Pensions Bill

Baroness Laing of Elderslie Excerpts

Tuesday 29th October 2013 Commons Chamber

[Gregg McClymont]

My letter has not had the desired effect. I thought that Madam Deputy Speaker called me “Greg Mulholland” there. I was processing that, rather than being shocked at the fact that the Treasury Parliamentary Private Secretary is going to vote with the Government. Believe it or not, that did not come as much of a surprise to me.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I beg the hon. Gentleman’s pardon. That was my mistake. Perhaps the hon. Member for Leeds North West (Greg Mulholland) will speak later. I call Greg McClymont.

[Gregg McClymont]

Thank you, Madam Deputy Speaker. I was not sure whether I had misheard or whether the hon. Member for Leeds North West (Greg Mulholland) was trying to intervene.

I want to pay tribute to the hon. Member for Warrington South (David Mowat), one of the group of 40, as a doughty campaigner on behalf of those who wish to see radical reform of the pensions market. I do not know whether he had left his place when I quoted from the “40 Policy Ideas from the 40” and the description of the private pensions market as “failed”. I noted that the language used by those 40 MPs was stronger than anything I had used about the private pension market, and suggested that it is a little odd that Conservative MPs take a tougher line on the industry than the Liberal Democrat Minister. Perhaps it is not odd, however, because those who believe in free markets will want the pensions market to work effectively. [Interruption.] I did not catch what was said by the hon. Member for Gloucester (Richard Graham), but I invite him to intervene if he wishes to do so.

Mr Speaker—[Laughter]—I am sorry, Madam Deputy Speaker. You are not the only one who can make a verbal slip!

I was struck by what the Minister said about decumulation. It proved my point about his ability to talk but not necessarily to take any action, or enough action. New clause 11 calls for an independent brokerage service to guide those who annuitise on retirement through the process. Its aim is to deal with the lack of competition which, according to the NAPF and others, causes people to receive an average of 20% less in their annuities than they would have received had they shopped around. That returns me to a point with which I have been trying to persuade the Minister to engage. Buying an annuity involves a huge decision which a person will make only once in a lifetime, and which will affect the rest of that person’s life. However, the process is complicated, and because they find it hard to understand what they are being told, most people currently default to the annuities that they are being offered by their existing pension providers.

[Katy Clark]

I am glad that my hon. Friend is speaking up for savers. He is raising issues that have already been raised with me by a number of my constituents. When I told the Minister that we were waiting to hear proposals from the Government, he said that we would hear something very soon. Has my hon. Friend been given any indication of when that might happen?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Gregg McClymont!

[Gregg McClymont]

Thank you, Madam Deputy Speaker. That was beautifully pronounced, which is what I would expect from a Member from Kilmacolm. I look forward to your pronunciation of my constituency.

My hon. Friend made a very good point. I think she, and indeed everyone who listened to the Minister’s response to new clause 11, will be wondering what he proposes in lieu of the new clause. “Nothing” is an honest and fair assessment—or, at least, “Nothing concrete or substantive.” Referring to decumulation, the Minister said, “An awful lot needs to be looked at. We need to go further, but we need a creative approach rather than merely focusing on annuities.” I understand what he meant, because there is an ongoing debate about annuities as a product, but people out there, including our constituents, are annuitising every day. I do not think that saying to those people, “We are going to think about some creative solutions, we cannot tell you what they are, and because we are going to do something creative, we should not at this stage do something specific and concrete in order to improve outcomes,” stands the test. How long will it be before the Minister deals with this problem?

We know that annuities are a huge issue and that plenty of ideas are flying around, but ours is a concrete, practical proposal to improve annuity outcomes as things stand. I do not deny that the Minister has done something pretty significant in respect of state pensions, and I know that he must maintain a balance between pension schemes, but is it really good enough for him to respond to us by saying, “We need to do something—we need to go further—but we need a creative approach rather than your approach, which is focused on annuities”?

Annuities are the product that most people have to buy, and I think it unfair of the Minister to reject our new clause on the grounds that he prefers a more creative approach without explaining what that creative approach will be. I know that he has a great deal on his plate with state pension reform—winding up the state second pension as quickly as he intends to wind it up constitutes an incredibly big reform—but I ask him to reflect on whether it is good enough to say to people who have saved throughout their lives, and who are now receiving much less than they could have received had they shopped around, “We cannot support the Opposition’s new clause because although an awful lot needs to be done and we need to go further, we need a more creative approach.” I do not believe that anyone will be convinced by that.

--- Later in debate ---

Finally, let me put this in context. The Minister has proposed new clause 1 as the framework around which we will discuss private pensions today. He referred to the fact that he has for some time had the powers to cap charges, but has not used them. One suspects that new clause 1 is a way for the Minister—and I do not complain about this—to promote and publicise his desire to be seen to take decisive action on pension charges. It is worth pointing out, however, as the Minister has pointed out to me several times, that he already has powers to cap charges. I tell the hon. Member for Warrington South, whom I greatly respect on these issues, that those powers have been in place for some time—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I appreciate that the hon. Gentleman is addressing a great many issues in this group of clauses and amendments, but, having heard his arguments several times, I trust that he will soon be drawing his remarks to a conclusion.

[Gregg McClymont]

Thank you for that wise advice, Madam Deputy Speaker. I was somewhat sidetracked by the excellent intervention—[Interruption.] That is another intervention from the Parliamentary Private Secretary. If Members want to stand up and say something, I am happy to take an intervention. If they want to heckle from the back row, I will continue to respond to those heckles.

Where are we? The Minister wants to be seen to be taking decisive action on pension charges but today he has called for yet another consultation. He has moved on during the past year, as he had said that Labour was scaremongering and he could see no need for a cap. The consultation is a development, but we need action now. Our amendment (a) to new clause 1 would ensure full disclosure of all costs and charges and our other proposals would ensure a private pension system that would mean that everyone who was auto-enrolled would get value for money. The Minister is right that auto-enrolment started well, but he knows as well as I do that the key is the smaller employers. We are determined that everyone should get a good deal from auto-enrolment and I therefore commend our new clauses and amendments to the House.

--- Later in debate ---

[Gregg McClymont]

This is all very curious, because the front cover of the document refers to “40 Policy Ideas from the 40”, and its states:

“The Forty Group consists of the forty most marginal Conservative seats”.

One of the MPs listed is the hon. Gentleman—

[Madam Deputy Speaker (Mrs Laing)]

Order. We are straying somewhat from the amendments and new clauses before us. If there is a difference of opinion, it will have to remain as such. I urge hon. Gentlemen on both sides of the Chamber please to stick to the points before us on private pensions.

[Richard Graham]

I welcome your advice, Madam Deputy Speaker.

Before the shadow Minister intervened, I had been referring to scale. I touched briefly on the fact that size is not everything when it comes to the management of pension funds, as with so much else in life, Madam Deputy Speaker. In order not to delay you further on that point, I will move swiftly on to annuities.

Annuities matter. We are in a new world, as the Minister said, because we are living longer and we need more options. There is more to annuities than simply a need for more competition, choice and help, although that is important and the code of conduct from the Association of British Insurers is a promising start. I agree with the Minister, though, that we should go further. At the heart of the matter is transferability—being able to trade annuities at different periods of life when different circumstances crop up and when there is different pricing in the marketplace. What we certainly do not want is a single product solution. I was lobbied heavily at the Conservative party conference by an annuity provider who was keen to impress on me the importance and relevance of their single product solution, but my instinct—I hope that the Minister is with me on this—is that such solutions are precisely what we do not need in the world of annuities.

Those were the six main points I wanted to cover—auto-enrolment, small pots, aggregators, charges, scale and annuities—and I have done so in about seven minutes. There is no need to go on for much longer, but I will try to bring my speech to some sort of rounded conclusion by asking the Minister to note three queries that constituents have raised with me.

The first query, which I think is important for Members across the House, relates to bereavement support payment. It is clearly an emotional issue, as all families who have had to deal with tragedy will understand, particularly when it comes to bereaved children. Winston’s Wish is a charity headquartered in the constituency of the hon. Member for Cheltenham (Martin Horwood), but it has a significant presence in mine. It has made a number of points, not all of which I agree with, but one is that the tax status of bereavement support payment is slightly unclear. I would be grateful if the Minister could say more about that and whether it will be tax-free, because that would be hugely appreciated. Given that the trend of his proposals on bereavement support payment is effectively to increase the amount of money but have it paid for a shorter time, having that payment tax-free would be hugely helpful for families affected. There is a second point from Winston’s Wish that I want to raise with the Minister. I understand that unmarried partners are currently ineligible for BSP, so perhaps he will confirm whether people in civil partnerships are eligible.

The second query from a constituent relates to changes to occupational schemes, which my constituent believes can be done under the Bill without agreement from either members or trustees; currently trustees would have to approve it. My instinct is that long-standing defined benefit schemes, such as that of the major nuclear power operator headquartered in Barnwood in my constituency—formerly British Energy but now EDF Energy—are most unlikely to close without any form of consultation or discussion with members or trustees, but I would be grateful if the Minister would comment on that.