Pension Schemes Bill

Baroness Noakes Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Minister for her explanation and for our meeting with her and the Pensions Minister yesterday. Small movements are better than none, but she will know from that conversation that, as regards the so-called reserve power, there is still a long way to go, and the House should be clear about the issues that remain. There are four in particular.

First is the principle of mandation, even if it is a reserve power to bring in mandation. The primacy of trustee fiduciary duty must be made clear. A structure that subordinates that duty is not acceptable, which means no mandation. Secondly, it is wholly unacceptable that the bar for trustees to decline to invest in the assets that the Government prefer is set higher than the fiduciary duty threshold, requiring trustees to prove material harm—which is a very high standard and probably impossible to do. What reward would the pension saver receive for taking that additional risk? The potential for higher returns alone is not sufficient, but that goes if mandation goes.

Thirdly, the Mansion House Accord has fiduciary duty and consumer duty embedded within it. If this clause is truly a back-up to that accord, it cannot set those duties aside and replace them with something else.

Fourthly, this whole part of the Bill, as the Minister has explained, is predicated upon an allegation of market failure. Were that not the case, I would maintain that competition law would come into play for policy co-ordination.

So what to do? The only logical conclusion is that mandation must go. That does not stop a nudge and monitoring approach—but no threatening reserve power or regulations, because that is coercive, like the debt collector who says they will break your arm, even if not right now. Supporting the Mansion House Accord should surely reference the enablers and caveats that are the fiduciary duty and consumer duty, as well as the government assistance with assets where appropriate.

As this whole project is, in effect, a competition law dispensation to permit co-ordinated policy action, it should be appropriately time limited—for example, to the end of the current Parliament, because that would also safeguard from what future Governments might do, which has been raised more than once. After that, the entire structure should fall away. If it needs replacing, that would be up to the subsequent Government.

Of course, as I have expressed all the way through, there must be no discrimination between investment vehicles, which we know is a Treasury plant, not an industry request, and an example embedded in the heart of the Bill of how highly inappropriate things can be imposed. It will come as no surprise that I will ask noble Lords once again to insist on our deletion and to disagree with the government amendment. I beg to move.

[Baroness Noakes (Con)]

My Lords, I will speak briefly to Motion C because that deals with Amendment 35B, which I moved in the last round of ping-pong. I am delighted with the amendments that the Government have brought forward. I felt, during the process of Committee and Report, that I was banging my head against a brick wall every time I spoke—which was often—about innovation and competition. I did not think I was getting anything other than a headache. I am absolutely delighted, and I completely accept that the broader wording that the Government have put forward in their Amendments 35C and 35D is an improvement on what I had been arguing for, so I thank them.

[Baroness Altmann (Non-Afl)]

My Lords, briefly, I support everything that the noble Baroness, Lady Bowles, said. I also thank the Minister: I recognise that there has been significant movement on the part of the Government on some of the other issues.

Unfortunately, although just constraining the mandatory power in the way the Government have proposed is better than it was before, it is not okay for members. Normally, if there is an expectation of market failure, we would wait until that failure is proven before we pass primary legislation, in case it were to arise. It has not been proven. Indeed, if the schemes that invest in the way the Government want—and in accordance with the voluntary accord we are trying to mimic—perform better, as the Government expect, then others are likely to follow, but forcing them to do so against their better judgment cannot be right. There is no compensation if the investment decisions go wrong. The Government have, as the noble Baroness, Lady Bowles, said, inexplicably excluded listed investment companies, which will potentially hold exactly the investments that the Government wish pension schemes to invest in. Therefore, it does not seem that the Government themselves are the best judge of how to invest.