Pension Schemes Bill [Lords]

Ian Blackford Excerpts

Wednesday 22nd March 2017 Commons Chamber

In conclusion, I am concerned that a lack of transparency in the scheme is a problem, and that that problem lies with insurance companies and master trusts. I am concerned about the low paid; the person with multiple jobs; women; people under 22; carers; and the self-employed, who have not been looked after by this Bill. I am concerned that the Government have removed the funder of last resort clause, which the Labour Lords succeeded in putting into the Bill. These are all issues that, I assure the Minister, we will continue to debate. However, for now, I look forward to his response to the new clauses and amendments I have highlighted.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I rise to speak to new clauses 6 to 9 and amendments 5 to 9. I am disappointed that new clauses 10 and 11 were not selected for debate.

--- Later in debate ---

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

Does my hon. Friend agree that it is because of such examples as he has touched on of unincorporated businesses at risk of losing personal assets that it is so pertinent that the Government bring forward the solution right now rather than wait for the opportunity to pass?

[Ian Blackford]

I am grateful to my hon. Friend, who is absolutely right. These are complex issues. That is why we make the suggestion that we are willing to work with the Government on this. We have to find a solution to this because at the end of the day ordinary people who have done the right thing could now be faced with losing their house, and that cannot be right. This issue has to be resolved.

There are a number of options for the UK Government to consider but each one has complications for the pension schemes, employers and scheme members. We urge the Government to weigh up the interests of employers with the need to protect benefits for pension scheme members. The former Pensions Minister in the other place, Baroness Altmann, indicated that she would look closely at how a solution could be reached to this complex issue. We need the same assurances from the Minister that he will work to find a solution for the industry and use this Bill to bring forward a solution.

SNIPEF’s four objectives are to achieve an amendment to section 75 debt legislation, as its main concern is for those involved in the unincorporated businesses that my hon. Friend mentioned who are at risk of losing their personal assets including their homes. It wants the Government to conduct a review of the actuarial methods used to value pension scheme liabilities, as it believes that the calculation of section 75 employer debt on a full annuity buyout basis is inappropriate and detrimental to non-associated multi-employer schemes given current economic conditions. It argues that orphan debt in any non-associated multi-employer scheme should be excluded from the calculation of section 75 employer debt. It suggests that provided the scheme is deemed to be prudently funded, the PPF acts as guarantor of last resort for orphan liabilities. It also believes that any changes in legislation should apply retrospectively to all employers from 2005. It would be helpful to get the Government’s view on this request. SNIPEF recently met the Minister, and it has advised SNP MPs that he confirmed that the objectives may have been incorporated within the Green Paper. We are now interested to hear the Government’s view as to whether they have identified a solution.

I want briefly to make passing reference to my two new clauses that have not been selected for debate, and signal my disappointment about that. New clause 10 would require the Secretary of State to identify support for women affected by the changes to the timetable for state pension age equalisation. We are disappointed that a pensions Bill has not been brought forward to deal with the pressing injustices within the pensions system.

[Mhairi Black]

Does my hon. Friend agree that by missing this opportunity the Government are wilfully ignoring it, much like they are ignoring the WASPI women themselves?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We do not discuss new clauses that have not been selected. We have to deal with what is before us and that is the new clauses on the selection list. I know that the hon. Gentleman wants to stay in order by dealing with those, not those that have been omitted.

[Ian Blackford]

Thank you, Mr Deputy Speaker; I am happy to receive the guidance that you have given me. I simply wanted to put on record that we had missed the opportunity to debate the measures today. I know that we will have the opportunity to raise these two issues again, so I will skip on without making any further reference to them.

The SNP believes that we need to look holistically at the problems inherent in the system and build on opportunities such as auto-enrolment. Only by giving pensions thoughtful consideration can the Tories get this right. With alarm bells ringing about the injustices facing the WASPI women, and concerns that we could see another hike in the state pension age, even the idea that the Government are contemplating reviewing the triple lock post 2020 is deeply troubling. If I may say so, we know that only by delivering an independent Scotland can the SNP deliver dignity in retirement.

I turn to amendment 5, which would mean that the financial sustainability of the scheme funder had to be taken into account when assessing the financial sustainability of a master trust scheme. The Association of British Insurers has told us that insurance companies already hold a very significant amount of capital under the European regulatory framework for insurance, solvency II. In our view it would not be reasonable, nor is it necessary, for insurers to be required to hold separate or additional capital on top of that to meet their new obligations as master trust providers under the Bill. We would like to hear assurances from the Government that insurers will be exempt if they already adhere to FCA and PRA regulatory and financial sustainability requirements.

Amendment 6 allows for exceptions to the requirement that a scheme funder must only carry out activities directly relating to the master trust scheme for which it is a scheme funder. Amendment 7 makes provision for the Secretary of State to define “restricted activities” by regulation, including a list of specific activities restricted to minimise the risk of loss by master trust scheme funders. Through these amendments, we acknowledge that there may be circumstances in which the scheme funder requirements in the bill should not apply. The amendments state that the requirements need not apply to firms whose activities are already restricted by virtue of existing regulation.

The ABI has said that, in particular, the Prudential Regulation Authority rules mean that insurance activities of the scheme funder that are not directly related to the master trust scheme are transparent and do not threaten the solvency or sustainability of the master trust. The ABI says:

“This is a sensible and pragmatic approach”.

It would be useful to understand what additional requirements will need to be met for firms to be exempt from the scheme funder requirements. It would also be helpful to gain an assurance that the Government are committed to working with the industry throughout the development and consultation process for the regulations.

Amendments 8 and 9 provide the Pensions Regulator with an alternative to stopping payments to the schemes under section 5(b) of a pause order. Amendment 9 is consequential on amendment 8. The Bill creates a new power enabling the Pensions Regulator to make a pause order requiring certain activities to be paused once a trust has experienced a triggering event. That includes accepting new members, making payments, accepting contributions and discharging benefits. The TUC is concerned about the impact of a pause order on a member’s savings because there are no mechanisms in place to allow ongoing contributions to be collected and held on behalf of a saver. We contend that it is unacceptable for a member to be penalised, and in effect to lose wages in the form of employer contributions, because of events out of their control. The Society of Pension Professionals has said that it will be necessary to ensure that the period of effect of a pause order cannot start before the trustees actually receive notification of the pause order. That would mean that any contravention could occur only after the trustees are were receipt of the order. Without this, they argue the trustees could be in breach of a pause order, through no fault of their own, if a direction is not complied with during the period between the date on which the regulator makes the order and the date on which the regulator notifies the trustees of it—for example, if new members joined the scheme in that period contrary to a direction under clause 32(5)(a).

The Government should clarify whether they intend to take action to protect savers now, as we are disappointed that our amendments were defeated at earlier stages. I look forward to hearing the Minister respond. We have sought to work constructively with the Government to enhance the Bill, which we broadly welcome. We affirm our position of wishing to work with the Government where we can to create an environment in which workers can have faith and trust in pension savings.

We should all desire to develop a landscape in which pension saving is encouraged, allowing us to ensure that all our pensioners—from both their own provision and the state pension—have dignity and security in retirement. The Bill helps us along that road, as far as the regulation of master trusts is concerned. There is more to do to enhance auto-enrolment, and I look forward to working with the Government to take steps to include those who are currently excluded from pension savings, particularly the self-employed and many part time workers, especially women.

In closing, although I welcome the Bill, I reflect on the fact that it was necessary for me to put down a prayer last night on frozen pensions after the Government again brought forward a statutory instrument to freeze the pensions of hundreds of thousands of British pensioners who are being denied their full rights. In pushing the measure through, the Government have denied Members of this House the right to debate the matter. I encourage all hon. and right hon. Members to sign early-day motion 1097. I hope that if we can, as I believe we can, demonstrate broad cross-party support against this measure, the Government will have the grace to bring forward a debate on this matter before recess. This early-day motion has already been signed by Members from six parties, including the Government party. I encourage them to listen to us on this matter, as part of proceedings on the Bill.