Women’s State Pension Age Communication: PHSO Report

Mark Garnier Excerpts

Thursday 29th January 2026 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

I thank the Secretary of State for advance sight of his statement.

As constituency MPs, we will all have met many campaigners from the Women Against State Pension Inequality campaign group—the WASPI women. I am sure that many Members will have received a large amount of correspondence on this matter recently. If they are anything like me—I have had 150 emails recently about it—they will really feel the strength of opinion out there. It is safe to say that both our constituents and us as Members of Parliament have been left wanting by this Government.

In December 2024, the previous Secretary of State, the right hon. Member for Leicester West (Liz Kendall), told this House that the Government would not compensate these women. Let me remind colleagues what her rationale was. She said that

“the Government do not believe that paying a flat rate to all women, at a cost of up to £10.5 billion, would be a fair or proportionate use of taxpayers’ money”—[Official Report, 17 December 2024; Vol. 759, c. 168.]

She also tried to argue that they could not afford it because of holes in the Government finances. However, as my hon. Friend the shadow Secretary of State for Work and Pensions rightly said:

“Government compensation should always be based on what is fair and just.”—[Official Report, 17 December 2024; Vol. 759, c. 170.]

Before getting into government, it seems that Labour MPs did think that an injustice had been done. Let us remind our colleagues of what members of this Government have said in the past. The Prime Minister himself called this situation “a huge injustice”. The Deputy Prime Minister and Justice Secretary slammed the “cliff edge” that he said faced WASPI women. The Foreign Secretary said that she was

“fighting for a fair deal for the WASPI women.”

The Chancellor of the Exchequer claimed to “want justice for WASPI women”. Even the current Secretary of State for Work and Pensions got in on the action, putting out a social media post with the caption:

“MPs campaigning for a better deal for WASPI women.”

It is therefore no wonder that the WASPI women, who were promised so much, are so angry; the people who used to stand beside them have now turned against them.

If the Government really believed that these women had faced a great injustice, they would have found a way to compensate them. They could have avoided a deal with Mauritius that will cost us all £35 billion, but they chose not to. They could have found savings on our country’s benefits bill, but they chose not to. They had 14 years to prepare for government and are messing up by doing nothing.

That brings us to the statement from the Secretary of State today. Is it not convenient that he should choose a sitting day when most MPs are not here? It is almost as if he does not want to hear the criticism from his own Back Benchers. In reality, all that the Secretary of State is doing is announcing that nothing has changed and that the Government will not be compensating WASPI women.

I have a few questions. Given that the Secretary of State previously campaigned for a better deal for WASPI women, does he think that today’s announcement provides that better deal? In his statement, he tried to argue that this issue is somehow the Conservatives’ fault. However, he forgets that the maladministration that the previous Secretary of State apologised for was committed under the last Labour Government, before 2010—the ombudsman’s report made that explicit. Can the Secretary of State hold up his hands and take accountability for those mistakes?

This is a really interesting point. The Secretary of State chose to mention the triple lock in his statement and to say that the state pension will go up by up to £575 this year, with incomes expected to rise by up to £2,100 a year by the end of this Parliament. We all know that there is no cap on the triple lock. [Interruption.] There is no cap on it, but he made the point that that would rise by “up to” £2,100 a year. Is he implying that the triple lock is about to be capped? Will he confirm that he is apparently U-turning on the Government’s policy on the triple lock by imposing a cap?

Is it not just a fact that, frankly, this Government resemble a bunch of joyriders pulling handbrake turns in a Tesco car park, when Labour should be a serious party of government? Their Back Benchers keep being marched up the hill, only to be told to march down again. The Government even take the Whip away from them for having a conscience, only to tell them later that Ministers are proud to support policies for which support was only recently a sackable offence. Does the Secretary of State really think that this constant back and forth is fair on WASPI women? I look forward to his comments.

[Pat McFadden]

I am grateful for the hon. Gentleman’s questions. He is right that there has been a forceful and energetic campaign, which has resulted in lots of emails and contact with Members across the House, but his Government had this report from the ombudsman. They could have taken a decision before the election, but they chose not to, as with so many other issues. And perhaps the ombudsman had an inkling of how unlikely it would be to get a decision from the previous Government, because the ombudsman made the recommendations on remedy to Parliament rather than to his Government.

The hon. Gentleman refers to Labour, to me and to other MPs on this side of the House, and I remind him that we voted against the acceleration in the rise of the state pension age that was put through by the coalition Government.

On re-examining the decision, I thought it was right to do so, to make absolutely sure that we got this right, considering not just the 2007 report but a whole range of evidence and documents. I have repeated my predecessor’s apology for the maladministration found by the ombudsman. There is no change in our position on the triple lock, and the figures quoted reflect the estimates of the Office for Budget Responsibility throughout the Parliament.

Oral Answers to Questions

Mark Garnier Excerpts

Monday 26th January 2026 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

Thank you, Mr Speaker—I had better add my sympathies for your poor leg to those of the hon. Member for Harlow (Chris Vince).

The Labour party has performed, frankly, a spectacular U-turn on its support for WASPI women, but now it finds itself bogged down in judicial reviews and accusations of incompetence. If the Government cannot even deliver literally nothing for the WASPI women without messing up, what hope is there for them delivering wider welfare reforms?

[Torsten Bell]

I simply cannot let the hon. Member off on this. It was the Conservatives who made the decisions on accelerating the state pension age and in some cases gave women around five years’ notice or less of the increase. That was a choice made by the Conservative party. This Government are considering a report from the ombudsman that the Conservatives left sitting on their desks and refused to make a decision on—and we are going to make a decision.

National Insurance Contributions (Employer Pensions Contributions) Bill

Mark Garnier Excerpts

Committee of the whole House
Wednesday 21st January 2026 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I beg to move amendment 5, page 1, line 10, after “income tax” insert—

“at the higher or additional rate”.

This amendment would exempt basic rate taxpayers in England, Wales and Scotland from the £2,000 cap.

[The Second Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 7, page 2, line 26, leave out from “as” to end and insert—

“the amount calculated under subsection (5) for a tax year (but subject to any provision made in reliance on subsection (6C)(a) or (b) of that section).

(5) In 2029-30 the contributions limit must be set at a figure equal to £2,000 uprated by any percentage change in the consumer price index between 2026-27 and 2028-29.

(6) In subsequent tax years the contributions limit must be uprated by the same percentage change as that applied to the consumer price index that year.”

This amendment would uprate the £2,000 cap by the percentage change in the consumer price index during the period before 2029-30, and would require the cap to be uprated by the same percentage as the change in the consumer price index each year thereafter.

Clause 1 stand part.

Amendment 6, clause 2, page 2, line 38, after “income tax” insert—

“at the higher or additional rate”.

This amendment would exempt basic rate taxpayers in Northern Ireland from the £2,000 cap.

Amendment 8, page 3, line 39, leave out from “as” to end and insert—

“the amount calculated under subsection (5) for a tax year (but subject to any provision made in reliance on subsection (6C)(a) or (b) of that section).

(5) In 2029-30 the contributions limit must be set at a figure equal to £2,000 uprated by any percentage change in the consumer price index between 2026-27 and 2028-29.

(6) In subsequent tax years the contributions limit must be uprated by the same percentage change as that applied to the consumer price index that year.”

This amendment would uprate the £2,000 cap in Northern Ireland by the percentage change in the consumer price index during the period before 2029-30, and would require the cap to be uprated by the same percentage as the change in the consumer price index each year thereafter.

Clause 2 stand part.

Clause 3 stand part.

New clause 1—Review of impact on SME recruitment and retention—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on small and medium-sized businesses with regard to the—

(a) recruitment of staff, and

(b) retention of staff.

(2) The report under subsection (1) must also consider the cumulative impact of changes to employer’s national insurance on businesses affected by this Act since July 2024.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the ability of SMEs to recruit and retain staff.

New clause 2—Review of impact on small and medium-sized business tax liabilities—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on small and medium-sized businesses with regard to—

(a) businesses’ overall tax burden,

(b) employment costs, and

(c) business solvency.

(2) The report under subsection (1) must also consider the cumulative impact of changes to employer’s national insurance on businesses affected by this Act since July 2024.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the overall tax burden and employment costs faced by SMEs.

New clause 3—Review of impact on employee marginal tax rates—

“(1) The Treasury must, within 12 months of the passing of this Act, lay before Parliament a report assessing the effect of its provisions on the number of employees brought into a higher marginal rate of income tax.

(2) The report under subsection (1) must give particular regard to the impact of the freezing of income tax thresholds between April 2022 and April 2031.”

This new clause would require the Treasury to review and report on the impact of the Bill’s provisions relating to National Insurance contributions on the number of employees who move into a higher tax band due the increase in their taxable income due to the effects of this Bill.

New clause 4—Reviews of the impact of the Act—

“(1) The Treasury must, before March 2029, lay before Parliament an assessment of the impact of the changes made under this Act.

(2) The assessment made under subsection (1) must consider—

(a) the adequacy of pension contributions made by or on behalf of individuals affected by this Act,

(b) use of salary sacrifice schemes and optional remuneration arrangements, and

(c) any effects on the investment capability of UK pension funds.

(3) The Treasury must lay before Parliament a follow-up assessment of the impact of the changes made under this Act before March 2034.”

This new clause would require the Treasury to undertake an impact assessment of the effect of the change made under this Act, before they take effect, and again five years later.

New clause 5—Calculation and publication of lifetime pension values—

“(1) The Treasury must calculate and publish the projected lifetime value of an individual’s pension before and after the changes made by under this Act.

(2) For the purposes of subsection (1), the projected lifetime value is the total amount of pension income an individual is expected to receive over their lifetime.

(3) The calculations made under subsection (1) must—

(a) be based on clearly stated assumptions, and

(b) include illustrative examples covering different pension entitlements.”

New clause 6—Assessment of changes to pension saving through salary sacrifice schemes—

“(1) The Chancellor of the Exchequer must, within 15 months of the provisions of this Act coming into effect, lay before Parliament an assessment of the effect of this Act on the amount saved into pensions through salary sacrifice schemes.

(2) The assessment made under subsection (1) must include an—

(a) estimate of the total amount saved into pensions through salary sacrifice schemes in the 12 months preceding the provisions of this Act coming into effect,

(b) estimate of the total amount saved into pensions through salary sacrifice schemes in the 12 months following the provisions of this Act coming into effect, and

(c) an assessment of the difference between those amounts.”

[Mark Garnier]

It is a great pleasure to be with you yet again, Ms Nokes. I enjoyed our last sparring with the Pensions Minister just before Christmas, which cheered us up to no end.

Let me speak to amendments 5, 7, 6 and 8 as well as new clause 4, which all stand in my name. It will not surprise the Pensions Minister to hear that we are not at all happy with this Bill, which actually will do nothing to enhance pension savings. I will go through each of our amendments in the reverse order of importance.

New clause 4 would require the Government to assess the impact of the Bill, should it receive Royal Assent, before and after its implementation in 2029. We think it is important that the Government do their homework before implementing policies. We asked for something similar in the Pension Schemes Bill, but the Pensions Minister described it as unnecessary. In this case, the Government seem not to have listened to industry, to experts or to savers. Our new clause asks the Government to do that, so that we can better understand the impact. First, how will the Bill affect pensions adequacy? That will be after the pensions review has concluded, so we do need to know. Secondly, how many people use salary sacrifice or optional remuneration arrangements? Thirdly, what are the investment capability of UK pensions?

There has been a certain amount of commentary on this matter. The Association of British Insurers has said:

“We have consistently raised concerns about the potential impact of a cap on pension salary sacrifice on both people’s savings and employers’ resources.”

There are some issues that are of great concern to many people on this matter, so have the Government fully considered the knock-on effect that it will have on investment from UK pension funds? Also, will the Government update the terms of reference for the pensions commissioner, which is being led by Baroness Drake, to ensure that this is considered?

We are unlikely to press new clause 4 to a vote. However, I believe that the Liberal Democrats’ new clause 5 would have a similar effect. Should the Liberal Democrats wish to move the new clause, we would support it.

Amendments 7 and 8 concern the indexation of the cap. These amendments look to make the £2,000 cap naturally rise in line with the consumer prices index. We have brought these amendments forward because if the cap remains static, it will become increasingly meaningless. We have seen today, when we have had an above-expectation inflation rise of 3.4%, that would clearly devalue the value of the cap, even by the time that it is implemented in 2029. Our amendments seek to address that so that salary sacrifice arrangements do not become redundant without parliamentary intervention. Obviously, we use CPI because it is the basis for inflation. Again, the ABI has made a similar argument, as the cap does not allow for inflationary changes. Having said that, we do not propose to press those amendments.

Let me move on to amendments 5 and 6, which we feel particularly strongly about. They are mirror arrangements for each other. Importantly, we are trying to make what we feel is a very poor Bill into something that is less poor. The amendments would make basic rate taxpayers exempt from the £2,000 cap. They would support the group in the UK that typically under-saves and is the least prepared for retirement. According to the Society of Pension Professionals, a quarter of the people who enjoy salary sacrifice, who will be hit by the changes that this Bill brings in, are basic rate taxpayers. Around 850,000 basic rate taxpayers will be affected by the cap.

More fundamental to that is the fact that this group of people—lower-paid workers—will be hit disproportionately hard. Salary sacrifice allows an employee to give up a certain amount of their salary to be contributed to their pension directly by the employer. We all understand that, but it not only takes advantage of the income tax allowance, as with all pension contributions, but allows national insurance contributions to be included and transferred into the pension, in the case of an employee national insurance, and allows for employer national insurance to be used at the discretion of the employer.

The employee element—the national insurance that we all pay as employees—is the important part of this matter. While higher rate taxpayers will continue to enjoy 40% tax relief at their higher rate, the national insurance is just 2 percentage points—around one-twentieth of the tax break on the income tax. While a basic rate taxpayer enjoys just 20% income tax breaks, their national insurance contribution is 8%. The effect on lower-paid workers is four times that on higher-paid workers. That is not a good thing—indeed, 8% is two-fifths of the value of the other contribution for which they benefit from their income tax savings.

In absolute terms, as I have said, the marginal rate is four times more expensive for lower rate taxpayers than it is for higher rate taxpayers, but there is an even bigger problem: this is a harder attack on other types of savers than we had anticipated. Another group of people affected are those paying back student loans. Graduates pay back their student loans once they pass the thresholds of £28,745, and they do so at a rate of 9%. Graduates who would otherwise enjoy that 9% that goes into student loans being paid into a pension will not see it being paid into their pension because of the salary sacrifice cap. The effective loss for a graduate paying back student loans is 9%. Graduates on the basic rate of tax will see not just a loss of 8% for their national insurance schemes, but a total loss of 17% of the benefit at the marginal level above the £2,000 cap.

The director of the Chartered Institute of Taxation agrees. She said:

“The change will disproportionately affect basic rate taxpayers because they will pay at 8% NIC on contributions over the £2,000 cap, compared with a 2% charge on higher earners. It will also disproportionately impact those with student loans who earn above the repayment threshold, as they will have incurred an extra 9% student loan deduction from their pay.”

At a time when we are trying to get people to do the right thing and save for the future, it seems that the Government want to whack the lower-paid harder. Because of the way that this system works, they will whack the lower paid. They also want to whack a younger generation even harder than those who enjoyed free university education. That younger generation cannot afford to buy a house and have to pay for university education. The Government have made it far harder to get a job, with their jobs tax, and at a time when we are desperately trying to get people to save for their retirement, they are making it harder to save for a pension.

I challenge Labour MPs. Why are they being whipped to vote against these measures and against the interests of lower-paid people? Why are they being asked to vote against the interests of graduates and younger people and vote for a regressive tax?

[Jim Shannon (Strangford) (DUP)]

I commend the shadow Minister for what he is saying. This is about not just those on lower incomes, but those on middle incomes. It is about the mums and dads of the students—all this falls back on their shoulders. Does he agree that this Bill is an attack on younger people who have aspirations and hopes for the future? We should be encouraging young people and helping them, and the Government have very clearly fallen down on that.

[Mark Garnier]

I completely agree. That is a fundamental problem. We are doing completely the wrong thing for people who want to do the right thing. We are disincentivising people taking responsibility for their future at a time when the state pension is coming under a lot of pressure. It is expected in 11 or 12 years, I think, that less money will be paid into the pension schemes pot than is withdrawn by those of us who are approaching retirement—I declare an interest, in my own case.

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

You have years to go.

[Mark Garnier]

I thank the Minister very much.

[Chris Vince (Harlow) (Lab/Co-op)]

Will the shadow Minister give way?

[Mark Garnier]

I am trying to finish my speech—in fact, I had finished my speech.

This is a very important point, and we will push amendment 5 to a vote. As I said, we will challenge Labour MPs not to do the wrong thing for their constituents—for the young, hard-working graduates who are desperate to do the right thing.

[The Second Deputy Chairman]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[Mark Garnier (Wyre Forest) (Con)]

The Pensions Minister is absolutely right that there is an awful lot that we agree on. It is always a great pleasure to spar with him and agree on certain things, but this Bill is not one of them. Let me be clear why we disagree with the Minister.

First, the contributors to the research done by His Majesty’s Revenue and Customs were absolutely against this Bill. The report, which was published last year and which the Minister mentioned on Second Reading, concluded that all the hypothetical scenarios explored in the research, including the £2,000 cap, were viewed negatively. It also pointed out that the £2,000 cap was the most complicated option presented. Given that the Government tabled no amendments to address the genuine concerns of savers and industry, it seems that the Minister is still apparently chuffed that he is implementing a policy that is, at best, the least worst option for everybody who was asked to comment.

Secondly, the Government are voting for a Bill that will add to the administrative burden on businesses. The pensions system is already incredibly complex for experts to navigate, let alone the general public. That is why salary sacrifice arrangements have been such a popular savings tool for both employees and employers. The principles are easy to understand, with the only real piece of admin being on the employer to ensure that the employee does not fall below the national living wage. But what are the Government doing? They are going for the option that the report considered to be the most complicated.

The Government are choosing to confuse with complications a system that is currently the simplest to deliver. The changes will add an estimated £30 million each year in administrative costs to employers—and this comes at a time when businesses and the wider economy already pay an estimated £15.4 billion just to comply with the tax system. What about the effects on businesses, which see a 15% employer national insurance bonus through helping people to save? The changes will mean that employers will be hit with a 15% increase on the costs of employment.

The savings that employers achieve through salary sacrifice arrangements are often invested back into their employees and their businesses, including through increased pension contributions to all employees, higher wages, or more investment into plant and machinery for growth. That is a good thing. The Government are now taking money away from the productive part of the economy and putting it into other parts. No wonder businesses think that this is a nonsensical policy delivered by a directionless Government, who forget that businesses are the ones that create wealth in our economy, add value to it and drive growth.

Thirdly, the Government are supporting a Bill that will not actually raise the stated revenue. As my hon. Friend the Member for North Bedfordshire (Richard Fuller) pointed out when winding up on Second Reading, the change appears to have been timed to maximise revenue in 2029-30: the year that counts for the Chancellor’s fiscal rules. That is £4.8 billion to fill the Chancellor’s black hole—she will have one by then—in order to make a cynical attempt to stick to a fiscal rule. This is a cynical measure that destroys a lifetime of savings opportunities for just one year of revenue. Frankly, it is also likely that the Government will not raise anywhere near the £4.8 billion budgeted for, as higher earners max out the benefits of the scheme before it comes into force in 2029; and, in any event, people are figuring out a workaround.

Fourthly, the Government are voting for a Bill that harms lower earners the most. As I pointed out earlier, the Society of Pension Professionals estimates that over 850,000 basic rate taxpayers who use salary sacrifice will be affected by the changes, and those 850,000 people will be taxed at a higher rate than their wealthier colleagues—something that the Government apparently seek to target with this policy. And I always thought that Labour Governments were meant to be on the side of working people, Madam Deputy Speaker!

Fifthly, and finally, the Government are voting for a Bill that will make the impending pension adequacy crisis worse. As I said in my introduction, there is widespread agreement that people are not saving enough, so why make the second largest revenue-raising measure of last year’s Budget one that goes after people’s savings for later life? It goes against that basic, important and agreed objective of people planning for their futures. More importantly, it goes against the Government’s own financial inclusion strategy.

As the Economic Secretary to the Treasury set out in November,

“Our aim is to create a culture in which everyone is supported to build a savings habit, building their financial resilience in the long term.”

How does the Bill accomplish that reasonable ambition? It won’t, because it disincentivises employees from saving more in their pensions and it disincentivises employers from providing it as an option in the first place.

Altogether, it is the wrong policy that sends the wrong message at the wrong time. We gave the Government a chance to address some of those concerns earlier, and they did not take it. We hear all those concerns loud and clear from businesses, savers and all the rest of them, which is why we want the Government to think again on this issue and why we will vote against this Bill on Third Reading.

People are simply not saving enough for their retirement. Rather than restricting the options, we should be encouraging the creation of new incentives that encourage people to save more. Instead, the Government are pushing through a Bill that will do the opposite. It is unbelievably unpopular because it punishes 3.3 million people who actively try to save for retirement by punishing the 290,000 employers who incentivise their employees to save. Worst of all, it breaks another of Labour’s manifesto promises: that it will not increase taxes on working people. It remains the wrong policy to pursue, and that is why we will vote against it.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

National Insurance Contributions (Employer Pensions Contributions) Bill

Mark Garnier Excerpts

2nd reading
Wednesday 17th December 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I have to say that it is a joy to yet again be locking horns with the Pensions Minister on a topic that is important to us all: saving for our retirement. And it is important to note that there are many things that we agree on. We all acknowledge there is an impending issue with pension adequacy: when 50% of savers are projected to miss a retirement income target set by the 2005 Pensions Commission, we agree there is a problem that needs dealing with. We also all acknowledge that UK pension funds are not investing into the UK equity market to the extent that we would all want, although I would caveat that with a fundamental disagreement: on this side, we want to understand the problem; the Minister wants to tell fund managers what they should and should not be doing in terms of where their investment goes. But we also agree with the noble aim of delivering growth in the UK economy, even if the Government are making a little bit of a mess of delivering that aim— growth slowing, inflation up, unemployment up—but we hope they get the hang of it in due course.

But that is why the Chancellor’s Budget is disappointing. For pensioners, she has flown kites about the tax-free lump sum, frozen the personal allowance threshold, and forced millions of pensioners to start paying income tax. Those are her choices. For savers, she has reduced the cash ISA limit to £12,000, scrapped the lifetime ISA for new investors, and increased tax on dividends and savings by two percentage points. Those are her choices. For hard-working people, this Government have reduced real household disposable income, pulled millions more people into paying the higher rate of income tax, and created perverse incentives that make some better off on benefits. These are her choices. So it is no wonder that this Budget has been dubbed the smorgasbord of misery.

It has now got to the stage where our economy has never been taxed so much, and it will get worse. When coming into office, the tax take was 36.4% of GDP. By the time Labour leaves office in four years’ time, it will be 38.2%. It is worth looking at examples of how it is levied. For example, a basic rate taxpayer earning £100 will pay 20% tax, but they will also pay 12% national insurance—an actual tax rate of 32%. Add to that their employer’s contribution, and for a headline basic rate taxpayer on up to £50,000, for each £100 they earn, the taxman takes £47. For a higher rate taxpayer, the marginal rate goes to 57%. The taxman takes more than the employee.

Given the hit to payrolls, both at the employee and employer level, it is no wonder that saving into a pension through salary sacrifice has become popular. Even the Government think it is a brilliant idea, using it for 10% of government employees. It is no wonder, therefore, that people use incentives such as salary sacrifice to make the most of their money, to do the right thing, to save a little bit more, to take responsibility for their futures, and to not rely on the state in their retirement. It is no surprise then that 7.7 million people take advantage of that.

Here we are with something that is popular and that incentivises the right behaviour, and the Government say, “No, we don’t like it.” The Government’s proposal, which we are discussing today, is a tax on 3.3 million people and 290,000 employers—those in the highest levels of pay. How much are they being asked to contribute? How much are we going to whack savers? Some £4.48 billion. That is right—if you do the right thing, if you work and save, this Government will come after you. The Office for Budget Responsibility gets it. It realises—unlike, apparently, the Government—that this will change behaviour and so the tax take drops to £2.6 billion in the second year because people will change their behaviour. Even the Government lose out.

The Government’s contradictions are legion. The financial inclusion strategy, published recently, stated very clearly:

“Our aim is to create a culture in which everyone is supported to build a savings habit, building their financial resilience in the long term.”

A brilliant idea. [Interruption.] Thumbs up from the Pensions Minister! But even after that very clear message, the Government reduced the cash ISA limit, scrapped lifetime ISAs for new investors, and introduced a 2% increase to dividend tax and, the icing on the cake, a £4.8 billion tax on pension savers.

[Edward Morello (West Dorset) (LD)]

To the hon. Gentleman’s point about changing behaviour, we have already seen reports that two out of five people are less likely to save if the salary sacrifice scheme goes. We have already seen a reduction in contributions because of the cost of living crisis. Are we not just moving the pain somewhere else? Will we not end up with fewer people able to support themselves in old age and it will be back on the state again?

[Mark Garnier]

Absolutely. The Government are really keen to get people to save for their futures and then they do everything they can to try to stop them doing that. The hon. Gentleman is absolutely right. We are just going to kick another problem down the road. By the way, when the Minister talks about hip replacements and so on, it is savers’ money. It is just that they are taxing them less.

At the same time as the Government look to improve pensions adequacy, they will be taking £4.8 billion from savers and employers. They identify a problem, say they will work to make it better, and then make it worse. Surely, when they were writing the Budget—I know the Pensions Minister has been a significant penholder in that process—they must have seen the extraordinary contradictions in their proposals?

The House would expect me to bang on about this—I am the shadow Minister and that is my job—but let us listen to the verdict from a few experts about the policy we are debating today. Pensions UK stated:

“Any change to salary sacrifice would inject uncertainty into a system that needs long-term trust, not sudden shocks…Introducing a cap would weaken incentives to save when we are facing a generation retiring with inadequate retirement savings.”

The Institute of Chartered Accountants in England and Wales stated:

“This cap will make it more complex for employers to offer a simple and flexible solution for retirement savings.”

The Institute and Faculty of Actuaries stated:

“The decision to impose a £2,000 limit…will undermine current efforts to improve retirement outcomes for individuals. In doing so, the act of saving into a pension will now be more expensive, more complex and less attractive to both employees and employers.”

Evelyn Partners stated:

“Restricting this sensible tax benefit that makes private sector saving more attractive adds insult to injury in a two-tier pension system”.

PwC stated:

“In a bid to bolster the public purse…Budget risks reducing employees’ take-home pay while placing additional pressure on businesses through rising employment costs”.

Hargreaves Lansdown stated:

“Restricting salary sacrifice on pension contribution could cause long-term damage to people’s retirement prospects. We could see employees less likely to increase pension contributions beyond auto-enrolment minimums”.

The Society of Pension Professionals—it goes on and on. Are the Government proud of this rousing endorsement by the industry? It is absurd.

When I was quizzing the Minister about this last week at oral questions—he will remember it well—he proudly held up the report that was commissioned under the previous Government—

[Torsten Bell]

Your report!

[Mark Garnier]

Indeed—our report, though it was published in May this year. It is a weighty tome. Even its title is pretty dry: “Understanding the attitudes and behaviours of employers towards salary sacrifice for pensions”. The Minister proudly told us that this document underscored the rationale for—[Interruption.] Oh—because it is important stuff. He told us that it underscored the rationale for capping salary sacrifice. However, having read the report, I can tell the House that it actually concludes that:

“All the hypothetical scenarios explored in this research”,

including the £2,000 cap, “were viewed negatively” by those interviewed. The changes would cause confusion, reduce benefits to employees and disincentivise pension savings. The report the Minister is using tells him not to do this.

The report also goes into why salary sacrifice for pensions is used by employers in addition to the incentive of paying into a pension, stating that extra benefits include: savings for employees, so that they have more to spend on essentials, tackling the cost of living crisis; savings for employers, which they can then invest back into their business and staff; and incentives for recruitment and retention. These are all good things—this is the stuff of delivering growth and the basis of creating a savings and investment culture. Why would this Government want to take it away?

The report came to the conclusion that of the three proposed options for change, the £2,000 cap is no more than the least terrible option. [Interruption.] The Minister talks about it being a secret plan—it is a published document. What is he talking about? It is the most extraordinary thing. He refers to it in terms that none of us recognises. But he has brought this in—this is the point. Is the Minister chuffed that his choice comes down to the least worst option for everyone? Here is the truth: it was the Chancellor’s choice to introduce this policy, and this Government are the ones implementing it—they are the ones who are in government.

Let us get to the measures and the impact of the Bill. To be fair, it is a very even Bill; there is something in it for everybody to hate. Take middle-income earners, who are typically in their 30s, and who earn on average a touch under £42,000 a year. This is the target area where the attack on savings starts. This is right at the point in life where people should be doing their very best for their future retirement. It is a perfect target market for the Government’s savings ambitions. However, it does not stop there. In total, at least 3.3 million savers will be affected, which is 44% of all people who use salary sacrifice for their pension. These are all people who work hard—people on whom the Chancellor promised not to raise taxes.

In fact, middle-income employees will be affected more than higher earners. According to the Financial Times, under the Bill, an employee who earns £50,000 and sacrifices 5% of that will pay the same amount in national insurance contributions as an employee on £80,000. If the contribution rate is doubled to 10% of their salary, the disparity grows even further, meaning that an employee earning £50,000 will pay the same amount in national insurance contributions as an employee on £140,000. How is that fair? The Government keep telling us that this policy will affect top earners, but the reality is that those on middle incomes will be disproportionately hit—the very people we should be encouraging to save more.

The Bill will also potentially hit low earners. Somebody who is lucky enough to get a Christmas bonus will not be able to add it to their salary sacrifice, taking advantage of any headroom, because the accounting looks at regular payments, not one-offs. [Interruption.] I am slightly worried, Madam Deputy Speaker, that the pairing Whip has a rather bad cough; I hope he gets better. This will potentially hit the 75% of basic rate taxpayers the cap supposedly protects.

Finally, the Bill hits employers. In the previous Budget, the Government absolutely hammered business. They increased employer national insurance contributions to 15% and, at the same time, reduced the starting threshold to £5,000. Businesses reacted and adapted. They were reassured by the Chancellor’s promise that she would not come back for more, yet here we are discussing further tax rises on businesses.

Let us look at the actual impact this raid on pensions will have on employers. According to the Government’s own impact assessment, it will hit 290,000 employers. A business highlighted in the 2025 report that

“If salary sacrifice were to go away, it would be additional cost of £600,000 to £700,000 per annum to the company in national insurance”.

While the Government are not abolishing it altogether, 44% of people currently using salary sacrifice—[Interruption.] I am worried; the pairing Whip is coughing. Anyway, there is going to be a cost, and that money will be taken away from businesses. This is going to be—[Interruption.] The Minister is chuntering from a sedentary position; he is obviously proud of what he is doing to the pensions industry.

Furthermore, the change will create administrative burdens for employers. With the current system, there are few administrative issues; the only thing that businesses have to bear in mind is ensuring that their employees’ pay does not fall below the national living wage—that is it. So what do the Government do? They go for the most complicated option that the report considered. That was explicitly stated by those involved in the research. As a pensions administration manager for a large manufacturing employer said,

“We’d have to reconfigure all our payroll systems and all our documentation. It would be a big job.”

The National Audit Office estimates that the annual cost on business just to comply with this Government’s tax system is £15.4 billion, yet the Government feel that the time is right to put more costs on businesses. I have to ask, what happened to the Chancellor’s pledge to cut red tape by a quarter?

I think I will move on to my conclusion in order to save people. [Laughter.] There was some great stuff in this speech, but I understand that people want to get away and wrap their Christmas stockings—particularly the Pensions Minister who, like the Grinch, is taking a lot of money away. To conclude, the Government should think again on this policy. People are simply not saving enough for their retirement. We need to do more to encourage them to save for their retirement. I know that the Minister would agree with that, so I hope that he hears the genuine concerns I have raised on behalf of a lot of people. Many people and businesses and are very worried about this policy, and he needs to take it away and think carefully about it.

Fundamentally, we are taking away something that is beneficial to the individual while also being tax efficient for business. Instead of encouraging the creation of incentives such as salary sacrifice or pensions, we are reducing the number. It is the wrong policy, and it sends the wrong message at the wrong time. All it does is add to the ongoing narrative that, “If you work hard to make a decent income, you will lose out. If you work hard as an employer to grow your business, you will lose out. If you try to save towards dignity and retirement, you will lose out.” It is the wrong policy to pursue and we will definitely vote against it tonight.

[Madam Deputy Speaker (Caroline Nokes)]

I remind Members that the knife will fall at 7 o’clock.

Oral Answers to Questions

Mark Garnier Excerpts

Monday 8th December 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

The Chancellor’s Budget put a cap on salary sacrifice for pension savers at just £2,000. That was to raise an extra £4.8 billion in 2029, and it will affect 3.3 million savers and 290,000 employers. What research has the Pensions Minister done to understand and quantify the negative effects that this will have on pension savings?

[The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)]

I thank the hon. Gentleman for his question because it gives me a chance to bring the House’s attention to research published after the general election in 2024 but commissioned under the last Conservative Government—I have the document here. What was the research into? It was into capping salary sacrifice pension contributions at £2,000. The hon. Gentleman can read the research published and commissioned by his own party about putting back under control this tax relief, which had got out of hand.

[Mark Garnier]

Well, it was not us who put it in place; it was Labour.

This policy hits the private sector disproportionately: 14 times as many people save through salary sacrifice in the private sector as they do in the public sector. Whether it is kite-flying about lump sum withdrawal or taxing inherited pension pots, in a week when Labour Together is canvassing Labour members about a new Labour leader, is it not the case that the Chancellor is more interested in throwing red meat to her sad and unfortunate Back Benchers in a vain attempt to save her job than she is in the interests of the savings of our hard-working constituents?

[Torsten Bell]

There is nothing sad about Labour Members watching wages rise faster under this Government than they did under the Conservatives. There is nothing sad about our Back Benchers seeing the end of austerity and seeing public services being improved right across this country.

Young People not in Education, Employment or Training

Mark Garnier Excerpts

Wednesday 26th November 2025 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Dowd. I add my congratulations to the hon. Member for Amber Valley (Linsey Farnsworth) on bringing this important debate to Westminster Hall.

Conservatives are the party of aspiration. We believe that work is not just a payslip; it is a pathway to opportunity, dignity and hope, but for too many young people across the country, those words may ring hollow. The number of people who are NEET has soared to nearly 1 million, meaning that one in eight people aged 16 to 24 is currently deprived of the sense of purpose that comes from holding down a stable job or training for a future career. In 2024, over half of the NEETs had a health condition, and around one in five had a mental health condition. These are young people with talent and potential; they could, one day, set up a social enterprise or make the next scientific breakthrough, or they could join the workforce as postmen, plumbers and paramedics, as well as countless other roles that form the backbone of our economy and our country. However, they are currently languishing at home with no purpose and no hope for the future.

Being out of work at a young age can cost over £1 million in lost earnings over a lifetime, according to the “Keep Britain Working” review. Every single day of worklessness is a day of wasted opportunity, damaged ambition and diminished income. So far, this Government have not demonstrated an incredible plan to turn the tide; the benefits bill is ballooning, with 1 million more people on welfare than when Labour first entered office, and they are kicking the can down the road with the independent investigation into youth inactivity led by Alan Milburn—we will not hear its findings until summer 2026. Meanwhile, the number of NEETs will continue to grow, with each one costing the economy nearly £200,000.

By contrast, previous Conservative Governments have demonstrated a strong track record of supporting young people into work. [Laughter.] I am glad that some Members find that amusing. We cut youth unemployment by 43.8% between 2010 and 2023, despite the rocky economic terrain that we inherited after the 2008 financial crisis. We oversaw the creation of 1 million more apprenticeships. Our new plan to get Britain working again will give young people a first job bonus, redirecting the first £5,000 of national insurance that they would have paid into a savings account instead, which they can then use to save towards their first home, for example.

However, this Government’s policies are effectively locking young people out of work, denying them the chance to build their own future. The Government have announced a youth guarantee, a new jobs and careers service, and foundation apprenticeships, which are available only to young people. To me, those sound like empty assurances. Labour should not be promising more apprentices on the one hand while slashing accessible jobs in hospitality and retail on the other.

If we are serious about reducing the number of NEETs, we must increase the number of jobs available overall, yet jobs in hospitality and retail have plummeted after Labour’s damaging hikes in employers’ national insurance contributions, with 150,000 jobs having been lost since the last Budget. Between October 2024 and August 2025, a staggering 89,000 jobs were lost in restaurants, bars and hotels, according to UKHospitality.

Additionally, the Employment Rights Bill has rightly been labelled the “Barriers to Work Bill”. Banning probation periods will discourage employers from giving young people a chance. We should be rewarding employers for taking a risk and hiring an inexperienced recruit, not narrowing the talent pool by taking this option off the table. To truly tackle worklessness, we must trust our small and medium-sized businesses to make their own staffing decisions. Increased employment rights mean nothing if there are no jobs in the first place. Shortly after I was elected, I set up the Wyre Forest jobs fair to connect private and public sector employers with local jobseekers, including young people. I recognise that looking for work can, in itself, be hard work, and that was one way to broaden people’s horizons.

Supporting this nation’s NEETs comes with great rewards. If we could get just 5% of unemployed under-25s back into work, the Government would save £903 million over the course of this Parliament, according to research commissioned by the Work and Pensions Committee. Indeed, it found that spending £1 in return-to-work schemes could save the taxpayer £6 through consequential cuts to benefits and increased tax intake from the subsequent jobs. Most importantly, we would also be offering young people the confidence boost that comes from discovering a job where they can thrive.

To conclude, we must ensure that there is targeted support for all young people, no matter what barriers they face, so that they can start and succeed in work. We urge the Government to reverse their damaging economic policies that are crippling the very sectors that offer many young people their first stint in employment. We must back our small and medium-sized enterprises to the hilt, rather than strangle them with ever more costly regulations. Having stronger businesses means more and better jobs for everyone. We cannot afford to waste a generation.

Draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025

Mark Garnier Excerpts

Monday 24th November 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I suspect the name of this statutory instrument is probably longer than my speech will be. I am grateful to the Minister for his words about the details of this instrument. Its intention is to bring more people who are not saving into pensions into the pension schemes. In that respect, it builds on work done by the previous Conservative Government, which I think we would all agree were 14 years of strong and stable Government [Hon. Members: “Hear, hear!”] Thank you very much. We are 100% behind this. It continues the work of the previous Government. It has the intention that we always had—to get more people saving into pension schemes. In the broader sense, it follows the intentions of the Pension Schemes Bill, which is currently passing through Parliament, and on which we disagree with one or two things. But we are in agreement on the overall thrust of this statutory instrument, so I will not trouble the Committee any longer.

Pensions

Mark Garnier Excerpts

Tuesday 11th November 2025 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I thank the Secretary of State for advance sight of his statement. As he rightly says, this is an important, albeit technical, statement, and we in the Opposition certainly accept the contents and the spirit in which it is given. It is about a legal process, and we respect that.

This relates to a matter of keen interest to many of our constituents: those women who have been affected by the changes in retirement age. Known as WASPI, the Women Against State Pension Inequality Campaign have probably met with all of us here in one way or another, and they will be looking at the point made by the Secretary of State late in his statement:

“retaking this decision should not be taken as an indication that Government will necessarily decide that they should award financial redress.”

The WASPI women are rightly angry with this Government. In opposition, shadow Ministers and Labour MPs stood alongside these women, as the Secretary of State did, campaigning for

“a better deal for WASPI women.”

However, when the Labour party won the general election, they quickly apparently U-turned on that position, blaming the fiscal situation they were left with. Indeed, in December last year, the Government made a statement confirming their about-turn on supporting WASPI women. If I may, Mr Speaker, I would like to quote the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who said in response to that statement:

“But let us be clear: the decision to provide no compensation is the Government’s decision, and they need to own it. I am not going to let them get away with saying that there is no compensation because of a fictional black hole in the public finances… Government compensation should always be based on what is fair and just.”—[Official Report, 17 December 2024; Vol. 759, c. 170.]

She is absolutely right: the Government had the choice then to stand behind the women who they said have faced a great injustice, but they chose not to. Instead, the Labour party is now fighting them in a judicial review in the High Court. Whether it be the multiple U-turns on pensioners’ winter fuel payments or the imminent rumoured freezing of tax thresholds in the Budget, forcing many pensioners into paying income tax, it is clear that this Government are not on the side of our pensioners.

That brings me to some questions for the Secretary of State. First, the Minister for Pensions said in a Westminster Hall debate on this topic on 15 January:

“we will work with the ombudsman to develop a detailed action plan, identifying and addressing lessons from this and other PHSO investigations.”—[Official Report, 15 January 2025; Vol. 760, c. 156WH.]

However, to my knowledge, nothing has been released to that effect. Could the Secretary of State provide an update on when we can expect the plan and what will be in it?

Secondly, in a follow-up to written parliamentary questions from the hon. Members for West Dunbartonshire (Douglas McAllister) and for Newport West and Islwyn (Ruth Jones), the Government said that they have “no plans” to meet representatives of the WASPI campaign. Indeed, the last time a Minister did meet them was on 5 September 2024. Why have this Government decided not to directly engage with the group they once stood shoulder to shoulder with, especially given that there is new evidence to consider?

Thirdly, during the 14 years we were in Government, we chose to help pensioners by increasing the personal allowance income tax threshold. However, independent research suggests that 1.6 million more pensioners are doomed to be filling in self-assessment tax returns within the next four years, thanks to the Government’s choices that may be made in the upcoming Budget. Has the Secretary of State had conversations with the Chancellor about the serious impact this retirement tax would have on a group that have consistently targeted by this Government?

Finally, why are this Government determined to blame everyone else for the decisions they have made? All this statement shows is that the Government want to keep kicking the can down the road and not be held accountable for their actions, but we should look at the record: unemployment is at 5%, the highest level since the pandemic, up from 4.2% in June last year; inflation is now sitting at 3.8%, up from 2% in June last year; economic growth has flatlined, despite having improved by 0.5% in the three months before this Government took office; borrowing costs have increased to their highest level since 1998, with 30-year gilt yields reaching 5.2%, compared with 4.7% when the Government took office; debt is now 96.4% of GDP, the highest since the 1960s; and winter fuel payments were cut for millions of pensioners, only for the Government U-turn on that after feeling the pressure of our strong campaign.

The Government are set to break their manifesto pledge and increase the tax burden to a historic high. Is it not true that this Government have been trying to dodge taking any form of responsibility for their actions? What is their problem with pensioners?

Oral Answers to Questions

Mark Garnier Excerpts

Monday 27th October 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

Back in May last year, while in opposition, the Labour party was outraged to learn that the average processing time for applications to the Access to Work programme was running at 43.9 days. In fact, so outraged were Labour Members that they made it a manifesto pledge to tackle that problem. After more than 15 months in government, Labour is far from having slashed waiting times; applicants now have to wait an average of 93.6 days. That is more than twice the waiting time under the previous Government. After a year in government, the Labour party has doubled the misery and uncertainty suffered by disabled people—why?

[Sir Stephen Timms]

We are fixing the very serious problems left behind by the previous Government. The number of people who are processing Access to Work applications has been increased by 118 since May last year, but the hon. Gentleman is right that delays are still a problem. That points clearly to the need for reform, which is what we are getting on with.

Pension Schemes Bill (Seventh sitting)

Mark Garnier Excerpts

Committee stage
Thursday 11th September 2025 Public Bill Committees

[Mark Garnier (Wyre Forest) (Con)]

The Opposition support the clauses and welcome the action to legislate formally for defined-benefit superfunds. Securing this in a legislative framework will give trustees and sponsors greater confidence when considering this new consolidation option for defined-benefit schemes. The measures build on the consultation conducted under the previous Government, as well as the intention that the former Chancellor of the Exchequer, my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), laid out in his 2023 Mansion House speech.

Superfunds are capital-backed consolidators that allow defined-benefit schemes to shift liabilities away from the sponsoring employer, thereby enhancing the security of members’ benefits. By transferring pension obligations to a superfund, companies can reduce long-term liabilities and refocus on core operations, while maintaining strong protection for retirees. Superfunds offer a new endgame strategy for DB schemes unable to secure an insurance buy-out, helping to safeguard member benefits in underfunded or marginal schemes. These measures all seem reasonable, and as I said, this work started under the previous Government, so we wholeheartedly support it.

Question put and agreed to.

Clause 51 accordingly ordered to stand part of the Bill.

Clauses 52 to 56 ordered to stand part of the Bill.

Clause 57

Prohibition of unapproved superfund transfers

Question proposed, That the clause stand part of the Bill.

[Torsten Bell]

Chapter 3 sets out the criteria for approving superfund transfers. The clause protects the integrity of the superfund regime that we are aiming to put in place through the Bill by making it clear that the penalty for committing an unauthorised superfund transfer may be a fine, imprisonment for up to two years, or both. I commend the clause to the Committee.

Question put and agreed to.

Clause 57 accordingly ordered to stand part of the Bill.

Clause 58

Approval of superfund transfers

--- Later in debate ---

[Torsten Bell]

Before a 2022 High Court ruling, it was widely accepted that the Pensions Ombudsman had the status of a competent court, so that a Pensions Ombudsman determination alone would be sufficient for a pension scheme to recoup an overpayment from a member’s pension. The ruling called that into question. Clause 93 simply reinstates the original policy intent that the ombudsman’s determination in pension overpayment dispute cases is sufficient. That is what was debated in Parliament when the ombudsman was established in 1931. Without this legislation, a large additional burden would be imposed on an already stretched county court system.

Turning to clause 94, being diagnosed with life-limiting illness can cause unimaginable suffering for a person and their loved ones. Those nearing the end of their life should be able to access the financial support that they need at that difficult time. I am pleased that we are now able to introduce this clause to amend the definition of terminal illness in the Pension Protection Fund and financial assistance scheme legislation.

Terminal illness is currently defined as where a member’s death from a progressive disease can be reasonably expected within six months. Clause 94 extends that to within 12 months. These new arrangements may enable a few more affected members to claim a payment, but they will mostly enable members to receive payments at an earlier stage of their illness. That small change could make a big impact for affected members at a very difficult time.

Clause 95 covers another aspect of the Pension Protection Fund: its levy. Improved scheme funding of the PPF means that it is far less reliant on the levy than it was previously. For the 2025-26 financial year, the levy has been set at £45 million, its lowest rate. However, the current legislation restricts the PPF board from increasing the levy by more than 25% of the previous year’s levy. That has made it risky for the PPF to reduce the levy significantly, even when it is not needed, because it could take several years to restore it to the previous levels if required. Clause 95 gives the board greater flexibility to adjust the levy by amending the safeguard. The new safeguard will be to prevent the board from charging a levy that is more than the sum of the previous year’s levy and 25% of the previous year’s levy ceiling.

Clause 96 focuses on pensions dashboards. Current legislation does not allow the PPF to provide to pensions dashboards information about the compensation that people can expect, or for the display of that information. The clause expands the scope of pensions dashboards to include information relating to compensation from the PPF and financial assistance from the financial assistance scheme, and it could benefit around 140,000 people. I commend clauses 93 to 96 to the Committee.

[Mark Garnier]

I will be incredibly brief. We have heard a number of details from the Minister. Clauses 93 to 96 contain what we believe are sensible and welcome amendments that reflect current market and scheme conditions. In particular, the changes related to the Pension Protection Fund are positive. With a strong funding position in many defined benefit schemes recently and the PPF’s healthy reserves exceeding £14 billion, these legislative changes are timely. The industry strongly supports the option for a zero levy, which reduces financial pressure on well-funded schemes. The Opposition wholeheartedly support these clauses.

[Steve Darling (Torbay) (LD)]

The Liberal Democrats welcome the direction of travel. As the shadow Minister identified, the industry has demanded some elements of the clauses, but they are mostly about supporting consumers. The end users of these services should be a key element of what the Bill is about.

--- Later in debate ---

[John Milne]

This is really about trying to place the Minister’s attention on this important issue—we will not press the new clause to a vote. It is about focusing the Minister’s mind on the task at hand. The undersaving groups include, but are not limited to, women, ethnic minority groups and others affected by long-term pay or pension gaps. The new clause would provide mechanisms to fund and deliver targeted support.

New clause 41 is designed to put a cap or ceiling on the amount of free advice accessed by any individual saver. It is a subset of new clause 1. Some individuals have very complicated financial affairs, which threaten to take a disproportionate amount of effort to decipher, in the event that we were to provide free advice. Those individuals will tend to be much better off and with multiple pension pots, which is precisely why they will end up needing more advice. Placing a ceiling on the advice available would ensure that the free advice was targeted only at those who needed it most.

New clause 43 is a potential solution to the information deficit that we are trying to address. It would enable auto-enrolment into Pension Wise as the vehicle for giving advice. We tabled it as a probing amendment to provoke the Minister’s consideration. The purpose of the new clause is to help people properly understand and engage with their pension by auto-enrolment into Pension Wise advice at key stages, with the freedom to opt out. Pension Wise guidance is free, impartial and has very high satisfaction rates—94%—among those who have used it, yet uptake remains strangely low, which is an excellent illustration of exactly why the whole advice area needs urgent attention.

Government data shows that of those who have accessed defined-contribution pension pots, only 14% have done so after receiving Pension Wise advice. That is despite various efforts, including a stronger nudge to encourage taking guidance before pots are accessed. Wake-up packs and other communications have shown limited effectiveness, and the evidence shows that savers will need more than passive information; they need action-oriented support.

If anything, the situation is getting worse. The proportion of pensions accessed after receiving guidance or advice has reduced by around 9 percentage points since 2021-22. Evidence from the DWP’s 2022 research shows that although most people start saving for retirement in their 20s and 30s, many do not start planning for retirement until their 50s. Auto-enrolment into guidance would therefore significantly increase take-up and improve retirement outcomes for many. Defined-contribution scheme members, in particular, often lack clear information about their options; Pension Wise would help fill that gap.

New clause 43 leaves flexibility for the Secretary of State to determine the appropriate ages, processes and notification methods. We recognise that it would be a significant move, and that there would be technical issues to solve. That is why we have tabled it only as a probing new clause, to explore whether the Government will look at trials or further measures to boost guidance uptake. Auto-enrolment into a pension scheme has been a great success, so perhaps the next logical step is auto-enrolment into advice. Why not try it?

[Mark Garnier]

I am keen to speak to these Liberal Democrat new clauses, because we have a fundamental problem. Research by Pensions UK shows that more than 50% of savers will fail to reach their retirement income targets set by the 2005 Pensions Commission, and closing the gap between what people are saving and what they will need must be a pressing concern of any Government. So, we need the second part of the pensions review to be fast-tracked, with a laser-like focus on pensions adequacy.

This takes me back to when I first became a Member of Parliament some 14 or 15 years ago. The big issue at the time in the independent financial advisers market was the retail distribution review. My hon. Friend the Member for West Worcestershire (Dame Harriett Baldwin) and I held our first Backbench Business debate on the retail distribution review, and it is recorded in Hansard that we predicted this would be a problem as a result—fewer independent financial advisers being available to give advice.

There were three key elements of the retail distribution review. They were very well-intended, and let us not beat about the bush: there were reasons why they were brought about. One of them was intended to raise the professional standards of independent financial advisers, and I think we would all agree that that has to be a good thing. The advisers complained at the time because they did not want to take exams. If they had been in the business for 40 years, why would they feel that they needed to take an exam? But why should they not improve their standards? There were issues to do with lifetime liability—advisers’ taking responsibility beyond seven years for advice that they had given, which was very contentious. Also there was clarity on the models of advice being given.

However, the key element that caused the problems was where independent financial advisers, prior to that moment, were being paid a commission on the product that was being sold, which potentially led to product bias. If a commission was being paid at 2.5% on one product and 1% on another, the independent financial adviser would have a material interest in selling that higher-commission product, even if it was a worse product. That could have been dealt with by having a maximum commission rate on all the products; it could have been set at 100 or 150 basis points, which would have dealt with that problem. We saw this issue in the London stock exchange until 1986, when there were fixed rates of commission, so nobody could undercut another broker by providing cheaper dealing measures. We therefore knew it could work.

The direct result of all this was that when the retail distribution review was brought in by the FCA in January 2013, we saw a massive drop in the 35,000 independent financial advisers. That has since recovered, and we now have around 36,000 advisers. The important point is that a financial adviser who goes out to persuade somebody to take advice on their pension now needs to charge a fee. Before that, to the person receiving the advice, the financial adviser would appear to be doing it for nothing. There would be an agreement, so it would be transparent and they would know exactly what was going on.

However, the point is that now, if I am being asked to put money into a pension fund and I know I am paying the 1.5%, the fact that the commission is coming out of the money going in feels much less restrictive than being sent a bill for £1,500 or £2,000. That is much more difficult to meet, even though it comes to the same point in the end. The result of this is that, whereas about 50% of people used to put money into pensions and receive financial advice, the number is now 9%.

There are an awful lot of newly elected Members of Parliament here. After 10 or 15 years, they will find themselves in a Bill Committee making these points and saying, “We told you this would be a problem. We told you so, yet here we are trying to resolve a problem that we knew was going to happen, and we allowed it to.” I am very cynical about Parliament sometimes, as all Members will be eventually. The important point is that the Liberal Democrat new clauses are an attempt to deal with the problems that we knew would come about. Auto-enrolment is brilliant—we really like auto-enrolment—but there are various things coming in under this Bill. We have to be careful that the things we bring in with the best intentions do not end up creating bigger problems due to unforeseen circumstances.

If the Liberal Democrats pressed new clause 1, we would happily support it, as it is a good amendment. It will be interesting to see if that comes through, but this is something we have to get right. People need to get advice because far too many people are going to go barrelling into their 67th birthday, or whatever it is, and suddenly discover that they have run out of money, and that is not a good place to be.