Pension Schemes Bill [ Lords ] (First sitting)

Angela Eagle Excerpts

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is a great pleasure to serve under your chairmanship, Mr Stringer. I thank colleagues for attending today’s debate. I hope to proceed with cross-party agreement on those matters that are relatively uncontested, so that we can make progress and then focus on and debate properly those matters that are genuinely contested.

I stand to introduce clause 1 and the associated clauses up to clause 25 and to speak in support of the new form of occupational pension that we are introducing, commonly called collective defined contributions. In CDC schemes, members and employers make fixed-rate contributions to the pension fund. At retirement, members receive their regular pension income paid out of the fund each year until death. The rate or amount of the pension is not guaranteed and will be adjusted annually depending on how much money is in the fund and the projected cost of providing benefits under the scheme. CDC schemes offer the security of an income in retirement, which we know many people value, without individuals having to purchase an annuity on retirement. However, CDC schemes do not require the employer to make additional financial contributions to the scheme if the scheme’s financial position weakens. CDCs have been introduced under a cross-party approach, with great support from all parts of the House. The pioneers of the scheme are the Communication Workers Union and the Royal Mail, which have proposed a way forward.

The Bill allows us to extend CDC provision to master trusts or non-connected multiple employers through further secondary legislation when appropriate, and we look forward to working with such employers in the industry on how such provision should operate and be regulated. It is a brave man who cites Tony Blair in aid of his proposals, but I genuinely believe that this is a third way in terms of pensions, as an alternative to defined-benefit and defined-contribution schemes. It is unquestionably something that huge numbers of people have sought to bring forward, so that we can address things in the main.

[Ms Angela Eagle (Wallasey) (Lab)]

The Minister talks about the third way. Will he also take a little time in his opening remarks to recognise that pensions policy is best if it is done cross-party? We are dealing with changes to the Pensions Act 2004, which was cross-party legislation that introduced opting in. Changes and tweaks to the system are far more likely to last across different Governments and across time if we have some form of cross-party consensus. It is not only a third way. The only way we will end up with a workable pensions scheme is by building in sustainability across Governments and across time. As a former Pensions Minister who put the auto-enrolment regulations on to the statute book prior to our loss of office in 2010, I am committed to cross-party working and I hope that the Minister is, too.

[The Chair]

This is an ideal opportunity to say that I do not think that members of the Committee will have any difficulty in catching my eye, but interventions should be brief and to the point.

--- Later in debate ---

[Guy Opperman]

I echo the support for the Clerks from this side of the Committee. We had a very helpful session yesterday, and they have been very helpful throughout. I will address the four or five points that have been raised.

On communications, I utterly endorse the point made by the Chair of the Select Committee. He will, I hope, appreciate that over the last three years, one of the major things that I have tried to drive forward in the Department is communications across the level. We are using simpler statements, by taking the 10 to 43-page pension statements that very few people read—putting them in a kitchen drawer and not necessarily taking them on board—and providing a simpler two-page statement and a written version. Our pensions dashboards create an amenable version of the online version, with great, ongoing communication.

On CDCs, I totally endorse the points that the right hon. Gentleman made: it is vital that we learn the lessons from the Netherlands, and that we ensure good communication. The possibility of fluctuations in benefits will be made clear and transparent in key member communications at points throughout their pension journey, including by providing details of fluctuation risks at the point of joining, by emphasising benefit changes in both active and deferred members’ annual benefit statements, and by making clear in retirement information packs that benefits can change during retirement.

Quite simply, that point was not made clear to members in the Dutch example. Some may not have taken it on board at the start, while others perhaps did not quite understand the situation as well as they would have had it been explained to them. We hope that we have learned that particular lesson and have very much taken that on board. I know that the two organisations that are looking at CDCs are very conscious of that and, to their great credit, have held multiple roadshows around the country, talking about this and engaging with people long before the legislation was introduced.

The reality of the situation for the CWU and Royal Mail was that their endorsement of the approach would not have been possible without member engagement from the very start. They have probably engaged more with a pension scheme than anyone has ever done before, prior even to the drafting of the legislation. They very much wanted that engagement to take place.

[Ms Eagle]

Clearly, the changes that the Bill would make allow for pioneering in the CDCs that Royal Mail and the CWU have introduced to be put into effect. Will the Minister say a little about how other organisations —smaller employers, perhaps—might try to get into the CDC space? Clearly, Royal Mail and the CWU are an unusual combination, both in the size of the industry and their buy-ins—very few employers are of the same size as the CWU, which represents its members, and Royal Mail, which wishes to offer this particular CDC.

[Guy Opperman]

I agree that large employers, such as Royal Mail, which employ nearly one out of every 200 full-time working employees in this country, will look at that and say it is a potential way forward.

Before I come to the hon. Lady’s point, I want to address DB briefly and make it clear that CDC is intended to offer a further pension-saving option for employers and their workers, should they wish to make use of it: it is for the employers and the workers to decide the type of benefit they wish to have via their occupational pension scheme. That has always been the right of the employer fundamentally, but also engaging with the employee. We specifically amended the subsisting rights provisions via clause 24 to prevent existing DB benefits in the scheme from being converted into CDC benefits. I hope that I have addressed in full the DB issue, which was also raised separately by the right hon. Member for East Ham.

--- Later in debate ---

[Guy Opperman]

I am now straying into industrial relations and how best to manage a company to take someone’s employees with them in a complex negotiation about future pension rights. All I can say is that I have worked and sat down regularly with the leading individuals in the Communication Workers Union and the individuals who have been running Royal Mail—that has changed slightly as it has gone along. I have seen the way in which they have engaged with their workforce and had a proper conversation up and down the country in a series of roadshows. With a large unionised workforce in the modern era, that is the right way in any event. I would certainly endorse that approach. It is clear that the company and the employees have been able to work together—working with the union, working with representatives—and it seems to me that, while I would not say the phrase is “gold standard”, it is an advisable way to proceed and it is good company relations to have a proper dialogue and engagement with individual employees.

The short answer I gave to the Chair of the Select Committee was yes, but the longer answer is that there is a whole supervisory regime, which we will discuss later, under clause 27 and thereafter, which must be submitted to the regulator in order to qualify to be accepted as a CDC. The practical reality of that is that I cannot see a way in which the regulator endorses and allows a company to go down the route of a CDC without all aspects of that communication being considered. Clearly, there are secondary regulations that follow. It is not in the specifics of the Bill, as I understand it. I make the point, when I am answering questions, that I am doing this utterly blind, so it has to be from my memory because I cannot take any notes from anybody. That is the fun of a covid Committee, as the right hon. Member for East Ham will know from chairing a Select Committee.

[Ms Eagle]

Semaphore? [Laughter.]

[Guy Opperman]

The practical reality is that there is a supervisory regime that must be embraced as part of the application to the regulator to become a CDC. I believe that that will be comprehensively addressed and it is my intention that that should be so in the relationships that we have.

The right hon. Member for East Ham asked about clause 47 in ballpark terms and the speed and expedition. I take the point that we are not debating those matters but yes, I accept that we need to press ahead with that. I wish to do so. I have been working on the Bill for the best part of two and a half years. It has not been for lack of trying. We started it prior to the general election and had to pause and start again afterwards, so it is not for the lack of trying to progress it. Both Royal Mail and the CWU are very keen to expedite it.

--- Later in debate ---

[Guy Opperman]

If clause 27(3) provides specifically for fairness, it may be open to interpretation and mean different things to different people. The legal advice we have received is that it would be inappropriate to include that in the Bill, and that it is far better to address the matter in detailed regulation rather than through a single word in the confines of the Bill.

[Ms Eagle]

The Minister is trying to achieve fairness across cohorts, and different people will have different interpretations of that. Such schemes are reliant on the general performance of the stock market, investment and what is going on in the world economy. Does he agree that fairness is subject to all those swings and roundabouts?

Will the Minister give the Committee some idea of what he would regard as fair, given that annuities were grossly unfair for those who happened to retire at a time when the market was taking a dip? What would he regard as “fairness” in the requirement that he will put in regulations?

[Guy Opperman]

Having been a 20-year lawyer, whose last client was a very famous Mr Ed Balls—I had to represent him when he was Secretary of State for Children, Schools and Families, five weeks before the 2010 general election—I am loth to start defining fairness, as a Government Minister, specifically because of the problem that has been identified.

I can say that we are attempting to ensure that members are treated fairly, and that has been part of the central thrust of our work on CDCs from the outset. We have learned from the problems experienced by the Dutch model, which allows schemes to make different benefit adjustments to different groups of members. That transferred contributions from savers to pensioners. The UK system will not work in that way. We intend that regulations under clause 18 will require CDC schemes rules to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised. That goes to the whole proposal under the supervisory regime and the submission.

Further—we will come to the word “bespoke” later in our consideration of the Bill—this is an opportunity for individual schemes. The examples have been given of a small care home scheme coming together, and of the vast might of Royal Mail. Clearly, those are very different organisations. I hope that the regulator will look at them in slightly different ways with an overarching code of principles that allows it to permit such a scheme to go ahead. I will resist the hon. Lady’s kind invitation to provide the exact definition that, we submit, would be one of the problems with clause 27(3).

[Ms Eagle]

We are here to tease out what the Government mean in the Bill, ahead of the unamendable regulations that have not yet been written. I hope that the Minister will indulge our temerity in using the Bill Committee to ask some relevant questions.

What the Minister said earlier about the Dutch schemes is correct. By reducing the available pensions, some choices were made between existing pensioners and those who were saving. His tone suggested that he judged that to be unfair. He states that he wants to achieve fairness between cohorts in CDCs, but how will that be done in reality?

[Guy Opperman]

I am invited to give a view on the future consultations on the points that the hon. Lady raises. The term “fairness” can be open to interpretation and can mean different things to different people. We envisage that regulations will clearly set out the principles and processes that schemes should follow to ensure that all types of members in CDC schemes are treated the same, where appropriate. Setting the requirement in regulations will give us the opportunity to consult on the approach that is to be taken. I respectfully suggest that rather than defining that in the Bill, the appropriate way forward is to consult, and to use all the opportunities that consultation entails for submissions on what that should look like, so that detailed regulations can then be taken forward.

[Ms Eagle]

rose—

[Guy Opperman]

I will give way once more, but I am not sure I can improve on the answer I have already given.

[Ms Eagle]

I thank the Minister for the further explanation, but is he saying that he does not yet know how this will work, because the regulations have not been written? Is he stating that he wants to achieve a certain principle without yet knowing how it will be achieved?

[Guy Opperman]

No; I can merely repeat the answer I have just given, which is that the regulations under clause 18 will require schemes to contain provisions so that there is no difference in treatment between different cohorts or age groups of scheme members when calculating and adjusting benefits. If the scheme design does not do that, it will not be authorised.

I will try to expand on that and give a better answer. There is a two-phase process. In the first phase, a company must come forward to the regulator and seek permission to go down the CDC route; that goes back to the way in which the company and the employees work. A separate set of regulations will then be the framework on which that is judged. I suggest that this is specific to individual companies, because fairness will be different for different organisations and they will be treated in different ways. There is a supervisory regime that must be gone through, and there will be a consultation on regulations regarding how it will be administered. For the present purposes, that is the best I can give to the hon. Lady.

I will now address amendment 25, which is about the actions of the regulator in relation to diversity considerations, taking into account the recruitment of the trustee board. This issue was raised in the other place as a point of debate. The Pensions Regulator is part of an ongoing discussion, and in February this year it launched an assessment of the appropriate way forward, looking at trustee board diversity across all schemes. It plans to set up an industry working group to bring together the wealth of available material and experience to help pension schemes to improve the diversity of scheme boards. I suggest it would be premature to pre-empt the outcome of the regulator’s work in this area. It has indicated to me, unofficially, that it will respond by Christmas. It is certainly the case that this Government has brought forward, on a cross-party supported basis, environmental, social and governance regulations in respect of investment. We would certainly hope that organisations that treat their investments with due account to social and governance matters would also take an appropriate way forward in that respect.

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right. She and I took part in a debate on a similar issue around 10 years ago, on the Welfare Reform Bill. She is right on this point, and that is an argument that I want to come to in a moment.

I hope the approach that I am advocating will be applied to other pension trustee boards in the UK in due course, because according to a report on diversity published in March by the Pensions and Lifetime Savings Association, which we used to call the National Association of Pension Funds, 83% of pension scheme trustees are male; 50% of chairs of trustee boards are over 60; a third of all trustees are over 60, while only 2.5% are under 30; 25% of pension schemes have trustee boards that are entirely male; and only 5% of schemes have a majority of female trustees. This is a particularly stark picture if we look at the make-up of pension scheme trustee boards at the moment.

As the Pensions and Lifetime Savings Association comments:

“It seems clear that occupational pension scheme trustee boards have generally not implemented robust diversity policies as effectively as FTSE 100 boards”.

[Ms Eagle]

I thank my right hon. Friend for making points that are difficult to argue against. What effect does he believe the age of pension fund trustees is likely to have on the intergenerational fairness points that I pressed the Minister on in our previous discussion?

[Stephen Timms]

My hon. Friend makes an important and interesting point. If we are to be confident that these new scheme trustees will make decisions that are fair to both the working members of the schemes and to pensioners, it is important that the voices of working age members should be taken fully into account in the trustee board’s decisions. She makes a good argument about why diversity, specifically in respect of age, is important in this context.

It is not as though there is no evidence that diverse trustee boards do a better job. My hon. Friend the Member for Westminster North has just reminded the Committee that there is a substantial, growing body of evidence that diverse company boards make more effective decisions than homogeneous boards. We have talked about age, but we should not forget that the gender pensions gap, which is nearly 40%, is almost twice the size of the gender pay gap. The issues here are stark.

The Pensions Regulator commented on diversity in trustee boards for the first time last year:

“Our view is that pension boards benefit from having access to a range of diverse skills, points of view and expertise as it helps to mitigate against the risk of significant knowledge gaps or the board becoming over-reliant on a particular trustee or adviser. It also supports robust discussion and effective decision making.”

Amendment 25 would require those who put boards together to report to the Pensions Regulator on steps to ensure diversity considerations are taken into account in the recruitment of the trustee board, with regard to age, gender and ethnicity. I know that the Pensions Regulator has set up an industry working group to consider this issue, as part of the consultation that the Minister referred to, and to raise the profile of it. However, to be effective, that group needs data, and this amendment would help to provide it. I think the result of the amendment would be not only greater fairness but better trustee decisions. I commend the amendment to the Committee.

[Richard Thomson (Gordon) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Stringer.

I will confine my brief remarks to amendments 6 and 25. I listened carefully and with interest to what the Minister said about the rationale for trying to withdraw clause 27 from the Bill. I agree that with him that in trying to come up with a legal definition of fairness, it will always be nebulous. There are clear difficulties around that, which is why I do not think the initial intention behind the clause was to provide absolute legal clarity.

I was reassured to a large extent by what the Minister said about the steps that would be taken to set up CDC schemes—by definition, schemes that are obviously unfair will not pass approval. The difficulty I have with that argument is that all that is being asked in clause 27 is that there is a requirement for trustees to make an assessment and nothing further. It is useful to have a process of self-challenge and continuous improvement, looking at aspects of the schemes that are directly under their control and that they can directly influence and alter. It is good to always have that consideration of whether the scheme is operating as fairly as possible for all present and future members and those taking benefits from it. My question to the Minister is, very simply, where is the harm? Even after taking on board all that he says, I still do not see the harm that lies in the Bill as it stands.

Moving on to amendment 25, I hear exactly what the Minister says about the requirement that already exists on trustees to be fit and proper people. My observation is that there are many potentially very fit and proper people who do not currently find themselves on boards, advisory committees or any of the governance structures around pensions, and who could nevertheless make a very good contribution to the running of those schemes.

Speaking from personal experience, prior to being elected as the Member for Gordon, I was a councillor in Aberdeenshire. Through that role, I was one of the Convention of Scottish Local Authorities nominees to the Scottish local government pension scheme advisory board, whose representation was equally split between employers’ representatives, of which I was one, and trade union representatives. The trade union representatives were all extraordinarily capable and represented quite accurately the diversity of the scheme members whose interests they were there to represent. In all honesty, the employers’ representatives perhaps did not represent that quite so well. I played my own part in skewing that representation.

The requirement to report back on the membership characteristics is a very useful tool in trying to understand whether all that is reasonable is being done to ensure that trustees and those in positions of governance on pension schemes are as representative as possible not just of the membership, but of the interests of the membership, and that we are giving as many people as possible the opportunity to fully skill up, participate and play the role that they can do. As things stand, we are missing out on the talents of many fit and proper people. Again, I do not see the difficulty in simply recording and reporting that information as part of the cycle of continuous improvement and self-reflection on whether we are achieving all that we seek to do.

[Ms Eagle]

I want to support, or enhance, the comments that have just been made by Opposition Members about the two issues that we are discussing in this group of amendments: amendment 25 on diversity, which was tabled my right hon. Friend the Member for East Ham, and the issue of intergenerational fairness and how it can be properly guaranteed in CDC schemes.

I hope the Minister will reaffirm on the record, in no uncertain terms, his agreement with the principles behind the amendment on intergenerational fairness that was made in the other place, even if he has issues with how one defines fairness in law. I have to say that, in social justice terms, we would have made very little progress in the whole of our society if we quibbled about the meaning of fairness in law. Just because it is difficult to define, it does not mean that we should not assert it or seek to bring it about.

The Minister’s response is a rather a technical answer to the principle that has been asserted by the change that their lordships made to this part of the Bill. His responses to my questions earlier did not fill me with confidence that he knew how the principle would be brought about if the amendment that their lordships put in the Bill was taken out. He simply seemed to say that it was a good thing to assert, and that it would be brought about by regulations that have not yet been written. He could not really give us any thoughts about how it might be guaranteed in the future, although he is asking us to take out an amendment that has actually been made to the Bill. He is asking us to exchange something that is really quite good and not damaging for something that is very nebulous and does not exist yet—it might do at some point in the future—in regulations that will be unamendable. We will have to take them or leave them when they come to the House, so I am slightly worried about that.

As is his wont, my right hon. Friend the Member for East Ham has zeroed in on the issue of diversity on boards and given us some shocking figures about what is happening on pension trustee boards. That ought to raise many alarm bells about potential group-think and about how the decisions made by trustee boards are not representing the interests of the many people who have pension savings in a way that we would find modern or appropriate.

Amendment 25 is a modest amendment. My right hon. Friend is asking only for the publication of information. He is not doing what I might do, which would be much more radical and would probably include all sorts of things, such as quotas and positive action, in order to make a real difference quite quickly. It is a modest amendment. If the Minister cannot accept that it is and does not have the good grace to support it, I will be rather disappointed.

[Guy Opperman]

I will try to address some of the issues raised. In respect of the approach of the regulator, the regulations for CDC schemes will require schemes to provide information to enable members to understand the unique risk-sharing features of CDC schemes. That will be underpinned by clause 15, which we have already debated. It requires the regulator to be satisfied that a CDC scheme has adequate systems and processes for communicating with members and others. Regulations will also require that scheme information is made available more widely to other interested parties, including employers, on a publicly available website. The practical reality is that we have learned from the Dutch model, which some argue had intergenerational fairness issues, and are producing a considerably fairer approach.

--- Later in debate ---

When the Government respond to the report, I hope that the Pensions Regulator will accept that recommendation, and we must all hope that the entirely sensible changes being made by the Bill do the important job that history makes clear is needed.

[Ms Eagle]

I support my right hon. Friend the Member for East Ham, who has crystallised some of the dangers in private sector schemes. I do not want to add to the excoriating verdict of his predecessor Committee in the two cases mentioned, except to say that this does have an effect on the willingness of individuals to save into pension schemes. Although people might not know the detail of this behaviour and the losses it has caused to retirement income, some out there in the ether will use the lack of effective protection that has resulted from the failure both of regulation and in pursuing effectively those who engage in this kind of larceny. Individuals who may otherwise be pension savers choose not to save into a pension and regard it as a bit of a mug’s game because their money is not properly protected. They know that there are scams and that a range of people out there—from the great killer sharks who loot pension schemes, to those who do dodgy things at the margins—are causing people who were saving into pension schemes, in good faith, to lose benefits in retirement.

How will the Minister drive the Pensions Regulator to be far more proactive and effective? Later, we will come to the Bill’s measures on scamming and the even worse end of bad behaviour, but that is for a future part of the Bill. I hope the Minister can reassure us that he will insist that the regulator transforms its passive attitude into a much more aggressive one that not only actively deters but drives this appalling behaviour out of the whole of the pension scene.

[Guy Opperman]

I utterly endorse the speech of the right hon. Member for East Ham. I did not disagree with a single word of it. I could wax lyrical about why the Government, with the support of the Work and Pensions Committee and the special joint inquiry it set up with the Business, Innovation and Skills Committee to address BHS, have introduced this overdue legislation, which is linked to a much-enhanced regulator with a strong direction from Select Committees and the Government that there should be a much more robust approach. The new chief executive of the Pensions Regulator was appointed by the Secretary of State and me with a specific exhortation that they take a different approach.

The actions of Philip Green at BHS and the Carillion case, with which the right hon. Gentleman is extraordinarily familiar, scarred all Members of Parliament. No matter what our political party, we have all seen the impact that those cases have had on individual members of our communities. I take the point that the hon. Member for Wallasey made: these scandals involving organisations and companies that have not been sufficiently regulated, and for which the regulator has not, to be blunt, had the power, to intervene and take a different approach, have affected people’s perceptions of the sanctity and safety of their pension.

We have gone to great effort to ensure, on a cross-party basis and taking on board the various Select Committee recommendations, that we give the regulator enhanced powers. We will come to the significant reality of the criminal sanctions that clause 107 outlines. Without a shadow of a doubt, we are in the business of ensuring that callous crooks who put a pension scheme at risk are not able to function as they did in the past. I most definitely endorse every comment that was made.

Question put and agreed to.

Clause 103 accordingly ordered to stand part of the Bill.

Clauses 104 to 106 ordered to stand part of the Bill.

Clause 107

Sanctions for avoidance of employer debt etc

Pension Schemes Bill [ Lords ] (Second sitting)

Angela Eagle Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Rob Roberts]

That may be, but as I mentioned earlier, it muddies the waters. If people want to access that information, there is a slew of providers out there. If they want the one that provides the most ESG information, they will gravitate towards it. We do not need to override the general public’s ability to make an informed choice by legislating to make it happen. As I mentioned earlier, “informed choices” are the big words. The ability to go that way should be entirely left in the hands of the consumer.

As I said, the Minister mentioned everything that I wanted to on amendments 4 and 5, but I reiterate that I am very happy to see the pensions dashboard finally taking a few steps closer towards completion. Hopefully the clause will stand part of the Bill.

[Ms Angela Eagle (Wallasey) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Mr Robertson, after the dynamic chairing from your colleague this morning; we made a lot of progress. I will make some observations about dashboards, and talk particularly about Government amendment 7, which, as colleagues know, removes the Drake amendment that was added in the other place. However, I will first comment on how potentially beneficial a good working pensions dashboard coming into existence would be for many millions of pensioners looking to plan for their retirement.

Many of us who have been involved in pensions policy making—in Opposition, in Government or both—know that the holy grails in this area are: first, to get people to think about pension saving in the first place; secondly, to get people, especially when they are younger, to think that they may ever reach retirement age, and to start planning for what their income might be when they get there; and thirdly, having established from a young age that interest in considering what their income will be when they are older and in setting money aside to ensure that they have a secure income, to ask them to navigate the current pensions landscape in the UK, which is asking an awful lot of most of our citizens, because it is extremely complicated and changes over time. We have the confluence of many different sorts of pension availability, from the much more effective DB schemes, which used to be more common but in which 10 million people still have savings, it has to be pointed out, to the evolving and developing DC and individual savings schemes.

--- Later in debate ---

[Guy Opperman]

Steve Webb has buyer’s remorse about many things.

[Ms Eagle]

It was inevitable.

[Guy Opperman]

I am not going to comment on his capabilities. The bottom line is that that was a persistent level of policy making made by successive Governments from 1993 onwards and utterly continued by the Labour Government, who, to the best of my recollection, proceeded to raise the state pension age to 65 by 2020 in the 2007 or 2008 Act. It was then clearly increased in the 2011 Act. One can argue about why that was done. Perhaps it was a consequence of the great former Prime Minister Gordon Brown’s efforts at manhandling the economy, or perhaps there were other reasons for taking that approach. However, I make the point that I have consistently defended individual Ministers and the Department for their consistent approach to addressing something that all other western countries have done in respect of state pensions. They have all approached it in broadly the same way.

We want the dashboard, and I accept that there is a desire to have many other things on it. We want it to be a simple interface that is accessible to all and that is not overlaid by many different things. With user testing over time, it is possible that more information will be outlined, but the comparable example I give—namely, simpler statements—is appropriate and right.

--- Later in debate ---

[Seema Malhotra]

I am grateful for the opportunity to speak to amendments 11, 12 and 13, all of which make the same point: that the total cost of charges incurred for the administration of the scheme should be displayed on the dashboard. We believe that this issue is important because the creation of a pensions dashboard creates a real opportunity to introduce much-needed transparency on pensions costs and charges.

Pensions charges can be very difficult to understand or to compare and the lack of transparency can lead to people paying excessive charges without realising it, eroding their hard-earned savings. Improving disclosure in this way is essential for consumers, who need to understand the risks attached to their investments. In a study by Which? carried out in 2019, 300 people were asked for their thoughts on a pensions dashboard. Some 77% said they would be likely to use one. State pension entitlement was the information that 74% of people most wanted to be included. That was followed by projections of total retirement income, 62%; current pension value, 55%; and charges, 54%. Clearly the inclusion of that type of information would be popular with dashboard users and would help people to use their pensions freedoms to protect their savings rather than fall victim to disproportionate charges.

Information about costs and charges is vital if consumers are to use dashboards to understand which pensions they could use to make additional contributions, whether any of their pensions have excessive charges and when making decisions about how to access their pensions using pensions freedoms. Research by PensionBee found that more than 70% of non-advised drawdown customers accessing their pensions paid more than 0.75% in charges, costing them £40 million to £50 million a year extra – more than £175 million since pensions freedoms were introduced. The long-term impact of high costs and charges for income drawdown can be significant and result in people being able to take less income out of their pensions or running out of money more quickly.

Transparency of charges is a particular concern because the DWP appears to have agreed with the arguments of some in the industry that putting costs and charges on the simpler annual statement would confuse people. The result is that instead of being provided with specific information about how they are paid, people would be signposted towards what could be pages and pages of information on charges. Which? has noted that an approach that believes that consumers are best served by not knowing how much they pay for pension scheme services is irreconcilable with the objectives of the pensions freedoms and the expectations placed on consumers in retirement.

It clearly may not be in the interests of commercial providers to make that information transparent, so I end with a question to the Minister. If the Government do not intend to support Labour’s amendment, which at this stage we plan to press to a vote, how will they ensure that people have the information that they need to avoid excessive charges and avoid making decisions that they may come to regret because they did not know about those charges in the first place?

[Ms Eagle]

I want to briefly add some emphasis to the points made by my hon. Friend the Member for Feltham and Heston from the Front Bench. This is really a battle between those who like to add horrendously high charges, in very small print, and transparency so that people can make decisions in possession of the right kind of information. Surely enabling that transparency is at the heart of what the pensions dashboard is all about. Financial services, particularly things like pensions, have always featured a uniquely complex, difficult and opaque pricing system, which can often eat away significantly at the money that people who are investing can expect to live on when they retire.

Thankfully, trail commission has now been abolished, at least to my knowledge, but it has been replaced with other opaque pricing systems that take people’s money away. The hon. Member for Delyn was right to say that pots that are very small are being eaten away by charges. Most people who put money into pots would have had no real knowledge or understanding of the price of keeping that money there, because it would not have been up front in the information; it would have been hidden away in hundreds or perhaps thousands of pages of tiny print.

The amendments, which I fully support, are all about getting price and cost transparency on the dashboard, which was clearly created to include such information. I will not understand it at all if the Minister has reasons for not doing so.

[Rob Roberts]

I rise to speak briefly to amendments 11, 12 and 13. I did not mention it earlier, but the general problem with small pots being eroded away by charges, especially in the auto-enrolment phase, is that many of them have set charges in pounds rather than percentage-based charges. If someone has 10 pots of £1,000 and they all have the same percentage charging structure, the charges will be exactly the same as one scheme with £10,000 in it; what causes the problem is that some schemes have a set charge in pounds per year.

Unfortunately, an awful lot of the time we focus too much on the cost of plans and the impact of charges: the principal-based tail is wagging the outcome-based dog. It is the outcome that is most important, because people cannot spend the principal; they spend the outcome. That is easily illustrated: if scheme A has a 0.5% charge and a return of 5% a year, and scheme B has a 1% charge and a return of 7% a year, scheme B is a better scheme despite having a higher charge. It is not the charging that is important.

The hon. Member for Wallasey mentioned people who will be put off from investing in schemes that are looted and abused in such ways. She was 100% correct; there were many nods on both sides of the Committee Room at the idea that that would put people off. Focusing too much on charges also potentially puts people off. It is worrying and scary, and potentially angers the consumer, who would not understand the figure for the total charges if it is expressed in a significant way. If we say, “Over the lifetime of your plan, you will incur £30,000-worth of charges,” without some kind of explanation or context showing what that relates to, people will see that as excessive and ridiculous.

--- Later in debate ---

There is a possibility of delay, because at the same stage we have the costs and charges review, and my Department and the Work and Pensions Committee are looking at small pots. It would seem entirely appropriate to bring those three pieces of work together to try to bring some standardisation and harmonisation to the process—I accept that successive Governments may not have had a brilliant record on this—through which simpler statements and/or dashboards will be much easier to comprehend. I advise the Committee that that process is ongoing.

[Ms Eagle]

I thank the Minister for his full explanation of some of the work that is ongoing, and I appreciate that it is a difficult issue. First, will he give the Committee some idea of the timescale for when we could get that important information into the dashboards? Could he be a bit more specific? Secondly, does he not accept that if standardisation is mandated by the Government, people will adjust and change in order to standardise and be in competition with other providers? It will bring some coherence to what is at the moment an extremely complex and confusing area.

[Guy Opperman]

To answer the second point first, there is already standardisation. There is already the charge cap, which allows a certain limit above which an individual cannot charge any more. That charge cap provides a certain percentage that can be incurred for the work provided. There is an ongoing discussion regarding automatic enrolment. If I have a tiny pot of £100 and that has been eaten away on an ongoing basis, then clearly the charges on an annual basis will slowly eat away into that small pot. If I have a much larger pot and I have a small standardised charged capped price that I am being charged, then it is clearly much easier for the pot to be preserved. How one approaches that going forward is extraordinarily difficult.

There is also the diversity of the products being provided—the point made by my hon. Friend the Member for Delyn—and ensuring that there is that diversity is appropriate. How does one try to balance those two things? That is what we are trying to do, with due respect. When will we do this? It seems to me that there are two answers. It is hoped—I use the word “hoped” given that we are now on 3 November—that by the end of this year, or the beginning of next year, these various pieces of work will come together and the Government will publish their views on them. I have been a little preoccupied with this and there are other things that are going on. The small pots review does not report back to the Department until 23 November.

In addition, the dashboard delivery group is at the same stage looking at this precise point about how it will provide this on an ongoing basis. It published its updated programme a week ago—I will have to do this off the top of my head, and if I have got it wrong I will correct it at a later stage—and its expectation is that it will provide more detail at the beginning of next year as part of what the dashboard will look like.

I come back to one final point. The original dashboard was proposed to be a simple find and view system; it is not proposed that this will have complex overlay at the start.

[Guy Opperman]

I should have pointed out that we already have legislation within the occupational pension scheme regulations 2018, which already require trustees to publish detailed information on costs and charges on a publicly available website. Members are told where this information can be found on their annual benefit statements. Obviously, we are doing it on simpler statements as well.

On the specific point raised, the hon. Member for Airdrie and Shotts keeps coming back to different charging structures that exist across the pensions landscape, and information about costs and charges are not often directly comparable between schemes. There is a risk that we fail to engage people with their pensions by presenting too much information of a differing nature, or worse, that misunderstanding of costs and charges presented without proper explanations of value for money results in poor financial decisions. It seems to me that the way it is drafted as well, speaking specifically to the administration of the scheme, hides a much wider problem: how does one address the individual nature of differing schemes and the individual costs that apply? With respect, although I have great sympathy for the amendment, I invite the hon. Gentleman not to press it.

[Ms Eagle]

Before we leave this point, what the Minister has described is a pensions landscape that is so complex that he is saying it is almost impossible to make proper price comparisons across the piece. If a consumer wants to make a decision on where to invest their money, what the Minister is saying is that at the moment we have a system that is so complex, and where comparisons are so hard to make, that it is impossible. What does that say about the landscape we are presiding over, and what have we got wrong? I have some ideas of my own, but now is not the time to talk about them, Mr Robertson. I appreciate that. It is an astonishing admission from the Minister that that is the situation we are in.

[Guy Opperman]

I had ended my speech, but I do not think that is a fair characterisation. There is a charge cap that applies already. It is a standardised charge cap. The difficulty is that there are different types of schemes charging different things and that is perfectly permissible. The flip side of the argument made by the hon. Member for Wallasey would be to have only one type of pension scheme—which, by the way, is what the Labour Government introduced. Automatic enrolment is one type of pension scheme. Yet, within the one type of pension scheme, which we all adore and agree is the greatest thing, there are problems on the charging of the individual, which is exactly why we are trying to improve the matter by doing the small pots review.

I take the point that the hon. Lady is passionate to try to improve the situation. My door is always open to hear her views but, with great respect, this is a simplified system that can get better, which is why we are doing the dashboard and why we are doing simpler statements.

Question put, That the amendment be made.

--- Later in debate ---

[Guy Opperman]

I am not sure that I can amplify or improve upon the comments that I have already made, save to make the point—again, I believe—that commercial dashboards will have to be part of the accessibility of this particular programme, and I genuinely believe it entirely right that they should be part of it from the word go, so that we can go forward together with those two particular products. Quite frankly, we keep coming back to the point that we should go to where the customer is already, rather than forcing the customer to go to some other place.

[Ms Eagle]

Why, if diversity in the delivery of dashboards is so crucial, do other countries manage with single, publicly provided dashboards?

[Guy Opperman]

Other countries have done things in different ways—they do not necessarily have the pension system that we have. We have a very substantial private pension system; some other countries will not have such private pension systems—the hon. Lady will have to ask them. It is argued that the right way forward—having looked at what countries such as Israel and Denmark have done—is to have a parallel system and two systems, commercial and public, working together. We already have a public system, whether it is “Check your state pension” or the pension tracing service, that exists with commercial providers. What we do not have is the great capability of dashboard and I believe, with respect, that we are doing the appropriate thing to drive that forward.

Pension Schemes Bill [Lords]

Angela Eagle Excerpts

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

[Stephen Timms]

I rise to speak to new clause 1, together with amendments 2 to 5, and I am grateful to those from my party, the Conservative party and the SNP who have added their names to them.

New clause 1 addresses a serious flaw in the implementation of the pension freedoms that George Osborne announced in his Budget speech in 2014 and that were implemented the following year. This is what George Osborne said in that Budget speech on 19 March 2014:

“Let me be clear: no one will have to buy an annuity. We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.”—[Official Report, 19 March 2014; Vol. 577, c. 793.]

That was a recognition that there could be pitfalls in allowing people to do whatever they wanted with their pension savings—for many people, the largest sum of money they would ever have access to—and that the Government would have to ensure that everybody had access to guidance to help them make the best decisions.

The outcome of George Osborne’s promise is the Pension Wise service operated by Citizens Advice, and it is an excellent service. It is free and it is impartial, as George Osborne promised, and it gets very high satisfaction ratings from those who use it. The problem is that hardly anyone does use it, and new clause 1 is intended to fix that. The latest figures show that about one in 33 of those eligible for Pension Wise actually use it. Last month, the Department for Work and Pensions published a document entitled “Stronger Nudge to Pensions Guidance: Statement of Policy Intent”. That proposed the adoption of new nudges, which, according to the trials, would increase the take-up from one in 33 to one in nine. Well, that is not enough.

[Ms Angela Eagle (Wallasey) (Lab)]

On that point, I thank my right hon. Friend for the way he is championing consumer advice in this very difficult space. Does he agree with me that we do not want a stronger nudge, but a great big shove into the arms of impartial, free advice?

--- Later in debate ---

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in the debate, to follow the right hon. Member for East Ham (Stephen Timms), the Chair of the Select Committee and to speak to the amendments that he has tabled and I have signed. I will start where he did, with the issue of mandatory guidance—or as near mandatory as we could make it, as I raised on Second Reading.

The right hon. Gentleman quoted the key statistics, which show that the take-up of this excellent, high-quality service—it attracts brilliantly good feedback from those who use it, and the people who provide that service accept that it changes the mind of 70-something per cent. of those who actually use it—is feebly low. Trials showed that the figure was somewhere around 3%, before the nudge was implemented. That is not what this Parliament envisaged when, five or so years ago, we introduced the pension freedoms. The safeguard we put in place at that time was to create the Pension Wise service: free guidance so that people would have the chance to check what they were doing was the right thing for them in exercising choices they did not used to have. Those choices are incredibly complicated. In many cases, they are a once-and-for-all: once they have done something, they cannot reverse out of it.

That is why, as a Parliament, we were so keen for people to have that chance of a warning and to understand how this all works. They save up all their money for 40 or so years at work and get to the very end point. In many cases, they do not understand all the options. They do not know what they are being sold and they buy the wrong thing. The data in the FCA’s own retirement outcomes review from about three years ago shows that a high proportion of people are just defaulting into a drawdown scheme with their existing pension provider. They are not shopping around and looking at the other options.

[Ms Angela Eagle]

Does the hon. Gentleman agree that at the moment the decumulation pension industry is unregulated, so there is no transparency on costs or on the kind of charges that may be applied to drawdown schemes? That is another area where people might be being scammed.

[Nigel Mills]

I am grateful to the hon. Lady. If only she was on the Select Committee, because that is an issue I have raised on a few occasions. Over the past decade or so, we have very effectively regulated the accumulation phase, but we have not yet got the decumulation phase in quite the same position, with charge caps. The default pathways are a great step forward that will help people, but there is a real danger even with that that people will end up on a default pathway with their default provider, rather than looking around to see whether there are any better options in the market.

We desperately need to find ways to get more people to access the free high-quality guidance. There is no reason for them not to do so. They do not have to pay a huge fee or wait a long time, and it is not a painful experience. It can be a relatively short phone call just to alert them to the situation and provide information. We need to get those numbers up. Last time we had a pensions Bill we had amendments calling for default guidance. We accepted a compromise that the FCA would do some work and find a way of increasing take-up so we would not need to legislate. The problem is that the FCA, I am afraid, took quite a long time to get round to starting the process. It did studies with some larger pension providers, showing that if they used the nudge with an extra reminder and gave them the information that Pension Wise exists, they could get take-up up to about 14%, or one in seven people.

I accept that we do not want or need 100% of people approaching retirement to take pension guidance. Some will be on such large pensions they will take advice that they pay for. In that situation, there is not much need for them to have simpler guidance. The irony is that the data shows a lot of people use pension guidance as a first step towards advice. They use guidance to work out what their options are and what they might need advice on, and then they go and get advice. That is a perfectly sensible use of guidance. I am not standing here saying let us have 100% of people, no matter if they have a tiny pension pot and there really is not much they can do with it, or if they have such huge ones they should be taking paid-for advice, but the right answer cannot be 14%. Even if we manage to roll out the nudge across every pension scheme in the country, we can only get to 14% of people. That cannot be the extent of our aspiration. That is why there have been various proposals on how we send people an appointment. If they do not take it, they can rearrange it, but until they have taken that appointment, or until they have signed to say that they understand they could have one but that they really, really do not want it, they cannot access their pension pot. I appreciate that some people will be rather angry when they pick up the phone to their pension scheme and are told they have to wait three weeks for a Pension Wise appointment before they can do that, but that, I think, is a price worth paying for them not to make a terrible mistake that they cannot reverse.

There is a real danger if people only get the nudge from their existing provider. We have all heard or taken part in those phone calls where we are told, “Now I’m going to have to switch the recorder on and read out some regulatory messages, but don’t worry, it’s all a bit of nonsense. It’s just one of those things we have to tell you. You don’t really need to listen. At the end just say yes.” Then they record the phone call and in that long spiel of “nonsense” there are the words, “and you have agreed to opt out of your Pension Wise appointment” and that is sufficient. That is the situation we are trying to avoid: people relying on one provider for their information.

I can accept that, as with all Back-Bench amendments, this proposal is not perfect. Is five years the right time? Are we going to end up spending far more than we need to? If, for some reason, the Minister will not accept this and has not come forward with alternative ways of doing this in law, I hope that he will at least accept that, even if we could roll out the nudge to all the providers that are as good as the ones the FCA used, a 14% aspiration is not sufficient. We could all work together, with the Select Committee and other key players, to work out what we think the right percentage take-up of Pension Wise would be, set that as a target for the FCA and if in two or three years it cannot get to that target, we can come back with legislation and put a default position in place. This would be a final warning to the FCA.

--- Later in debate ---

[Jim Shannon]

I thank the Minister for that response. The Department for Work and Pensions estimates that 50 million pension pots will be lost or dormant by 2050, and people are vulnerable. We hope that the intervention he made may allay some of the fears people have. The ABI continued:

“Pensions Dashboards will not only help to find lost pensions and reduce the cost of financial advice, but should also prompt people to engage more closely with and save more into their pension, aiding consumers to make informed retirement decisions.”

That is really what we have to be doing—the thrust of this debate should be to try to focus that attention. The ABI went on:

“Pensions Dashboards are now woven into nine different Government and regulatory policy strategies, including the Government’s UK Digital Strategy, the FCA’s Retirement Outcomes Review and the Cabinet Office’s Dormant Assets Commission.”

The ABI also tells us that 60% of 25 to 34-year-olds would be most comfortable viewing their pensions through their mobile banking app—because that is the nature of the future—compared with only 11% of those aged 65-plus, which is probably my generation and thereabouts; 20% of those aged 65-plus would be comfortable receiving their pension data via post, compared with only 4% of 18 to 24-year-olds; and 61% of those aged 55 to 64 would find it most convenient to view their savings through the pension provider’s website, compared with 30% of 18 to 24-year-olds. What does that tell us? It tells us that people have different ways to access their pension, to look at what it means to them and to get the answers that they need.

More people in Northern Ireland feel that they have low financial capability—indeed, Northern Ireland has the lowest proportion of all the regions of the United Kingdom of Great Britain and Northern Ireland. Fewer Northern Irish people describe themselves as “confident and savvy consumers”, with 43% saying so, versus the UK average of 52%—so we do fall behind—or as highly confident in managing their money, with 26% saying so, against the UK average of 37%. Fewer consider themselves to be highly knowledgeable in financial matters, with 10% saying so, against the UK average of 16%. We in Northern Ireland need the necessary advice so that we can decide, collectively, what our pension pots are worth.

The figures I have outlined suggest that pension savers in Northern Ireland may appreciate the benefit of a Pension Wise appointment even more than their counterparts elsewhere in the UK. Sadly, the DWP, FCA and Pension Wise data does not split user stats by location, so we do not know user stats for Northern Ireland; we know only the headline UK-wide stat that just 14% of pension pots were accessed after the Pension Wise service was used. The Northern Ireland proportion of current retirees whose main income is the state pension is the same as that for the UK as a whole; however, that proportion is predicted to fall back to 37% for those aged 45 and over and not retired.

I was reading through some of the briefings, and one of them said that the DWP had recently confirmed its intention to base new guidance and regulations on a “stronger nudge”. I am of a generation that can remember Monty Python and the story that went, “Elbow, elbow, wink, wink, nudge, nudge, say no more,” but in this instance we need to say a whole lot more. We look to the Minister for more than just a nudge when it comes to the key points. We hope that Pension Wise guidance sessions will be available, and I think it will be good for people to take them on. In a survey of some 1,000 defined -contribution pension savers aged 45 to 54, nearly eight in 10, or 77%, said that they wanted impartial guidance to help them to understand their pension access options, yet a larger proportion, 81%, did not know that they were entitled to receive free, impartial guidance from Pension Wise. Fewer than half said that they understood enough about pensions to make decisions and just 4%, or one in 25, said that they would opt out of a pre-booked guidance session. I welcome the Minister’s response to the intervention; I feel that that might just make the difference for a great many people.

In relation to the workplace—[Interruption.] My voice is starting to go; it is going to crack up shortly. It is significant that greater numbers of people will have defined-contribution pension savings as a result of being auto-enrolled into workplace schemes. For these people, achieving financial security and wellbeing in retirement will depend on making well-informed decisions. This is a much greater challenge for those who do not get impartial guidance or regulated financial advice. I can well remember when my mother took me down, as 16-year-old—that was not yesterday, by the way—to open my first bank account, and she had me in a pension scheme at 18. That is many, many years ago—

[Ms Angela Eagle]

Surely not!

[Jim Shannon]

I am afraid it is. My mother was very wise—she still is: she is 89 years old now and is even wiser today than she was whenever I was 18. It is always good to have your mum to tell you what to do, even though you might be a lot older. But that is by the way.

It is clear that the way that we are doing these things is not as effective as it should be. New clause 1 is essential to underline the importance of people understanding their pension and taking control of it, with appropriate advice, rather than simply thinking, “This is for when I’m old.” Take it from me: that time comes quicker than one could possibly imagine.

I conclude with this: the issue is incredibly complex, and it needs a complex answer. I look to the Minister to outline how he believes that issue has been addressed in the Bill. I feel that we need both a robust dashboard and compulsory written statements, and I am not content that that has been provided for in the Bill. I respectfully ask the Minister for that advice and help. We have to get pensions right for everyone, whether they be 18 or 65. We will do it together.

[Shaun Bailey (West Bromwich West) (Con)]

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon) and all the other speakers in this thoughtful and well considered debate. It was also a pleasure to serve on the Public Bill Committee; it is great to see so many of its members in the Chamber today. I pay tribute to the Clerks and staff on that Committee as well as to right hon. and hon. Members across the House for their work, diligence and patience in taking part in that Committee.

I am going to focus my comments predominantly on new clause 1, which was introduced by the right hon. Member for East Ham (Stephen Timms)—the Chair of the Work and Pensions Committee, on which I also serve. I pay tribute to the right hon. Gentleman for his fantastic work in chairing that Committee over the past six months. He has been an absolutely fantastic and very diligent, hard-working Chair.

To focus on the scams point for a minute, I should say that scams often come from the fact that people have not had advice, and those at not the bottom end but what would perhaps be classed as the normal end of the market are most exposed by not having access to advice. Given the comments in the Chamber so far, I think we can all agree with the principle that everyone needs access to advice. We need to ensure that people are informed as they make these life-changing decisions. From our casework and the evidence that the Select Committee has heard about people who have lost their savings—the money that they have accrued over years and years—we know the impact of not having the advice. We know the importance of ensuring that the advice is there.

I agree in principle with the underlying purpose of the new clause, but I question whether primary legislation is the right place for it. There could be a place for it within the secondary regulations that will be needed as part of the process to ensure that people have access to correct advice.

I absolutely agree with the comments about the Pension Wise service; we have heard how fantastic and well received that has been. People have genuinely been impacted by their exposure and access to the Pension Wise service. There is definitely a role for the service to play—there is no doubt about that at all. The fact that 72% of people who access the service change their decision shows clearly that advice has to be central to pension planning as we go forward.

The people most vulnerable to scams are those who most need the advice—they do not have humungous pension pots to fall back on or above-£30,000 pots they can transfer; these are ordinary working people who need the advice. I am thinking of the people in my constituency, in places such as Tipton, Wednesbury and Oldbury—people who have worked for 40 years at CLM Construction in Oldbury, for example. They have paid into a scheme and now want to draw from it; they are the ordinary working people who rely on the advice.

The Minister has given assurances that he will take a listening approach when considering the secondary regulations—I am sure that in summing up he will discuss what that means, not that I want to give him any more work to do in what will have to be an extensive summing up. I feel that it is there that the spirit of what the new clause is trying to achieve can really be brought to life. I agree with what many right hon. and hon. Members have said: there is a wider debate to have about how we ensure that those on the ordinary end of the scale, who do not have humungous pension pots but have worked hard for what they have got, get that advice.

The logistical challenges that my hon. Friend the Member for North West Cambridgeshire (Mr Vara) outlined in his intervention—he is not in his place now, because of social distancing—can be challenged effectively. This is an interesting proposition, and I do commend the right hon. Member for East Ham for the work he has done, because I do think there is a place for it. However, we need to have such debates on secondary regulations to really get into the nuts and bolts of how this operates and how this works, so that we can get this right.

We also have to remember—this has been picked up as well—that there is an existing regime with how the FCA operates. It sends out guidance when someone is two months from their 50th birthday and so on. That is not to say it is perfect; we know it is not perfect. It is not advice as would want to see it; it is a fact sheet that people are then left to interpret as they wish. It is not where we want to get to. I think we agree with where we want to get to—the destination—but it is just the mechanics of how we do that. From that perspective, I agree with the principle of new clause 1, but I think there is a better place for how we do this. I absolutely commend the principle behind it—at its core, it is fundamentally about ensuring that people have access to the right advice to make informed decisions to ensure they protect the money and what they have built up through hard work—because it is absolutely essential.

I am very conscious of time, but if I may, I will turn very quickly to amendment 16 which is to clause 124. My hon. Friend the Member for Grantham and Stamford (Gareth Davies)—I absolutely commend him, by the way, for the work he has done on green finance and the green gilt work he has done—covered this so well that he has taken most of the points I wished to add. However, I will just re-emphasise one point he made about the unintentional consequences particularly of divestment.

Many of the organisations that perhaps would be impacted by this are actually the organisations that we need to lead on these new green challenges. As part of my research, I looked at some of the organisations that we might think of as ones that may need to be divested from. We looked at the oil companies like Shell, BP, Texaco and so on, and the work they have done—for example, that of Shell on biofuels, or BP on renewable energy in homes. I claim no interest—people can google it, see it and find it—but I think we risk a real unintentional consequence here of actually going backwards and almost shooting ourselves a bit, because by divesting from those schemes we inhibit the work that we need to solve this climate crisis.

In concluding my remarks, I think the principle of new clause 1 is absolutely right, but I think there is more to be done on the mechanics, and the place for this is in the debate on the secondary regulations and making sure that we absolutely drill down into this. I am reassured by my hon. Friend the Minister’s reassurances on how he is going to approach that. On amendment 16, I think there are some real unintended consequences that, if we are not careful, could actually take us backwards, not forwards.

[Ms Angela Eagle]

It is a pleasure to follow the hon. Member for West Bromwich West (Shaun Bailey) in this reasonably consensual debate.

Madam Deputy Speaker, there is nothing like seeing men rushing into the Chamber in hazmat suits to ensure that we are as brief as we possibly can be, even though—and this is no criticism of the Chair—the grouping of these amendments means we have rather a lot of things to refer to in this gigantic group. One of the things I am going to do is to refer only in passing to new clause 1, because so much has already been said about it, and to concentrate a bit more of my remarks on the pensions dashboard and some of the amendments there, because that has not really received much attention in the comments we have had so far.

There are some themes that are really important to bear in mind in this whole group and in the Bill that we are discussing today. The first is strengthening consumer protections, which is what new clause 1 is about, and ensuring that when people are making a decision about probably some of the largest amount of funds they have laid aside for their entire lives in savings, and they are going to make decisions about what to do with that money that are irreparable, they do not get their heads turned by a slick advertising at one end and con artists at the other end, and that they get enough time, space and consideration to make the choice that is right for them.

Our pensions landscape is very complex, and it is getting more and more complex as it matures, changes and evolves. We are left trying to deal in legislation with DB schemes, DC schemes and CDC schemes, which we all welcome, but all these changes and innovations over time make the pensions landscape difficult for people to navigate. As we all know, consumer protections are quite weak, and the introduction of so-called pension freedoms in 2014 increased the chances for mis-selling and scams, so we have to be very careful. That is why I support new clause 1. I support any protections that will make it slightly more inconvenient for people to shift their money and that will reassure regulators, providers and customers of pensions that this decision is the right one for them, because, as we have heard, it is irreparable.

I do not agree with those who have said that we have enough protection against scams. The cost of losing a pension is huge and irreparable. The risks for scammers and con artists are quite low, but the minimum rewards are huge. Because our capacity to deal with fraud in this country has been eaten away, meaning that it is not nearly as good as it should be and needs to be improved massively, the chances of scammers being caught are quite low too. The potential for high rewards from conning people out of their life savings versus the risks taken means that we are a magnet for scammers.

What we have to do—and what the Bill begins to do—is try to close some of those loopholes. That is what amendments 2 to 5 are about. It is also about regulating superfunds, which is covered in new clause 6, and creating the new criminal offences that we all agreed with in Committee, to try to strengthen regulation, put up some real barriers and increase the risk that those who are trying to con people out of their pensions will be caught. I support amendments 2 to 5, as well as new clause 6, which is about regulating superfunds.

The introduction of the pensions dashboard is one of the things that will mark the Bill as an important piece of pensions legislation. I commend the Minister for all the work he has done to create the capacity for pensions dashboards to be introduced, so that information can be collected from disparate places and presented in a way that is meaningful to consumers. We are now trying to make the pensions dashboard more useful and important and to ensure that it is introduced in a way that does not throw the baby out with the bathwater.

Amendments 11, 13, 14 and 15 are about how the dashboard should work. While I commend the Minister for the huge amount of work he has done, he has unfortunately overturned some of the amendments made in the other place on the dashboard. One of those amendments would have ensured that the first dashboard introduced was the publicly provided objective one, which would have a year to bed in before other commercially offered dashboards were introduced. The other place decided that that would be a good thing to do. The Minister and his Government have decided—he gave us explanations in Committee—that it would not be, and that he wants multifarious dashboards to crop up all over the place, some of which are commercially offered, and some of which I think would just confuse the situation.

[Guy Opperman]

rose—

[Ms Eagle]

The Minister is hopping about on his feet, so I will give way.

[Guy Opperman]

It is hard to hop from a sedentary position, but I will do my level best in future. I accept that the hon. Lady is a former Pensions Minister and speaks with great authority, but the Government feel that dashboards should be created in the circumstances where the customer is, rather than making the customer come to them. Even if one did not accept what the Government said, I specifically rely on the fact that the no. 1 consumer organisation in the country, Which?, specifically said that the Government’s view is the right one on this issue.

[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.