Private Pensions: Annual Benefit Statements

Guy Opperman Excerpts

Monday 19th October 2020 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government have published their response to the consultation on the approach to delivering simpler annual pension benefit statements.

Participation in pension saving has been transformed through the success of automatic enrolment. However, there is a growing likelihood that people will have a number of different jobs in their lifetime, and therefore multiple pension pots and annual pension statements.

This is why the Government’s ambition is for pension benefit statements to be simpler, more consistent and jargon free. Consistency across pension benefit statements will help savers better understand their pensions and effectively plan for retirement. A standardised template will be more accessible, drive member engagement and signpost members to detailed information on costs and charges and investment strategy. It will also complement the work Government are doing with the pensions dashboard to bring pensions online to your phone or laptop.

We will focus first on defined contribution schemes used for automatic enrolment, but it remains the long-term ambition to improve consistency across all schemes. We will consult later this year on draft regulations for a mandated approach to simpler statements, working with industry on the detailed design of the regulations and associated statutory guidance.

In addition, the Government will work with the pensions industry to introduce a statement season, building on the success of pensions awareness month. It will support the normalisation of workplace pension saving, provoke debate among the public and enable easier comparison between statements and providers.

These measures will help individuals engage with their workplace pension savings, and enable savers to achieve greater financial security in retirement.

[HCWS522]

Oral Answers to Questions

Guy Opperman Excerpts

Monday 19th October 2020 Commons Chamber

[Christian Wakeford (Bury South) (Con)]

What steps she is taking through the Pension Schemes Bill to support the Government’s commitment to net zero carbon emissions by 2050.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

As my hon. Friend knows, we want safer, better and greener pensions. This Government were the first in a G7 country to legislate for net zero by 2050. We lead the way on environmental regulation of pensions, and we are introducing transparency of climate-related financial disclosures in the Pension Schemes Bill that require schemes to take account of climate change goals, including net zero.

[Christian Wakeford]

I thank the Minister for his response. Climate change is the single biggest threat not only to mankind, but to the planet. Does he agree with me that if we are to meet the climate change targets set out in the Paris agreement, more needs to be done to ensure that large financial institutions, including institutional investors such as pension funds, channel more investment into areas that do not actively harm our environment and contribute to climate change?

[Guy Opperman]

I agree with my hon. Friend. The Government are setting a regulatory framework and enabling pension funds to make sustainable investments happen, whether that is through the Bill itself or through our illiquid investments proposals, which will see renewables, hydrogen and potentially new nuclear. We do not believe in divestment, but we welcome the change in investment practice that is already beginning to take place, although we want to see more.

[Jack Dromey (Birmingham, Erdington) (Lab) [V]]

With David Attenborough urging pension funds to move away from fossil fuels, it is hugely welcome that the Government have joined Labour to incorporate in legislation, for the first time ever, climate change commitments on pension funds. Now we must translate our ambitions into action. Previously, the Minister has received positively our proposal for a pension fund summit. Will he now agree to work with us—across party and bringing together the world of pensions to save our planet—to organise a cross-party climate change summit, because this is the biggest form of investment potentially worldwide in climate change pension funds?

[Guy Opperman]

As the hon. Gentleman knows, we are already working with a large number of pension funds and also with companies. We all want to see a safer, better and greener pension system. I am happy to work with him on an ongoing basis, and I am happy to reach out on a collaborative basis on this particular issue, which matters to all of us.

[Jo Gideon (Stoke-on-Trent Central) (Con)]

What steps her Department has taken to support an effective transition between legacy benefits and universal credit.

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020

Guy Opperman Excerpts

Tuesday 13th October 2020 General Committees

[The Chair]

Before we begin, may I remind Members about the social distancing regulations? Spaces available to Members are marked, and Hansard would be grateful if Members could send any speaking notes to [e-mail].

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I beg to move,

That the Committee has considered the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 (S.I., 2020, No. 990).

It is a pleasure to serve under your chairmanship, Mr Robertson. I am pleased to introduce these regulations, which were laid before the House on 15 September. They form part of the corporate insolvency and governance legislative regime and ensure that there is no gap in the application of its provisions. The Corporate Insolvency and Governance Act 2020, which we in this House passed in the summer, introduces important measures to give specified entities in financial difficulty the best chance of survival. This is part of a suite of measures to help businesses weather periods of economic uncertainty.

We debated one set of regulations on 7 September, and today’s regulations extend the Pension Protection Fund’s creditor rights to certain other entities, namely relevant co-operative and community benefit societies in the case of moratoriums, and relevant societies in the case of restructuring provisions. I commend the regulations to the Committee.

--- Later in debate ---

[Guy Opperman]

I can assure the hon. Lady that the Government are constantly vigilant, and remain so. In all seriousness, the Pension Protection Fund is one of the great products of the Blair Government, and it has been supported by the coalition and Conservative Governments since then. Throughout the summer, I spoke on a number of occasions to the chairman and chief executive of the Pension Protection Fund to ensure that it is sustainable and functioning in a good way. They are confident that their long-term funding strategy and diverse investment approach gives them the ability to weather the current market volatility and any future challenges. Their modelling shows that the fund is well placed to achieve its self-sufficiency target. To put it broadly, the Pension Protection Fund members and members of defined benefit schemes can be confident in the fund’s ability to continue to provide the compensation required and remain a robust safety net.

I am happy to write to the hon. Member for Westminster North in more detail if she wishes, but I would suggest that the PPF is well able to continue its level of resourcing, albeit that it is keeping it under review. We keep all matters to do with the Pension Protection Fund under review. It is an arm’s length body, but it is also something with which the Department is very concerned. All Departments are obviously aware of the difficulties that followed the Corporate Insolvency and Governance Act in the summer and are continuing to take due action as we follow this through. I commend the regulations to the Committee.

Question put and agreed to.

Pension Schemes Bill [Lords]

Guy Opperman Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in the debate on this excellent Bill, and I think that I echo most of the remarks we have heard so far by saying that there is nothing in the Bill really to oppose. It leaves most of us looking for things we would like to add to the Bill, rather than being upset with anything that is already in it.

Much as the Opposition spokesman said, there are some key challenges for pensions, and I will address how the Bill tackles those challenges. The three challenges I generally look at are how we can increase people’s engagement with what their pension means, how much they need and what they are likely to have in their retirement; how we can increase the number of people who get a decent pension in retirement, rather than just some small amount of money; and how we can protect what people have actually saved. The Bill makes progress on all three, but the key thing is engagement.

If we can get engagement right, people will understand how important the issue is, what it means and what some of the risks, consequences and benefits are. Through that, we can probably get people saving more, and we can help stop them being a victim of a scam or making a bad choice when they get to retirement.

It is tempting to think, because we have 10 million more people saving for pensions through the great success of auto-enrolment, that we have fixed the engagement problem, but the opposite is true. Auto-enrolment has not been such a success because people have engaged; they just have not chosen to opt out, and that was the whole basis for the inertia that was the reason for the adoption of auto-enrolment. We need to do more to engage people to make them understand exactly what all this means and what their retirement will look like if they carry on saving as they are.

The pensions dashboard is a key component. If we can get that right and people can go on to something and find out how much they have saved, find out what pension they would get from that, find out perhaps what ideally they would have saved by now and what their shortfall is, and then get some ideas for what action they should take over the rest of their working life and how to close that, then we can genuinely improve the outcome people will have from their saving.

The challenge we have with the pensions dashboard is that we will get those improvements in behaviour and the outcomes we want only if people actually go on the dashboard on a regular basis and find the information they need. I would be more sceptical about how advantageous a stand-alone MaPS dashboard would be, because I have a horrible feeling that if we write to people and say, “Here’s your logon and here’s your password,” some people might log on the first day and think, “This is great—it’s really useful,” but would they remember it existed next year, the year after, when they get to their mid-life MOT time and when they get to their retirement? For a whole load of people, that envelope will never get opened, or would go in a drawer and basically just be gathering virtual dust.

We need to get that information to where people are managing their finances—whether their banking app or whatever else people are using. I am not too precious about whether there is a one-year gap before we open up that data, but I think for this to work and to get the advantages we seek, we need to get it further than just one dashboard that people might look at if they remember it exists and they can find their password and their username. That is not how this will really work.

I would not support having two-way functionality. The dashboard has be about sucking out data, not a transactional dashboard. I would hate the idea that someone could go on the dashboard, click a button and do something to their pension after a few beers on Friday night. That would be a crazy thing to get into. The model we have of a dashboard that sucks out data when it is asked for it is the right one. However, we need to get people using it, not just have it gathering real or virtual dust.

The challenge we do really need to address on pensions is how we get people from saving a pretty small amount of money, which will not get them the quality of retirement that they think it will, to saving the amount that they need. That is where collective defined contribution schemes can play a really important part, if they are used as an improvement to DC, not as a weakening of final salary schemes. I think that we would all encourage employers who do want to give their staff the best possible pension to think about whether they can move from a DC to a CDC to give their staff a far better outcome.

The Secretary of State called my hon. Friend the best Pensions Minister in living memory, and I think here that is indeed true. Steve Webb may claim that prize, as perhaps the longest-serving Pensions Minister in living history, but this Minister will not just bring on to the statute book a dream of defined ambition or a third way, but actually see schemes in this space, and it will be a real achievement if we can get these schemes operating.

My only caution is that it when we are selling the advantages, we should be clear that there is no magic. There is no employer guarantee here. The reason why someone gets a much higher pension from this is that the people who, sadly, die earlier in their retirement will in effect be paying for those who have a longer life to have a higher pension. That has always been a feature of defined benefit schemes and it is a feature of annuities, but we should not let people think that somehow this extra pension comes from nowhere. People should understand that they will not have their own pots to pass on to their family if they are one of the ones who, sadly, dies young. At times, the marketing of these has been a little bit over-optimistic about what the benefits of the improved investing strategy or the reduced costs are, when most of the increased pension actually comes from the collective risk sharing.

It is a pity that the Bill has not looked at how we can expand the scope and rates of auto-enrolment. I understand why that has been done, and I know that we have set a mid-2020s timetable for further increases to the rate and changes to the age or the scope of earnings. However, the fact that we have seen opt-outs be far lower than we thought does create the scope to bring forward some of those changes in trying to get people much higher than the 8% savings ratio and nearer to the 12% that we think they really need, or to at least the 12% that we think they really need.

My final area of remarks is on how we protect people and protect what they have saved in relation to scams. There are clearly welcome measures in the Bill, but we possibly could look at how we can go further to make sure that we are putting every tool out there that can possibly be there. We heard evidence at the Work and Pensions Committee this morning from pension scheme administrators, and there is the awful situation where they suspect that the transfer being asked for might be a scam, but they cannot be absolutely sure. They have a duty to make such a transfer, but can we find a way to allow them to delay the transfer a little while so the member can have some more information and a bit of time to reflect and make absolutely sure that that is what they want to do before they go ahead? That sort of change in emphasis in relation to the powers would be really helpful in this situation.

We also need to go further in ensuring that, if people cannot afford advice, they at least take guidance from Pension Wise before they take fundamental decisions. Last time a pensions Bill came before the House—there is one every few years—amendments were tabled to try to make accessing pension guidance if not compulsory, as close to compulsory as we could get. It was suggested that before money was moved, there should be a release code from Pension Wise, to say that the person had taken guidance. The compromise at that point was to get the regulator to go away, do some work, and put measures in place to try to include that nearly mandatory use of guidance. Regrettably, however, the regulator has been incredibly slow, and three years have gone by without us seeing a great deal of action. I hope that this Bill will be clear that that is what we expect the industry to do, and the regulator should put that in place and monitor it.

We want everyone who has saved for decades not to make a horrible mistake at the last minute, and to take that free guidance. Such guidance has huge support and receives overwhelmingly positive feedback, and there is no reason for someone not to take high quality free guidance before risking thousands of pounds that they have saved. I accept that we cannot make that compulsory, but it should be as close to that as possible.

On pension consolidators, the idea of consolidation for weaker, smaller defined benefit schemes is attractive, and I welcome the market moving in that direction and the regulator’s approach so far. However, given that pensions Bills do not come before the House that often, I wonder whether we have missed an opportunity to put some of those rules on a statutory footing. Normally, I would not want the Government to include a clause that allows them to make secondary legislation, as that is not great for parliamentary scrutiny, but I wonder whether the power to introduce such rules could have been included in the Bill, should the regulator start to believe that regulation alone does not have the force or impact that we need. We would not want one of those consolidators to get any kind of market share if we are not sure that it is improving the situation for members, rather than making it worse.

Finally—I asked the Secretary of State about this—the pensions industry can be a huge force for good, and thanks to auto-enrolment it is investing billions of pounds every year. However, it should not invest passively, or just put money in, leave it there, and see what happens. When we have scandals, or corporate failures or disasters, we frequently see that large investors in some companies have not been playing an active role in ensuring the high standards that they should have expected. We must send out a loud and clear message that, where pension schemes and their asset managers are sizeable investors in some of the largest and most significant businesses in our country, we expect them to play an active role in the stewardship of those companies, and not just leave it to others. That is essential if the climate change measures in the Bill are to work. We should not just expect a report every couple of years.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I hesitate to interrupt my hon. Friend’s flow, but there is an ongoing consultation on illiquids and consolidation. I endorse what he says about stewardship. He will no doubt be aware of the consultation that closes this week, which specifically encourages active stewardship regarding the management of large funds as he describes.

[Nigel Mills]

I am grateful to the Minister—perhaps he will submit my views to those consultations. This is about a behaviour change. It is not enough for us to just put rules in place; we need such behaviours to become the norm for large pension schemes that are investing huge amounts. That needs to be part of the behaviour; otherwise, we will have yet another report that gathers dust and that nobody really reads. Members and savers expect such measures. They want their money to be invested well—ethically, and in businesses that will improve the climate outcome. That would be good for pension schemes and their members, and companies need to take such measures seriously.

[Stephen Timms (East Ham) (Lab)]

As has already been widely said, there is much to welcome in this Bill. Some important changes were made in the other place, and I pay tribute to the work that it did. I also appreciate the efforts that the Minister has made to work with my hon. Friends on the Front Bench, with me and the Work and Pensions Committee, and with others across the House to secure broad support for the measures in the Bill.

Pensions dashboards should be an important step forward in enabling savers to understand their pension position, allowing them more readily to make good decisions in planning for retirement. The Select Committee, under its former Chair, Frank Field, to whom I pay tribute, said in 2018:

“The case for a publicly-hosted pensions dashboard is clear cut”

because

“consumers want simple, impartial, and trustworthy information.”

In 2019, the Committee observed:

“A non-commercial pensions dashboard will be a welcome, if overdue, additional tool to provide transparency to individuals and help them plan how they use their pension funds.”

We have heard that it was agreed in the other place that the dashboard provided by the Money and Pensions Service should be up and running for a year, and the Secretary of State should report to Parliament on its operation, before other commercial dashboards are set up, and that commercial dashboards should not have facilities for engaging in financial transactions. Like others, I hope that those changes stay in place.

The former Committee reported in 2016 on defined-benefit pension schemes in between reports that it published on the BHS and Carillion scandals, and its recommendations at that time are reflected in the new powers provided to the Pensions Regulator in this Bill. The Committee recommended, for example, that the Government should consult on proposals to give trustees powers to demand timely information from sponsors, and I welcome the new offence created by the Bill of “knowingly or recklessly” providing false information to trustees.

The Committee also highlighted, in 2018, the attractions of collective defined-contribution pensions. I echo the observation of the hon. Member for Amber Valley (Nigel Mills), whose contribution to the Select Committee I am grateful for, that the pooling of risk offers better pensions than standard defined-contribution saving and avoids the large potential liabilities that have made defined-benefit schemes less popular than they were. I welcome the legislative framework provided in the Bill, and I hope that this new model will be widely taken up.

However, I want to focus my remarks on the issue of pension scams, echoing a number of points that have already been made. As we have heard, the Select Committee has started an inquiry on pension scams, which the Secretary of State referred to. That is the first strand of three in an assessment of the pension freedoms five years on from their introduction by George Osborne.

Losing one’s pension savings to a scam is devastating. The Select Committee has heard of lives that have been ruined by scams—of people who have worked hard all their lives and were looking forward, as they were entitled to, to a comfortable retirement, finding suddenly that their savings have all been stolen; husbands not daring to tell their wives what has happened, or of the shame or dread of the future that they are suffering.

We do not know the scale of this issue. Many scams are never reported, partly because people are ashamed of what they have done and partly because they know that the chance of ever retrieving any of the money is slim. There are grave concerns about the effectiveness of Action Fraud in investigating and ensuring the pursuit of scams, given the low rate of success in retrieving scammed pensions.

The pension scams industry group, to which I pay tribute, estimates that scams could account for anything between 0.5% and 12% of all transfers out of employer pension schemes in the last five years. If we take the middle figure—say 5%—that would mean that over the last five years £10 billion of pension savings have been stolen. There are certainly well-informed reports of named individuals living in the lap of luxury in homes in exotic locations around the world on the proceeds of pensions out of which they have defrauded hard-working savers.

I am bound to say that these awful problems should have been foreseen when pension freedoms were introduced five years ago. Indeed, as I remember well, they were foreseen, but the coalition Government did not adequately prepare for them. I do not know why—they should have done, but they did not. Charles Randell, chair of the Financial Conduct Authority, said at the 2020 annual public meeting of the FCA that

“the manner in which the pension freedoms were introduced leaves a number of lessons to be learnt, including about the importance of coordinating changes in government policy with regulatory and industry preparedness and the speed with which major changes are introduced.”

He was absolutely right—those things were not done, and thousands of hard-working people have had their lives ruined as a result.

The pension scams industry group has thought long and hard about this, and the pensions industry has every incentive to worry about the reputational damage that it suffers as a result of the impact of scams. If people cannot trust what will happen with their money they will not save. The industry group has identified red flags to assist in establishing whether the destination for a proposed transfer is likely to be a scam. It has suggested three main flags, any one of which, most people would agree, should mean that the transfer should not go ahead: first, if the receiving scheme is on the FCA warning list or some other internal list of schemes, entities or individuals of concern; secondly, if advice on the proposed transfer has been provided by firms or people who do not have appropriate regulatory permissions; and, thirdly, if the provider or self-invested personal pension operator is not registered with the FCA. The industry group has identified a number of other flags that may not in themselves show that the transfer ought not to go ahead, but do suggest that further checks need to be made before it does.

As I mentioned in my exchange with the Secretary of State, an amendment to the Bill was tabled in the other place to ensure that if a proposed transfer raised red flags it should not go ahead until the saver had taken financial advice. The problem graphically reported by the pension scams industry group is that only about a quarter of would-be scam victims would be deterred from proceeding after receiving advice telling them not to do so. The scammers win people’s confidence—they become their friends, as we heard in the Select Committee this morning. The scammers tell people, “Yes, they will say that, but that is because they do not want you to move your money.” People trust scammers until the moment they find their pension has gone.

I want to table a proposal enabling trustees to refuse to make the transfer altogether if one of the major red flags is raised. In my view—and I know that other Members support such an amendment—the statutory right to transfer conveyed in pension freedoms legislation should not apply in such cases. We heard this morning from scheme trustees not only that they had an obligation to transfer even if they knew perfectly well that the destination was a scam but that if they did not do it quickly enough they would be fined for not getting a move on under the arrangements that are in place. It is hard to argue that the statutory right of transfer should apply, for example, if the destination is a firm that is listed on the FCA warning list. If the trustees of a scheme know that a particular transfer is going to a firm that is on the warning list, they should surely not have a legal obligation, as they do at the moment, and will still have under the Bill, to hand the money over to crooks if the saver has taken advice but still, despite that advice, wants to go ahead. If the receiving firm is a above board, it must show that to the FCA and get itself off the warning list.

[Guy Opperman]

I am grateful to the Chair of the Work and Pensions Select Committee with whom I have had, I think, three separate meetings over the summer specifically to address this point. Clearly we are all keen to ensure that clause 125 and the powers within it address the issues that he rightly raises and that are of concern to fellow members of the Select Committee.

The right hon. Gentleman will be aware that I wrote to him yesterday and have given evidence in a more detailed document to the Work and Pensions Select Committee. With his permission, I will put both those documents in the Library of the House, so that all colleagues, including the hon. Member for Airdrie and Shotts (Neil Gray), have an opportunity to be aware of them. I am very happy to continue working with the right hon. Gentleman, and he will be well aware that the view of my Department is that the matters he raised can be addressed fundamentally by clause 125. The FCA has particular views of the red-flag list warning list point, but I am sure we can continue the dialogue.

[Stephen Timms]

I am extremely grateful to the Minister for those points and for the work that he has done, the responsive way that he has looked at the issue over the past couple of months and for the information that he has now provided. I will be very keen to hear from the Pensions Scam Industry Group whether it feels that the proposal that the Minister has now tabled will meet the points that it has been raising. However, I am grateful for the progress that we have been making on this issue and that will no doubt be further explored in Committee in the weeks ahead.

The determination by the pensions ombudsman in 2015 allowed trustees to decline a transfer request when there were concerns about a scam but the Hughes v. Royal London court case in 2016 overturned that determination and established that the trustees do have an obligation to go ahead even when they know the receiving scheme is a scam. That must be changed, and I am very encouraged by the Minister’s point that he believes that it will be possible to bring forward regulations under the Bill as it stands to have that effect. It is important that that change is made.

Mr R complained to the pensions ombudsman about the decision of the London Pensions Fund Authority and Newham Council, which is my local authority, to allow him to transfer his pension to the Gresham pension scheme. That transfer went ahead and he has lost his entire pension valued at £64,000. He has been awarded £1,000 in compensation since then. His view now is that the trustees should have refused to make that transfer but, under the 2016 Hughes v. Royal London decision, the trustees are legally obliged to go ahead with the transfer in a case of that kind. I think Mr R is right that the transfer that he requested should have been blocked by the trustees, and I very much hope that in future that will be possible. Very few people would today argue that the pension freedoms should be repealed but pension savers are entitled to expect protection. The change that I have described is designed to provide it.

My final point has been touched on by the shadow Secretary of State. Clause 123 was amended in the other place. As the Minister knows, there is very strong support for the amended clause on the part of current defined-benefit schemes, such as the railways pension scheme and the BT scheme, that remain open. If that amendment were to be removed, those schemes fear that they would be treated unfairly by the regulator and in the same way as schemes in very different circumstances. Their future would be threatened as a result. It could be the final blow for private sector defined-benefit schemes. There is great nervousness about the Minister’s intentions on that clause, as he well knows, and about the fact that if he removes the amendment, he may make those schemes unsustainable. I wonder if, in closing the debate, he might comment on his intentions on clause 123.

[Gareth Davies (Grantham and Stamford) (Con)]

It is a great pleasure to follow the Chair of the Work and Pensions Committee. This is an incredibly important debate because we know that our population is growing in age. By 2024, it is projected that 24% of our population will be over the age of 65, and in my constituency, 31% of our population is already over the age of 65. One of the key challenges that we face in this place is determining the best way to ensure that older people have safety, dignity and comfort in their retirement. They have paid their taxes, contributed to our economy and raised the next generation. But let us be clear: ultimately, the surest way of ensuring that people have safety and security in their retirement is through economic growth. No pension fund reform will be as effective if we do not have economic growth, because through economic growth, people earn more money and save more money

It is clear that our pension system simply has not progressed to meet the needs of a modern economy. That is why I warmly welcome the Bill for its clarity for pensioners and the protections that it brings. I would like to focus my speech on the dashboard provision, which is one of the most interesting aspects of the Bill, and I have three points to make: first, on why I believe the dashboards are needed; secondly, on concerns from the industry about the commercial provision; and thirdly, on concerns about the cost to pension plans.

In terms of why the dashboards are required, pension provider LV= estimates that a typical worker in Britain changes job every five years. As the Secretary of State said, a British person today can have as many as 11 jobs throughout their career, going from job to job and collecting pension plans along the way. It is hard to keep track of those pension pots, and people forget or lose them. The Pensions Policy Institute has outlined that around 1.6 million pension pots, worth a staggering £19.4 billion, are lost today. That works out at around £13,000 per lost pension plan. By 2050, it is estimated that there may be as many as 50 million lost pension pots.

These dashboards are incredibly important because, as the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) rightly pointed out, an additional 10 million people have been put into workplace pension plans in the last eight years alone. To ensure that all pension pots are included in the dashboards and to harness the very best of British FinTech, we need a commercial provision, and that brings me to my second point.

While some in the industry have suggested that commercial dashboards open pensioners up to mis-selling, I put it to the House that this mistrust is unfounded. I looked at Denmark and Israel, which both have pension dashboards alongside commercial transactions, and not once has there been a case of mis-selling. We have one of the greatest financial regulators in the world in the Financial Conduct Authority, and I have tremendous faith in its ability to ensure that mis-selling does not occur.

Thirdly, I want to address the comments made about cost to pension plans by others in the industry. A dashboard is only as good as the data put into it. I would expect pension plans to already have their house in order and to have been practising data hygiene for many years. Anybody who has worked in a senior position in the investment industry, as I have, will know that data science is one of the fastest growing parts of any business today, and not least pension or investment businesses. Those businesses should have been practising strong data hygiene for many years. I think we can all agree that the many benefits that are brought to millions of pensioners up and down our country, across these lands, will far outweigh any cost to pension plan providers.

I also want to highlight—it was mentioned by my hon. Friend the Member for Winchester (Steve Brine) who is no longer in his place—the provision to compel pension providers. I want to emphasise it, because I think it is under-appreciated just how important that is. If we look at what happened in Denmark and Sweden, which had a voluntary provision to provide data, it took between 10 and 13 years for those dashboards to be fully operational and fully comprehensive; if we look at Australia, which had similar provisions to this Bill, it took a fraction of the time. That is an under-appreciated point that deserves recognition.

[Guy Opperman]

To address that point, the Government were clearly waiting for the industry to volunteer the provision of the data to create a pension dashboard, but upon that not being done on a voluntary basis, it was inevitably the conclusion of both industry and advisory bodies that we should proceed to compulsion. Hence, the Bill, following consultation, requires such data to be provided. I accept the international examples as totally correct, and that is why we are proceeding as we are.

[Gareth Davies]

I am grateful to the Minister for clarifying that and, again, I welcome the provision to compel pension providers. It allows the dashboards to be as effective as possible as quickly as possible.

Finally, let me address clause 124, requiring pension fund managers to include climate change risk. Again, I would expect pension fund managers already to be incorporating climate considerations in their investment process—climate change is clearly a risk for all pension pots. I am disappointed that we have to include it in the Bill, but I welcome it none the less and highlight how it emphasises, once again, this Government’s commitment to green finance.

It would be remiss of me, however, to stand up in this Chamber without mentioning my long-standing call to the Government to issue a Government green gilt, which would help to raise literally billions of pounds to fund some of the announcements that have been made this week. That would follow Germany, Netherlands, France and many countries around the world in tackling UK pension fund assets, some of which—many of which—have already been funding other countries’ bond issuances around the world. I would welcome any comments that the Minister has on that point.

In conclusion, this is an excellent Bill. I welcome the clarity that it brings to pensioners, as well as the powers for the regulator that will give a lot of comfort to many. It will clearly help bring our pension system into the modern world.

--- Later in debate ---

[Ben Lake (Ceredigion) (PC)]

Diolch, Mr Deputy Speaker, for calling me to contribute to this very important debate, which I think has revealed quite a refreshing amount of consensus on both sides of the House. It is a pleasure to follow the hon. Member for Runnymede and Weybridge (Dr Spencer). I agree with many of the points he made in relation to the measures in clause 125.

The Bill represents a welcome step to ensuring the security and responsible use of UK pension schemes. I particularly welcome clause 124, which addresses the vital issue of climate change: the risk it represents to our long-term socioeconomic security and the role pension funds can play as key levers in the decarbonisation effort of our economy. Wales has a proud record on sustainability and climate change mitigation. A commitment to sustainable development is written into our de facto constitution and we were a world leader with our Well-Being of Future Generations (Wales) Act 2015. I know the Minister is aware of the groundbreaking work undertaken at the Centre for Alternative Technology, which is located in the constituency of the hon. Member for Montgomeryshire (Craig Williams). There is also groundbreaking work undertaken on my side of the Dyfi estuary. In particular, Aberystwyth University boasts the world-leading Centre for Glaciology, while IBERS—the Institute of Biological, Environmental and Rural Sciences—and Aberinnovation campus conduct crucial work into climate change mitigation.

[Guy Opperman]

I am grateful to the hon. Gentleman for putting on the record my knowledge of mid-Wales and support for so much of what is taking place there. I would be delighted to join him and visit the two institutions in his constituency and in that of his neighbour, my hon. Friend the Member for Montgomeryshire (Craig Williams), when we are allowed to do visits in future.

[Ben Lake]

That is a very kind offer from the Minister and I will take him up on it.

Achieving net zero emissions will undoubtedly be a difficult and expensive challenge, yet, as the past few months have shown, the state, with its unrivalled ability to borrow and invest, can effect unprecedented change to our society and economy quite rapidly when there is a desire or need to do so. With around £3 trillion invested in UK pension schemes, pensions represent an equally transformative source of investment and could support our decarbonisation efforts.

I welcome the requirements in the Bill for pension schemes to assess their exposure to climate change risk. Those requirements are necessary and well overdue. The Economist Intelligence Unit’s estimate that climate change could eliminate up to 30% of the world’s total manageable assets, along with the fact that the vast majority of UK pension schemes currently do not take climate change risk into account, offer sufficient justification for the introduction of the requirements.

Closer to home, in 2019 Welsh local authority pension funds still had more than £1 billion invested in fossil fuels. That means not only that the pension holders are exposed to future climate change risk, but that the funds are—indirectly at least—undermining collective efforts to decarbonise the economy. I therefore urge the UK Government to consider how they can better work with the Welsh Government to encourage the use of pension wealth to realise decarbonisation and productivity improvements across the four nations of the United Kingdom.

The opportunities are there. In recent years, vital projects such as the Swansea Bay tidal lagoon have gone unrealised, while the UK Government have proven themselves unwilling to finance key aspects of our carbon transition in Wales, including improvements to the Welsh railways. Simply put, we have an opportunity to make pensions work better for Wales, to achieve our climate targets and to meet our international commitments.

I welcome the Bill’s increased powers for the pension regulator and the greater urgency for funds to consider climate change risk, but the Bill could go one step further. The finance sector has already taken welcome steps not only towards divestment but in advancing the environmental, social, and corporate governance agenda. The UK Government could bolster those efforts by amending the Bill so that all default funds are required to reach net zero by 2050, at the latest. That would stimulate green investment, as well as industry development, including better reporting standards and stewardship, as mentioned by the hon. Member for Amber Valley (Nigel Mills) earlier.

Pension funds have a pivotal role to play in decarbonisation—from influencing companies’ boardrooms to invest in a green transition, to protecting pension holders from the risk of climate change. For too long, their transformative potential as investors in that regard has been underutilised, so I welcome the Bill, and particularly clause 124, and hope that the Government can consider strengthening it further so that pension schemes play an even greater part in achieving our vital climate change targets.

--- Later in debate ---

[Steve McCabe]

That is a good point. I think surveys have been undertaken that show that younger people from the 25-plus age group—there is an age divide in this—are much more concerned about where their pension investments go. As with most other things, if you are putting the money in, you should have a voice in where it is directed. That seems perfectly reasonable.

[Guy Opperman]

Let me try to clarify the legitimate point raised by the hon. Gentleman and also the flipside in terms of the argument by my hon. Friend the Member for Grantham and Stamford (Gareth Davies). The Department for Work and Pensions has driven pension trustees forward to embrace ESG and the path of net zero, and asset managers have been lagging behind. I want to put on record the good work done by the FCA, which I accept has been criticised legitimately in the past. Only last week, Chris Woolard and his team specifically issued guidance that accelerates the asset managers to put them on a parallel path to the pension trustees so that we basically ensure that the original investor, and then the actual manager of the money, are working off the same hymn sheet.

[Steve McCabe]

I am grateful to the Minister and acknowledge the points that he has made. I just think that there may be permission to go a bit further in this regard, and that is the point that I want to emphasise.

I support directed advice, particularly where there is any question of a scam. I welcome a power for trustees to intervene. I am happy to support the proposal from my right hon. Friend the Member for East Ham (Stephen Timms). In my view, it might be better to give the Money and Pensions Service a role in offering limited advice rather than just the guidance so that we try to bridge the gap between guidance and advice. The fundamental difficulty seems to be that, unless people have a particularly big pot and can afford advice, they are denied it, and guidance is not sufficient to protect them or steer them in the right direction. There is an argument for something to bridge that gap, and it might be worth looking at a role for the Money and Pensions Service in doing that.

Finally, I want to go back to where I started and share my concerns that the Bill might be giving too much power to the Pensions Regulator. I was not entirely convinced by the Secretary of State’s comments at the outset. There is a legitimate fear that clause 107 has the potential to criminalise a much wider group of people than can possibly be necessary or sensible. I ask the Minister to look at that again and see if we can be absolutely certain that the net has not been cast too wide.

--- Later in debate ---

[Guy Opperman]

I am grateful to my hon. Friend for what she is saying, but on what Mr Mark Carney has said, she will be aware that he is a member of the Task Force on Climate-related Financial Disclosures. Under the Bill, the UK will be the first G7 country to bring that into statute. The advantage of that is that the very aspect that she has highlighted as a problem—FTSE 100 companies are not aware of what the risk is from climate change to the way in which they do business—will be tackled, as they will now be forced to disclose that on an ongoing basis to the wider market and individual consumers with pension investments. I believe that the issue raised by Carney, the Treasury Committee and others is addressed in the Bill and the consultation that accompanies it.

[Harriett Baldwin]

I welcome what the Minister says, and I did not want in any way to undermine the provision in the Bill and the incredible progress that it represents on our journey to a greener financial future. I welcome those steps wholeheartedly, but I wish to highlight that those risks, although disclosed, will be there. Many of our constituents, every month in their payroll, put investments into index-based funds in which those risks are inherent. It is incumbent on us all to recognise that that could be a big driver of UK returns, given that a significant portion of the index consists of carbon-based industries in the UK.

I make that point, and I make the point about charges, because the pension dashboard will play a vital role in showing people what they are paying for those returns in an environment where interest rates are virtually zero, where the index has quite a lot of climate-affected assets, where charges can be as high as those from NEST, the state-backed provider, and where investment returns could be lower for a protracted period as we recover from the pandemic. It is worth flagging the fact that giving information on charges in particular and the way in which they compound over a lifetime will be a powerful part of the very many welcome changes that we can see in this excellent piece of legislation.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

This is an important Bill for millions of everyday people: those who have already retired and those who are saving for retirement. The Bill makes pensions safer, better and greener. I thank colleagues from across the House for their support of the Bill. I am nervous when there is consensus in praise of a Bill. It is a bit like when the chairman of a football club indicates that they have confidence in the manager, and we all know how that goes in the normal course of events.

First, I would like to address some of the issues that are not in the Bill. State pensions are not a part of the Bill. The scope of the Bill makes provision for occupational pension schemes only. The points on the state pension are duly noted, but they are not within the scope of the Bill. On automatic enrolment, it is entirely true that the automatic enrolment review sets out our ambition to remove, in the mid-2020s, the lower earnings limit and the lower age threshold. That will happen, but in due course. On superfunds, I welcome the support in broad terms—I accept it is in broad terms—from the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), and the SNP spokesman, the hon. Member for Airdrie and Shotts (Neil Gray). I accept that this is an ongoing process. There is an interim regime, which has been brought forward by the pension regulator. It is something we hope to take forward, but I accept that the Government do need to address it in due course. On pensions taxation, many points have been raised. I am sure the Chancellor is listening avidly and will address the matter in due course.

The importance of the Bill has been shown by the many different and thoughtful contributions by hon. Members. The House welcomed the fact that certain Members have been willing to identify themselves as pension geeks, not least the shadow Secretary of State and my hon. Friend the Member for Delyn (Rob Roberts). I thank all colleagues from the 2019 intake who have contributed so brilliantly, including my hon. Friend the Member for Grantham and Stamford (Gareth Davies), who explicitly made the case for green gilts. I also thank my hon. Friend the Member for North West Durham (Mr Holden), who is my new neighbour. All I can say about him as a neighbour is that he is an awful lot better than the previous occupant of his seat, and I welcome him to it.

This Bill matters, and, as was put best by the hon. Member for Blaenau Gwent (Nick Smith), it matters most to the mums and dads in Tredegar. My hon. Friend the Member for West Bromwich West (Shaun Bailey) said that we need to look at the impact of this legislation, whether it is on the people of Tredegar or Tipton. I will be resolute in ensuring—to the best of our abilities within the confines of the Bill—that scams are stopped. It is crucial that we drive forward real change through clause 125 and the regulations that follow. As I said, I have written to the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Stephen Timms), and given detailed evidence to the Committee. I am quite sure that we can continue the dialogue to flesh out what that will mean in the regulatory process. I am keen that the Bill is utilised to the best of our ability and that it sets out a road map to ensure that people are not scammed through their pensions. We will stop those callous crooks and ensure that transfers are carried out appropriately.

[Nick Smith]

It is great to hear the Minister speak up for the good people of Tredegar, my home town. I accept that dashboards and transparency should help in understanding schemes’ performance, fees and important matters that affect pensioners across the country, but, as the Secretary of State said in her introduction, we have 40 million-plus pensioners and there are 40,000 different schemes. Will the Pensions Minister please tell us more about how he is going to ensure that dashboards are sufficiently regulated so that there are no future problems with this initiative?

[Guy Opperman]

I will come to dashboards in more detail. I am happy to discuss this with the hon. Gentleman individually. The long and short of it is that we are keen that there is a detailed authorisation regime and that there are suitable restraints in place to ensure that the system is not open to abuse. This is different from the type of dashboard envisaged by some, which is a repository of all data. We are definitely not going down that route. With the data team, we are designing the dashboard to ensure that it is data accessed by the individual, not a pot that all parties can take data from. It is a detailed conversation and one that I would be delighted to take up with the hon. Gentleman, but I assure him that our objective is to ensure that there are no problems of the kind he raised.

Let me turn to green technology and climate change. I look forward to my visit to mid-Wales and to working with the Welsh Government. I agree with the point made that if one wants to change the world, investing in a pension is unquestionably the right way forward. I endorse the comments of my hon. Friend the Member for West Bromwich West and my hon. Friend the Member for Grantham and Stamford, and I am certain that the Treasury is listening to the idea of green gilts as an alternative vehicle for pension funds to invest in on an ongoing basis.

There is no doubt that, by including TCFDs in the Bill, we are continuing a narrative: this Government are driving forward work against climate change more than any other Government in the world. We are the first Government in the G7 to legislate for net zero. We are leading the way on environmental, social and corporate governance throughout the European Union, as is acknowledged by all our partners in the EU. We are the first Government to legislate to bring TCFDs into law in this country. Without a shadow of a doubt, this builds on the work that we have done, and on the promises and assurances made by my right hon. Friend the Prime Minister in his speech to the Conservative party conference yesterday.

I turn to CDCs, for which there is welcome support across the House. Royal Mail, and all the postmen and women who support all our constituencies up and down the country, are keen to see this measure. I have worked extensively with the Communication Workers Union, Royal Mail and the various organisations that have supported this policy. I do not want to be too Blairite in a spirit of cross-party unity, but there is no doubt that CDCs are the third way in pensions, and a way forward that provides an alternative to the current regime.

With the dashboards, we are trying to bring pensions into the 21st century. We are building on the work that has been done in other markets, whether energy, banking or savings, all of which have similar things with open banking, savings apps and the ability to change an energy provider. I can assure the hon. Member for Birmingham, Selly Oak that the state pension will be part of the dashboard. On the formulation of the dashboard and what it looks like, many people want to talk about the end product. I merely want to get the product up and running, but the end product will, quite clearly, have something about costs and charges, which addresses the point that the hon. Gentleman raised, as did my hon. Friend the Member for West Worcestershire (Harriett Baldwin). I can assure her that charges are under review on an ongoing basis. The dashboard will also, we hope, do much to provide simpler statements, simplifying something that has been very technical for very long time.

We heard about the issue of small pots and the difficulties in understanding those on an ongoing basis. It may have escaped the House’s attention, but the Department has an ongoing small pots review that is working cross-industry to try to assess exactly what the particular problems are. That will include, I assure the House, a consideration of “pot follows member”. Clearly, all that would require future regulation, but we are definitely looking at it as a Department.

We believe very strongly in the importance of a Government-backed, impartial dashboard, and we have committed to having the MaPS dashboard available from the start. We strongly believe, though, that multiple dashboards will help a consumer base with differing priorities. In launching a product, do we expect the customer to find it, or do we launch the product where the customer is? There are different customers who have different expectations and needs, and some already have a relationship with a provider. A variety of dashboards can help to evolve the project.

[Neil Gray]

I thank the Minister for giving way. I want to say at the outset how pleased I am to see him in his place. He should rest assured that the thoughts of my family are very much with his. Likewise, I take a moment to ask the House to remember that my hon. Friend the Member for East Dunbartonshire (Amy Callaghan) would have been here, were it not for her health issues, as the SNP pensions spokesperson.

I think it is clear that Members on both sides of the House, even those on the Government Benches, are not far apart on the issue of the dashboard. Between now and the Committee stage, would the Minister be willing to discuss his intentions with me and with Labour Front Benchers and the Liberal Democrats to see what compromise could be sought in all our interests going forward? This is a really important issue for us. I know the Minister to be someone who seeks consensus where possible, and I hope he would like to do so again in this case.

[Guy Opperman]

I have already engaged in extensive discussions, but I would be delighted to continue to do so both in and out of Committee. I think it is very clear that the Secretary of State and I have gone to great efforts to try to take the House with us in that dialogue and debate, and I can assure the hon. Gentleman that that will continue.

Let me move on to address the powers of the Pensions Regulator. I think it is right for me to put on record that TPR has done a good job during Covid, and, as an organisation, it is definitely improving. I accept that there have been criticisms, but it has unquestionably progressed under the supervision of its current chairman. I agree with my hon. Friend the Member for Delyn that these regulatory powers provide a fresh set of dentures for TPR to ensure that its bite is a little more substantial than its previous bark. That is a fair point well made. This builds on work that has already been done.

Several colleagues have raised the issue of open DB pension schemes. The Government continue to engage with the schemes and the Pensions Regulator, and we want to understand the concerns. I met stakeholders last Friday, and I have discussed this with Opposition Members. The measures in the Bill are designed to deliver clearer funding standards while upholding the flexibility of the scheme funding regime. There is an ongoing consultation, issued by the regulator, which looks at a potential bespoke regime. I have already discussed with the individual schemes whether the consultation is the right way forward, but I am happy to continue that dialogue, as I am on other issues.

I thank many colleagues for their kind words and support for my wife and I following the death of our twin boys. It is genuinely appreciated. This House is a special place when we are presented with adversity. It brings us together, and I think it humanises us that, while we disagree politically, we share the same problems. I echo the comments made by the hon. Member for Airdrie and Shotts and wish the hon. Member for East Dunbartonshire (Amy Callaghan) well.

We are pushing ahead with an innovative and ambitious pensions agenda that is reforming retirement. It delivers on commitments made in a manifesto backed by the people of this country in December 2019. It makes our constituents’ pensions safer, better and greener—safer by cracking down on scams and unscrupulous bosses, better by utilising new technology to develop and create a dashboard, and greener by ensuring that we get to net zero through ethical and sustainable pension investment. I look forward to further discussion, and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Pension Schemes Bill [Lords] (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Pension Schemes Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 5 November 2020.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Michael Tomlinson.)

Question agreed to.

Pension Schemes Bill [Lords] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Pension Schemes Bill [Lords], it is expedient to authorise:

(1) the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided; and

(2) the payment of sums into the Consolidated Fund.—(Michael Tomlinson.)

Question agreed to.

Social Security (Up-rating of Benefits) Bill

Guy Opperman Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I would like to begin by thanking everyone who has spoken in the debate, which has been wide ranging and consensual and has covered a number of topics.

Because this is my first appearance back at the Dispatch Box, Madam Deputy Speaker, I just want to raise a personal matter. This is my first appearance since the demise of my twin boys in late June, and I was genuinely struck by the amazing words of commiseration and support that I received across the House from all colleagues. I am deeply grateful, and I know I speak for my wife on that particular point as well.

Moving on, I was struck by the opening point from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on the shadow Front Bench, and it is one I think we should all celebrate in this House: rising longevity is a fantastically good thing, and it is a wonderful problem to have. Clearly, there are policy and fiscal issues that follow it, but it is a genuinely good thing that we are addressing.

Even though the House is not well populated today, I am conscious that before me I have a former Pensions Minister from the Department for Work and Pensions—the right hon. Member for East Ham (Stephen Timms), who now chairs the Select Committee. I also think that the hon. Member for Stalybridge and Hyde was a special adviser—

[Jonathan Reynolds]

Not quite.

[Guy Opperman]

He was an adviser—let’s put it that way—to the previous Labour Government, and he is acutely conscious of the issues that we are dealing with today.

Clearly, there is a delightful sense of a cross-party consensus, but I want to address some of the key points that were raised. People clearly wish to make the case on pensioner poverty, and I will address that. One can trade statistics, but material deprivation for pensioners fell from 10% in 2009-10 to 6% in 2018-19. There are 100,000 fewer pensioners in absolute poverty before and after housing costs than in 2009-10. Average pensioner incomes have grown significantly in real terms over the past two decades. Average weekly income in 1994-95 was £165 a week after housing costs; that compared with £320 a week in 2018-19. For 2020-21, we are forecast to spend £126 billion a year on pensioners, including £102 billion on state pension. Colleagues will know that that is a record sum spent by any Government in this House in respect of pensioners.

I will attempt to answer some of the particular points that were fairly made on pension credit. It is again the case, and I should put this on record, that pension credit increased significantly under the coalition and then under this Government, from £132.60 to £173.75 for a single person and from £202.40 to £265.20 for a couple. The take-up of pension credit is something that all would like to see increased. I echo my hon. Friend the Member for Delyn (Rob Roberts) on that; this is the first chance I have had to respond to him in this House, and it is delightful that he is here. He makes the fair point that it is in all our interests that pension credit be increased.

One of my colleagues asked what had been the impact of the BBC decision. There is no totally granular data on that, but I can assist to a degree: the claims for pension credit, which is what we want to see, were dramatically increased as of July 2020 compared with January 2020. There is definitely a massive increase in claims and clearly a filtering through of the acceptance of said claims. I refer hon. Members to the parliamentary question asked by the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), PQ 82024. I will ensure that I put a note of the issue on the record in the Library to answer that particular point and expand upon it.

In respect of pension credit, the Secretary of State was right to identify that we had a significant nationwide campaign in the spring of this year, and that the combination of that and the impact of the BBC decision clearly had an impact on greater take-up. The specific causes of the increase in take-up are hard to assess, but there is no doubt that the take-up has been larger.

In respect of the point raised by various hon. Members about working-age benefits, it is right to say that the Government are proud of the fact that they have provided support during the pandemic for those below state pension age, whether through the plan for jobs, with Kickstart now open for bids across Great Britain and doing very well, increasing the standard allowance in universal credit and working tax credit by £1,040 this year, benefiting 4 million families, investing approximately £9 billion of extra support to protect people’s incomes through the pandemic, removing the seven-day waiting requirement for employment and support allowance claims linked to covid-19, or relaxing the universal credit minimum income floor for self-employed people.

As the Secretary of State said to the right hon. Member for East Ham and the Work and Pensions Committee yesterday, that is a matter that is clearly in her mind and that is to be considered by the Secretary of State. I cannot really add or expand upon the answer that she gave, and it would not be appropriate to comment further, because clearly she has to conduct a review and then return to this House to respond to that review.

Having dealt with the specifics, all colleagues have identified that this is an important piece of legislation, without which the state pension would be frozen for a year from April 2021. It makes technical changes to ensure that state pensions can be uprated, providing peace of mind to pensioners regarding their financial health. It is a one-year Bill, so it is not the case that we are considering the matter beyond the first year. Clearly, this arises out of the covid emergency and its impact on earnings, and it would not be appropriate to address the future at this stage. I believe this Bill is a further demonstration of this Government’s action in support of pensioners, and provides them with financial peace of mind in the face of the coronavirus pandemic. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

SOCIAL SECURITY (UP-RATING OF BENEFITS) BILL (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Social Security (Up-rating of Benefits) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(David T.C. Davies.)

Question agreed to.

Social Security (Up-rating of Benefits) Bill

Guy Opperman Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons & Report stage & Report stage: House of Commons
Thursday 1st October 2020 Commons Chamber

Again, I pressure the Government to consider what this pandemic means for those 1950s women and whether there is the opportunity to bring forward more support for them. I ask the Government, in responding to this amendment, to consider that. There will be further opportunities in future to recognise the strain on this cohort of women and what further measures could be done for them.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I thank colleagues for their contributions and will respond briefly because I accept that these are probing amendments. I will most definitely not take up the opportunity to refight the 2019 election with the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), because, frankly, that is probably somewhere he does not wish to go.

On the probing amendment on the triple lock, this is a matter, as was rightly highlighted by the hon. Gentleman, that the Secretary of State herself was pretty unequivocal about. I also welcome his analysis and appreciation that the state pension should not be viewed in isolation, because, quite clearly, it is one element of the various supported benefits that are available—whether a national health service, free at the point of delivery, or the support that is now going through with automatic enrolment, a cross-party policy developed by the Labour party and the Turner commission. Various Ministers in the Labour Government had brought that policy forward as part of the coalition, and it was then implemented by the Conservative Government. That has clearly had an impact, as has, obviously, the expansion of pension credit, and it should be seen in the round rather than on its own in that particular context.

Clearly, the key policy has been the increase in the basic state pension and the fact that we are now £1,900 larger than we were in 2010. Clearly, this is a matter that all parties in this House are supporting on an ongoing basis. I submit with respect that it is entirely appropriate that the Secretary of State should be allowed to bring forward this legislation, as the House seems to deem fit, and should conduct the uprating review and then come back to this House, as she is required to do, and debate the matter in this House.

The issue of pensioner poverty leads me into amendment 5 in respect of the women against state pension inequality. It is unquestionably difficult to predict future poverty rates when one is assessing an impact. The Bill is an enabling piece of legislation. It is not a piece of legislation that then implements a particular policy. There is also a danger with trying to accurately predict future poverty rates, when one is looking at an individual policy and an individual part of a Bill. For example, the published predictions of the Resolution Foundation, which were cited by colleagues earlier on, suggested that relative child poverty after housing costs would increase in 2017-18 when they actually fell. The Institute for Fiscal Studies has not published projections of poverty since 2017.

Let me turn now to the other amendments submitted by the hon. Member for Glasgow South West (Chris Stephens). In respect of the assessment in amendment 3, I submit that there is a “be careful what you wish for” approach. The assessment is unnecessary and, in reality, unfeasible. The reality is that the UK state pension is payable worldwide and given that the socioeconomic conditions of each country vary enormously, it is simply unfeasible to produce a meaningful assessment of the uprating policy’s impact on overseas recipients, and—this is the crucial point—notwithstanding issues regarding feasibility, the timetable for laying a draft order for uprating does not allow for an assessment to be made. If there were to be an assessment, and the amendment was successful, the reality is that that assessment would not be made in time—by November 2020—with the consequence that the state pension would be frozen. I most definitely suggest, with great respect, that that assessment would be a negative idea for all the pensioners who are seeking an increase, potentially by reason of this legislation.

On amendment 4, this is a long-standing policy pursued by successive post-war Governments, who have taken the view that priority should be given to those living in the United Kingdom in drawing up expenditure plans for pensioner benefits. There are no plans to change that policy. The up-rating of the state pension is intended to provide support for pensioners who live in the UK.

I turn to the perennial issue that the hon. Gentleman seeks to raise—I do not diminish the fact that he wishes to raise it, as did the hon. Member for Stalybridge and Hyde from the Opposition Front Bench—in respect of the changes to the state pension increase, which were, of course, supported for 13 years by the Labour Government when they were in power and, in fact, were enhanced by the 2007 Act. It is not the Government’s intention to amend the 1995 Act, the 2007 Act or the 2011 Act. Clearly, if the Scottish Government wish to act, sections 24, 26 and 28 of the Scotland Act 2016 give powers to the Scottish Government to intervene in Holyrood if they choose to do so. We would certainly resist any changes in this Parliament.

I take the point made by the hon. Member for Stalybridge and Hyde about the 2019 election and the debate on that matter, but since then, there has been the Court of Appeal’s decision in respect of the court case, which unequivocally found for this Government, the coalition Government, the Labour Government and the Conservative Government, dating back to 1995 on all issues on these grounds, including notice. With respect, I believe that the matter should rest there.

The long and the short of it is that I would resist the amendments, and I invite the hon. Member for Glasgow South West, with due respect, not to press them.

[Chris Stephens]

I would love to say that I am shocked and stunned that the Government have not accepted any of the amendments, but that would perhaps be an oversell. As the Minister said, they are probing amendments. He will be well aware that we will return to these topics, and I invite Members of the other place perhaps to pick them up when they discuss the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Bill read the Third time and passed.

Oral Answers to Questions

Guy Opperman Excerpts

Monday 14th September 2020 Commons Chamber

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

What steps she is taking with the Secretary of State for Business, Energy and Industrial Strategy to ensure that vulnerable people have access to welfare benefits through Post Office services.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

Ministers in the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy worked closely with the Post Office to ensure that vulnerable customers were able to access benefit payments during lockdown. It remains the case that at least 99% of customers with a bank, building society, credit union or Post Office card account can already access their benefit or pension payments at post office branches or post office ATMs.

[Martyn Day [V]]

Some 1.23 million people do not have a bank account. Given the DWP’s decision that new benefits or state pensions will no longer be collected using the Post Office card account, with the scheme officially closing in November next year, how will the Minister ensure that an estimated 300,000 vulnerable people can still access their benefits?

[Guy Opperman]

Any customer with a building society or credit union account will be able to continue to access their benefit or pension payments at a post office, even after the closure of the Post Office card account, including all bank accounts. There is also the ability to open a basic bank account, for which assistance can be given.

[Bob Blackman (Harrow East) (Con)]

What steps her Department is taking to ensure that welfare benefits for rent are paid to landlords to prevent rental arrears building up.

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[Paula Barker (Liverpool, Wavertree) (Lab)]

What steps her Department is taking to (a) investigate and (b) rectify errors made in the payment of the state pension to retired women.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

We are aware of a number of cases in which individuals have been underpaid category BL basic state pension. We corrected our records and reimbursed those affected as soon as the underpayments were identified, and we continue to check and remedy further cases that are identified.

[Dame Diana Johnson]

With up to 130,000 women potentially affected, and with many of those women who have already contacted the DWP having been told, wrongly, that they are not entitled to any additional money, will the Minister say what more he is going to do, in the light of the miscommunication that affected thousands of women represented by the Women Against State Pension Inequality campaign, to ensure that the women affected are contacted and given the correct information?

[Guy Opperman]

As the hon. Lady knows, I cannot comment on the live litigation in respect of the WASPI women, although I can say that at the first hearing before the judicial review, notification and communication were found for on behalf of the Government—this Government, the coalition Government and the Labour Government whom she served. In respect of category BL pensions, we are improving the training and the ability of the individuals who are handling the cases.

[Paula Barker]

I join my hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) in paying tribute to the WASPI women. Estimates suggest that as many as 130,000 women could have been underpaid their state pensions. Will the Minister confirm the total number who have been affected by the Department’s error and how he intends to ensure that they receive the full amount to which they are entitled?

[Guy Opperman]

This matter dates from 2008 and a Labour Government who introduced the particular changes. The Department continues to check for further cases, and if any are found, awards will be reviewed and any arrears paid in accordance with the law. We continue to encourage anyone who believes that they are being underpaid the state pension to contact the Department for Work and Pensions.

[Neil Gray (Airdrie and Shotts) (SNP) [V]]

This issue is in addition to the UK Government continuing to deny justice for WASPI women at a time when women are disproportionately impacted, socially and economically, by the coronavirus outbreak. The Scottish National party believes that mistakes were made in the changes to the state pension age and has repeatedly called on the UK Government to oversee a full impact assessment that considers the wide-reaching effects of the detriment felt by 1950s-born women. Will the Minister commit to a full impact assessment on both issues?

[Guy Opperman]

The hon. Gentleman knows that I cannot comment on live litigation, but he also knows that when the High Court heard the judicial review, it found for the Government on all the issues that he outlines. I point out that sections 24, 26 and 28 of the Scotland Act 2016 give the Scottish National party Government in Holyrood extensive powers to intervene, if they choose to do so.

[Jack Dromey (Birmingham, Erdington) (Lab) [V]]

Up to 130,000 women who have been denied their pension entitlements through pension underpayments are awaiting justice. An investigation is under way; when will it finally conclude so that those women, many of whom are in their twilight years, get the justice that they deserve? To make a bad situation worse, the Government pledged in their manifesto that they would honour the triple lock; we now hear that they are considering scrapping the triple lock when UK pensioner poverty is the worst in Europe. Will the Secretary of State commit today that her party will not add to its long list of U-turns by scrapping the triple lock?

[Guy Opperman]

I really think the hon. Gentleman needs to talk to his good lady wife, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), because she was the Secretary of State for the Labour Government who so grievously underpaid state pensions such that the coalition Government and this Government have now transformed basic state pension so that it is more than £1,900 a year higher than it was a decade ago. That is thanks to the actions of the coalition Government and this Conservative Government. The House will be aware that the matters the hon. Gentleman raises in respect of category BL state pension were a result of the changes brought in by the regulations introduced under the Labour Government in 2008.

[Jane Stevenson (Wolverhampton North East) (Con)]

What steps her Department is taking to help ensure employment support is tailored to local labour market conditions.

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020

Guy Opperman Excerpts

Monday 7th September 2020 General Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I beg to move,

That the Committee has considered the Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020 (S.I. 2020, No. 693).

It is a pleasure to serve under your chairmanship, Mrs Murray. The regulations form part of the corporate insolvency and restructuring regime introduced by the Corporate Insolvency and Governance Act 2020, which Parliament passed in the summer. The Act introduced corporate restructuring tools, including a moratorium and restructuring plan, to keep companies going, particularly during this period of great economic uncertainty.

The regulations are for the pension element, and provide the board of the Pension Protection Fund—the statutory compensation scheme—with creditor rights in specified circumstances. That includes when a company, a limited liability partnership or a charitable incorporated organisation retains a moratorium from creditor action or a proposal on the restructure of the business, as applicable.

The Pension Protection Fund, as the Committee will be aware, pays compensation to eligible occupational pension scheme members when a sponsoring employer has become insolvent and the pension scheme’s assets are insufficient to meet the scheme’s liabilities. It was invented under the Labour Government and has been supported by all Governments since. It is funded mainly by a levy collected from eligible pension schemes.

In the circumstances, we believe that the regulations are vital for the continuation of the new regime, and I recommend them to the House.

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[Guy Opperman]

I endorse the hon. Gentleman’s comments on our good friend, the hon. Member for Birmingham, Erdington (Jack Dromey), who is much missed and to whom we send our best wishes, and on his sober and sensible approach to the disastrous events over the weekend. All of us in the House would echo his comments, and I applaud what he said.

With regard to Government support for pensions organisations and for automatic enrolment in the various coronavirus job retention schemes, this Government have a fantastic record on showing true support—from the Chancellor and the Secretary of State for Work and Pensions—for organisations that we all represent up and down the country. As a result of the regulations, we have powers to intervene to assist pension scheme members whom we all represent.

The criteria for intervention, as the hon. Gentleman will be aware, are no different for the particular roles of the Pensions Regulator or the Pension Protection Fund. The reality of the situation is that the Corporate Insolvency and Governance Act takes over and provides protections for businesses. The regulations provide the support that we need for the Pension Protection Fund to do its job on an ongoing basis. I commend the regulations to the House.

Question put and agreed to.

Work and Pensions

Guy Opperman Excerpts

Wednesday 8th July 2020 Ministerial Corrections

[Nick Smith]

Informed commentators say that more than 100,000 women will be impacted by this error. Many will be old women and more likely to be living in poverty. To put this right, will the Minister agree to an investigation into this issue? Will he look again at the rules on backdating to ensure that those women are treated fairly in the future?

[Guy Opperman]

I note the hon. Gentleman’s comments, and we invite anyone who thinks that they have failed to claim a state pension increase that they are eligible for to contact the Department through the Pension Service helpline. Alternatively, Pension Wise can assist.

[Jack Dromey (Birmingham, Erdington) (Lab) [V]]

Case after case is being uncovered of retired women being underpaid on their pension. To this day, many do not know about the Department’s mistake, and some have tragically died before learning of it. This must be properly investigated. Crucially, those women deserve justice. When will the Department work out how many women have been affected, and who they are? Will it bring forward a plan to contact them so that the women who built Britain get the justice in retirement that they deserve?

[Guy Opperman]

As the hon. Gentleman is aware, this dates from March 2008, when married women receiving a low-level state pension based on their national insurance record should have had their entitlement reviewed when their husband reached state pension age. The Department for Work and Pensions is looking into the matter, and we invite any individual who feels that they are affected to claim a state pension increase by contacting the Pension Service helpline or Pension Wise.

[Official Report, 29 June 2020, Vol. 678, c. 15.]

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 the answers I gave to the hon. Members for Blaenau Gwent (Nick Smith) and for Birmingham, Erdington (Jack Dromey).

The correct answers should have been:

[Guy Opperman]

I note the hon. Gentleman’s comments, and we invite anyone who thinks that they have failed to claim a state pension increase that they are eligible for to contact the Department through the Pension Service helpline.

[Guy Opperman]

As the hon. Gentleman is aware, this dates from March 2008, when married women receiving a low-level state pension based on their national insurance record should have had their entitlement reviewed when their husband reached state pension age. The Department for Work and Pensions is looking into the matter, and we invite any individual who feels that they are affected to claim a state pension increase by contacting the Pension Service helpline.

Oral Answers to Questions

Guy Opperman Excerpts

Monday 29th June 2020 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

What recent estimate she has made of the number of women who have been underpaid their state pension uplift as a result of an administrative error.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

We are aware of a number of cases where individuals have been underpaid category BL basic state pension. The Department has already taken action to correct our records, and we reimbursed those affected as soon as any errors were identified.

[Nick Smith]

Informed commentators say that more than 100,000 women will be impacted by this error. Many will be older women and more likely to be living in poverty. To put this right, will the Minister agree to an investigation into this issue? Will he look again at the rules on backdating to ensure that those women are treated fairly in the future?

[Guy Opperman]

I note the hon. Gentleman’s comments, and we invite anyone who thinks that they have failed to claim a state pension increase that they are eligible for to contact the Department through the Pension Service helpline. Alternatively, Pension Wise can assist.[Official Report, 8 July 2020, Vol. 678, c. 4MC.]

[Jack Dromey (Birmingham, Erdington) (Lab) [V]]

Case after case is being uncovered of retired women being underpaid on their pension. To this day, many do not know about the Department’s mistake, and some have tragically died before learning of it. This must be properly investigated. Crucially, those women deserve justice. When will the Department work out how many women have been affected, and who they are? Will it bring forward a plan to contact them so that the women who built Britain get the justice in retirement that they deserve?

[Guy Opperman]

As the hon. Gentleman is aware, this dates from March 2008, when married women receiving a low-level state pension based on their national insurance record should have had their entitlement reviewed when their husband reached state pension age. The Department for Work and Pensions is looking into the matter, and we invite any individual who feels that they are affected to claim a state pension increase by contacting the Pension Service helpline or Pension Wise.[Official Report, 8 July 2020, Vol. 678, c. 4MC.]

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

What discussions she has had with Cabinet colleagues on the potential merits of providing extended income support for people in seasonal industries.

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[Darren Henry (Broxtowe) (Con)]

What steps her Department is taking to support pensioners affected by the covid-19 outbreak.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

I congratulate my hon. and gallant Friend on his outstanding maiden speech last week, for which credit is due. The Government are committed to ensuring that older people are able to live with the dignity—[Inaudible.]

[Mr Speaker]

Would somebody step in, please, and answer the question?