Pension Schemes Bill [Lords]

Jim Shannon Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Gentleman for that point of order. We were asked to suspend the House just to ensure that there was a little bit of extra cleaning. I do not have any further information other than that, but I am sure that it is precautionary, and if there is anything further that Members need to be informed of, I am sure that they will be.

[Jim Shannon (Strangford) (DUP)]

First, let me thank all those who have made contributions, which have been excellent. I thank the Minister for his response and the hon. Member for Grantham and Stamford (Gareth Davies) for the contribution he made just before me. It is a pleasure to speak on this issue. Although I know that this is not the purpose of this Bill, I cannot in all good conscience let the occasion go without raising the issue of the WASPI—Women Against State Pension Inequality Campaign—women, who still want their pension scheme. Once more, I look to the Minister for a response on that.

I want to speak to new clause 1 and some of the other amendments, ever mindful of the fact that the Bill provides for territorial extent, as set out in clause 117 and schedule 8, clause 120 and schedule 9, clauses 118, 119 and 129 and schedule 11. Pensions are a devolved matter in Northern Ireland, but this is an area where Northern Ireland has long maintained parity with Great Britain. There is, in effect, a single systems of pensions across the UK, with many pensions schemes, and indeed the regulator, the pensions ombudsman, the Pension Protection Fund and so on operating on a UK-wide basis.

Devolved government has now been restored in Northern Ireland, and we are pleased to have it in place. On 1 June, the Northern Ireland Assembly approved the legislative consent motion on the Bill, as introduced, and a further LCM will be necessary to cover amendments to the Bill, which the Northern Ireland Minister for Communities has agreed will be done and should extend this to Northern Ireland. So some things are positive on that.

I have been in contact with a number of pensions bodies that have expressed concern about the proposals in the Bill. We all know how essential a good pension is, and it is becoming more important with each month. I am sure that I am not the only one to have seen the losses in pensions in this year’s statement. I have a decent understanding of how my pension pays out, but I was listening to the girls in my office and it is clear that, although my staff members in their 40s and 50s have a grasp on their pension, the two staff members in their 20s and 30s do not and they do not seem to be able to understand just how it works. The older girls say, “I wouldn’t swap my pension but I like to see what is in it,” and they have already had a look at their pensions to know what they have. Many people are wise and astute enough to do that, but others are not and they have no understanding of what can be done. There is more to doing our best to secure our financial future than simply opening a letter—there has to be more than that.

The right hon. Member for East Ham (Stephen Timms) referred to new clause 1, which underlines the importance of an easily accessible, easy to navigate pensions dashboard that is easier to understand than an annual statement. The Association of British Insurers has said:

“Pensions Dashboards are a necessary addition to Automatic Enrolment. More than 10 million people have now been automatically enrolled into workplace pensions through inertia, and will need to find their pension pots and make decisions about them.”

We are all probably at that age, Minister, when we have to think about our pension pots, and if we are not doing so, there is something seriously wrong, because we should be. The ABI went on to say:

“Already 1 in 5 adults admit to having lost a pension pot and latest PPI research suggests that there is at least £19.4bn held in pots that consumers have lost track of.”

It is horrendous to hear that.

[Guy Opperman]

I welcome the hon. Gentleman back to the House, as this is the first opportunity I have had to do so. He is rightfully regarded as an institution in this place and long may that continue. I hope that he will understand that a combination of the pensions dashboard, as set out in clause 118, which will give people online access to their pensions, simpler statements, which the Department is taking forward in respect of written statements, and many other pieces of work we are doing to trace individual pensions will make tracking down past pensions an awful lot easier.

[Jim Shannon]

I thank the Minister for that response. The Department for Work and Pensions estimates that 50 million pension pots will be lost or dormant by 2050, and people are vulnerable. We hope that the intervention he made may allay some of the fears people have. The ABI continued:

“Pensions Dashboards will not only help to find lost pensions and reduce the cost of financial advice, but should also prompt people to engage more closely with and save more into their pension, aiding consumers to make informed retirement decisions.”

That is really what we have to be doing—the thrust of this debate should be to try to focus that attention. The ABI went on:

“Pensions Dashboards are now woven into nine different Government and regulatory policy strategies, including the Government’s UK Digital Strategy, the FCA’s Retirement Outcomes Review and the Cabinet Office’s Dormant Assets Commission.”

The ABI also tells us that 60% of 25 to 34-year-olds would be most comfortable viewing their pensions through their mobile banking app—because that is the nature of the future—compared with only 11% of those aged 65-plus, which is probably my generation and thereabouts; 20% of those aged 65-plus would be comfortable receiving their pension data via post, compared with only 4% of 18 to 24-year-olds; and 61% of those aged 55 to 64 would find it most convenient to view their savings through the pension provider’s website, compared with 30% of 18 to 24-year-olds. What does that tell us? It tells us that people have different ways to access their pension, to look at what it means to them and to get the answers that they need.

More people in Northern Ireland feel that they have low financial capability—indeed, Northern Ireland has the lowest proportion of all the regions of the United Kingdom of Great Britain and Northern Ireland. Fewer Northern Irish people describe themselves as “confident and savvy consumers”, with 43% saying so, versus the UK average of 52%—so we do fall behind—or as highly confident in managing their money, with 26% saying so, against the UK average of 37%. Fewer consider themselves to be highly knowledgeable in financial matters, with 10% saying so, against the UK average of 16%. We in Northern Ireland need the necessary advice so that we can decide, collectively, what our pension pots are worth.

The figures I have outlined suggest that pension savers in Northern Ireland may appreciate the benefit of a Pension Wise appointment even more than their counterparts elsewhere in the UK. Sadly, the DWP, FCA and Pension Wise data does not split user stats by location, so we do not know user stats for Northern Ireland; we know only the headline UK-wide stat that just 14% of pension pots were accessed after the Pension Wise service was used. The Northern Ireland proportion of current retirees whose main income is the state pension is the same as that for the UK as a whole; however, that proportion is predicted to fall back to 37% for those aged 45 and over and not retired.

I was reading through some of the briefings, and one of them said that the DWP had recently confirmed its intention to base new guidance and regulations on a “stronger nudge”. I am of a generation that can remember Monty Python and the story that went, “Elbow, elbow, wink, wink, nudge, nudge, say no more,” but in this instance we need to say a whole lot more. We look to the Minister for more than just a nudge when it comes to the key points. We hope that Pension Wise guidance sessions will be available, and I think it will be good for people to take them on. In a survey of some 1,000 defined -contribution pension savers aged 45 to 54, nearly eight in 10, or 77%, said that they wanted impartial guidance to help them to understand their pension access options, yet a larger proportion, 81%, did not know that they were entitled to receive free, impartial guidance from Pension Wise. Fewer than half said that they understood enough about pensions to make decisions and just 4%, or one in 25, said that they would opt out of a pre-booked guidance session. I welcome the Minister’s response to the intervention; I feel that that might just make the difference for a great many people.

In relation to the workplace—[Interruption.] My voice is starting to go; it is going to crack up shortly. It is significant that greater numbers of people will have defined-contribution pension savings as a result of being auto-enrolled into workplace schemes. For these people, achieving financial security and wellbeing in retirement will depend on making well-informed decisions. This is a much greater challenge for those who do not get impartial guidance or regulated financial advice. I can well remember when my mother took me down, as 16-year-old—that was not yesterday, by the way—to open my first bank account, and she had me in a pension scheme at 18. That is many, many years ago—

[Ms Angela Eagle]

Surely not!

[Jim Shannon]

I am afraid it is. My mother was very wise—she still is: she is 89 years old now and is even wiser today than she was whenever I was 18. It is always good to have your mum to tell you what to do, even though you might be a lot older. But that is by the way.

It is clear that the way that we are doing these things is not as effective as it should be. New clause 1 is essential to underline the importance of people understanding their pension and taking control of it, with appropriate advice, rather than simply thinking, “This is for when I’m old.” Take it from me: that time comes quicker than one could possibly imagine.

I conclude with this: the issue is incredibly complex, and it needs a complex answer. I look to the Minister to outline how he believes that issue has been addressed in the Bill. I feel that we need both a robust dashboard and compulsory written statements, and I am not content that that has been provided for in the Bill. I respectfully ask the Minister for that advice and help. We have to get pensions right for everyone, whether they be 18 or 65. We will do it together.

--- Later in debate ---

[Jim Shannon]

I thank Members and the Minister for their contributions on Third Reading. I look forward to bringing to the Minister’s door issues on behalf of my constituents, which he has been very generous in responding to in the past. I know that he will not be averse to me calling at his door, and that as always, he will respond in a positive fashion. That is the sign of a good Minister.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.