Pension Schemes Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd March 2020 Grand Committee

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[Baroness Neville-Rolfe]

72: After Clause 122, insert the following new Clause—
“Pension dashboards: impact assessment
Within six months of the passing of this Act the Secretary of State must lay an impact assessment before each House of Parliament setting out the expected costs of the provisions of this Part for businesses, and governmental and non-profit organisations.”

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[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 72 would require the Secretary of State to lay an impact assessment before Parliament, once the Bill becomes an Act, setting out the expected costs of our pension dashboard proposals for businesses, government and not-for-profit organisations. I envisage the assessment covering business pensions, civil service pensions—of which I am lucky enough to be a beneficiary—and other government unfunded schemes such as the old-age pension, which we were discussing, along with funded government schemes, such as the universities pension scheme, and the pensions of non-governmental bodies: charities such as Oxfam or small not-for-profits such as Red Tractor, which I chair.

I start by thanking the Minister for the helpful briefing that she arranged with the Bill manager and the DWP team on the Pension Schemes Bill 2020 impact assessment. They have tried hard to respect the spirit of impact assessment, which allows Ministers and Parliament to address costs alongside the case for new legislation. The page numbering is confusing, but I found the document, particularly the section on dashboards, which is more than half way through, timely and informative. That is not always the case with the legislation that we scrutinise, so well done.

My concern today is that not enough attention is being given in our discussions to the costs of the new dashboards and that all the debates so far in this Committee—everything stretching from the climate change provisions debated last week to the long list in Amendment 46 in the name of the noble Baroness, Lady Bowles—are likely to increase them further.

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[Baroness Drake]

I certainly agree with the spirit behind the amendment—that transparency is a good thing and that the costs should be known—but I just hesitate over how the costs are looked at. One would think from some of the debates that I have participated in that I am reluctant to harness financial technology, but that is absolutely not the case. I am very pro it; I just want it done well.

I spoke at an industry event the other day. I will not name the person but it was the first time I had heard the CEO of a major financial organisation say, absolutely correctly, that a single piece of public policy—auto-enrolment—brought billions of pounds into the financial services industry which providers themselves did not achieve. I am conscious that the industry is very aware of its costs but it benefited hugely from a simple piece of public policy, and I found it quite rewarding that there was recognition of that. I have often said that all this money is coming in because the state took the decision to use the private sector to deliver a second-tier pension and therefore it has a wider responsibility for delivering a big piece of public policy.

I am not saying how one should do it, but it would be wrong not to attribute to the cost of the pension dashboard costs that should be incurred anyway. Where you start in looking at costs influences what they aggregate to. Getting the data accurate in order for the dashboard to work has to be done anyway. You cannot make a profit on inaccurate data. I know that that has been the model for a long time but it is not the correct model; it is a dysfunction in the market. On the trust-based side, the Pensions Regulator is driving, and is required to drive that occupational trust-based schemes and master trusts increase the accuracy of their data. If you are auto-enrolling somebody into a product, the least you should do is provide them with accurate data about what they have accrued. I would not want to attribute to the costs of the dashboard something that the industry and pension schemes should be doing anyway, which is getting their data accurate. It is indefensible to say, “It’s an unacceptable cost to require us to get our data accurate.” If they were told, “You’ve got to get it 100% as opposed to 99.9% accurate,” that might be unreasonable within the timescale, but that should be at the heart of providing pensions, whether contractually, by trust or whatever.

Also, the sector has a duty to harness what is available in financial technology so that people can access more easily what is available. I agree that there should be this visibility, but I make a plea. Some of these things required by the dashboard should be done anyway, and some are being driven to be done by regulators. We must not overstate the costs attributable to the dashboard when they would be incurred anyway to meet other government priorities or the efficient operating of pension schemes or market providers. That is my only hesitation.

[Baroness Neville-Rolfe]

I am a big supporter of auto-enrolment, which has been transformative and helps with this long-term problem of providing for old age. The cleaning of data is not a big aspect of the impact assessment I read, although I am sure that we will be advised on that by the department. A lot of it is setting the things up. It is good that data is gradually being tidied up. We must ensure that the system is clean for the future.

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I hope that this commitment to further assessments at the most appropriate time provides at least some reassurance to my noble friend and that she will feel able to withdraw her amendment.

[Baroness Neville-Rolfe]

As I said right at the beginning, I value the work that the department has already done on this matter and the thought that it has given to it. I very much agree about the value of the single pension finder which reduces multiple costs. On climate change, I was not really commenting on the Government’s amendment as much as on the additional amendments that have been suggested and on many amendments on different areas. The point I am making is that often things seem a very good idea, but when they are added together, they bring cost and complexity. I feel that the spirit of this discussion is that we should avoid that to the extent that we can and bring in a simple system in a staged way. As noble Lords know, I always worry about small businesses, small operators and small charities because they find these things very difficult. I am delighted to hear that the Government have brought in outside advice from PwC. We will be looking at that in terms of what might be done and how it might be sequenced. If the Minister would like any assistance, I have a lot of experience of difficult tales from small businesses. I thank my noble friend, and I beg leave to withdraw the amendment.

Amendment 72 withdrawn.