Pensions Dashboards (Prohibition of Indemnification) Bill

Baroness Sherlock Excerpts

2nd reading
Friday 3rd March 2023 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Lord, Lord Young of Cookham, for introducing this Bill, and all noble Lords who have contributed. I am grateful to the noble Lord, Lord Young, for his characteristically clear introduction. I commend him on his many years of service in the interests of debating pensions and, like him, I say it is nice to have those of us interested in pensions dashboards back together again. It is always good to get the band back together again, even if the pensions dashboards crew is about as un-rock and roll as it is possible to be. But it is lovely to be here today.

I have a long speech on the importance of pensions, which I am going to spare your Lordships this morning because, if nothing else, the noble Lord, Lord Holmes of Richmond, has done a fine job of this and it is a very narrow Bill today. But since the discussion has ranged a bit more widely, I will say that we were supportive of the idea of pensions dashboards in the original legislation but that support came with a number of questions. Like so many things, things can be a good idea, but how they are done is crucial to whether they end up being a good idea. We raised questions about ID, data security, governance and redress. What happens when things go wrong? This is an unusual situation, where tens of billions of pounds of assets will be mandated by the state to be released and put on to this central spot. If something goes wrong, this is potentially very serious indeed.

I think that was amplified by the Government’s insistence on going with commercial dashboards from the outset. This House had to press to insist that a public dashboard be there from day one, but I still think the Government’s attachment to commercial dashboards raises some risks. Imagine for moment that you are a commercial pensions company. You can sit somebody down, show them your dashboard and say, “Look at your pots all over here. Let’s gather them all into one tidy pot in this corner. Should I just move them into this space?” It does not take very much imagination to consider the possibilities for mis-selling even within what is legal. Those questions have been raised and have yet to be satisfactorily answered.

The principle of today’s Bill is very simple. It is that the interests of pension scheme members should be protected from the actions of rogue trustees and others who fail in their statutory duties. The Bill, as we have heard, will make it a criminal offence for a trustee or scheme manager who is given a penalty for failing in their duties to dip into scheme funds to pay the penalty. Inasmuch as it aligns the position in relation to penalties for failure to fulfil dashboard requirements with those for other comparable penalties, the Bill seems straightforward and we are very happy to support it.

But I would like to add a few brief questions to those put to the noble Lord, Lord Young, and the Minister may wish to reflect his view as well, given the Government’s wholehearted support of this Private Member’s Bill. First, can somebody confirm to the House that this Bill simply replicates for dashboard-related breaches the prohibition in the Pensions Act 2004 which prevents trustees or managers using member funds to pay regulatory penalties; in other words, that there is nothing novel hidden in here?

Secondly, why was the provision not included in the Pension Schemes Act 2021? Was it, as the noble Lords, Lord Young and Lord Sharkey, have suggested, simply an oversight? If so, I do not think the noble Lord, Lord Sharkey, should beat himself up. I do not think it is his job to bury in the small print details of how things may align with the original legislation. I certainly feel no guilt at all. Frankly, I am prone to feeling guilt but, on this occasion, I feel absolutely fine.

Thirdly, will it be permissible for trustees to be covered by indemnity insurance paid for out of scheme funds? I think this can be done elsewhere.

On a related point, when we debated the Pensions Dashboards Regulations on 15 November 2022, the then Minister, the noble Baroness, Lady Stedman-Scott, said

“we accept that the regulatory requirements on trustees have grown a great deal over the years”.—[Official Report, 15/11/22; col. 839.]

It is always the case that rogue trustees can simply ignore the rules, but has the DWP made any assessment of whether there is a point at which the demands and risks of trusteeship might deter individuals and lead to a growth in the use of corporate trustees, and whether that might lead to a reduction in the important diversity of trustee experience which may be necessary to protect members’ interests?

My final question was going to be to ask whether trustees are ready for the first connection deadline on 31 August 2023. However—as the noble Baroness, Lady Altmann, rightly pointed out—yesterday, from a clear blue sky, dropped a Written Ministerial Statement which was just 418 words long. It calmly and simply said that additional time would be needed to deliver the technology and for the

“industry to help facilitate the successful connection of a wide range of different IT systems to the dashboards digital architecture.”

The Minister continued:

“Given these delays, I have initiated a reset of the Pensions Dashboards Programme in which DWP will play a full role. The new Chair of the Programme Board will develop a new plan for delivery.”


The Statement also said:

“DWP will legislate at the earliest opportunity to amend the timing of these obligations”.


We do not know, therefore, when the start date will be, but given that we are not promised another update before the Summer Recess, presumably it is not imminent. Can somebody, either the mover or perhaps the Minister, tell the House what on earth has gone wrong? Is it technical? Is it problems with schemes? Is it data?

When did the Government know? Did they know when this Bill was going through another place just recently? Did they know when we debated the regulations in November in some considerable detail? I am really interested to know to what extent the problems associated with creating commercial dashboards and connecting them to the dashboard architecture from day one have contributed to the need for a reset. What does it mean that

“DWP will play a full role”

in the new programme? Was it not playing a full role already? Has that changed?

When will the Government legislate to delay the programme? Are there plans to amend, for example, the many forthcoming pensions regulations we have before us? Also, I wonder, given that there is now no urgency at all, would government legislation not be a better way to deal even with the matters under debate today than a Private Member’s Bill which has the wholehearted support of the Government?

The Government were so confident of being able to meet their dashboards timetable—–on which we challenged them—that they hardwired the connection dates for schemes into the schedule. It says that the “staging deadline” for

“master trust schemes that provide money purchase benefits only”

for 20,000 or more relevant members is 31 August 2023, and so on. They were that confident. But since then, because that was published, pension schemes have spent time and money scrabbling to get ready for those hard deadlines. I suspect the irony will strike them that we in Parliament are debating a Bill designed to ensure that trustees pay penalties if they do not get their schemes connected to the dashboards in a timely and appropriate manner and the DWP just slips out a Written Statement saying, “You know what, we are not going to make it for August, after all. We are just going to reset the programme and we will give you some kind of update before the summer.”

I know that things go wrong. I get this. I have been a special adviser in government. I have been involved in enough programmes. But when things go wrong, I think the House is owed an explanation of exactly what went wrong. I suggest to the Minister that one thing he might usefully do is to forward to his colleagues in another place the proceedings of this House on the original legislation, the debates on the regulations and the associated debates. The Government were warned that this was incredibly complex. They were warned about the issues about data, ID and all kinds of things. I think this may be a good opportunity, since we are to have a pause enforced, for the Minister to tell the House that he will take the opportunity both to engage with the concerns raised around the House and to brief the House on how these are going to be addressed. I look forward to the replies.

Pensions Dashboards (Prohibition of Indemnification) Bill

Baroness Sherlock Excerpts

3rd reading
Friday 21st April 2023 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I am pleased that the Pensions Dashboards (Prohibition of Indemnification) Bill has now reached its final stage in your Lordships’ House. I thank my noble friend the Minister and his officials for their support, as well as those noble Lords who supported the Bill on Second Reading: my noble friends Lady Altmann and Lord Holmes, who flank me on either side, the noble Baroness, Lady Sherlock, and the noble Lord, Lord Sharkey, all of whom who are present in the Chamber this morning to ensure the safe passage of this legislation. I am also grateful to Mary Robinson for introducing the Bill and expertly steering it through all stages in the other place.

The Bill’s purpose is clear. It will increase protection for pensions savers by making it a criminal offence for trustees and managers of occupational pension schemes to reimburse themselves using assets of the pension scheme for penalties imposed on them due to non-compliance with any relevant pensions dashboard regulations. I hope noble Lords recognise the importance of the Bill and agree to its passage today. I beg to move.

[Baroness Sherlock (Lab)]

My Lords, I congratulate the noble Lord, Lord Young of Cookham, on piloting the Bill through the House with his usual flair, and it is very nice that we can all be here to see it on its way. It is a narrowly focused Bill which simply addresses a lacuna in the original legislation, and we are happy to support it. I also thank the noble Viscount for giving us an assurance at Second Reading that before long, we can look forward to an update on the likely implementation of the pensions dashboards themselves. It remains of paramount importance that people can save for their retirement with confidence and with an understanding of all the implications of the choices they are making or that have been made on their behalf. We support the creation of a pensions dashboard to contribute to that goal, although we will continue to debate with Ministers choices about how it can best be done. For today, we are pleased to wish this Bill on its way.

[Viscount Younger of Leckie (Con)]

My Lords, I, too, am grateful to my noble friend Lord Young of Cookham for presenting his Bill to the House, and to my honourable friend in the other place, Mary Robinson, for her skilled stewardship of the Bill. It is a pleasure again to offer my support for the Bill on behalf of the Government. I, like my noble friend, also thank all noble Lords who were present for Second Reading for their interest in the Bill and for supporting it as it moved towards its final stage.

I committed to follow up on the topics relating to this Bill and questions about pensions dashboards more broadly that were raised by noble Lords during the previous debate. I have placed copies of letters I sent after Second Reading in the House Library, and they are also available on the Bill’s webpage—hopefully, noble Lords have had a look at them. I hope the letters sent have helped to address these queries, which included asking for an update on progress on the department’s state pension records correction exercise, the readiness of public service pension schemes to connect to dashboards, and whether penalties could be incurred for loading incorrect data to pensions dashboards. Queries were also raised more specifically about the penalties which could be imposed on trustees and managers of occupational pension schemes under the proposals in the Bill, and for compliance breaches under the pensions dashboards regulations.

I further addressed questions about the challenges faced by the pensions dashboards programme in delivering the digital architecture underpinning pensions dashboards. On this final point, I made clear to the House during Second Reading the importance of this Bill, and that it is needed irrespective of the delivery timeline for pensions dashboards. To be helpful to the noble Baroness, Lady Sherlock, I also pledged—and I stick to that pledge—to update noble Lords as soon as is reasonably possible, and an invitation will be forthcoming.

To reiterate why the Bill is required, it corrects a legislative gap which, left as it is, means that no provision would prohibit trustees or managers from reimbursing themselves using pension scheme assets to pay penalties in respect of breaches of any relevant pensions dashboards regulations. There was unanimous agreement among noble Lords at Second Reading that this would be unacceptable.

The proposals under this Bill seek to deter rogue actors from reimbursing themselves using the assets of pensions scheme members by allowing criminal proceedings to be brought against trustees or managers of occupational pension schemes if they are reimbursed and knew or had reasonable grounds to believe that they had been reimbursed as such. If a trustee or manager is found guilty of this offence, the Bill’s provisions allow for a maximum sentence of up to two years in prison, or a fine, or indeed both.

As I emphasised at Second Reading, the Bill does not place any new requirements on trustees or managers of occupational pension schemes or burden them with additional costs. It simply extends an existing prohibition in Section 256 of the Pensions Act 2004, which already applies to a number of areas of pensions legislation, to include pensions dashboards.

To conclude, the Bill rightly increases protection for consumers saving for their retirement. I do hope, therefore, that the whole House will join me in its support for my noble friend’s Bill and agree to its passage.