Pensions Bill [HL]

Lord Flight Excerpts

Thursday 3rd March 2011 Grand Committee

[Lord Flight]

My Lords, I support these amendments but express a caveat about something that could lead to the wrong decisions. It may be wrong for people who have relatively small entitlements from defined benefit schemes to take transfer values and move them into a money purchase pot such as NEST, even though small amounts of money are involved, because transfer values have been getting relatively mean under the changed rules. I have always thought that NEST itself could have a problem. Managing large amounts of money in an optimum manner is quite a difficult thing to do. Therefore, although I am sure that NEST will be run relatively safely and sensibly, it will have to be run on a blue-chip investment basis. Therefore, it is likely to underperform some other funds. However, the principle of allowing consolidation and people to take the cash out if it is peanuts has to be right.

[Baroness Turner of Camden]

My Lords, I support the notion behind these amendments. At Second Reading I drew attention to the possibility of people arriving at retirement with lots of little pension pots and not knowing what they would be entitled to. That sometimes happens now; people phone up and say, “Am I in your pension scheme? I just don’t know”. They reach retirement and, if they have been working for around 40 years, they do not know what they have. It seems sensible to have some mechanism whereby one’s pension entitlement is, as it were, collected as a cumulative amount of money. People would then know that they have access to this cumulative amount and the pension that is generated from it. In this sort of system we have the opportunity to do something like that. It would be a very good idea and I congratulate my noble friend Lady Hollis on what she has come up with in Amendment 35. The noble Lords, Lord Stoneham and Lord German, certainly had something similar in mind with Amendment 34. The notion is a good one, whichever amendment is acceptable to the Government.