Pension Schemes Bill

Debbie Abrahams Excerpts

Wednesday 15th April 2026 Commons Chamber

I say again to the Minister, “Listen to the industry, listen to the other place, and listen to us.” There is a strong consensus behind much of the Bill. There is much to like in it, and there is still time to fix it.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I must say that I am slightly surprised by the shadow Minister’s speech. I understand that Pensions UK agrees with the asset allocation, and has welcomed the change that has been announced, which is in line with the amounts prescribed in the Mansion House accord. The accusations about the Government stealing pensioners’ money are just scaremongering. [Interruption.] If my hon. Friend the Minister wishes to intervene to point out how ludicrous that is, I am happy to give way to him. This is dangerous scaremongering, and given that the last Government presided over a doubling of pensioner poverty, they should be ashamed of themselves.

I hope that, in his closing remarks, my hon. Friend will make clear where the UK stands on pension providers’ investments in UK assets. It seems that we are quite low in the rankings. Like Canada and Norway, I believe, we are in the 5% range, whereas Sweden and Switzerland are investing 10% in their countries’ investable assets. At the high end, Australia, Hong Kong and Japan are investing 20% or more. [Interruption.] I think it is my turn to speak. Perhaps we should reflect on how we are disadvantaged by that. I will support the Government today, but I hope that my hon. Friend the Minister can clarify those points.

It will not surprise my hon. Friend to hear that I want to briefly mention pre-1997 indexation. I know that it is not covered by the amendments that have been selected today, but it was debated in the other place. I know that he has already done a huge amount on providing indexation, but members of the financial assistance scheme are a very elderly group; they were particularly disadvantaged by the changes that were introduced, and there are fewer and fewer of them. I know it is difficult, given the appalling financial circumstances that this Government inherited and the difficulties that we face internationally, but I hope that when opportunity allows it, my hon. Friend will do the right thing by those FAS members.

[Steve Darling (Torbay) (LD)]

For many people, a pension is their second largest investment, after their home, but we must bear in mind that many others can only dream of having a private pension, as they face the challenges of the cost of living crisis. We Liberal Democrats want to make sure that pensions work effectively for those who invest in them, and there is much to be welcomed in the Bill.

I want to share a personal reflection with the House. My father, who was a lorry driver, feared poverty in his pensionable age, and saved massively because he had seen that poverty with his own father, but sadly he was perhaps not as financially literate as some other people. He kept his savings in shares; then the stock market crashed in 2008, and his savings for his pension were virtually wiped out. With today’s greater safeguards, that might not have happened; there might not have been the mis-selling that he felt had taken place, or the poor advice that he received from advisers. In that regard, the Bill takes significant steps in the right direction.

We Liberal Democrats, however, want to see our economy working well, and that means a lack of state interference, in the form of direction of investment. It is right that the state should encourage investors, suggest where they should go, and have appropriate schemes to guide them, but the idea of direction is anathema to us. We have repeatedly seen what is almost a nervous twitch, whether through the Public Authorities (Fraud, Error and Recovery) Act 2025 or the introduction of facial ID on our streets, as the Government give more and more powers to Ministers, and that disturbs us. We Liberal Democrats plan to vote against the Government amendments relating to Lords amendments 1 and 15 and specifically to mandation, because mandation is the dead hand of Government on growth, particularly when it comes to people’s pensions, and it goes against our free-economy approach.

The Minister may be a reasonable individual—who knows?—but we have spent many hours on this, and the clock is ticking for the Government. In two or three years’ time, we may have a new Government, and we need only look at the other side of the Atlantic to see what democracy can throw up. We could be giving a future Government whose colour we do not know a challenging approach to mandation. Any reassurances that the Minister gives would not be worth the candle then. We fear that going ahead with mandation would be feckless, and dangerous for our pensioners.

Another area, which I know my hon. Friend the Member for Wokingham (Clive Jones) will touch on later, is pension scandals. The Government missed an opportunity to address pension scandals as part of this behemoth of a Bill, but Lords amendment 78, which they are sadly opposing, applies to the AEA Technology pensioners. That is a small step in the right direction to address the injustice that these pensioners have suffered. I remind the House that the Public Accounts Committee drew on a report by the National Audit Office that highlighted that civil servants were poorly advised by the Government on transferring the scheme to the private sector. Many of the AEAT pensioners have significantly lost out financially. I call on the Government to reflect on that and to take a small step in the right direction. We will vote against the Government motion to disagree to Lords amendment 78.

--- Later in debate ---

[Torsten Bell]

I am always ready to engage in exciting debates about pensions. The right hon. Member for Tonbridge (Tom Tugendhat) is right to say that far more Members should be enthused enough to come and talk for as long as possible about pensions. I hope not to speak for two hours, but somewhere close to that, and I thank Members on both sides of the House and from the other place for their thoughtful contributions to an important debate. I will avoid trying the House’s patience by reiterating the reasons why the Government do not think it right to accept amendments that are unnecessary or that undermine policy intent, but I will respond in detail to the important points that hon. Members have made.

The Chair of the Select Committee, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) asked specifically about what the international evidence on asset allocation tells us. Two things stand out. The first is that the UK defined contribution market has an unusually low allocation to private assets, for example compared with similar schemes in Australia. The second is the point she raised that they have lower home bias—a point also partially raised by the right hon. Member for Tonbridge. Those two are related. We tend to see higher levels of home bias in investments that are in private assets than investments in public assets, for all the obvious reasons to do with the comparative advantage that comes from knowing more about the home market.

I recognise the argument that my hon. Friend the Member for Oldham East and Saddleworth made about the PPF and the FAS. Her powerful campaigning on this issue, including raising it through the Work and Pensions Committee, is one of the reasons why we have acted in a way that previous Governments and Pensions Ministers have not.

[Debbie Abrahams]

Going back to the asset aspect of the debate, I came across some new analysis from the New Financial that shows that over the last 10 years UK equities allocation by DC pensions has fallen from 25% to just 5%. It argues that this has helped create a self-fulfilling doom loop of lower demand, lower valuations and lower performance. It argues that an increase in allocation to UK equities would have delivered performance that was broadly in line with or better than the performance that most pension providers managed to deliver. That makes the Minister’s argument for him, but I wonder if he wants to comment on it?

[Torsten Bell]

I thank the Select Committee Chair for her intervention. The organisation she mentions has been consistently making these cases. In fact, the hon. Member for Wyre Forest (Mark Garnier) has spoken from the Opposition Front Bench about the work of that organisation in these debates, including in a Westminster Hall debate just a few months ago. It is an important thing to think about. Some of it reflects increasing international cross-border investments, but my hon. Friend is right to highlight that we see a lower level of home bias among the UK’s defined contribution schemes.