Pension Schemes Bill

Lord Davies of Brixton Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I will briefly add my support to Motion A1 from the noble Baroness, Lady Bowles, to remove the mandation reserved power. On Monday, the Minister told us:

“On the question on fiduciary duty, nothing in the Bill disapplies trustees’ existing duties of loyalty, prudence and acting in members’ best interests”.


Her argument was that

“the savers’ interest test allows a scheme to seek an exemption if it can show that compliance would cause material financial detriment to members”.—[Official Report, 20/4/26; col. 591.]

I hope that noble Lords can see the rather fundamental flaw in that argument. Not causing “material financial detriment” is very different from acting in members’ best interests. Would the Minister put her pension savings into a fund that promised only that it would not cause material financial detriment? Of course she would not, but that, as she has said, is the standard to which the mandated asset allocation will be held. So, contrary to what she keeps claiming, the power to mandate asset allocation, even with the latest proposed constraints, quite clearly undermines the fiduciary duty of trustees to act in members’ best interests, and it has no place in pension scheme regulation.

[Lord Davies of Brixton (Lab)]

I will make just two points. First, on the issue of mandation, we need to be clear. I am really concerned about the absolutist no mandation point. There is, of course, an issue to discuss as to how effective these measures would be and what effect they would have on trustees’ responsibilities, but it is important to remember that we are talking about tax advantage provisions, where there is a substantial cost to the Exchequer, so it is entirely reasonable, in principle, for the Government and the legislation to lay responsibilities on those tax advantage arrangements. Saying that mandation is wrong in and of itself is clearly incorrect. As a matter of public policy, it is entirely right that we should legislate to place requirements on tax-advantaged investment arrangements. People can invest their own money in any way they wish but, in return for the tax advantages, there are equal responsibilities.

The second point I want to make is that we need to be clear—it may be of some comfort to my noble friends—that Amendment 77 does not produce a review of public service pensions. It just requires important information to be published within a one-year timescale. I said in Committee that I would welcome a review of public service pensions, but this is not a review of public service pensions. It is just a requirement on the Government Actuary to produce a report.