounding promises that never get implemented. We need pension schemes and their investment managers to be much more—

--- Later in debate ---

[Ms Eagle]

I thank the Minister for that point. We had this discussion in Committee, and we are having it again on the Floor of the House. I think it is worth exploring, but within the context that I think dashboards are a good idea.

With new amendments, the Opposition are trying to get more information in the dashboard, which the Minister is trying to keep a bit simpler. The information that our amendments would introduce into dashboards includes fees, charges, costs and price—information that I would say is quite important to consumers who are thinking about where to put their money or whether to switch their money around. In what other area where services were being bought would we try to hide the price of the service that is being offered in quite this way? People argue that it will just confuse consumers to know how much money is being taken out of their funds in charges or fees. I would say that the opposite is true. The more transparency we have in the dashboard, the better.

I know that others will speak about investment philosophies and amendments 16 to 24, which are also in this group, so I will leave that to them. Overall, the Bill is a good thing. The introduction of CDCs is an extremely good thing. Despite the fact that we are having this boxing match about scams and strengthening the rules against them, increased consumer protections and increased transparency, I think that everyone on both sides of the House will note that the Pension Schemes Bill, when it becomes law, will take forward some of the work that needs to be done to try to ensure that all our constituents, whether they are of a younger generation or a slightly older one, can look forward to a framework that will guarantee them some reasonable income in retirement. I do not think that anyone on either side of the House would argue with that.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

It is a pleasure to follow the hon. Member for Wallasey (Ms Eagle). I welcome her constructive approach and her general support for the Bill. I have no formal interest to declare, but I should tell the House that my father was a consulting actuary for much of his career and went on to run a friendly society, so I was brought up on probabilities and portfolios. I did not just learn my timetables; I also learned my mortality tables.

This was my first Public Bill Committee, so I took the opportunity just to listen. It was a highly informative and very good-natured Bill Committee. I thank the Minister for that; I thank the Clerks, and I thank all Opposition Members and the Scottish National party Front Bench for the constructive comments that they made in Committee. Given that one of my predecessors in Newcastle-under-Lyme, Mr John Golding, once spoke for over 11 hours in Committee, I think the Committee should perhaps be grateful that I did not speak, and I note that this debate has to finish by 9 pm as well.

[Ms Eagle]

I knew John Golding, and he never spoke for one second longer than he needed to for a particular political purpose. I know that he spoke for that length of time because he was conducting some parliamentary manoeuvres that were extremely important for the progressive cause.

[Aaron Bell]

I thank the hon. Lady for that intervention. Yes, I think Mr Golding successfully pushed the Telecommunications Bill to the other side of the 1983 general election, but that election, as she may well remember, did not go well for her party.

This Bill makes pensions safer, better and greener. I will briefly turn to some amendments on each of those three topics. Amendments 2 to 5 are on scams. The right hon. Member for East Ham (Stephen Timms) acknowledged that those are probing amendments. I will not repeat the story that I told on Second Reading of my constituents who suffered from a pension scam—all hon. Members will have similar stories—but those scams are extremely destructive. As my hon. Friend the Member for West Bromwich West (Shaun Bailey) said, they often affect people who have no real experience of financial matters. At a vulnerable point in their lives, they can be taken advantage of, so I welcome the work that has been done, and I welcome the commitments that the Minister has made to work further in this area.

On the greener side of things, like my hon. Friend the Member for West Bromwich West, I cannot add much to the excellent speech by my hon. Friend the Member for Grantham and Stamford (Gareth Davies), who set out the reasons why the Government disagree with the amendment 16. It is an inappropriate use of the legislation. As my hon. Friend the Member for Amber Valley (Nigel Mills), on whom I intervened, said, the Government have other ways to make sure that companies meet those targets. We cannot ask pension trustees to make those fine decisions. I firmly believe that the Bill is a real step forward, but engagement, not divestment, is the way to proceed.

I turn principally to dashboards which, for me, are the most exciting part of the Bill, enabling the same sort of transparency, flexibility and, crucially, easy tracking of our pensions as we have all come to expect of our current accounts, credit cards and mortgages. We are in the information age, and we need to make that information accessible to people, particularly with all the stuff that we have heard in Committee and on Second Reading about the number of jobs and pension schemes that people have. Auto enrolment, in particular, enables people to bring their pensions into one place and perhaps to consolidate them, which is a real step forward, as it empowers people. As my hon. Friend the Member for Delyn (Rob Roberts), who cannot be here today, said in Committee, the key principle is informed choices. When we inform people about their choices, that can drive sensible decision making on, for example, consolidation.

The amendments that seem to circumscribe dashboards —for example, amendment 15, 8, 14 and others—are not necessary. More than that, they would be frustrated by the market. The Which? report that I quoted on Second Reading said:

“It is clear that even if the government was to decide that there should only be a single government-run dashboard, other private sector dashboards would continue to develop outside of the regulated market. These may rely on screen-scraping or other potentially unsecure forms of transmitting customer data.”

Alternative products are already springing up, and we cannot hold back the tide like Canute. We have to go where the customer is, as the Minister said when intervening on the hon. Member for Wallasey.

I do not think that we should try to buck the market in regulation. Instead, we should regulate effectively, and that is what the Bill does. I urge the House to reject the amendments, although I accept that they are well meaning. As many hon. Members have said, there is real agreement among us about how we should proceed, but I do not think that any of the amendments are necessary. I congratulate the Minister on the Bill, and I look forward to the safer, better and greener pensions that we all deserve.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I support new clauses 4 and 5, which I tabled with my hon. Friends. It is a pleasure to follow the hon. Member for Newcastle-under-Lyme (Aaron Bell). This has been a good-natured debate. We all have particular issues we want to raise in relation to the Bill, but everything has been presented in a compelling, interesting and mainly consensual way.

The pernicious impact of section 75 of the Pensions Act 1995 on multi-employer pension schemes, particularly plumbers’ pensions, must rate as one of the biggest pension injustices of recent years. The litany of devastating stories of honest, hard-working men and women who face crippling debts and liabilities, sometimes of hundreds of thousands of pounds, is simply heartbreaking. We heard another example today from the hon. Member for North East Fife (Wendy Chamberlain), who is not in the Chamber. I have had plumbers, including some in their 60s or even 70s, who have been forced to continue to work because of the effects of the scheme. They have been in tears describing to me what that will do to them and the impact on their life and health. They are on all sorts of support to try and get through the real concerns and anxieties about possibly losing everything, from their home and bank balance to their livelihood and sense of self. It has been a dreadful experience for anyone who has been caught up in it. These are people who have worked all their lives, earnestly and honestly paying into their pension scheme, believing that their retirement was safe, secure and something to look forward to, only for it to become a living nightmare.

I have been trying to get justice for these plumbers for some five years now. I formed the all-party parliamentary group on plumbers’ pensions in an attempt to get this addressed and resolved. Over the years, we have met successive Pensions Ministers, including the current Minister, with colleagues from all parties, we have secured debates in Westminster Hall and on the Floor of the House, and we have brought in a private Member’s Bill from my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown). We have even facilitated brainstorming sessions involving officials from the DWP, the pension providers, SNIPEF—the Scottish and Northern Ireland Plumbing Employers Federation—and some of the trustees, all without being able to address the fundamental problems associated with section 75 of the 1995 Act. Here we are, years later, with this still unresolved, and some plumbers facing the possibility of ruin for doing exactly nothing wrong.

I appreciate that the Government have addressed this responsibly, and even helpfully. I congratulate and thank them for the easements that have been introduced in the course of the past few years. But there has been no resolution to the central issue, and today there are still plumbers in all our constituencies who will be facing crippling debts and their retirement being made an absolute misery. We know that this is difficult to resolve. We know that the best brains in pensions across the country have looked at it to try to find a solution. My plea to the Minister is that we cannot give up: we cannot simply desert these people who have done absolutely nothing wrong. If we have not found the solution yet, we must keep on looking for it. We will keep on trying to ensure that we do get justice for these people, We cannot leave a certain section of our constituents in such a hellish limbo in being faced with these demanding constraints and pressures.

If I could find a couple of words that would adequately describe section 75 of the Pensions Act 1995, they would be “unintended consequences”. There is nothing wrong with section 75. It is designed to meet a few demands and requirements, and it is actually quite a sensible and elegant inclusion in the Bill, but the unintended consequences for these multi-employer pension schemes have been absolutely and utterly devastating. Since 2005, any employer who has left the scheme or prompted a trigger event is required to pay the section 75 debt. That debt is calculated on a buy-out basis that assumes that the whole scheme has been bought out by an insurance company, but more than that, the accrual value that the insurance companies would put on to it is real testament to that value. They are then required to pay part of the orphan liabilities of past employers who may have become insolvent or left the scheme before 2005 and who did not pay their own section 75 debts. This means that those who remain in the scheme are required to pick up the debt of others who have been able to leave it without that burden being placed on them. Under no circumstances can this be thought to be right.

Some Pensions Ministers—I give credit to the Department, which has looked at this very seriously—have gone the extra mile to try to have this resolved, but I want to mention one of them who was getting to the heart of it—Richard Harrington. Richard did a huge amount of work on this. He worked diligently on it, putting energy, resource and commitment into trying to find a solution. I am pretty certain that if Richard was still in government he would be closer to finding some sort of resolution. I have only had one meeting on this with the current Minister, but I detected an enthusiasm from him to try to get this resolved. I will overlook some of the comments that he made in Committee in response to the excellent speech by my hon. Friend the Member for Gordon (Richard Thomson). I hope that the Minister may take a generous view of some of our amendments, because they are actually very modest amendments that would at least start to improve the situation of those who are facing the biggest liabilities. There are only about 30 of them.