Pension Schemes Bill

Baroness Bowles of Berkhamsted Excerpts

Monday 27th April 2026 Lords Chamber

Moved by

[Baroness Bowles of Berkhamsted]

Leave out from “House” to end and insert “do insist on its Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88, do insist on its disagreement to Commons Amendments 88A, 88C and 88E to 88P and do disagree with the Commons in their Amendments 88R to 88W to the words restored to the Bill by the Commons disagreement to Lords Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88.”

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Minister, including for our meeting on Friday. For the record, we suggested a “have regard” framework, requiring trustees to consider private market investment in alignment with the Mansion House Accord and to report to the regulator. That approach would meet the Government’s stated policy aims without overriding fiduciary duty or distorting the market. It was rejected, apparently because it lacked a sufficiently heavy sanction threat. So we continue and, unfortunately, mandation remains.

At the second round of ping-pong, I dealt with the technical and market concerns, and all those concerns remain. Today, I turn to the constitutional issues. First, fiduciary duty is a foundational principle in our common law. Trustees must act solely in the beneficiary’s interests, yet this clause directs them towards particular asset classes without any statutory defence or immunity. Trustees are left in a double bind: comply and risk personal liability or refuse and face deauthorisation.

Secondly, the process has been procedurally defective. There was no consultation on mandation, discrimination between investment vehicles or the sanction. The Commons amendments this time merely add procedural language around the savers’ interest test, due regard and reasons, which public law already requires. Further, there is the coercive effect of the so-called reserve power, which is already being deployed to pressure schemes and trustees into compliance without the consultation, assessment or regulatory discipline that regulations would require. That is constitutionally improper. Policy is being pursued by threat, not by law.

Thirdly, the savers’ interest test itself is unchanged in substance. The insertion of “likely to” is trivial. The test still reverses the logic of fiduciary duty, savers have not consented to the additional risks, and the penalty of deauthorisation remains draconian and disproportionate.

Fourthly, pension savings are members’ property. A coercive statutory scheme backed by deauthorisation is an interference with property rights that requires clear justification and careful design. Neither is present.

For these constitutional, procedural, proportionality and rights-based reasons, the clause remains defective and the Government’s amendments do not cure it. This is legislation that relies on threat rather than clarity and coercion rather than properly framed substance. I therefore will ask the House to insist on our deletion and to disagree with the Government’s amendments. I beg to move.

[Baroness Altmann (Non-Afl)]

I support the noble Baroness, Lady Bowles. I point out to the Minister that the Mansion House Accord had two parts. The second part had government obligations, on the basis of which the industry voluntarily agreed to invest in the private assets that the Government favour. None of the Government’s obligations is enshrined in the Bill; they are hoped for. The Minister assumes that private assets will definitely outperform and that if savers do not invest in them they will be losing out somehow. There is no underpin for the losses and even if the investment experts decide that they disagree and would not normally want to buy them, they will still be forced to. This is not the way to get pension funds to invest successfully or to trust the Government in the future. I hope that the Government will think again.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, my speech says, “I would like to thank all noble Lords who have spoken in today’s debate”—but that will not take long.

I will not hold us here for a long time, tempting though it is to go over the arguments in considerable detail, but I will say a couple of things. We need to remember that the whole purpose of the Pension Schemes Bill is to improve outcomes for savers. Where are savers in all of this? It is their interests that are there. The reason the Government are doing this is that the evidence is clear internationally that pension funds which have a small holding in private assets as part of a diversified portfolio bring better returns.

If there were a situation where that would not be in the interests of a particular scheme, that is the point of the savers’ interest test. This does not cut across fiduciary duty because, in fact, nothing in the Bill overrides that core principle of fiduciary duty. If trustees believe it not to be in their interests, not only can they make an application for an exemption under the savers’ interest test but we would expect their fiduciary duty to guide them to make that application. That really is the beginning and end of it.

I will simply say this. The whole point of the Bill is to make pensions better. This whole Bill will transform our pensions landscape. Pensions are the promise we make to millions of people that years of hard work will be rewarded with security and dignity in retirement. Bigger, better pension schemes will drive better returns, as well as tackling inefficiencies. We need to find a way to get the Bill agreed. Industry wants to get on with implementing the reforms and our pensioners want to start benefiting. The other place has expressed its view clearly, repeatedly and by substantial margins. I hope that noble Lords will reflect on whether it is right to ask the elected House to vote for a fourth time on a question to which it has given the same answer on every occasion. I ask noble Lords not to insist on their amendments and to agree the amendments proposed in lieu in the other place.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the arguments have been well rehearsed. I am not convinced that this coercion is as innocent as has been made out and I therefore wish to test the opinion of the House.