Pension Schemes Bill

Clive Jones Excerpts

Wednesday 15th April 2026 Commons Chamber

[John Milne (Horsham) (LD)]

First, may I express my support for the words of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) with regard to pre-1997 pensions and that long-standing scandal? It is a great injustice and it feels like successive Governments—including this one, sadly—are just waiting for the problem to literally die away.

I would like to speak to Lords amendment 79, which aims to ensure that pension schemes can offer robust guidance without falling foul of the new regulatory landscape the Bill creates. The Liberal Democrats remain committed to ensuring that the Bill works for individual savers. Of course, it must work for our economy and for industry, but it must, first and foremost, help the “little and less” saver. That requires ensuring that savers have access to decent relevant guidance on their pensions, because without guidance choice does not translate into good outcomes.

The reality is that engagement with pension guidance for the average person is, to put it simply, woeful and worsening. Around 90% of defined-contribution pots are accessed without any engagement with Pension Wise. Uptake of the service has fallen by about 4% since 2018, despite the fact that Pension Wise is demonstrably successful—nine out of 10 users say that they would recommend it to others. That context matters, because in 2015 the introduction of pension freedoms represented a significant opportunity to ensure that guidance could be offered to far more people. Individuals were given the responsibility for spending their pension savings, but that was often without a clear understanding of the tax implications or the consequences for later life. Since then, from 2015 to 2025, many, including the Work and Pensions Committee, have argued that this was precisely the period when an auto-enrolment-style trial for guidance should also have taken place.

The Government recognised the scale of the problem in 2022, when they introduced a stronger nudge towards Pension Wise. That followed a Department for Work and Pensions report that showed a marked increase, rising from 5% to 30%, in drawdown products being accessed without guidance. Over half of transfers were out of pension products, often driven by mistrust, and lower income savers were disproportionately negatively affected by drawdown use compared with higher earners. Yet even then, the opportunity to trial the automatic booking of guidance appointments, which was backed by the Work and Pensions Committee and Age UK, was not taken.

Now, the landscape has changed again. The Bill reshapes the regulatory framework in a significant way, including through the introduction of defaults for pot holders. That makes this moment another opportunity to ensure that as many savers as possible receive good quality guidance, but that chance will be missed if guidance is not properly embedded alongside these reforms. Defaults will fundamentally affect how savers interact with their pensions. That means the Government must provide urgent clarity not just for savers, but for schemes and trustees. Schemes need clear and concise guidance on how defaults operate, and on what advice and guidance they can lawfully provide so that they are protected from future legal challenge, ambulance chasing or scandal.

Equally, savers themselves will need support to navigate what is often a collection of multiple pots with multiple defaults and varying outcomes. What should not happen is for a default system to be put in place without updated and clearly defined guidance alongside it. That would risk encouraging passive defaulting while alternatives are not properly explained or understood, which might act to supercharge the existing problem of disengagement rather than solve it. At the very least, we must ensure that people are given the opportunity to engage. The dashboard’s imminent introduction might address some of these problems, but it is not a silver bullet.

The Department for Work and Pensions and the Minister have set out a road map for reform, but the big glaring hole in that road map is access to guidance. I ask the Government to ensure that guidance is explicitly part of the plan, to set out clearly what role the Money and Pensions Service and free and impartial guidance will play for savers who want it, and to consider whether, alongside the necessary secondary legislation, the Department could publish a clear statement on the role of guidance in both the default and savings journey of pension savers.

[Clive Jones (Wokingham) (LD)]

I wish to speak to Lords amendment 15 and, ultimately, what it still fails to address: the long-standing injustice faced by almost 1 million pensioners.

The Chancellor’s decision last year diverted attention, with her announcement of the restoration of indexation to a quarter of a million pensioners in some of the schemes in the PPF. While 250,000 now have their indexation back, 90,000 in the PPF do not. In addition to the 90,000 who have lost out, there are 139,000 in the financial assistance scheme. Some of those pensioners were once part of the civil service where functions were privatised. I specifically refer to members of the AEA Technology and Carillion public sector pension schemes, who were promised that their civil service pensions would be honoured after privatisation. Imagine being legally cheated out of your pension by your country’s Government and then ignored when you plead your case. Finally, 750,000 people in private defined-benefit schemes, the pre-1997 pensioners, have also lost out. We are talking about 979,000 people—almost 1 million pensioners—who have lost out on the regular increase for part, or for the whole part, of their pension.

The Bill is trying to paper over an enormous crack in our national pension framework. Ministers themselves have acknowledged the problem for pre-1997 pensioners. Most recently, the Minister confirmed that around 17% of defined-benefit pensioners have not received discretionary increases—in some cases, for nearly 30 years. It is not a minor anomaly. Many have lost more than half the real value of the pensions they have earned. Many will not live long enough to see any redress, but their survivors will receive a fraction of the pension at a time when food costs are projected to go up by 9% this year alone, and who knows what will happen with energy costs.

What is particularly difficult to justify is the piecemeal nature and inconsistency of the Government’s approach. They have been entirely willing to mandate how defined-contribution schemes invest, yet they remain unwilling to mandate even basic fairness for the 17% of defined-benefit pensioners whose sponsoring companies are following a law and avoiding doing the right thing. The Lords amendment would return us to a Bill that would make it easier to extract surpluses from defined benefit schemes. The Minister tells us that the trustees will be in the driving seat, but for the pre-1997 pensioners, trustees have never been in the driving seat. In most cases, trustees cannot compel discretionary increases. They cannot even advocate effectively for those who have already lost out, and they cannot override employers’ decisions. The imbalance is clear: employers decide, trustees administer. Trustees are told that it is not their role to seek to change benefits for pre-1997 pensioners. What is the value of a trustee? Surely it is not just to be a rubber stamp for boards of directors, usually based inthe USA.

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

I appreciate that the hon. Member is very learned on this subject, as are many Members on both sides of the House. Is he saying that the Bill does not give sufficient protection for pensioners in terms of governance of trustees and equitable distribution of any surplus from defined benefit schemes?

[Clive Jones]

For the pre-1997 pensioners in companies such as Hewlett Packard and many others, the trustees are not able to act on behalf of the pensioners because a board, usually in the USA, says, “No, we are not going to give you a pension increase, even though the trustees say you should have it.”

To ease surplus extraction without first addressing that injustice risks locking it in permanently. It is the wrong thing to do. Once surplus is removed, there may be no realistic prospect of restoring the value lost by pre-1997 pensioners. There will not be any spare cash available to restore their pensions. The spare cash will have gone to the company with the Minister’s blessing. The Minister said, during the Adjournment debate on 19 March, that there was a need to build the evidence base, but decades have already passed. Why has that not been done before? Pensioners are dying at a rate of 15 a week. Delay at this point is not neutral: it is a choice to delay, deny and wait until they die.

Those pensioners have families. What message does the pension failure send to young people about the security of pensions? If the House can legislate in detail on how pensions are invested, it can legislate to ensure that surplus extraction does not come at the expense of those who have already borne nearly 30 years of erosion.

I end with a direct question for the Minister. Will he commit to ensuring that secondary legislation requires that each scheme seeking surplus extraction must have an independent professional examination of the effect of pre-1997 pension erosion, and that funds will be withheld to ensure restoration of full pension value for pre-1997 pensioners?

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

There is a simple question running through what we are debating today: who is ultimately in control of people’s pension savings? When I speak to residents in Bognor Regis and Littlehampton, they assume that the answer is straightforward. They assume that their pension exists to deliver the best possible outcome for them, not to serve a wider policy aim and not to be steered from the centre. That is why Lords amendment 1 matters. It would do something very simple. It would remove the ability for Ministers, through regulations, to require schemes to invest in particular assets, particular sectors, or in particular places. It would set a clear boundary. It would say that those decisions sit with trustees, acting in the best interests of savers. If the Government believe in the strength of their growth agenda, they should make the case for it. They should create the conditions for investment, and they should not need a reserve power to lean on pension funds if that case does not land.

The same concern sits at the heart of the Lords amendments to clause 40. Those amendments would strip out what is known as the “asset allocation requirement”. In plain terms, they would remove the mechanism in the Bill that would allow Ministers to set conditions on how pension schemes invest their assets as part of the approval framework. We are told those are only backstop powers that may never be used, but if that is true, why fight so hard to keep them? Why remove amendments that simply take that power off the table?

The Government have, in effect, acknowledged the issue by proposing limits in lieu—caps on how far they might go—but that does not answer the underlying question. It just manages it. Because this is not about whether the number is 5% or 10%. It is about whether that power should exist at all. There is a broader point here: bigger schemes and consolidation can bring benefits, but only if they improve outcomes, not if they are driven by a single model applied from the top down and not if well-performing schemes are pushed into structures that do not suit them.

Lords amendment 77 would require the Government to publish a full review of public service pension schemes within 12 months, and not just their cost, but their long-term affordability, their sustainability, and whether they are fair across generations—a point made so well by my right hon. Friend the Member for Tonbridge (Tom Tugendhat). That is not a controversial ask. It is basic due diligence. People in my constituency are thinking about their own retirement, about what they can afford to save and about the pressures on public finances. They expect us to do the same at national level.

Taken together, the Lords amendments would do something quite straightforward.

They would protect savers from unnecessary interference, they would keep decision making where it belongs, and they would ask the Government to be transparent about the long-term picture. I do not think those are unreasonable tests, and the Government are wrong to strip them out.