Pension Schemes Bill

Baroness Stedman-Scott Excerpts

Committee stage
Thursday 22nd January 2026 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, as has been expressed, this group establishes the foundation of the value-for-money framework. We welcome the ambition to improve outcomes for savers. However, the effectiveness of value for money will depend on how it is defined, measured and implemented, and I welcome the comments from the noble Baronesses, Lady Bowles, Lady Altmann and Lady Kramer, which elaborated on these points.

I shall concentrate on Amendments 49 and 54 and I hope I can persuade the noble Baroness, Lady Coffey, that they are of value. These amendments will extend the scope of the Bill’s value-for-money provisions. They ensure that they apply not only to defined contribution schemes but defined benefit occupational pension schemes as well.

The arrangements make it clear that regulations can make different provision for different types of scheme. Critically, however, all schemes must be covered by the value-for-money assessment, with a proper value-for-money rating. Members of DB schemes deserve the same transparency and assurance about value for money as members of DC schemes. DB schemes still represent a significant part of the pensions landscape. Excluding them risks creating an uneven playing field and less scrutiny where it is still needed.

A single, consistent framework across occupational pensions improves comparability, avoids regulatory gaps and ensures that all savers benefit from the same standards of accountability. The two amendments in my name would ensure that the Bill delivers on its promise of value for money across all pension schemes. The measure is simple: every saver in every scheme, whatever its type, deserves value for money. Other noble Lords have expressed this in detail.

The noble Baroness, Lady Altmann, spoke about pensions jargon. We are here in a very rarefied atmosphere, where people have some knowledge—I have less than many in the Room—of what pensions are about and what phrases such as “default pensions” mean. We need to make it clear to people who have no interest in pensions other than receiving a cheque at the end of the month at a certain age what it all means. Some people need to be clear about the choices they make, and we need to do as much as we can. These amendments, both those that have been spoken to already and the two in my name, seek to protect people’s interests.

[Baroness Stedman-Scott (Con)]

My Lords, we come again to a varied group. I shall focus my remarks on the amendments in my name and that of my noble friend Lord Younger of Leckie. I welcome the contributions from other noble Lords and I look forward to the Minister’s response. We have a few amendments in this group: Amendments 50, 51, 52, 53, 57 and 74, and the Clause 13 do not stand part proposition.

Before I turn to the amendments in my name and that of my noble friend Lord Younger of Leckie, I will say a few words about the value-for-money framework that sits at the heart of the Bill. The introduction of a value-for-money framework has the potential to be genuinely transformative for workplace pensions if it is designed and implemented well. We support the principle of value for money. However, much of what this legislation seeks to achieve will stand or fall on how the framework is designed, applied and enforced.

As drafted, the provisions are relatively skeletal, despite the pivotal role that value for money is expected to play. If value for money is to drive real improvement rather than box ticking, it must be transparent in its methodology, robust in its metrics and genuinely comparable across schemes. Cost alone cannot be the determining factor. A scheme that is cheap but delivers persistently weak net returns does not represent good value for money for savers. Comparability will be key. Without clear, standardised metrics, there is a risk that value for money simply reinforces price-chasing behaviour rather than improving outcomes. My amendments are therefore intended not to oppose the concept of value for money but to strengthen it, to ensure that it is implemented in a way that improves saver outcomes, respects fiduciary duty and avoids unintended consequences.

I turn to the amendments in more detail. Amendments 50 to 53 in my name and that of my noble friend Lord Younger of Leckie, and the noble Baroness, Lady Bowles of Berkhamsted in the case of Amendment 53, are probing amendments that go to the heart of whether the value-for-money framework established by Clause 11 will operate as a genuinely effective tool for improving saver outcomes.

Clause 11 creates a very broad enabling power. It allows for the creation of a value-for-money framework, but is largely silent on what value for money should actually consist of. Given the centrality of value for money to the Bill as a whole, it is important to test the Government’s intentions on the minimum elements that will underpin the framework.

Amendment 50 would require value-for-money regulations to include publication of a fees-to-returns ratio. The purpose here is straightforward: cost on its own is not value. As I have said, a scheme that is cheap but delivers persistently weak net returns cannot sensibly be said to offer good value to members. If value for money is to be outcome-focused, it must show what savers are receiving relative to what they are paying, rather than allowing headline charges to dominate decision-making.

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[Lord Palmer of Childs Hill (LD)]

These are obviously probing amendments. They are all to do with the jargon: if we are arguing about the jargon, how much more confused will the normal punter be in trying to understand the jargon. This group focuses on how value for money is expressed, enforced and communicated.

We support the principle that members should be able to understand whether their scheme is performing well. However, value-for-money ratings also carry significant power. They will influence trustee behaviour, in particular, as well as employer decisions and market structure. That makes proportionality and precision essential.

I am particularly concerned about overreliance on short-term performance metrics. Saving for a pension is, or certainly should be, inherently long-term. Schemes should not be penalised for temporary underperformance driven by market cycles or responsible long-term investment strategies.

We also question whether compliance mechanisms become blunt instruments. Labelling schemes “poor value” without clear context may drive consolidation for the wrong reasons, reducing competition without improving outcomes. Clear language matters—I use the word “jargon” once again—but so does nuance. Members need information they can trust, not simplified labels about market complexity.

I have some questions for the Minister. How will this regime distinguish between persistent structural failure and short-term variation? How will it use this intermediate rating? How will it encourage genuine improvement rather than defensive behaviour by trustees? Trustees are meant to be very careful; they will be cognisant of the intermediate position. I will be interested to hear the Minister’s views on that.

[Baroness Stedman-Scott (Con)]

My Lords, again, this is a substantial group. I will not detain the Committee for too long but, before I turn to my amendments, I briefly welcome those tabled by the noble Baroness, Lady Altmann. As she set out so clearly, her amendments seek to simplify the language used in value-for-money assessments so that they are more readily and intuitively understood by scheme members. This goes to a point that has arisen repeatedly during our discussions in Committee: many of the concepts in this Bill, as well as the language used to describe them, are dense, technical and difficult to grasp. A considerable level of prior knowledge is often required simply to understand what is being proposed, let alone its practical effect. I am reminded of a remark attributed to Joseph Pulitzer. He said that information should be put before people,

“briefly so that they will read it, clearly so that they will understand it … picturesquely so that they will remember it, and, above all, accurately”.

Surely that is the standard to which we should aspire, in not only this Bill but more broadly in our legislative work. Clarity, intelligibility and accessibility should be central objectives. The language we choose and the way in which we define key terms in legislation are fundamental, yet they are too often treated as secondary concerns.

I therefore warmly welcome the amendments in the name of the noble Baroness, Lady Altmann, precisely because they address this issue head-on. Jargon is easy to reach for, but it is also, in a sense, lazy. When we are constructing a value-for-money framework whose purpose is to communicate value for money, we must be vigilant about terminology that obscures rather than illuminates and about euphemisms and phrases that sound authoritative but fail to convey real meaning. Many noble Lords will be familiar with Eric Blair’s essay, Politics and the English Language, and the amendments tabled by the noble Baroness serve as a timely reminder of some of the lessons it contains.

The first amendments in this group to which I have added my name—Amendments 60 and 61—would remove sub-paragraph (ii) from Clause 15(1)(b) as well as subsection (2). These amendments speak to a simple point: where responsible trustees or managers have determined that a scheme is not delivering value for money, that judgment should be sufficient to justify a rating of “not delivering” without the need to satisfy additional statutory conditions that risk being overly prescriptive.

Trustees already sit at the centre of this framework. They are charged with assessing investment performance, costs, charges, service quality and long-term member outcomes. They are subject to fiduciary duties and regulatory oversight. It is therefore entirely reasonable to trust their professional judgment when they conclude that a scheme is failing to deliver value for money. As the Bill is currently drafted, that judgment must be supplemented by one of a series of defined conditions, whether persistent intermediate ratings, a lack of realistic prospect of improvement or regulatory non-compliance. While well-intentioned, those conditions risk turning what should be a principles-based regime into a mechanistic one, encouraging trustees to focus on meeting thresholds rather than acting decisively in members’ best interests.