Work and Pensions
Guy Opperman Excerpts(6 years ago)
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Guy Opperman
For the avoidance of doubt among everyone reading the debate, the PPF compensation scheme ensures that individuals receive at least 90% of their pension benefits.
[Official Report, 10 July 2018, Vol. 644, c. 330WH.]
Letter of correction from the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman).
An error has been identified in my response to the debate.
The correct wording should have been:
Guy Opperman
For the avoidance of doubt among everyone reading the debate, the PPF compensation scheme ensures that individuals initially receive at least 90% of their pension benefits, subject to an overall cap.
Universal Credit (Liverpool)
Guy Opperman Excerpts(6 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I congratulate the hon. Member for Liverpool, Walton (Dan Carden) on securing today’s debate. I apologise to the House that the Minister for Employment is not able to be here, so I am deputising on his behalf.
We are introducing universal credit at a time when record numbers of people are in work and unemployment is at its lowest rate in more than 40 years. Since 2010, 1,000 jobs a day have been created, and in the north-west region more than 3.4 million people are employed, up 268,000 since the 2010 general election. The north-west employment rate is 74.3%, up from 68.7% in 2010. Nationally, according to the labour market statistics released today, the unemployment rate is now 4%—it has not been lower since 1975—and the employment rate is 75.5%, which is again a near-record high.
It is a pleasure to serve under your chairmanship, Ms McDonagh, and it is also an opportunity for me to make the point that, nationally, the number of children living in workless families is down 608,000 since 2010. As of March 2018, the employment rate of people aged 16 to 64 in Liverpool itself was 67.6%, up from 60.3% in March 2010, and in Merseyside, as of March 2018, the employment rate had increased from 64.2% before the 2010 election to 70.2%.
Turning to the points raised by the hon. Gentleman, I will try to address the issues relating to universal credit. As I am not the Minister, I may not be able to answer the specific questions raised, but, as the hon. Member for Garston and Halewood (Maria Eagle) has been artfully demonstrating to me across the Chamber, I will write to hon. Members, or the Department will write to them, on the specific questions they raised.
The Government believe that universal credit remains a vital reform. It replaces an outdated and complex benefit system; the six benefits are replaced with one simple monthly universal credit payment, designed to support people whether they are in or out of work. There is no doubt that the old system did not incentivise people to come off benefits and get into work.
Maria Eagle
Does the Minister accept that the administration of universal credit is chaotic? I had a constituent who ended up being sanctioned for a year after his father died and he was unable to cope with going to meetings. After my office intervened, his benefit was reinstated and the sanction was removed. He had eight letters telling him that, but when he received his first payment, which was supposed to be a back payment, it consisted of £5.
Guy Opperman
I cannot comment on the individual case, but it is unquestionably the case that the old system had inherent flaws and, as the hon. Member for Liverpool, Walton very fairly said in his speech, it was right for it to be reformed at that particular time. We may have a debate and a discussion about the quality of the system thereafter, but the reform of the old system was unquestionably the right thing.
Under UC, claimants are better off when they move into work and better off when they progress in work; the payment is gradually reduced as earnings increase, so claimants will not lose all their benefits at once if they are on a low income. There is no 16-hour ceiling, no 16-hour floor and no risk to people’s benefit as they move into work. It also means that the more people work, the more money they get in their pocket. We believe that universal credit lies at the heart of our reforms to transform the welfare system, because it supports those who can work and cares for those who cannot.
The UC full service is available in approximately 63% of jobcentres in Liverpool, with those remaining to be rolled out by December, as the hon. Gentleman outlined. I would urge all hon. Members to visit their local jobcentres and to speak to the staff in charge of the system, the work coaches and the claimants who are attending. I myself have visited a number of jobcentres and sat in on randomly selected interviews with dedicated work coaches. I held a jobs fair last Friday in Hexham with my Jobcentre Plus, and I am going to another jobcentre this week.
Mike Wood
I thank the Minister for visiting my constituency and meeting with local advocacy organisations, representative groups and local charities, who deal with people claiming universal credit on a daily basis. What lessons and messages did he receive from those organisations in Dudley, where the roll-out was completed over a year ago, about how the system has changed and improved with the tweaks that have been made?
Guy Opperman
The reality of the situation is that, as the roll-out takes place across the country, there are good examples, as was seen when I visited Brierley Hill in my hon. Friend’s constituency, of excellent integration—
Siobhain McDonagh (in the Chair)
Order. I have been generous in my interpretation of what can be said during this debate, but it is about the introduction of universal credit in Liverpool, and I would like us to concentrate on Liverpool.
Guy Opperman
I totally accept that, but with respect, Ms McDonagh, the integration of services is a nationwide matter, and the roll-out is happening across 430 jobcentres.
Maria Eagle
Would the Minister like to have a go at answering my question about administration of the benefit in Liverpool?
Guy Opperman
With respect, that is what I am attempting to do and intending to come to. The hon. Member for Liverpool, Walton raised the issue of local authority funding. The Department for Work and Pensions provides local authorities with UC support funding and new burden funding to take account of additional costs. The local authority should provide the data, and he should be aware that £14 million has been paid out in this tax year alone.
On the managed migration, there was a “Universal Credit programme full Business Case summary” early this year, which showed that when UC is rolled out it will deliver £8 billion worth of benefits to the UK economy every year. The hon. Gentleman mentioned Citizens Advice in his speech; he will be aware that only recently, when the changes were made to universal credit, it was quoted as saying:
“These changes should make a significant difference to the millions of people who will be claiming Universal Credit by the time it’s fully implemented.”
Similarly supportive comments were set out at the time by the Trussell Trust and others.
I will ensure that the Department writes to the hon. Member for Liverpool, West Derby (Stephen Twigg) on the specific point he raised. In relation to the lady from Everton, if he provides the detail to the Department I will ensure that a specific point is raised, and I will also ensure that the point about the constituent case mentioned by the hon. Member for Garston and Halewood is addressed.
It is important to mention that there have been significant changes and a “test and learn” approach to universal credit as it is being rolled out. Changes were made in November last year following the Budget, and the Secretary of State herself made changes in June this year. We have made a commitment that anyone we move onto universal credit without a change of circumstance will have their existing benefit entitlement safeguarded until their circumstances change. That is to accommodate the changes needed; managed migration will be completed in 2023. We have also announced that people on legacy benefits receiving severe disability premium will stay on legacy benefits until we move them, even if they have a change of circumstances, and we will look at protection for people previously in receipt of severe disability premium who have already moved onto universal credit.
Dan Carden
I just want the Minister to answer the points about housing associations and private rented landlords, who are saying they will no longer take universal credit claimants in the private rented sector. What is the Department going to do to talk to housing associations and landlords, and to stop a homelessness crisis hitting our city?
Guy Opperman
I will ensure that the Department gets in contact with the hon. Gentleman to find out the details of which he complains. He will understand that I cannot specifically answer that particular point now, but contact will be made if he provides the explanation of the specific examples that he is concerned about. It is definitely the case, though, that the individual jobcentres are working with the local authorities and with the various charities on an ongoing basis.
To finish, we are in the middle of a fundamental structural reform that is already changing lives. We will continue to work with claimants, partners and hon. Members to resolve the issues and improve universal credit as it is rolled out across the country. I congratulate the hon. Gentleman, who is a worthy successor to his predecessor, on securing today’s debate; it is definitely the case that we call on all hon. Members to get behind this particular revolutionary reform, but I am grateful for the opportunity to set out the position today.
Motion lapsed (Standing Order No. 10(6)).
Pensions Update
Guy Opperman Excerpts(6 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Throughout the last decade, Government have worked closely with the pensions, financial services and consumer community to rebuild the UK’s pension savings culture.
Through automatic enrolment, 10 million people will be newly saving or saving more into a workplace pension scheme, with an estimated £20 billion extra pension saving by 2019-20.
The pension freedoms have given people much greater choice about when and how they use their pension savings.
The Government have a significant programme of work ahead to increase confidence in workplace pensions, by improving:
The provision of information to, and financial capability of, individuals, in order that they can make informed and more confident financial decisions.
The way pensions are run, making them more secure; improving transparency; and responding more quickly when things go wrong.
Improving the provision of information to, and financial capability of, individuals
The pensions dashboard will offer people the opportunity to access their pension information in a clear and simple form—bringing together an individual’s savings in a single place online.
The work that the Department for Work and Pensions has done in assessing feasibility for a pensions dashboard has made it clear that we should not underestimate the size or complexity of the challenge. An industry-led dashboard, facilitated by Government, will harness the best of industry innovation. We will continue to engage with industry on this model and Government will protect pension savers and personal information by legislating where necessary. This will build on the Government’s “Check your State Pension” online service for the state pension. We will shortly report on the findings from the feasibility study.
To improve financial capability and understanding we have taken through Parliament the Financial Guidance and Claims Act 2018, which gives us the power to introduce the Single Financial Guidance Body. This will bring together the services currently delivered by the Money Advice Service, the Pensions Advisory Service and Pension Wise. The creation of the SFGB is a genuine opportunity to improve provision of free and impartial Government-sponsored money and pensions guidance and debt advice so that people—especially those who are struggling, can make informed choices about their finances.
The appointments of the chair and chief executive of the new organisation have recently been announced, and we expect to establish the body as a legal entity in October when the chair and chief executive take up their roles. It will then launch in January when it takes on its delivery functions of money and pension guidance, and debt advice.
Improving security and transparency
We have legislated to introduce a new master trust accreditation regime from 1 October 2018 for multi-employer pension providers wishing to continue to operate in the automatic enrolment market.
We will strengthen the powers of the pensions regulator to ensure that peoples’ pensions are protected. The Department recently consulted on proposals to improve the regulator’s powers so that they can be more proactive, punish wrongdoing and get involved earlier when employers make changes which could affect their pension schemes. We are currently considering the responses, and hope to publish our conclusions towards the end of this year. We are also investigating how to facilitate consolidation of DB schemes, including looking at the establishment of “superfunds”, and intend to publish a consultation on this in the autumn.
Finally, collective forms of pension saving offer interesting new possibilities, and the Department is currently working through proposals for the first collective defined contribution schemes in the UK. We intend to launch a formal consultation in the autumn.
This is an ambitious programme of work, which has the potential to further transform the pensions landscape and benefit consumers.
[HCWS933]
Defined-benefit Pension Schemes
Guy Opperman Excerpts(6 years, 3 months ago)
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Paul Masterton (East Renfrewshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I refer the House to my entry in the Register of Members’ Financial Interests. For the 10 years before I was elected, I was a pensions specialist solicitor. I must say to the hon. Member for Crewe and Nantwich (Laura Smith) that, for someone who claims not to be an expert, she demonstrated an incredible grasp of the key issues in a good opening speech, which certainly puts me to shame.
When we talk about protecting DB schemes, it is worth remembering that the fiduciary duty on the part of trustees is to protect the benefits already built up. Their responsibility is to ensure that the benefits accrued can be paid, not to ensure that an employer continues with ongoing DB provision. That is fundamentally an employment matter. On many occasions, the best way to protect DB benefits is to reduce future accrual, to close the scheme or—in the most nuclear option—to tip the employer into insolvency and have the scheme move into the Pension Protection Fund, so we must be careful about what we mean by protecting DB benefits and DB schemes.
It goes without saying that DB schemes face major challenges, and the Government have recognised that through the Green Paper and then the White Paper. When the Green Paper came out, I was not sure whether I agreed with the statement that DB schemes were not largely unaffordable simply due to my case load in the office at that time. Generally, the system works well for most employers, but we need a tougher approach for those failing to act responsibly.
I am pleased that the regulator was granted many of the powers it sought, because one of my big frustrations in practice was that it was largely toothless. It would send a lot of letters and have conference calls. Those who were really unfortunate would be dragged down to Brighton for an awful meeting where nothing really happened.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
My hon. Friend will be pleased to know that I am not being dragged but going voluntarily down to Brighton, where the Pensions Regulator is based, this Thursday for a proper five-hour sit-down. In that, I will certainly take up some of the concerns of the hon. Member for Crewe and Nantwich (Laura Smith).
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Crewe and Nantwich (Laura Smith) for three things: first, for bringing this important debate forward; secondly, for entitling the debate, “Protecting defined-benefit schemes,” when we have a White Paper on that exact point, which allows me to address that; and thirdly, for being complimentary and measured in the way that she approached a serious problem for her constituents.
It has been an interesting week in Parliament. Two Cabinet Ministers have resigned, Donald Trump is President and arrives in this country on Thursday, and a Conservative Minister has received not one, but two compliments for a speech at TUC house. I do not know which is the more remarkable of those events. I greatly enjoyed my time at TUC towers. I made it out alive and look forward to the return invite from the comrades, when they want me to further elucidate the way ahead. It was an honour to speak at Congress House. I genuinely wanted to do it and I would welcome the opportunity to return.
The debates gives me the opportunity to talk about defined benefits in the round. I will then try to address all the individual points raised. The DB schemes provide an important source of income in the retirement plans of millions of people. In the private sector alone, 10.5 million members rely on such schemes, with around £1.5 trillion-worth of assets under management. That helps to fuel the UK economy, whether through corporate bonds, Government bonds or equities.
We fundamentally believe that the system is working well in the majority of cases for the employers, the trustees and, importantly, the scheme members. I stress, however, that while we already have a robust and resilient system of pensions protection in place in the United Kingdom, we want it to work in the interests of everyone. While it is not always possible to get that balance right, nor to prevent insolvency, where insolvency occurs we should never forget that we have the Pension Protection Fund, set up in 2005 and taken forward under successive Governments. It has utterly transformed the landscape for so many people who would have been desperately vulnerable and affected previously. For the avoidance of doubt among everyone reading the debate, the PPF compensation scheme ensures that individuals receive at least 90% of their pension benefits.[Official Report, 9 October 2018, Vol. 647, c. 1MC.]
To ensure that the DB system is sustainable in the long term and future-proof, we have addressed the key challenges and opportunities in our 2017 Green Paper and published our White Paper, as I said earlier, which sets out our conclusions, which effectively fall into three core areas: increasing member protection, improving scheme funding and exploring options around consolidation.
The key proposals strengthen the Pensions Regulator’s powers, as set out in the Government’s manifesto, and give the regulator new powers to punish those who deliberately put their pension schemes at risk. For the worst offenders, that could mean criminal sanctions.
We will strengthen the system that enables the regulator to oversee corporate transactions, which will mean that it will be aware of more types of transactions, and will find out about them earlier, so that it can intervene at the right time. It will also mean that employers must explain how they have taken account of their pensions in relevant corporate transactions.
On corporations and dividends, which the hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised, she will be aware that although we are not against a healthy company paying out dividends, the Department for Business, Energy and Industrial Strategy is undertaking a consultation on insolvency and corporate governance specifically. That ongoing consultation looks at how the framework of distributable profits could be improved. That Department will respond in due course—my expectation is that that will probably be in September.
I take issue with the hon. Lady’s point on pensioner poverty, as I think I have done before. In the 1970s, pensioner poverty was at 40%. It is now down to 16%—close to historical lows. That is clearly still too high, but it is a dramatic improvement on the previous position.
On scheme funding, defined-benefit pension trustees must report their funding position to the regulator. The Pensions Regulator can use anti-avoidance powers, including contribution notices and financial support directives. We accept that that process has to be improved—there is no doubt about that—so there will be clearer requirements and more explicit accountability, which should lead to positive changes in behaviour among employers and trustees. We will give the regulator the power to enforce clearer funding standards and to take action if trustees or sponsor employers fail to comply.
The regulator will produce a revised DB funding code for public consultation, which will be clearer about some key issues that cause confusion. The trustees will also be required to appoint a chair who must submit a chair’s statement with the scheme’s triennial valuation. We will work with the regulator and others to consider what can be done to promote greater transparency of costs in DB schemes and to support trustees in communicating more clearly with their members on scheme funding issues.
On consolidation, benefits of scale can help schemes to reduce costs per member, improve governance and enable access to more effective investment strategies. There are already several ways for DB schemes to consolidate, such as DB master trusts, which the hon. Member for Birmingham, Erdington (Jack Dromey) and I debated earlier. As the White Paper announced, we are considering ways to raise awareness of the benefits of consolidation among employers and trustees. In addition, the industry is actively looking at ways to innovate and is proposing new models of consolidation such as super-funds, as hon. Members will be aware.
I stress that the White Paper made it clear that consolidation must be done in a safe way, which is why we are looking to introduce clear parameters within which those vehicles can operate, as well as a supporting authorisation and supervisory regime. Any transfer to a consolidator would require the consent of the transferring scheme’s trustees, who would need to take a considered view, along with the sponsoring employer, on whether consolidation could improve outcomes for their members.
I will try to address some of the key points of the debate. In relation to collective defined-contribution schemes, which were raised by the hon. Member for Birmingham, Erdington, it is right to say that the Government are open to working together with the Communication Workers Union and the Royal Mail, which I have met together, and to say that I have been impressed by how much they are joined at the hip. We wish to assist them in finding a way forward to CDCs. Everybody understands that there is a way to go, but they are clearly an option. We will continue to assist by way of Government time.
The hon. Member for Crewe and Nantwich raised the issue of the regulator’s powers and whether it had the capacity to take them forward. I should make it clear that it will have an additional £3 million of funding to boost its frontline resource, which will result in more than 40 new members of staff. It is taking on more cases, and its proactive work has increased by 90% this year. It has made four successful prosecutions for non-provision of information, and has secured more than £1 billion in settlement through the use of anti-avoidance powers, including cases such as BHS, which secured £363 million, and Lehman Brothers, which secured £184 million. It has also prosecuted a number of scammers and the like.
There were a couple of other quick points. The hon. Member for Strangford (Jim Shannon) wanted more contributions to be made, and auto-enrolment is clearly the answer to that. The hon. Member for Stroud (Dr Drew) wanted greater accountability for the Pensions Regulator, and I will write to him about that.
It is fair to say that my hon. Friend the Member for East Renfrewshire (Paul Masterton) is the No. 1 pensions expert in the House of Commons. He is very much after my job and I accept the challenge. I agree with a great deal of what he said. Likewise, my hon. Friend the Member for Solihull (Julian Knight) made a superb speech. He has bitten off an awful lot if he is going to solve social care on the back of a pensions revision, because that is a mighty challenge.
The hon. Member for Ellesmere Port and Neston (Justin Madders) is aware of the letter I wrote to him about Foster Wheeler. As for several other similar schemes in relation to pre-1997 indexation, I stand by that letter. We do not propose to intervene in a matter that is between the company and the individual employee. Clearly, however, I am happy to discuss that further with him.
I believe I have answered most of the points that were made. Clearly, this is a consultation. The White Paper is detailed and sets out comprehensively what we are trying to do, but we do not necessarily think that everything in it is perfect. We want to get people’s views and opinions, and I value the opportunity to briefly sketch out some of the key points. I want the case of the hon. Member for Crewe and Nantwich to be made in future. I will take the product of this debate to the Pensions Regulator when I spend the afternoon in Brighton on Thursday. I thank her for her time and for securing the debate.
Draft Occupational Pension Schemes (Master Trusts) Regulations 2018
Guy Opperman Excerpts(6 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I beg to move,
That the Committee has considered the draft Occupational Pension Schemes (Master Trusts) Regulations 2018.
The draft regulations were laid before the House on 18 June. Some 9.7 million people are saving through auto-enrolment, and 1 million employers are successfully assisting their employees. The vast majority do so through a master trust pension scheme, and these draft regulations will provide a robust set of standards and controls to ensure safe management and protection of their savings.
The draft regulations will introduce a new approach to how those occupational pension schemes are regulated. From 1 October, both existing and new master trust pension schemes will be required to be authorised by the Pensions Regulator and will be subject to ongoing supervision to ensure that they are maintaining the standards required at authorisation. Any scheme that chooses not to apply for authorisation or that fails to meet the required standards on application will be required to wind up and transfer its members to an operating scheme. The draft regulations will fully commence the authorisation and supervision regime for master trust pension schemes under the provisions of the Pension Schemes Act 2017.
The past eight years have seen significant growth in the master trust pensions market, with membership growing from 200,000 in 2010 to approaching 10 million today. The assets managed by that market now account for more than £16 billion, and that will continue to grow over the coming years. The rapid increase in both membership and assets is a direct result of the overwhelming success of the policy automatically to enrol employees in workplace pensions, with more than 90% of those being enrolled by their employer saving into a master trust pension scheme. As always, it is fair to say that the policy was originally introduced under a Labour Government, expanded by the coalition and taken forward by this Conservative Government.
The 2017 Act received Royal Assent in April last year. Since then, Government officials have been working closely with the regulator, the industry and other parties to develop the detailed policy design for the draft regulations. The draft regulations were subject to a public consultation, which I launched on 30 November 2017. The consultation generated more than 70 responses; it was detailed and well received. The vast majority of responses were supportive. Some made suggestions for technical improvements to the drafting, which were most welcome. I thank all parties who have so contributed.
On the draft regulations themselves, we have always been clear that our aim is to design a regulatory regime that meets the needs of all parts of this diverse market, which ranges from long-established schemes, including many not-for-profit organisations, to new schemes set up in the wake of automatic enrolment and large, long-standing insurance providers that have taken the decision to diversify and join this emerging market.
During the passage of the 2017 Act, we made provision for regulations to apply the regime to schemes that could be said to fall outside the definition set out in the Act and to disapply it to schemes that otherwise would fall within the definition. That is intended to provide flexibility when deciding the detailed scope of the regime and to respond to market changes. We have considered that at length. The draft regulations provide greater clarity on the characteristics of schemes that will be subject to authorisation requirements.
In relation to the application process, the draft regulations require schemes to have a business plan approved by the trustees and the scheme funder. That critical document will include detailed information about the ambition and financial strategy of the scheme, as well as information about the scheme funder and the systems and processes that are to be used and information on trustees and others in a position of influence over the running of the scheme. In addition, schemes and scheme funders will need to provide their audited accounts and the accounts of any third-party funder.
The Act identified five key authorisation criteria that schemes must meet: the people running the scheme must be fit and proper; the scheme must be financially sustainable; the funder of the scheme has to meet various requirements; the scheme must have adequate systems and processes in place; and the scheme has to prepare a continuity strategy. I will quickly summarise those points.
In relation to the people running the scheme being fit and proper, the regulator needs to be satisfied that everyone involved in the running of a scheme has the appropriate integrity. Those in identified roles will each need to complete a questionnaire covering bankruptcy, unspent criminal convictions, disqualification from being a director or trustee, any adverse civil judgments and any decision or information provided by a regulator or Companies House. An additional test will be applied to those who are acting as scheme strategists or trustees, as they will also need to demonstrate a level of knowledge and understanding appropriate to their roles.
On financial sustainability, the regulator will need to be assured of the prudence of the assumptions made by the scheme, the capital it holds, the insurances that are in place, or the strength of the sponsor covenant to fund the operating costs up to the break-even point. Trustees and managers will also need to show that the scheme has financial resources to meet certain costs, including the costs should it get into difficulties and be required to wind up.
The scheme business plan will further provide details of any arrangement between the scheme and the scheme funder. The regulator also needs to be satisfied that the scheme funder can meet certain costs. That is why funders have to provide their accounts, together with the accounts of any third-party funder.
On systems and processes, when assessing whether the IT and wider systems and processes, including those relating to governance arrangements and resource planning, are sufficient to ensure that the scheme is run effectively, the regulator must take account of the scheme’s need to provide an effective service to its members and to deliver the future ambitions set out in its business plan.
Finally, a continuity strategy must be prepared by the scheme strategist and signed off by the scheme funder. It will need to set out how the scheme plans to respond, in the interests of its members, in the case of a triggering event that could lead to closure of the scheme.
I briefly want to address the supervisory regime. Our intention is to have a process that supports high standards and encourages schemes to seek support when any difficulties are first identified. The regulator will require schemes to update their business plans regularly, including when significant changes occur. Examples of that are a change to key personnel or a failure to keep to or meet a previously declared key milestone, target or planning assumption.
The regulator will also be able to request periodically a supervisory return from any scheme. That will inform the regulator’s ongoing risk assessment of all authorised schemes and will be based on the five authorisation criteria. Although the regulator can only request such a return at most once a year, it will have some discretion over how regularly returns are requested, based on an ongoing assessment of the level of risk each scheme carries.
The master trust market is growing and vibrant, and it is not in our interest, and nor is it our intention, to interfere with it unnecessarily. We believe that this new approach is accepted and supported by the industry, which in turn is being actively supported in its preparation for the changes ahead by the Pensions Regulator.
The draft regulations introduce a robust new regime for master trust pension schemes that will provide added protection for the millions of our constituents who are saving towards their retirement, most of whom do so by way of automatic enrolment. I commend the draft regulations to the Committee.
Guy Opperman
To address the three points raised by the hon. Member for Birmingham, Erdington, I accept the challenge that we need to do more to ensure the long-term prosperity of pensions for all of the population. Auto-enrolment is making a massive impact on that particular problem, with 9.7 million signed up to it. The figure is expanding regularly: it is up to 5% and will be reach 8% next year.
On the issue of governance, the Pensions Regulator already has a range of powers that it can use to support a failing master trust scheme, which include appointing new trustees where necessary. The regulator’s powers have been increased so that it can better oversee schemes and, if necessary, direct trustees in a particular situation, which will, of course, safeguard members’ pots. The hon. Gentleman should remember that master trusts are required to regularly submit to the regulator an up-to-date business plan and accounts, and I believe that that addresses the point made about governance.
On transparency, the hon. Gentleman may have forgotten—like me, to be fair—that on 26 February this House passed regulations relating to costs and transparency. They specifically gave members of a money purchase scheme the right to know the costs and charges that they pay. Moreover, on occupational money purchase schemes, those regulations also set out that trustees have to publish, online in a publicly accessible format, details of all costs and charges. I accept, however, that the process is ongoing and we are acutely aware of the need to do more regarding the publication of that information and its distribution to members, so that they are made aware of it.
I take the hon. Gentleman’s point about scale. Although it is unquestionably the case that scale can deliver better value, we have taken a slightly different approach to master trusts for good reason. We will certainly review the draft regulations on an ongoing basis. He mentioned the FCA’s cost-collection template, which is pending and on the horizon. I am happy to discuss that with him at a later stage.
The draft regulations will provide additional consumer protection for many of our constituents and the 10 million or so people who are newly saving towards their retirement outcome. They are very much deserving of the support that the new regime will provide. I commend the draft regulations to the Committee.
Question put and agreed to.
Oral Answers to Questions
Guy Opperman Excerpts(6 years, 4 months ago)
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Mr Philip Hollobone (Kettering) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
In 2010, there were 17,400 recipients of the state pension in Kettering, and the most recent data shows that that number had risen to 18,600 in 2017. In cash terms, the full basic state pension is now worth £1,450 a year more in 2018-19 than in 2010. That is a £660 a year more than would have been the case if the pension had been uprated solely by earnings.
Mr Hollobone
That is great news for existing pensioners in Kettering and throughout the country, but what about tomorrow’s pensioners? How many people are being auto-enrolled into private pension schemes?
Guy Opperman
As you know, Mr Speaker, where Kettering leads the nation follows. In Kettering, a record-breaking 10,000 men and women have now been automatically enrolled into a workplace pension. They are part of the millions of working men and women of this nation who are similarly benefiting from automatic enrolment.
Clive Efford (Eltham) (Lab)
Mr Stephen Hepburn (Jarrow) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Department has received a number of representations from people regarding changes to state pension age since 1995, and the matter has been comprehensively debated on many occasions. Women will receive their state pension either at the same age as men or earlier as we remove the current inequality.
Mr Hepburn
The Government have seen fit to award the richest personal earners and the top five wealthiest corporations in the country tens of billions of pounds in tax cuts. Do the Government think that the Tories are being fair when they steal the pensions of women to stuff their friends’ pockets?
Guy Opperman
It is always good to hear the dinosaur that is my friend from the north-east, the hon. Member for Jarrow (Mr Hepburn). He was in government between 1997 and 2010 when he could have changed the law and did not. The reality of the situation is that the richest 1% have never paid more tax than at present and that corporation tax reductions create jobs, as has been comprehensively proved. He, I am afraid, has no grasp of the facts as they now are.
Jack Dromey
Women born in the 1950s are the victims of a monumental pensions injustice. Christine is 62 and cannot retire until she is 66. Her husband has died, and she now has to do three cleaning jobs to make ends meet. At the very least, will the Government follow the lead of the Labour Mayor for Greater Manchester and introduce free bus travel for the women affected? They deserve better.
Guy Opperman
I merely repeat the point that I made previously: between 1997 and 2010, there was a Labour Government. Not only did they support this policy, but they expanded it through the Pensions Act 2008, which, as the hon. Gentleman knows full well, raised the state pension age.
Sir Desmond Swayne (New Forest West) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The reality of the situation is that these matters are going through a particular process. That process is ongoing, and the outcomes will be revealed when the decisions are made. There is no difference in any way from how the Government treat other claimants.
Rachel Maclean (Redditch) (Con)
I do not want to see any young person in Redditch unemployed, which was why I set up Redditch Mentors, a scheme to help young people to reach their full potential. The last Labour Government presided over a record rise of 45% in young people being unemployed. What more are the Government doing to improve that?
Private Pensions
Guy Opperman Excerpts(6 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Further to the Protecting Defined Benefit Pension Schemes White Paper published in March this year, the Government are today announcing the publication of a consultation to gather views on enhancing TPR’s powers. Proposals include higher fines and criminal offences for wilful and/or reckless behaviour that puts pension schemes at risk, as well as new powers to enable the regulator to intervene. The package aims to balance protection for pensions while not imposing unnecessary regulations on business.
We are seeking views on our proposals before we move to implement them at: https://getinvolved.dwp.gov.uk. The consultation will be online from today and will run until 21 August 2018.
[HCWS795]
Oral Answers to Questions
Guy Opperman Excerpts(6 years, 5 months ago)
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Mary Robinson (Cheadle) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Automatic enrolment is a cross-party success story, with more than 9.6 million workers enrolled in pensions saving and more than 1.2 million employers meeting their duties. Approximately 9,000 eligible jobholders have been automatically enrolled in my hon. Friend’s constituency, with 1,600 employers meeting their duties and supporting them.
Mary Robinson
Typically, the young are a difficult demographic to encourage to save early, as retirement seems a distant milestone to them. What steps is the Minister taking to encourage more people entering the workforce to stay in their workplace schemes to ensure that they have steady incomes when they retire?
Guy Opperman
My hon. Friend is right, and younger people agree with that. When NOW: Pensions carried out research, it found that only 4% of its 22 to 29-year-old members opted out. Our “Automatic enrolment review 2017” set out our plans to make saving the norm by lowering the age of automatic enrolment from 22 to 18. When an employee pays in, the employer pays in as well, and the Government pay in the tax relief.
Adam Afriyie (Windsor) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Private pensions have been transformed by automatic enrolment, which is a social reform of which all Members should be proud. It involves behavioural economics and nudge theory. In my hon. Friend’s constituency, 30,000 eligible jobholders have been automatically enrolled and 2,310 employers have done their duties.
Adam Afriyie
I am delighted with the Government’s progress in helping people to save for retirement, particularly through lifetime ISAs and workplace pensions. Does my hon. Friend agree that, given the open banking initiative and the pensions dashboard, the FinTech industry can help to nudge people to save more and create greater competition in the private pensions sector?
Guy Opperman
The pensions industry can and should make the most of the opportunity presented by FinTech. We believe that if it is to succeed, it will be vital for industry and Government to collaborate in the development of the pensions dashboard. As others countries have shown, pensions dashboards are a fantastic way of giving people access to pension information in a clear and simple form, bringing together an individual’s savings in a single place online.
Jeremy Quin
Young? You flatter me, Mr Speaker. I already had my excuse: I was going to say that we were all taking a close interest in the Windsor constituency at present. My particular interest, in relation to Windsor pensioners, is in the fact that they are being held back by a lack of knowledge about their pension provision. Does my hon. Friend agree that a properly constituted pensions dashboard would encourage pensioners to take their own fate in their hands, and would encourage accountability?
Guy Opperman
It is true that Windsor is the centre of the universe, and we should all congratulate Prince Harry and Meghan on their marriage at the weekend. It is also true that Windsor, and all parts of the United Kingdom, will benefit from the pensions dashboard. The internet has transformed travel, insurance and other businesses when they have gone online, and we believe that when the pensions industry comes out of the Victorian age and goes online, there will be great progress for everyone.
Graham P. Jones (Hyndburn) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Government recognise that customers need value for money, but lowest cost does not always mean best value. By working with the Financial Conduct Authority, we believe price transparency for trustees can drive effective competition and allow asset managers who can add value to thrive.
Kelvin Hopkins
The Minister will recall my earlier question to him on 9 October last year, but is it not the case that all essentially private pension schemes, defined benefit or not, incur costs and uncertainties that significantly reduce benefits to savers, and the only way to minimise such costs is to establish a universal full-blown defined contributions and defined benefits state earnings-related pension scheme for all?
Guy Opperman
The hon. Gentleman will be aware that the Financial Conduct Authority published the final rules in September 2017, and that independent governance committees on personal workplace pensions have had rules in force since January. On his discrete point, surely auto-enrolment, with 9.6 million people in this country signed up to it, and the enhanced state pension, which stands at over £1,250 more than in 2010, are the answers to his question.
Robert Halfon (Harlow) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It was a Labour Government who created the Pensions Regulator in 2004, and I think we can all agree that there are lessons to be learned from Carillion and other recent high-profile cases. However, there are two options. We either try to discredit an organisation and run it down or—this is my choice—support the regulator, give it the further powers that we set out in detail in the defined benefit pension schemes White Paper and stress that the vast majority of employers do right by their employees.
Jack Dromey
The DB White Paper proposes criminal charges for directors who neglect their duties. Would Carillion’s directors go to jail under the proposed changes to the law? If not, why not?
Guy Opperman
I look forward to working with the hon. Gentleman as we steer the DB White Paper into legislation, but the legislation is looking at the future—it is not necessarily retrospective.
Henry Smith (Crawley) (Con)
Guy Opperman
My hon. Friend is right to say that the state pension has been enhanced and increased; the new state pension has gone up to £164-plus. There is fantastically good news on auto-enrolment in her constituency, and I will write to her with the specific details.
Clive Efford (Eltham) (Lab)
My constituent was called back early for a PIP assessment, which made no reference to the fact that he has an inoperable brain tumour, which has led to his having intractable epilepsy and Parkinson’s disease. Can the Minister explain why he was recalled for an assessment?
James Cartlidge (South Suffolk) (Con)
My hon. Friend the pensions Minister is doing a lot of work on auto-enrolment for the self-employed. Has he looked specifically at the so-called worker category, in which a person might do their self-employed work for one large firm that could, with willing and regulatory help, roll them into its employee scheme?
Guy Opperman
I would be delighted to take up that specific example and will definitely take it forward. I remind my hon. Friend that 12,000 people have been auto-enrolled in his constituency.
Colleen Fletcher (Coventry North East) (Lab)
The latest quarterly figures show that in Coventry, 81% of PIP, 76% of ESA, 83% of income support and 100% of jobseeker’s allowance appeals heard by Her Majesty’s Courts and Tribunals Service were decided in favour of the appellant. Does the Minister accept that the high proportion of successful appeals highlights the flawed nature of the DWP’s decision-making processes?
Financial Guidance and Claims Bill
Guy Opperman Excerpts(6 years, 6 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Later today I will place in the Library of the House the Department's analysis on the application of Standing Order No.83L in respect of the further Government amendments tabled for Commons Report stage for the Financial Guidance and Claims Bill.
[HCWS637]
Oral Answers to Questions
Guy Opperman Excerpts(6 years, 7 months ago)
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Stewart Malcolm McDonald (Glasgow South) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
There are no current plans to revisit the announced jobcentre provision in Glasgow. Doubtless the hon. Gentleman will welcome the 1,000 jobs a day created in this country since 2010 and the fact that the claimant count in his constituency has gone down by 50% since then.
Stewart Malcolm McDonald
Let me bring the Minister back to the nature of the question by asking whether he can answer something else. On 5 February, I asked the Minister for Employment for all the impact assessments done on the closure programme. I did so through a freedom of information request, as he suggested on 12 February. On 23 February, he told me that it would take too much time and cost too much money to provide me with all those things. So will today’s Minister drop the diplomatic and bureaucratic flannel, publish every impact assessment and get them in the post to Glasgow Members of Parliament?
Guy Opperman
I thank the hon. Gentleman for his question, and I will take it up with him after this debate; I will be delighted to sit down with him and be clear on that matter. The Minister for Employment is at the G7 in Canada, so he cannot answer that point, but we will take it up.
Matt Western (Warwick and Leamington) (Lab)
Mr Marcus Fysh (Yeovil) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Secretary of State, Treasury Ministers and I hold regular discussions on this topic as part of our work on the Financial Guidance and Claims Bill, which spans both Departments’ policy areas.
Mr Fysh
Given the importance of pensions and the many changes that have occurred under successive Governments, what proactive steps can the Department take now to ensure that my constituents and others are kept up to date and informed about their own pensions and the options available to them?
Guy Opperman
Pensions guidance is a vital part of the work that the Government are doing. We are committed to ensuring that people have access to the information and guidance that they need to make effective financial decisions. My hon. Friend will be aware that we are debating the Financial Guidance and Claims Bill in the House tomorrow. I urge him to come and listen to the positive developments in that Bill.
Several hon. Members rose—
Jack Dromey (Birmingham, Erdington) (Lab)
The Port Talbot shift supervisor wept as he told the story of how he had been conned out of his pension, and that 20 people on his shift had followed his lead. The ban on pensions cold-calling is welcome, but will the Minister go further to ensure that it is for the Financial Conduct Authority, not just the Information Commissioner, to play a role in enforcement, so that those who act disreputably using information obtained through cold-calling are struck off and can never practise again?
Guy Opperman
I will answer this question in detail tomorrow, when I have more time. Anyone considering transferring their pension should speak to the Pensions Advisory Service.
Guy Opperman
Yes, yes and Project Bloom, a City of London police operation to ensure that we stop scammers, has brought many prosecutions—pending and future.
Scott Mann (North Cornwall) (Con)
Alex Burghart (Brentwood and Ongar) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Funding has been agreed for local authorities to implement universal support to help claimants with transition to universal credit. That partnership working is fundamental to the successful implementation of universal credit, which is of course part of the 1,000 jobs a day that we have seen under this Government since 2010.
Alex Burghart
Will the Minister ensure that as universal support is rolled out, it helps people to overcome the two most pernicious barriers to work—addiction and mental health problems?
Guy Opperman
I agree that it is vital to ensure that people can overcome the barriers to work, including mental health problems and addiction. We are already investing in the skills and capability of the work coaches, but we have also trained 1,800 universal credit work coaches in how to support claimants with specific mental health issues.
Patrick Grady (Glasgow North) (SNP)
Mr Laurence Robertson (Tewkesbury) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
My hon. Friend is right: we now pay £1,000 more in the basic state pension than in 2010. For those in employment, 23,000 people in his constituency have a private pension due to auto-enrolment. Pensioner poverty of itself has fallen dramatically, but I am happy to take this up and to discuss it with him in more detail.
Mr Speaker
I wish the hon. Member for Tewkesbury (Mr Robertson) a happy birthday on Thursday, which will be an important day in the life of the hon. Gentleman and I am sure of the people of Tewkesbury.
James Cartlidge (South Suffolk) (Con)
Auto-enrolment has been a great success, but does my hon. Friend agree that we need to do more to encourage the self-employed into it? What steps is he considering in that regard?
Guy Opperman
Myself and my opposite number, the hon. Member for Birmingham, Erdington (Jack Dromey), were extraordinarily trendy: we were at a hackathon this morning, which is taking place over two days in Hoxton. The Government are working very hard to make sure that the self-employed have the benefits of auto-enrolment.