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.