Private Sector Pension Abuse

Lord Kirkwood of Kirkhope Excerpts

Monday 22nd January 2018 Lords Chamber

[Baroness Buscombe]

I am grateful to the noble Lord for mentioning that the Prime Minister clearly takes this situation extremely seriously. He reiterated that we intend to strengthen the regulator’s powers. Importantly, we have done that with care, introducing a Green Paper last year, and we have committed to the publication of a White Paper in the spring. Although the Pensions Regulator and the Pension Protection Fund manage the process of company insolvencies, and while most pension schemes are managed successfully and very robustly, we accept that there are instances where it might be possible to improve and strengthen the powers. We have received more than 800 responses to the Green Paper. The department is analysing these and will bring forward proposals as quickly as possible.

It is important to emphasise—I sense that the noble Lord opposite appreciates this—that it is hypothetical to suggest that a different set of powers for the Pensions Regulator, such as the ability to clear corporate activities, would have necessarily made a material difference to the pension schemes. Having said that, there has been strong communication between the regulator and Carillion since the middle of last year, when a profit warning was announced. But of course, a profit warning is a warning as opposed to a transaction, so it was not necessarily a sign that the company overall was in such difficulty.

It is important to stress that we are very keen to strengthen the powers but, at the same time, we need to ensure that the new measures we introduce build on existing measures that to a large extent have worked extremely well since 2004, as I said before. However, we want to strengthen the Pensions Regulator’s anti-avoidance framework and information-gathering powers.

I am afraid that as yet, I cannot be certain about when legislation will be forthcoming. Obviously, we will look forward to and welcome the consultations and responses to the White Paper.

[Lord Kirkwood of Kirkhope (LD)]

My question is further to the important one raised by the noble Lord, Lord McKenzie, about timing. Whereas the Statement is correct to say that big insolvencies happen infrequently, when they do happen they strike at the confidence among employees about occupational pension savings altogether. I hope the Minister shares the House’s concern about the indirect impact this may have on auto-enrolment. As the Minister knows, some important steps are being introduced in the next phase of auto-enrolment in the near future but, if there is a White Paper in March, it may be 2020 or 2021 before the regulations are available to regulators, auditors and others. Will the Minister undertake to do everything in her power to push forward proper and sensible consideration of the regulations to be introduced, with as much dispatch as it is possible to muster?

[Baroness Buscombe]

I thank the noble Lord for his question. I share his concerns about the direct impact this might have on those who have pension plans and on those who are retired and in receipt of their pensions. Our drive on auto-enrolment has been extremely successful thus far. More than 9 million people have enrolled, via the auto-enrolment scheme, up to the end of last year. We will push this issue with as much dispatch as is sensible. Having said that, at the same time we do not want a knee-jerk reaction. We will publish our White Paper in the spring. We want to be sure that we make the right decisions and do not compromise the established, robust and, to a large extent, successful scheme that exists for the current powers of the Pensions Regulator. Yes, we must do all that we can. I am pleased to say that, as I speak, colleagues in another place are now debating the Second Reading of the single financial guidance body Bill, which I hope will support giving people advice and good counsel. The Pensions Advisory Service and others are already working on the Carillion issue. We are looking all the time to improve the system, to reassure people and to give them good advice and guidance on their pensions. We will legislate to do the right thing as soon as we can.