Saving for Later Life

Debate between Laura Trott and Gareth Davies

Tuesday 7th February 2023 Westminster Hall

[Laura Trott]

I think what we need to do is set out a plan. I accept that when we look at the various mechanisms that I have outlined today, we should outline the impact that we think they should have. I commit to go away and have a look at that.

My hon. Friend the Member for Torbay asked what the Department is doing to develop sectoral pension schemes and whether they can be made available for gig economy employers. Collective defined contribution schemes have the potential to transform the UK pensions landscape. He will know that we introduced legislation to allow them for single employers last year, and we are currently consulting on multi-employers. They are really exciting and could be a way forward in this space.

I am conscious of time; I will obviously write to hon. Members to cover anything I do not get to. The Work and Pensions Committee is right to raise concerns about ensuring pensions adequacy. The shift from the promise of retirement income through defined benefit to defined contribution places responsibility on the saver to ensure they have the outcome they want, but I do not think there is widespread understanding of that among the general public. Personal circumstances obviously dictate what individuals consider an adequate level for retirement savings. It is my role as the Pensions Minister to enable people to save adequately, as well as to ensure pension-maximising returns on their savings. The key to that is empowering savers to take control of their financial future. The introduction of simple annual statements, the midlife MOT and the pensions dashboard will make pensions more understandable to the saver and empower them to take control of their retirement outcomes.

My hon. Friend the Member for Amber Valley (Nigel Mills) was entirely right that the pensions dashboard will be crucial to that. We expect to see on the dashboard an understanding of what current savings will lead to as retirement income. What he said about comparing that to what others have was really interesting, and I will take that away.

[Gareth Davies]

There has been a lot of discussion today about the adequacy of the amount saved, but no discussion of what the investments are made in. The UK has one of the lowest levels of investment in illiquid assets—private equity, venture capital and infrastructure. What does the Minister think we need to do to encourage a greater diversity of investment so that our pensioners have greater returns?

[Laura Trott]

My hon. Friend makes a typically excellent point. He is right that we have a lower investment in illiquids than many of our European counterparts. We are at 7%, and they are at 15% or 16%. Last week, I announced a change in regulations, which I believe will come to the House in around March. It will mean that the performance charges can be passed on for the first time, which will hopefully take away a barrier to investment in those types of asset. It is of course for the pension trustees to make investments in the best interest of pension savers, but it is important that we do not put any barriers in the way of that. My hon. Friends the Members for Grantham and Stamford (Gareth Davies) and for Amber Valley are right that we need to focus on returns. If we are going to deal with adequacy, we need to ensure that investments in pension schemes return the maximum amount that they can for savers. Illiquids are part of the story in making that happen.

Oral Answers to Questions

Debate between Laura Trott and Gareth Davies

Monday 5th December 2022 Commons Chamber

[Laura Trott]

I am grateful to the hon. Member for highlighting the record rise in state pension brought forward by this Government. We are, as ever, on the side of pensioners as we go through this winter, and I would point out that the state pension has doubled from the level we were left by Labour in 2010.

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

21. What progress his Department has made on increasing the number of people with disabilities in work.

Oral Answers to Questions

Debate between Laura Trott and Gareth Davies

Monday 31st October 2022 Commons Chamber

[Laura Trott]

I completely understand those concerns, but that is why we have provided a package of support—now—which is worth more than £850 for everyone receiving a state pension and £1,500 for those receiving pension credit.

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

Last week we celebrated the 10th anniversary of automatic pension enrolment. This is, genuinely, an amazing cross-party policy achievement which has transformed the saving culture across our country. As we look back on that success, will the Ministers consider expanding the system to 18-to-22-year-olds?