Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Tuesday 28th January 2020 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I wish to make a brief contribution to this Second Reading debate and, like others, I welcome the provisions in the Bill. I wish my noble friend well in piloting it through your Lordships’ House and commend her and her department for the briefing with which they have provided us.

It may be my noble friend’s first pensions Bill but I hope she will not mind if I tell her that I first spoke on a pensions Bill on 18 March 1975. The Bill was Barbara Castle’s Social Security Pensions Bill and the Opposition spokesmen were the now noble Lord, Lord Fowler, and Mr Kenneth Clarke. I must have been the Whip on the Bill, and reading my Second Reading speech, I was clearly a pretty obnoxious young man, haranguing Barbara Castle as follows:

“As a generation we have the collective effrontery to insist that our children make sacrifices on our behalf, on a scale that we are not prepared to make on behalf of the elderly today.”—[Official Report, Commons, 18/3/1975; col. 1538.]


I went on:

“If the benefits which she has promised are forthcoming, it is not she whom we ought to thank but the future generations, as yet unborn, who have been committed by her to a level of contributions that we are not prepared to pay ourselves.”


My parting shot at Barbara Castle was:

“I leave the Minister with this thought. How sad it would be if, in order to meet the contributions that future generations will have to make, the retirement age had to be raised to generate the necessary income.”—[Official Report, Commons, 18/3/1975; col. 1540.]


That was an accurate prediction of what has in fact happened.

Forty-four years later, and a beneficiary of that Bill, I want to focus my remarks on Part 4, dealing with the pensions dashboard. Like other noble Lords, I welcome putting this on a statutory footing and placing a requirement for pension schemes to provide information for the dashboard. Most people make inadequate provision for their old age, despite the success of auto-enrolment, and this is particularly true of young people. The excellent briefing by Which? for this debate showed that half of those over 50 and still in employment are not sure of the value of their pension savings, one-third find it difficult to keep track of their pension pots and one-fifth have never checked. The dashboard will bring home to people at the flick of a mouse what their entitlement will be and perhaps cause them to think seriously about whether that will suffice. Perhaps the dashboard might have some options indicating what that individual’s contributions would need to be if they wanted to retire on today’s salary.

I have a few queries, which my noble friend might like to address in a letter if that is more convenient. Over the weekend, I logged on to the Pensions Dashboard Prototype Project, which I found informative, but right at the end it said:

“The industry and government hope to have Pensions Dashboard services ready by 2019.”


That sounds as if folk will already be able to access the service, but they cannot.

Reading the response to the consultation document, we are told:

“Once the supporting infrastructure and consumer protections are in place, and data standards and security are assured, most pension schemes should be ready to provide consumer’s information to them within three to four years.”


Even that rather long timescale is qualified by the words “most” and “should”. This project has been on the stocks for some time, and I wonder whether we really have to wait that long for this. If we do, perhaps somebody might amend the wording on the website as it is seriously misleading.

My second query is about the identity service referred to in Clause 119(3). The government response says:

“Before the pension search can take place, the identity service will authenticate the user to an accepted standard.”


The Explanatory Notes state:

“For example, the regulations may provide that ID verification must be completed before any information is provided”.


As I understand it, that means one has to register with a service such as Verify in order to get the digital key that unlocks access to this new service.

Last year, the NAO issued a very critical report on Verify:

“GDS reported a verification success rate of 48% at the beginning of February 2019, against a 2015 projection of 90%.”


GDS is the Government Digital Service. I tried to access Verify and was rejected by two before I succeeded with the third of the six private sector authenticators. Government support for Verify ends this March, with the hope that the private sector will take over. Is my noble friend satisfied that those who want to access the dashboard will not be deterred by the at times cumbersome and unreliable identity services?

My third query is about the many pension schemes where the widow, widower or partner has benefits when the principal beneficiary dies. Will those “secondary” beneficiaries be able to access their entitlement under the principal’s scheme both before and after the principal has died? If the objective is to give people a good idea of what their pension will be and whether they need to make additional provision, that information is essential if they are to get a complete picture. There may be data protection issues, but I think that this issue needs addressing and I hope that my noble friend will be able to say something about it.

It is not clear—this point was raised by my noble friend Lady Altmann—whether the information will include charges and income projection figures. To be meaningful, both should be included. Presumably, schemes will not be able to make their own heroic assumptions about projections. Can the Minister confirm that there will be a standardised methodology for projections?

Next, equity release is becoming an increasingly important component of retirement planning. A person’s equity might be worth far more than their pension pot and be capable of providing an income stream in retirement. I do not want to suggest anything that might slow down the rollout of the dashboard, but is it being configured in such a way that it will be possible downstream to incorporate the savings locked up in equity as well as the savings locked up in the pension pot, together with potential income streams?

My final query relates to the use of “pensions dashboards” in the plural—a point raised by other noble Lords. If I were mischievous, I would table an amendment to delete “dashboards” and insert “dashboard” in the singular in Clause 118. I assume, incidentally, that there will be no charge for access to any dashboard, and perhaps that might be made explicit in the Bill.

As a Conservative, I am in favour of competition and choice, but I asked myself why we need more than one dashboard, particularly as under Clause 122 the Money and Pensions Service will be obliged to provide one itself. Of course, the same information will be available to all dashboards, and designing and setting one up will involve providers in considerable expense, with no revenue. The excellent Library briefing refers to the industry’s concern about the costs of establishing a dashboard.

I see a parallel with the directory enquiry service. That was abolished in 2003 and replaced with a bewildering array of no less than 20 118 schemes. I am not convinced that competition and plurality has always been a worthwhile innovation. Any mischief on my part might be avoided if any dashboard had to be regulated by the FCA—as suggested by the noble Baroness, Lady Drake—to make sure that it was compliant.

As a postscript, can my noble friend shed some light on the recent support of the Pensions Minister for a new pensions commission, as suggested by the Fabian Society and Bright Blue?

Having said all that, I welcome the Bill and hope that it might reach the statute book before too long.

Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting : House of Lords
Monday 24th February 2020 Grand Committee

Moved by

[Lord Young of Cookham]

9: Clause 25, page 17, line 26, at end insert—
“( ) If the trustees receive an application under section 95 relating to money purchase benefits that are collective money purchase benefits, the trustees must check that the member or survivor has received appropriate independent advice before—(a) converting any of the benefits into different benefits that are flexible benefits under the scheme;(b) making a transfer payment in respect of any of the benefits with a view to acquiring a right or entitlement to flexible benefits for the member or survivor under another pension scheme;(c) paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.( ) The Secretary of State may by regulations make provision about—(a) what the trustees or managers must do to check that a member or survivor has received appropriate independent advice for the purposes of this section, and(b) when the check must be carried out.”

[Lord Young of Cookham (Con)]

My Lords, Amendment 9, which is tabled in my name and that of my noble friend Lady Altmann, seeks to give protection to beneficiaries of CDCs who want to transfer out. Basically, it extends the protection that already exists in statute for DB beneficiaries to beneficiaries of CDCs, which we are discussing this afternoon.

As the law stands, that protection does not apply to the beneficiaries of the schemes we are talking about, so I have done a cut-and-paste job, lifting a chunk of legislation and applying it to CDCs. I welcome the steps the Government are already taking to stop people being misled into giving up rights under pension schemes—they have banned cold calling for example—but there are still too many abuses out there and there is a risk of people being approached and encouraged to forgo the benefits they have accrued under a CDC scheme for something that may not be worth quite so much.

I found the meetings that the Minister held with officials and Members of your Lordships’ House enormously helpful. This issue was raised. If I remember correctly, two arguments were given for not doing what I propose now. One was that it will take time to build up a transfer value of £30,000, which is the trigger level at which you have to get independent financial advice. In other words, people who are subscribing to these schemes would not be able to build up £30,000-worth of assets very quickly so there would be time to introduce a scheme. The other argument was that we are talking about a new type of scheme and therefore independent financial advisers may need time to develop the relevant portfolio of skills to give relevant advice to those who are thinking of transferring.

I do not find either of those arguments convincing, particularly as it would be possible for people to transfer into, for example, the Royal Mail scheme. Like other noble Lords, I got a letter from Royal Mail:

“Dear Lord Young … If you have any questions or would like to discuss the issues raised during the debate at Second Reading, please do not hesitate to contact me.”


I contacted Royal Mail and asked whether it is envisaged that those who join Royal Mail after the scheme has started and have a pension pot from their earlier employment will be able to buy into the CDC scheme. The answer—it is now “Dear George” rather than “Dear Lord Young” as the relationship warms—was:

“In answer to your question, yes, the rules of our CDC scheme will allow members to transfer in (“buy in”) and provide themselves with additional benefits under the two parts of the scheme, (a CDC pension and a defined benefit lump sum on retirement).”


So it could be the case that quite soon after the Bill becomes an Act and Royal Mail goes ahead somebody who joins Royal Mail and after a few months or a year decides to transfer out may have a pot worth more than £30,000, but at the moment they will not have to seek any independent financial advice before taking that decision, putting them in a different category from other beneficiaries.

The other argument was that this is a different product and therefore different skills will be needed to give advice to a beneficiary about whether it is worthwhile transferring out. It is a different product, but I wonder whether it is so different that IFAs will not be able to give independent advice to an individual looking on the one hand at the advantages of remaining within a particular CDC scheme and on the other hand at the possible advantages of transferring out. Given that CDC schemes exist in other countries and that there has been a debate about CDCs for some time in this country, I would have thought it perfectly possible to require people to take that advice.

I was reading the briefing from the RSA, which drew my attention to the fact that:

“There is a provision in the Bill to allow the Regulator to temporarily ‘pause’ the transfer option, which mitigates the risk of large-scale transfers out of the system due to misinformation.”


There is indeed a provision in the Bill. It is tucked away in Clause 44 under a pause order. It seems very cumbersome. This clause enables the Pensions Regulator to pause certain activities once a collective money purchase scheme has experienced a triggering event, and one of the things that a pause order can then do is stop a scheme making transfers out of the scheme. I am not sure that is what we want. It involves the Pensions Regulator and is essentially reactive, whereas we need something proactive, which happens automatically and in advance. I did not find that provision in Clause 44 an adequate response to a problem that may affect just one or two individuals in a CDC scheme, and will therefore not engage the attention of the Pensions Regulator, because there is nothing systemically wrong with the way the CDC scheme is being run.

There is an issue here. It may arise slightly more quickly than was originally envisaged. The solution I have may not be perfect, but it is a little better than the pause order, the triggering events and the provision in Clause 44. I beg to move.

--- Later in debate ---

[Lord Young of Cookham]

My Lords, we are inching towards the solution that I was after. I think I heard my noble friend say that she did not rule out legislation in due course, once the necessary skills had been acquired.

I would like to pick up one or two points. At one point, I think my noble friend said it might not be cost effective to have advice for smaller amounts. The amount that I envisaged was exactly the same amount that is already required to get independent financial advice for a defined-benefit scheme, so if it is cost effective for a defined-benefit scheme beneficiary to get advice for an amount over £30,000 then I would argue that it is the same for someone with collective contributions.

I heard what my noble friend said about safeguarding the interests of other scheme members but that is not actually the point I was making. I understand that the trustees will want to look at the impact on other scheme members if a large number withdraw, but that is not quite the same as making sure that those who withdraw have had access to the right advice. I think she also drew a distinction between benefits that are safeguarded because they are defined benefits and benefits under this scheme, which are not safeguarded. Legally she is of course perfectly correct, but in effect one hopes that there will not be that much difference between the level of benefits that you get from the scheme that we are discussing and the level that you get from a DB scheme.

I look forward to the regulations that my noble friend referred to. I was reassured by what my noble friends Lord Eccles and Lady Altmann said about the role of trustees. At the moment, under Clause 25(2), all they can do is hold things up for three weeks. However, if trustees take the advice of my noble friend Lord Eccles and take steps to ensure that people have taken the necessary advice before they transfer out, that is the way to go. As I said, I am grateful to my noble friend for her response. We are moving in the right direction and I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 26th February 2020 Grand Committee

These amendments are not an argument against commercial dashboards. They are saying, “Get it right; get a level of confidence before you put 25 million people’s data out into a network of commercial services.” It is not only the private interest of the individual customer. If you are putting the whole of the second-tier pension system in the UK into the dashboard ecosystem there are huge issues of public interest and public good. I am not arguing against the dashboard or against harnessing the benefits of financial technology. I am saying that the challenges and the risks are so great, so what is wrong with trialling it through a public dashboard for a year and presenting it to Parliament? If the Secretary of State is confident, the Government go ahead; if not, and they need more time, we will not have done anything wrong in this amendment. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, Amendments 70 and 71 in my name have much in common with Amendments 47 and 60, tabled by the noble Baroness, Lady Drake, which I support. But my amendments are more specific, in that Amendment 70 designates the Money and Pensions Service as the public body, to which the noble Baroness has just referred, which would have to provide a publicly owned pensions dashboard. Amendment 71 stipulates a date by which it should be up and running. Without a date, there is no guarantee in the Bill that we will ever see the service. I will mention in a moment some of the slippages.

I assume that MaPS would qualify under the description of a public body from the noble Baroness, Lady Drake. It is an arm’s-length body sponsored by the DWP, and the Government appoint the chairman and chief executive. It is funded by levies on both the financial services industry and pension schemes, but that does not preclude it from being a public body. We have been told that it is going to provide a dashboard. Page 70 of the very helpful policy brief says:

“The Government is committed to the provision of a dashboard hosted by MaPS.”


If that is a commitment, I see no difficulty in making it a statutory requirement, which Amendment 70 does. Without such a requirement, we would be entirely dependent on the private sector to take the project forward. As we saw from the Library briefing at Second Reading, it has doubts about costs, and the noble Baroness, Lady Drake, has just reminded the Committee of some of the warnings about being over-reliant on the private sector.

I turn to Amendment 72 about the date. At Second Reading, I quoted from the Pensions Dashboard Prototype Project, which said:

“The industry and government hope to have Pensions Dashboard Services ready by 2019.”—[Official Report, 28/1/20; Col. 1372.]


My remarks were drawn to the attention of the project and the comment was hastily withdrawn. However, yesterday, I logged on to the ABI website entitled, “The Pensions Dashboard—your online pension finder”. That website has a 2020 date at the foot of the last page, indicating that it has been updated relatively recently, but on page 1 it said:

“The Government’s objective is for the service to be available to consumers by 2019.”


I expect that also to be revised in the near future—indeed, an email may already be winging its way to the ABI.

Against that background, my target date of December 2023, for something for which we are told the Government’s objective was for it to be up and running two months ago, is excessively generous. Reading the ABI website further, I found the following question:

“If the prototype has worked, why do I have to wait until 2019 to use this myself?”


The answer makes it clear that, in the ABI’s view, any delay is down to the Government. It says:

“The prototype has proved that the technological challenges of agreeing data standards, verifying people’s identities and reporting back in a secure and meaningful way can be done, but it is only part of the solution.”


It goes on to say:

“Setting up a service like this cannot be done by the pensions industry alone, but needs support from the Government and regulators to agree rules for how it will operate.”


That, of course, is what we are doing this evening. It seems that the ABI is ready to go and is just waiting for the Government.

I will put this in a historic context. In 2002, the then Secretary of State at the DWP, Andrew Smith, said that the Government would create a web-based retirement planning tool—the online retirement planner—showing people their total projected pension income. Fast-forward to 2014—if fast-forward is the right expression—when Mark Hoban, then Financial Secretary to the Treasury, said:

“A ‘RetirementSaverService’ (dashboard) will be essential to support pension freedoms.”


Five years after pension freedoms were introduced, there is still no dashboard. In the meantime, eight national pensions dashboards have been launched in Europe.

Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd March 2020 Grand Committee

Moved by

[Lord Young of Cookham]

38: Clause 118, page 105, line 7, at end insert “or any person named as a beneficiary under that individual’s pension scheme”

[Lord Young of Cookham (Con)]

My Lords, Amendment 38 in my name endeavours to fulfil the objectives of the pensions dashboard by ensuring people have access to all their pension entitlements. At the moment, they will be able to access entitlements under schemes only in their own name; they will not be able to access information about entitlements they may have because their husband, wife or partner has named them as a beneficiary under another scheme. More and more couples are both at work, and most pension schemes enable a beneficiary to provide for a surviving spouse. My amendment would enable a named beneficiary to access a dashboard where they had an interest. Without that information, that beneficiary will not know whether they have made adequate provision for their old age, which is a primary objective of the dashboard.

There may be other ways of achieving this objective. When a policy is taken out, beneficiaries could be sent a copy; I do not think this happens at the moment. They could be sent an annual statement, as the main policyholder is, or the main policyholder could be given the option of ticking a box so that beneficiaries can access the relevant dashboard with their consent. The point made in the amendment is a simple one: if the dashboard is to give people a complete picture so they can make informed judgments, they need to have access to this relevant information.

Amendment 43, supported by my noble friend Lord Flight, and Amendment 44 have a similar objective in enabling someone to see whether they have made enough provision for their old age by including relevant assets that can provide a pension income on the dashboard. The helpful policy brief says on page 45:

“Putting individuals in control of their data, dashboards should support engagement in pensions and planning for retirement.”


Planning for retirement involves more than pensions. Each Sunday, the Money section of the Sunday Times has a “Fame and Fortune” feature, in which there is a standard question:

“What’s better for retirement—property or pension?”


Yesterday, the Olympic medallist Sharron Davies said “Property.” The question makes the point that, for many people, there is a choice of how to provide for retirement. This amendment is a permissive one, which would enable a pension provider with a dashboard to include information on the equity locked up in someone’s home.

For millions of people, the equity in their home is worth more than their pension pot. Increasingly, that equity can be and is unlocked to provide an income stream in retirement. According to the ONS, we have £14.6 trillion in wealth—perhaps a little less following the slump on the stock exchanges last week—within which private pension wealth makes up 42% of national wealth, while net property wealth is not far behind at 35%. Arguably, equity release should play a higher role in proactive financial planning. Potentially, it is a valuable source of supplementary retirement income, particularly for pensioners on low incomes in homes that they own.

Many pension providers also provide equity release: for example, Aviva, Liverpool Victoria, Scottish Widows and Legal & General. It would make sense for them to be able to include illustrations about equity release alongside the pensions dashboard. Equity release is regulated by the FCA and can be sold only through a financial adviser. It is now one of the most highly regulated financial service products in the UK. In many ways, the decision whether, when and how to access equity release is not unlike the decision to access a pension pot. Independent advice is necessary, taking all considerations into account. I repeat what I said at Second Reading: I do not want to do anything to slow down the introduction of the dashboard, but I want to ensure that, when it is up and running, it can be used by those providing it to give customers a comprehensive view of assets and options, rather than a partial one.

I turn finally to Amendment 45, which deals with the verification process before one is allowed to access the dashboard. This is the weakest link in the chain. The ABI website—incidentally, it still proclaims that the Government’s objective

“is for the service to be available to consumers by 2019”—

says this about verification:

“The process to confirm the identity of users is based on the gov.uk/verify system which has already proved to be a secure portal for people accessing personal information.”


That could be an understatement. So secure is the portal that, as I will come on to in a moment, 56% of those who try to verify that they are who they are fail to do so and hence would be unable to use the dashboard.

There are risks in building the dashboard on the shaky foundations of Verify—one of the Government’s least successful IT initiatives—from which it is hastily disengaging, leaving its future in doubt. The NAO described Verify in March last year as

“intended to be a flagship digital programme to provide identity verification services for the whole of government ... In its 2016 business case, GDS identified the following key targets and expectations for the platform: 25 million people would use Verify by 2020, and 46 government services would be accessible through Verify by March 2018.”

As of 13 February, 22 government services use Verify—fewer than half the number expected by March 2018—and only 5.8 million people have signed up. There is a verification success rate of 44%, against an initial target of 90%. I failed twice to verify who I was.

In July 2018, the Infrastructure and Projects Authority recommended that Verify be closed as quickly as practicable. In a recent report, the NAO concluded:

“Even in the context of GDS’s redefined objectives for the programme, it is difficult to conclude that successive decisions to continue with Verify have been sufficiently justified.”


The Institute for Government’s Whitehall Monitor recently commented that the scheme continued to be “mired in issues”, had fallen short of targets and had

“failed to build its intended user base and it is not delivering the efficiencies that the government sought.”

In October 2018, the Cabinet Office announced that the Government would stop funding the scheme in March 2020. Against the background of the unpromising progress of the scheme, the then Minister for Implementation stated, in words that could have been crafted by the scriptwriter of “Yes Minister”, that it was

“now sufficiently mature to move to the next phase of its development.”—[Official Report, Commons, 9/10/18; col. 3WS.]

The intention is that the private sector will take over responsibility for the scheme, despite the NAO finding that the Government have failed to make the scheme self-funding and the Government failing to convince their own departments to use the scheme. What will the private sector do with the scheme? With no government support, the providers of the service may have to increase the charges to government departments, which the NAO warns may make it unaffordable for them to use. Of the 22 that use it, half have alternative means of accessing the services provided.

This is what the whole dashboard depends on. Will the private sector continue with it? If so, will it be free for consumers, as at the moment? What happens if there is no Verify process? On charges, the policy brief says on page 51:

“Government is clear that accessing basic information via pensions dashboards must be free at the point of use for consumers.”


I ask this in passing: where in the Bill is that commitment legislated for, and what is the point of making it free to access the dashboard if the verification process has a charge? I appreciate that my noble friend the Minister is dependent on the Cabinet Office for support on this issue, as that is where responsibility for Verify rests, but she has an obligation to satisfy the pension industry and pensioners that the system proposed in the Bill is fit for purpose.

Finally, at the moment, many pension providers have websites that customers can access and where they can get information about their individual pension pot. They can not only access that information but top up their pot, withdraw sums and switch investments. But under the Government’s proposals, if that pension provider then provides a dashboard, existing customers will not be able to access it using their usual log-on procedure; they will have to go down the Verify route first. Perhaps the Minister can confirm that that is indeed the case.

So, we have the odd situation where a purely passive site such as the dashboard, which can provide only information and is not interactive—Amendment 39 secures that—has a different and higher standard of security than the pension provider’s site, which is interactive. I do not understand why a pension provider that has satisfied itself about the bona fides of a customer to the extent that it will respond and pay drawdown cannot allow access to a dashboard on its site, which is purely passive, without obliging the customer to go through a cumbersome verification process. Perhaps that could be looked at as well. I beg to move.

[Lord Flight (Con)]

My Lords, I support Amendments 43 and 44 in the name of the noble Lord, Lord Young. He made the point that equity release is a growing source of income for people later in life. I would say it more strongly than that: I can imagine it being the biggest source of income for such people in 20 years’ time. I understand that the financial advisers who advise otherwise on pension fund matters are not qualified to advise generally on equity release. That has been substantially cleaned up, as it were, over the past 10 years so it is not a problem, but if the dashboard cannot include equity release, it does not meet its objective of setting out what people have to live on in older age. We do not want to delay wider progress but if equity release is not included quite speedily in the dashboard, it will not do its job.

--- Later in debate ---

[Lord Flight]

My Lords, is there not the point that, with people having on average 11 different jobs during their career and potentially 11 different pension pots, particularly those they were part of when they were younger, many of them have no information at all about it. They do not even know who the manager or the provider is. Already, the amount of unclaimed financial assets in this country is colossal. Without what is happening under this legislation, the problem will get worse, and we urgently need to sort out the ownership of lesser pension schemes, going back a long time.

[Lord Young of Cookham]

My Lords, this has been a long debate, and I do not propose to lengthen it much more. I am grateful to all noble Lords who have taken part, in particular my noble friend Lord Howe, who gave a very full response to the many issues raised. I was particularly encouraged by what he said a few moments ago—that the debate we had last Wednesday, and the view of the Committee that it would be best if the MaPS scheme was up and running before the other ones, had made some impact. I noted that he said that he hoped to come back to us with more news on that in the future.

I will say just a word on Amendment 39, in the name of the noble Baroness, Lady Drake. I read page 56 of the policy brief, which says:

“Dashboards will present simple information, without the ability to carry out transactions.”


As I understand it from what my noble friend said, that has been qualified and, subject to all the reservations and safeguards that he mentioned, it may be that under this existing legislation, transactions could be provided—I think that is where we ended up. In that case, the wording in the policy brief, if it is by any chance ever reprinted, might be qualified. At the moment it is quite stark:

“Dashboards will present simple information, without the ability to carry out transactions.”


I am being given a look; I am not quite clear what it means, but I will move on.

I was grateful to my noble friend Lord Flight for the support he gave to my amendment on equity release. However, I take the overall view that, while it makes sense at some point to have the opportunity to take a picture of all the assets available that can form a pension income stream, perhaps using the pensions board to do it up front is not the right place. I was reassured by what my noble friend Lord Howe said—that in future, we could consider some embellishments to the scheme, but the top priority was to move ahead as currently planned.

I am afraid that my concerns have not been satisfied at all on Verify. I was grateful to my noble friend for the assurances, first, that there would be no charge for accessing any pensions dashboard; and, secondly, that there would not be a charge for accessing the verification process. The Government have spent hundreds of millions of pounds and many years developing Verify, so I was slightly surprised when he said that the identification process for the pensions dashboard may not be Verify. If it will not be Verify, what will it be? There is no other game in town at the moment. As of yesterday, the Government lost all leverage over Verify by stopping any funding, so its development is now entirely in the hands of the providers. Given that the providers have now heard that Verify may not be the scheme for the pensions dashboard, that may weaken even further their incentive to develop it. What is the business model for Verify if you cannot charge the people who are having themselves verified?

There is therefore still a huge question mark over how we will get access to the pensions dashboard if there is some doubt, as I explained a few moments ago, about Verify, and no clarity at all about what this alternative system might be, which is not Verify and which will unlock the key to the dashboard. Having said that, I do not want to sound at all mealy-mouthed to my noble friend, who did a heroic job dealing with all the other amendments, but I still have some lingering doubts on that one. However, I beg leave to withdraw Amendment 38.

Amendment 38 withdrawn.

Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th March 2020 Grand Committee

[Lord McKenzie of Luton]

My Lords, it will not take us long to deal with this amendment. When it was conceived as an amendment, there was a fairly grand design behind it but, as time has moved on, it has perhaps condensed just to a statement of beliefs in the key issues. The amendment calls for the establishing of a pension schemes commission—I hesitate to raise that issue in the proximity of my noble friend Lady Drake; we live in awe of what that commissioner achieved. The idea of the commission would be to conduct a public policy review of pension schemes. There is plenty to reflect on without stepping on the policy responsibilities of the Minister, or indeed of any Select Committee.

In recent times we have experienced the implementation of a Pensions Commission and auto-enrolment; the new state pension; changes to state pension age; the so-called pensions freedoms; master trusts, CDCs, and the future of DB schemes; an increased focus on governance, transparency, levels of charges and the pension tax system. Some of this has reached a degree of maturity and some not; some has been seen in the strategic context, and some not. In respect of this, there remain the ongoing matters of gender equality, savings levels and, still, pensioner poverty. In addition, there is our consultation on investment principles and the important issue of climate change. Therefore there is scope in all of this to reflect in future pensions issues, and today I do no more than set down a list for consideration. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I see that on the website of an organisation called This is Money, published on 20 January, Mr Opperman, who is of course the Minister with responsibility, is quoted as saying that he

“believes a new commission should review the future of the automatic enrolment system”.

Noble Lords may also remember that on 17 January, two think tanks, the Fabian Society and Bright Blue, launched a report calling for a cross-party commission on pensions. Responding to that, an organisation called B&CE published the following comments:

“Commenting, Guy Opperman MP, Minister for Pensions, said: ‘Over the last decade, Conservative and coalition governments have made huge strides to improve pensions for the next generation, with the introduction of auto-enrolment, an enhanced state pension and the development of the Pensions Dashboard. For the next stage of pension reform, we need to continue the consensus that emerged following the Pensions Commission of 2003 to 2005. A new Commission has cross-party support, and will help us map out the future of auto-enrolment, so we can boost contribution rates in the coming decades, and explore how we can support savers with pensions freedom reforms. Let’s not give up on the progress we’ve made in pensions through cross-party working. It’s time to explore ideas for the next generation’.”


It therefore seems that the thinking behind the proposed new clause in the name of the noble Lord, Lord McKenzie, has some support at the moment within the DWP.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the noble Lord, Lord Young, has done the job for me, but broadly speaking, I support this amendment. As well as what has already been elaborated, it plays into the feelings that have come up several times as we discussed the Bill as well; namely that, although the noble Earl has said that there is policy, a lot of implementation is also yet to come, and perhaps some of us feel that some policy is also yet to come. I therefore hope that a commission could come along subsequently and that it would be able to have an overview of some of the newer things as well as reviewing older things and looking forward. Therefore, I also support the notion of having this pension schemes commission.

Pension Schemes Bill [HL]

Lord Young of Cookham Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

Moved by

[Lord Young of Cookham]

53: Clause 118, page 106, leave out line 32
Member’s explanatory statement
This is a probing amendment, following the debate in Committee, to establish the Government’s proposals to use GOV.UK Verify for the purpose of authorising access to the Dashboard.

[Lord Young of Cookham (Con) [V]]

My Lords, Amendment 53 in my name presses the Government to clarify progress on identity verification. This is crucial because without a system for identity verification—proving you are who you say you are—no one can use a dashboard. The original proposal for verification was summarised on the ABI website:

“The process to confirm the identity of users is based on the gov.uk/verify system”.


Verify was a government-sponsored IT project that began in 2014 and has cost about £200 million. It should have provided the basis for accessing pensions dashboards. To put it mildly, however, it has not lived up to expectations, leaving a void in the dashboard programme.

Last year the NAO published a critical report on what in its words was

“intended to be a flagship digital programme”.

It said:

“Even in the context of GDS’s”—


the Government Digital Service’s—

“redefined objectives for the programme, it is difficult to conclude that successive decisions to continue with Verify have been sufficiently justified.”

A year earlier, the Infrastructure and Projects Authority recommended that Verify be closed as quickly as practicable. The Institute for Government’s Whitehall Monitor commented that the scheme continued to be “mired in issues”, had fallen “short of targets”, and had

“failed to build its intended user base and … is not delivering the efficiencies that the government sought.”

In March this year the Government stopped funding the scheme. Verify’s falling out of favour was heralded by my noble friend in his reply to my amendment in Committee. This is what he said:

“I understood what my noble friend said about Verify, and I assure him that the industry delivery group has this issue squarely on its radar.”


Putting on his black cap, he went on to say:

“The solution may not be Verify. … We hope to make announcements on that in due course.”—[Official Report, 2/3/20; col. GC 205.]


Responsibility for taking identification verification forward now rests with MaPS, the Money and Pensions Service. In its progress report in April on identity verification, there is no mention of Verify, which seems to have been airbrushed out.

Yesterday, I got an email from Mr McKenna of MaPS, for which I am grateful. I had asked him whether the current market engagement exercise on the dashboard included verification, and this is the reply:

“The current market engagement exercise does not include identity verification. This is a separate work strand within the programme that requires more work before we will be in a position to engage with the supplier market.”


So a prerequisite for the dashboard programme has been put to the back of the queue. Who is going to provide the identity verification service? Given the commitments that we have heard this evening that the service will be free, how on earth will it be funded? Will it be by MaPS, for example? Is my noble friend able to make the announcement that he trailed in his earlier reply to me, on the timing and funding of this crucial element in the programme?

Amendment 65, in my name, places an obligation on MaPS to provide a dashboard by replacing “may” with “must”. It is the identical twin of an amendment that I tabled in Committee, and I am grateful to my noble friend Lady Altmann and the noble Lord, Lord Sharkey, for their support. To the amateur, our one-word change seems a more economical way of achieving the desired objective than the five government amendments with thousands of words, but we bow before the expertise of professional drafters. I say straight away how grateful I am, as I am sure other noble Lords are, that the Government have listened to the strong case made on all sides in Committee, and recognised that we need the certainty of compulsion, rather than the uncertainty of discretion, when it comes to MaPS and the dashboard. That we have this concession is typical of the patient listening of Ministers and their officials in the last three months, on this and other issues, and I warmly welcome it.

But—and it is an important “but”—there is no date by which they have to do this. Without some idea of timescale, we could be left holding the menu without ever getting the dish—hence my Amendment 68, which obliges MaPS to complete this task by December 2022. I referred in Committee to the length of time it has already taken to get this project up and running. It was first promised by Government in 2002 as an online retirement planner, and we were told 12 years later by the then Financial Secretary to the Treasury that:

“A ‘RetirementSaverService’ (dashboard) will be essential to support pension freedoms.”


Five years after pension freedoms, there is still no dashboard, while eight national dashboards have been launched in Europe and we have been reassured by the ABI that there has been extensive testing of prototypes.

In response to my amendment in Committee, my noble friend Lord Howe said,

“but I can tell my noble friend that MaPS and the industry delivery group intend to set out their approach for the year ahead by Easter. By then, we should have at least the outline of a plan, with milestones I hope, so that we can be a little clearer on the answer to the question that he raised.”—[Official Report, 28/2/20; col. GC 184.]

Easter has come and gone, but no milestones. The latest from MaPS is:

“We plan to lay out a more detailed timeline by the end of the year.”


I looked at the ABI website over the weekend to see if it had updated it on the subject of the dashboard since Committee, and I found this under “FAQ”:

“If the prototype has worked, why do I have to wait until 2019 to use this myself?”


Perhaps that could be updated before Third Reading.

Since Committee, MaPS and the ABI have had to cope with the pandemic, and their top priority has to be the continued payment of pensions, the collection and investment of contributions, and the provision of advice. But the introduction of “must” instead of “may” risks being meaningless without some indication of a date by when the obligation must be discharged. I hope that my noble friend can provide some sort of road map and destination time by which we will do this.

Finally, Amendment 63, in the name of the noble Baroness, Lady Sherlock, would require the MaPS dashboard to be up and running for a year before other dashboards. My initial view was that we did not need to have more than one dashboard as the data displayed on each would be identical, so why duplicate? However, as a Conservative, I was persuaded to support competition and choice, but I have a lot of sympathy with this amendment; I believe it would be best if MaPS became the brand leader of dashboards and was well established as such in the minds of the public. It has a better chance of doing this if it is first out of the traps, rather like the BBC and commercial broadcasters. In practice, this should be the case as MaPS is in charge of the plumbing for all the dashboards.

Looking at the progress update report from MaPS in April, I see that Chris Curry of MaPS is in charge of the pension dashboards programme. His remit will be to develop the secure digital architecture to support and enable the development of pension dashboards. Therefore, MaPS is doing the specification, procurement and testing of the common systems that everyone will be using; with this inside track, it ought to be first in the field.

The Minister said in reply to the debate on this in Committee:

“It could be that the publicly funded dashboard will be launched first and be first in class, and that others will follow.”—[Official Report, 26/2/20; col. 185GC]


It would be helpful if the Minister could go a little further this evening and encourage MaPS to say publicly that it is indeed its intention to be up and running before anyone else. On this, as indeed with other amendments, I will listen very carefully to what my noble friend says in reply. I beg to move.

[Baroness Drake [V]]

My Lords, the introduction of a pension dashboard service raises major considerations of the public good and consumer interest, which is why I, my noble friend Lady Sherlock and many other noble Lords across the House have argued strongly for citizens to have the right to access their data through a public dashboard and not be restricted to commercial services.

I thank the Minister for his courteous consideration of our arguments and the decision of the Government to require the Money and Pensions Service—MaPS, a public body—to provide a pension dashboard service. Amendment 63 would ensure that the MaPS public dashboard must have been in operation for a year, and the Secretary of State must lay a report before Parliament on the operation of that service, before commercial dashboards are authorised by the FCA to enter the market. A MaPS dashboard would be part of their function to deliver guidance to the public that is free at the point of use—a safe space, unfettered by any commercial interests.

As the Government can mandate all pension providers and schemes to release personal financial data on the order of 22 or more million people, Parliament needs to be confident that the public good and consumer interest are well served. The points of the noble Lord, Lord Young of Cookham, are extremely valuable and important, and I thank him for making them. Financial technology should be harnessed for the public good and to improve financial markets, and the dashboard has that potential.

However, building a dashboard service has complexities and challenges. The architecture, the liability model, consumer redress on detriment, data standards and sharing risks, identity verification and security—that quite rightly preoccupied the noble Lord, Lord Young—delegated access and consumer behavioural responses, to name just a few, are all work in progress. As I observed in the previous debate:

“The long-term savings market is particularly vulnerable to consumer detriment”.—[Official Report, 26/2/20; col. 176GC]


There is a major governance challenge to be addressed: the consumer protection of millions in both the provision of the dashboard and the infrastructure that supports it.

The ABI, speaking for some commercial providers, has acknowledged the need for strong governance to make clear what obligations, liabilities and controls will be in place and are necessary. In requiring near-universal coverage, the dashboard service raises the bar on protecting customers from poor behaviour by regulated and unregulated providers, scammers and consumers’ own vulnerability, when all their savings can be viewed in one place.

--- Later in debate ---

[The Deputy Speaker]

I have received no requests for noble Lords to speak, so I call the noble Lord, Lord Young.

[Lord Young of Cookham [V]]

My Lords, I thank noble Lords who have taken part in this debate, not least my noble friend Lord Howe for his response to the issues raised. I repeat the welcome given by all those who spoke to the government amendments, which in effect oblige MaPS to provide a dashboard. I make it clear that I do not propose to press any of the amendments in my name to a Division.

On identity, I note the new joint unit between DCMS and the Cabinet Office to come up with a digital verification process. It sounds a little like the exercise that was started in 2014 to initiate the Verify programme, which had the same objective. I only hope that this initiative is more successful.

On funding, there was a sentence in my noble friend’s response that I did not have time to write down in full, but it sounded as if it came from the Treasury: that funding options would be considered as part of a range of solutions. I would like to look a little further at that, but I welcome the reassurance that there will be no charge to the consumer. I am grateful that he recognised the importance of getting the identity verification process right as a precondition for a successful dashboard.

On the date, I say with respect that we heard a lot from my noble friend about “day one” but nothing about “day when”. We are no further forward in having any idea as to when the pensions dashboard will be up and running. I look forward to the six-monthly progress reports and I welcome what he said about recognising the urgency of getting the system up and running.

I think that we had a new commitment from my noble friend this evening which I welcome, which was that no one would be able to provide a pensions dashboard before MaPS. I am not sure that we have had that before. I wonder whether there will be some legislative underpinning of that commitment, which I would very much welcome.

The bulk of the debate was on Amendment 63. The majority of those who spoke, led by the noble Baronesses, Lady Drake, Lady Janke and Lady Sherlock, my noble friend Lady Altmann, and the noble Lords, Lord Vaux and Lord Sharkey, all wanted, in the interest of consumer protection, MaPS to have a head start so that it could be trialled and tested. My noble friend Lady Neville-Rolfe put the contrary view that there should be a more market-based approach to the dashboards without an inside track for the public sector. I do not propose to support the amendment in a vote, but my view is that it would be best if MaPS made it absolutely clear that it plans to be up there, using all its advantages, ahead of the field to set the pace. However, I understand the arguments and I suspect that when it comes to a Division the Government may be obliged to rethink whether this is something they really want to go to the stake on, or whether it is something that they can live with. In the meantime, I beg leave to withdraw Amendment 53.

Amendment 53 withdrawn.

--- Later in debate ---

[Lord Young of Cookham [V]]

My Lords, I will add a brief footnote to the powerful case made by the noble Baroness, Lady Bowles. She referred to the Railways Pension Scheme. As Secretary of State for Transport from 1995 to 1997, I am familiar with the scheme, which has grown in the intervening years to be one of the UK’s largest funds and which I believe to be well run.

I shared with my noble friend Lady Stedman-Scott the concerns of the RPS; namely, as the noble Baroness, Lady Bowles, has said, that the draft DB funding code that will emerge as a result of this legislation would oblige the various schemes under the RPS to de-risk with lower returns. As the noble Baroness has explained, these would have to be made good by the industry, if it could afford it, or its employees, or the schemes would be closed to new members.

I was encouraged by my noble friend’s helpful reply, dated 17 June, which said:

“Those employers and schemes who are already following good practice and planning for the long term should not need to change and we would not expect such schemes to require significant additional funding.”


However, I shared the letter with the RPS and, despite this, it believes that the powers in the Bill are too loosely expressed and that more specificity would ensure that the subsequent regulations got off on the right track. If the Minister cannot accept the amendment, can he make a commitment that there will be a distinction between open and closed schemes, to be followed up in the subsequent regulations? Will he ask his officials to discuss these concerns further with interested parties in an endeavour to find an acceptable way through as the Bill completes its passage through both Houses?

[Baroness Altmann [V]]

My Lords, I support Amendment 71, to which I have added my name. I have little to add to the excellent words of the noble Baroness, Lady Bowles, and my noble friend Lord Young of Cookham.

I stress to my noble friend the Minister that this is a really important amendment. The Government’s recent White Paper called for pension scheme funding which enables the best deal for members, supports the economy and does not place extra burdens on business. If those are the objectives—and I think they are the right ones—they will be at odds with the draft DB funding code that may emerge from this legislation, which seems to want to drive DB schemes on a path to so-called de-risking, aiming for a particular date of maturity. This concept is simply inappropriate for an open scheme.

The regulatory approach for schemes such as USS or the Railways Pension Scheme would see their ability to invest for the long term, which must be in the members’ best interest, become much more difficult. There does not seem to be sufficient recognition of the difference in liquidity profile and investment horizon of an open, relatively immature scheme compared to a closed scheme. Indeed, this would pose an existential threat to the survival of all remaining 1,000 or so open schemes. In the face of quantitative easing, increasing exposure to gilts and fixed income assets makes little sense while central bank policy is designed to force bond yields lower. Forcing schemes to compete with central banks to buy ever more expensive bonds is the most expensive way to fund these pension commitments.

The Bank of England’s pension scheme is an ideal example. It follows a lowest-risk approach, investing solely in gilts and other such supposedly safe assets. It does not match its liabilities, but it is open and entails a contribution rate of between 40% and 50% of pensionable salary. Should such pension contributions be required without any upside potential for a diversified investment strategy that can take advantage of the wide range of investment options available from infrastructure assets, building housing for rental and other areas where pension schemes with a long-term horizon are ideally placed to take advantage—for example, our own infrastructure, in which other countries’ pension schemes have significantly invested—schemes such as RPMI would require such significant contribution increases that members could not afford it and would opt out, and employers could probably not afford it either.

Therefore, I urge my noble friend to look carefully at this really important issue and to recognise explicitly that there are different needs for open DB schemes relative to those that are otherwise closed.