Pension Schemes Bill

Jayne Kirkham Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does my hon. Friend agree that it is good that, in the local government pension scheme, representatives of both employers and employees can sit on the pension committees, and that we often have trade union representatives on the committees as well?

[Neil Duncan-Jordan]

My hon. Friend is quite right. Trade unions do sit on many of the LGPS committees. I was making the point that it is on the pools where there is less representation for those member voices to be heard, and that is extremely important.

Finally, I want to talk about the pre-1997 pensioners. We know that those who have seen the biggest drop in income are those who built up pensions before 1997. They have not received an annual inflation-linked increase to their pension and, over time, particularly when inflation is high, the value of their pension is eroded. Some 80,000 Pension Protection Fund members, mostly older people and disproportionately women, including some of my constituents, find themselves in this position. I hope the Government will therefore consider legislating to provide inflation protection on pre-1997 benefits, and to give the PPF greater flexibility to use its surplus to give discretionary improvements to members.

In conclusion, the idea that workers’ pension funds can be used to build much-needed social housing and invest in green technology and jobs is something that a progressive Labour Government should be proud of, and I hope we can ensure that the Bill delivers a win for pensioners, a win for our environment and a win for society as a whole.

--- Later in debate ---

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Having been lucky enough to chair a local government pension scheme committee and sit on a pool oversight board—purely because I was the only person left on the committee after the election, I think—I would like to talk about the Bill’s impact on local government pension schemes.

The Bill would consolidate LGPS funds into six pools, on the basis that that would be effective in achieving scale, diversification of assets and cost savings. LGPSs were recently merged into eight pools by the last Government, of course. Cornwall’s pool contained nine LGPSs from the south-west and the Environment Agency. It took a number of years to set up and transfer the funds over to the pool. Setting-up costs meant that the consolidation savings from acting at scale are starting to show only now, a few years later. Hiring an extra tier of staff on top of the LGPS staff, who were still needed to administer the fund, correspond with members and employers, and manage the investments, was expensive. Closing down our current pool and joining another is likely to be the same. There are also concerns, which I would like the Minister to address, that going to a larger pool may affect that local link. We have a strong south-west pool at present, and removing that link and scattering us across the country could impact the effectiveness of our pool at making local investments. That is what I want to talk about next.

Bringing schemes together enables them to invest in bigger local projects, from infrastructure to clean energy. That boosts returns for savers and helps communities. Cornwall was very good at that. We used our £2.3 billion, which is not a huge fund when we think about the size of the pools that we are talking about now, to do precisely that kind of thing.

Other Members have talked about responsible investment. We had a very strong responsible investment policy, and our carbon-neutral target date was earlier than that of the rest of the pool. We were able to maintain those policies and our environment, social and governance focus by having a strong presence on the oversight board. That enabled us to influence the pool. I hope that this influence will continue, so that pools are not dragged down to the lowest common denominator when it comes to ESG matters and responsible investment, but will instead be raised up.

Our local social impact fund was, in the end, 7.5% of our investments. We were able to channel our LGPS investment into affordable private rental housing and local renewables in Cornwall, as well as renewables more widely around the UK. Will local government pension schemes still be able to set their own targets in the pool in this way and do their own thing? Although we worked closely with the pool to ensure that pooling delivered scale advantages, we wanted to make sure that our local impact portfolio, as part of our social impact allocation, enabled us to combine our fiduciary responsibilities to our members with delivering that social and environmental positive change in Cornwall, where we were, and where our members worked and lived. That had a massive impact on how the funds were viewed locally. We hoped that it would provide a framework for others to follow, but within our pool of 10, we were the only ones who did it. Will the Minister confirm that local LGPSs will be able to set their own targets in a bigger pool, even if the area is geographically disparate?

I want to mention the measures that require regulations for the LGPS to include a duty for administering authorities to work with strategic authorities in their area to identify opportunities for investment. When we ran our social impact fund, it was difficult to organise that at arm’s length. Members who were part of the local authority wanted to direct where all investments went, but that had to be done at arm’s length through investment fund managers, who have little connection to the area. It was hard to stand back and watch them do that. How will the fiduciary duty allow local government pension scheme administration authorities to work with the strategic authorities in their area, particularly if, as in Cornwall, they are one and the same? Cornwall unitary authority was exactly the same size and had the same authority as the administrating authority of the LGPS.

To conclude, the scheme worked well in Cornwall and provided good results. I still drive past the houses in Camborne that were built by our local government pension scheme; local people live in them, doing local jobs. The good results were mainly down to good officers, to be honest, and a flexible pool that allowed us to do our own thing and take our own route. I hope that that freedom will remain under the Bill.

Pension Schemes Bill

Jayne Kirkham Excerpts

Report stage
Wednesday 3rd December 2025 Commons Chamber

[Kirsty Blackman]

I would like to see much more conversation. Gateway benefits allow people eligibility for other things, and sometimes those do not work either. A person might be eligible for universal credit, but they do not necessarily get the follow-through to free school meals, for example. Anything we can do to make that path smoother, either in the cessation of benefits or in agreement on eligibility, would be really helpful. I agree with the hon. Gentleman; we have seen issues with carers, for example, being chased for overpayments that were not their fault.

Again, I support the Government’s move on the consolidation of small pots, which I think is incredibly sensible. I am famously a massive supporter of the pensions dashboard and have never been at all critical of its timelines, but when it comes online there will be a rush for consolidation anyway. This is all about consolidation for people who have not touched their small pots, and making sure they get a return from that is totally sensible.

Guided retirement and the mid-life MOT are mentioned in a number of amendments, and ensuring that people are given the correct advice at the correct time is incredibly important. When the Government do their sufficiency review—when we are looking at the adequacy of pensions and what people will get when they hit retirement—I would be very surprised if that and the consultation do not conclude that more people need more advice earlier. The more advice that people have on their pension, and the more money they put into their pension at the earliest time, the bigger their pension will be.

I have already mentioned compound interest: if we put £100 into our pension when we were 21, it will be significantly bigger by the time we retire than if we put £100 into our pension when we are 40. That is just a fact. The more advice that we can give people at various important life stages, but particularly significantly before retirement, would be really helpful. That is another thing that should be included.

Finally, the hon. Member for Boston and Skegness (Richard Tice) spoke at a press conference about the local government pension scheme and how terrible it is that it is spending so much money on fees. That was in September, after Second Reading, at which he did not speak about that. He did not table any amendments on it before the Committee stage, and he has not shown up to raise it on Report. It is almost as if Reform MPs are saying things in press conferences and not doing any actual work. [Interruption.] I told him I was going to mention him. It is almost as if they make statements in press conferences and do not do anything, just as they have not shown up today.

Should a Reform Member have been particularly keen to make changes to the LGPS—such as to cap the level of fees it can pay, which are probably not unreasonable, as the LGPS is phenomenally successful in its returns for members—they could have amended the Bill, but they would have had to show up to do so. I suggest that the media organisations who are happy to cover press conferences ask the Members giving those press conferences what they will actually do to get their policies implemented. If such Members have an opportunity, they should use it rather than just shouting from the sidelines.

As I think I have made clear, I am largely supportive of an awful lot of things in the Bill, the direction of travel and many of the technical measures, which are great fun to have a good look at. I have some concerns about pre-1997 indexation. I am delighted that it has happened, but more could have been done. I will be interested to follow the progress of the fiduciary duty statutory guidance and the sufficiency and adequacy review and whether there will be mandation powers.

Lastly, on new clause 3, can we please make it easier for members who are terminally ill to have that conversation? I would very much appreciate the Minister committing to taking that away and considering how the PPF and FAS can get that information more easily without requiring people to jump through significant hoops.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I welcome the real progress made on the pre-1997 fund. I do not have as much specific technical knowledge as most hon. Members in the Chamber, and I was not on the Bill Committee, but I have looked at the amendments and would like to comment on them, as I was lucky enough to chair a local government pension scheme committee—I think it was very well run—and sit on a pool oversight board. I will use that experience as an example.

Our LGPS in Cornwall was a good example of responsible investment and good practice in the sector. The Bill will consolidate LGPS funds into six pools from eight on the basis that that will be effective in achieving scale and diversification of assets and cost savings. Brunel—the pool that Cornwall is in—is not to go forward. Forming Brunel was costly and, as I said on Second Reading, the Cornwall fund was due to break even following the forming of that pool only this year. The costs involved in moving to another fund are expected to be high, which concerns me, as that may impact members, though we hope those costs will be recouped by investment growth as a result of the consolidation.

Being in a bigger pool did enable funds to invest in local infrastructure such as housing, transport and clean energy. Cornwall was good at that: we used our £2.3 billion—not a huge fund when we think of the size of many of these pools—to invest in affordable rental housing near Camborne, where 67 new homes were built on a brownfield site. I am looking forward to seeing the infrastructure projects that further consolidation will make possible.

On Second Reading, I raised concerns that moving to larger funds may affect local links. Brunel is a strong south-west pool and, although it covers as far up as Oxford, we have managed within that pool to be effective on a local level.

The Environment Agency—I noted the amendment on that—was part of our pool, and it did have slightly different rules, which was tricky and somewhat impacted on our pool. I am pleased that the scheme managers will now have a duty to co-operate with strategic authorities, as the inability to do that often led to perhaps unintended consequences. In social housing, for example, we may have been looking at investments that were the same as the local authority’s. It would make sense to be able to talk about such investments so that we are not doing silly things like competing against each other.

In Cornwall, we had a strong responsible investment policy, and our carbon-neutral date was earlier than the rest of the pool by five years. We were able to maintain those policies and our environmental, social and governance focus by having a strong presence on the oversight board, which enabled us to influence the pool and be a bit different within it. I hope that will continue so that pools do not end up following the lowest common denominator when it comes to things like social impact, investment and ESG matters, but instead will be raised up to the highest level. In our local fund, we had employers and employees on our pension committee, and that worked well. The union reps and the employers gave some very valuable input, and I think that would be valuable for the larger pools as well.

Our local social impact fund was, in the end, 7.5% of our investments. We could channel our investment into rented housing and local renewables in Cornwall, as well as more widely around the UK, and I hope that local government pension schemes will still be able to set their own local investment targets in that way, even when working with local authorities.