Pension Schemes Bill (Second sitting)

John Grady Excerpts

Committee stage
Tuesday 2nd September 2025 Public Bill Committees

[John Grady (Glasgow East) (Lab)]

Q I apologise: I should say that my wife sits on the committee of the Scottish Government pension scheme. I should disclose that to the Committee.

I would like to move on to a slightly different topic: small pots. Ms Singleton, the SPP made supportive comments in its submission about small pots. Would you like to elaborate on why you support the small pots element of the Bill, and are there any practical considerations you would like to draw to the Committee’s attention?

Sophia Singleton: Small pots are a challenge for both the industry and for individuals. You have got a much more mobile workforce, and more and more people have small pots and have lost sight of those pots. Obviously, the dashboard will help them to gain sight of them, but actually bringing them together will help them to manage it. We know that it is much easier for people to manage greater-sized pots of money. For the industry, it is a huge cost to manage lots and lots of very small pots of money. I think it benefits savers and it benefits the industry to have this.

This is a pragmatic solution that is within the Bill, as far as we are concerned. The industry has considered a number of different ways of addressing this problem, and we feel that this is actually a very pragmatic solution. It does rely on a technology platform, so we were pleased to see that it is further down in the timeline for the Government’s road map for implementation, because we all know that introducing technology platforms can take some time and there are a lot of other things that we need to be working through, including consolidation and so on.

We did put forward some small technical suggestions within the Bill. Did you want me to talk to them?

[John Grady]

No.

Sophia Singleton: Good. We are positive that this will help, and we are also positive about the timeline for it.

[Damien Egan (Bristol North East) (Lab)]

Q I would like to move us on to the aspects of the Bill that place a duty on schemes to offer members default retirement products. We touched on it a bit this morning. What do you think they could look like?

Sophia Singleton: I might start on this because I think that the Bill should not set out what the product looks like. The policy should set the rules of the game, providers and pension schemes should be allowed to innovate and to develop solutions that meet the needs of their members, and then policy should obviously monitor and oversee product development to ensure that it is effective. When I say “set the rules of the game”, I mean clear guidance around the things that should be considered when developing these solutions. It should consider whether it should deliver an income and consider whether it should provide longevity protection. It should consider those factors, but an income for life might not be the answer for all schemes. It will probably be the answer for many, but not for all, so that is why there needs to be flexibility for providers and schemes to develop solutions.

Helen Forrest Hall: From a PMI perspective, obviously we recognise that with the shift from DB to DC, the choices that are facing people at retirement are growing ever more complicated, and at the moment, they are largely left to their own devices and that is a far from ideal situation so we very strongly support the proposals in the Bill to provide those default pathways, particularly for those who have not made an active choice. Actually, we support the focus on those default options as generating an income because, after all, that is what a pension is for. We do strongly support that.

We have a question around where this sits in the pensions reform road map. We very much share the desire to provide people at that point of retirement with a bit more support, guidance, help and some form of default pathways as soon as possible. But we are concerned that doing so in advance of trying to bring those small pots together and reaching scale in the market puts a burden on schemes, in terms of the number of DC schemes that might not meet the scale test having to put this in place in the meantime, and potentially confuses members. For example, if you have got 11 pots that all happen to be trust based, and you have got 11 different default solutions, that is potentially going to be confusing.

We do not think that nothing should happen in the meantime. Our proposal would be to extend the point at which the mandation requirement would come in, but use engagement from regulators, particularly for large schemes—those that are going to meet scale or be exempt from the scale test—to really start piloting what good looks like in terms of both the guided retirement requirements and the FCA’s proposals for targeted support. There is a really important piece of work to be done thinking about how all of those align into a better, but not perfect, pension saver member journey at the point of retirement. It is not about moving slowly; it is about thinking about the right time that the mandation kicks in so that schemes can plan effectively and things can be tested in the meantime.

Sophia Singleton: Just to add one other element to that point around timescale, I think master trusts are going to be required to comply by 2027. One of the solutions, which might be the right solution for schemes, is the decumulation CDC. We do not expect that the regulations to facilitate that will be in place by 2027. Ensuring that those align so that that option is available to schemes when they are considering their decumulation solution would be beneficial as well. I agree with everything Helen said, but just add that extra element.

Pension Schemes Bill

John Grady Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[John Grady (Glasgow East) (Lab)]

I rise to speak in favour of the Bill. On a policy basis, the Bill addresses a number of very important challenges.

The first is ensuring that the pension system delivers good outcomes for the millions of pension savers in Britain. That is absolutely critical. In my lifetime, the risk of pension savings has shifted from the employer to the employee—in other words, to our constituents. At the heart of the reforms is one essential fact: investment in a diverse set of assets leads to better returns and better outcomes than investment in a narrow set of assets. We need to move away from a focus on cost in the industry and on to a focus on overall value and the outcomes that savers get, so they have comfortable retirements. I am determined that the working people in Glasgow East have comfortable retirements and are properly rewarded for their hard work. Therefore, the Bill’s objective of ensuring that savers in Glasgow East and across the United Kingdom ultimately have access to a wider pool of investments, which have historically been restricted, is a good outcome and a good policy.

The second challenge the Bill seeks to address is growth. People in Glasgow East are very ambitious, as I know they are in Aberdeen North and in Hampshire. As I knocked on doors ahead of last year’s election, people would say to me, “Britain has lost its way.” And many people said that they felt their children would be better off working abroad, or that there were more opportunities for their children abroad. That is the challenge the Bill plays a part in addressing. We do not invest enough in our productive capacity so we have lower, sclerotic economic growth.

Pension savings are an essential source of finance for British industry and infrastructure. In that regard, the Bill includes, in chapter 3 of part 2, something that seems to be causing anxiety: the backstop mandation of investment by defined-contribution pension funds into private asset classes linked to the United Kingdom. Private non-listed shares and debt are now central to investment in a way that they were not when I started off as a junior lawyer many years ago. Growth companies in areas such as medicine, AI, technology and, of course, space remain in private hands for much longer, and list on public markets much later, if at all. The mandation power must be viewed in that context. If UK pension funds do not invest in those classes of domestic assets, working people may miss out on significant returns, and we risk losing the opportunity of growth and of developing the great innovations from our fantastic universities, including the University of Strathclyde.

[Kit Malthouse]

The hon. Gentleman is making a good point, but does he accept that illiquid investments, by their very nature, tend to be more volatile, and that from a risk-adjusted point of view they therefore represent much higher risk for investors? He mentioned investment in life sciences companies; he will be aware of the collapse a couple of years ago of the fund led by Neil Woodford, which was a significant investor in illiquid private sector life sciences companies and, because of that illiquidity, collapsed. The point is that if we are mandated to do that stuff—I ask the same question as I asked the Minister—who will pay? Who carries the can?

[John Grady]

I hope the right hon. Gentleman would accept that diversification is critical here. Of course, illiquid private assets are not something that one holds for a couple of years and then sells, but the funds are designed to be large enough to bear the risk from diversification. That is the critical point.

Pension funds are a statutory arrangement, with significant taxation and other legal benefits. That creates a business opportunity for pension providers—and quite right, too. Against that background, it is right that the Government review whether, under the existing arrangements, savers are getting a fair return from that special statutory and legal arrangement. Given the tax breaks, it is not unreasonable to address the question of whether there is sufficient investment in the United Kingdom.

Let me turn to our attitude to risk in the UK, on which the success of pension arrangements turns, as does our desire for more economic growth. We will not get more economic growth unless we take more reasonable risks, as the Chancellor of the Exchequer and others have made clear. It is essential for banks and fund managers to consider whether they take enough risk.

The chief executive of the National Wealth Fund, John Flint, made the point last Tuesday at the Treasury Committee, when he said,

“I would encourage the stewards of private capital to go back and challenge themselves on their risk appetite…the country’s growth outcomes are, for me, largely consistent with the country’s risk appetite generally.”

I venture to say that our great fund managers and banks need to turn their minds to whether they are taking enough risk, because that drives economic growth and drives successful outcomes for savers.

Another aspect of pensions reform and risk taking is the individual savers, as was brought home to me in a quite different context, when I was on a football history tour organised by Football’s Square Mile, which promotes the history of football in Glasgow East. As we stood mainly in Glasgow East—I must admit that some of it was in Glasgow South—the guides explained to us that when Queen’s Park decided to organise the first international football match between Scotland and England in 1872, the club had just over £7. It had a choice: the low risk was to hold the match at a rugby club, free of charge; the higher risk was to hold the match at the West of Scotland cricket club at Partick, an old, closed ground where tickets could be sold and there was potential revenue. The problem was that the West of Scotland cricket club wanted more by way of rent than the Queen’s Park had—much more than £7. The guides put the choice to us all as we stood just in Glasgow South constituency, and just outside my constituency. The vast majority of people on the tour picked the low-risk option: an indication, at the end of the week, of how risk-averse we have become in Britain.

Encouraging sensible risk taking is critical to pension saving and if we want more economic growth. In fact, Queen’s Park took the higher-risk option: it rented the cricket ground and made a huge profit. The game transformed the profile of football and was the foundation for Queen’s Park’s building the first international football stadium in the world, which opened a year later in 1873 in my constituency. Queen’s Park took a risk that was pivotal to the development of modern football, and modern football contributes billions to the Exchequer. My point is that risk is essential to economic activity, as Mr Flint explained and as was illustrated later in the week.

The Bill is critical for economic growth. It takes active steps to ensure that money flows to the entrepreneurs and risk takers who will create wealth across Britain. It ensures that working people have access to better pensions. On that basis, I support the Bill.

Poverty: Glasgow North East

John Grady Excerpts

Tuesday 6th May 2025 Westminster Hall

[John Grady (Glasgow East) (Lab)]

It is a pleasure to serve under your chairship, Ms Butler. I thank my hon. Friend the Member for Glasgow North East (Maureen Burke), who is my neighbour, for securing this important debate. Glasgow has disgraceful levels of absolute poverty, with families who cannot afford the essentials to live: food, heat, school uniforms and clothes.

We do not help those in desperate poverty by making unaffordable promises. But despite the constrained public finances, our Government have taken action. Our last Budget raised billions in extra taxes to fight poverty. In Scotland, that means an extra £4.9 billion for the Scottish Government, so that they can tackle record NHS waiting lists and arrest the alarming decline of Scottish education. Our Employment Rights Bill tackles the evil of in-work poverty, with the biggest upgrade to workers’ rights in a generation. Our Government have increased the living wage well above inflation.

Our Government have been in power for 10 months; the Tories were in power for 10 years and the SNP have been in power for 18 years—at the helm of an incredibly powerful devolved Administration blessed with significant powers. The SNP have run Glasgow city council for eight years.

[Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)]

Does my hon. Friend agree that many of the essential services that families rely on are delivered by local authorities, and that local authorities have had their budgets slashed year on year by the Scottish Government, which impacts their ability to protect and support the most vulnerable people in our societies?

[John Grady]

I agree. Local government has been emasculated by the Tory Governments in England and Wales and the SNP Government in Scotland. I must say that they are pretty non-discriminatory in their emasculation, because they have failed to properly fund the SNP council in Glasgow for years.

In Scotland, one cause of poverty is the shocking state of the NHS. Record waiting lists do not just delay people getting back to work; the delays mean that their conditions deteriorate to a point where they cannot return to work, and we should be incredibly angry about that. In 2007, the Scottish Government promised to establish a ministerial taskforce on health inequalities, yet Scotland continues to have the worst health inequalities in western and central Europe. On disability health checks, following a successful pilot in 2019-20, the Scottish Government committed to carry out annual health checks for people with learning disabilities in 2022. It was to be completed by 2023, but as of 2023-24, only 6.9% of eligible people had been offered a health check. The SNP’s record in Holyrood on health is absolutely shameful.

Education is an essential pathway out of poverty. However, the attainment gap in Scotland is widening, which means that kids in my constituency and others with large working-class populations have fewer life chances, and they are getting worse—it is an absolute scandal. College education is in crisis. Again, this should be a source of anger.

Glasgow city council has an opportunity to help some of the most vulnerable in Glasgow. Homeless Project Scotland has a food and night shelter in the Merchant City in Glasgow. It serves free hot meals and provides an immaculately clean shelter for homeless people. However, it has had its planning permission refused. The shelter is at serious risk of closing, but I am heartened to hear that Glasgow city council has said:

“We are available to engage...and do whatever we can to help them secure suitable property”.

I hope that the council does that. It has two golden keys to a resolution. It has an extensive property portfolio and it is the planning authority. I cannot think of an organisation better placed to help.

I helped at the shelter on Sunday night. That night, it served over 100 men and women, but because children are also homeless in Glasgow, it serves them too. On Sunday night, there was a boy—just like my boy—with his dad, a teenage boy with his mum, and a girl perhaps the same age as my daughter. If the shelter is closed, where will those children and their mums and dads get a hot meal? Where will the most vulnerable in my city get a safe bed for the night? I hope that Glasgow city council delivers on its promise.

--- Later in debate ---

[Danny Kruger (East Wiltshire) (Con)]

May I start by acknowledging the very powerful speeches that we have heard this afternoon from the Members for Glasgow? I would not say that my view is that the people of Glasgow are generally well represented by Scottish Labour, but they have been very well represented in this debate.

I pay particular tribute to the hon. Member for Glasgow North East (Maureen Burke) for the way she highlighted the tragedy of low life expectancy and of poverty in general in her constituency. She mentioned Easterhouse, which occupies a particular place in the pantheon of Conservative thinking about welfare because my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) visited it 20 years ago and had his epiphany about what she described as the context of poverty. He described the interconnectedness of the different factors that drive poverty, which go so far beyond simple income poverty—issues around welfare itself but also joblessness, family breakdown, addiction and so on.

The hon. Member for Glasgow North (Martin Rhodes) talked about the long consequences of deindustrialisation, which are relevant across our country but especially in places such as Glasgow. He also mentioned the consequence of the 2008 global financial crisis.

The hon. Member for Glasgow North East mentioned the stagnation of wages in her constituency. Low wage growth has been a problem across the United Kingdom since that time. When my right hon. Friend the Member for Chingford and Woodford Green became the Welfare Secretary in 2010, he introduced reforms that offered real, direct benefits and improvements in welfare and in worklessness. There were 1 million fewer workless households in 2020 than in 2010 and, after housing costs, 1 million fewer people in absolute poverty—100,000 fewer children, 200,000 fewer pensioners and 700,000 fewer working-age people in poverty.

The last Government did make a real impact on poverty. Nevertheless, I want to acknowledge some of the points that have been made in this debate. The fact is that the fiscal situation that we inherited and the choices made by the coalition Government meant that insufficient support was given to people who needed it, particularly as a result of cuts to local authority budgets and reforms to the DWP budgets.

I echo what the hon. Member for Glasgow North East says about the neglect of Glasgow under the SNP since devolution and over the past decade, but I do not agree with her about the value of the reforms being introduced by the new Government. What we have seen is a rushed effort driven by the imperative to balance the books in consequence of a failed Budget last year, leaving a real crisis in the public finances that is now being felt by the recipients of benefits. The Government are balancing the books on the backs of the people least able to sustain that weight.

[John Grady]

On failed Budgets, my constituents go to the shops with terror at the rising prices that followed the Budget of Liz Truss and Kwasi Kwarteng. Does the hon. Gentleman agree that that is the very definition of a failed Budget—one that plunged many of my constituents into poverty?

[Danny Kruger]

I am not going to defend the mini-Budget to which the hon. Gentleman refers, but I do not accept that the rise in prices that all our constituents have experienced are solely, or even in large part, due to that event. They are a result of wider global events—and since this Government came in, I am afraid to say, of a failed economic policy that has driven the necessity of the disability benefit cuts that have been introduced and the winter fuel payment cut, causing 10 million people to lose a vital part of their income. Since the cut, 100,000 more pensioners have been admitted to A&E and 50,000 children have been plunged into poverty in consequence of what is happening at the DWP.

I am very concerned about the announcement of cuts to the benefits regime before the review of the assessment system that gives people the entitlement to benefits. We have a genuine failure at the DWP. In addition to that, jobs are being destroyed by Treasury decisions to raise national insurance on employers, drive up energy costs and introduce a new Bill that will make employers much less keen to take on new workers.

My suggestion to the Minister, if she will allow me to make it, is to rethink the changes to winter fuel payments. I am conscious that in Scotland the Scottish Government are taking over responsibility for this area of policy and I echo the point made by the hon. Member for Aberdeen North (Kirsty Blackman) that it would be good to hear from the Minister about how the interaction of the benefits reforms will work in the light of Scottish Government policy. I also hope that the UK Government will rethink the disability benefit cuts until we get the review of the eligibility assessment schemes. We need more support for people who need help to navigate the system and get into work.

Let me return to the point I made in response to the reference to Easterhouse by the hon. Member for Glasgow North East. We need to attack the drivers of poverty—the interconnected factors that account for the demand for welfare, which is so high. It is social breakdown rather than purely DWP systems that account for the high— indeed, unsustainable—benefit bills that we have. We need to grow the economy to create jobs—good jobs, as the hon. Lady said, that will be right for Glasgow and right for the UK.