Pensions Strategy

Mark Hoban Excerpts

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

I am grateful to the hon. Gentleman for his wholehearted endorsement of our plans. The guidance guarantee is as it says on the tin: it is guaranteed. It is a right of members of the scheme. It is a duty on schemes to make sure, for the first time, that people coming up to retirement have a conversation with someone who is independent and who is on their side, and the schemes will have to make that happen. The Financial Conduct Authority will oversee that process. We will look into whether we can involve the voluntary sector and the advice sector in that.

We often hear the phrase “advice gap”. The hon. Gentleman suggests that we started from a blank sheet of paper, but we did not. We started from a situation where many people coming to retirement were making the wrong decisions and buying poor value products. This is the sort of thing that we have had to address.

The hon. Gentleman asks whether the Budget was really one for savers. To me the increase in ISA limits sounds like good news for savers. The new pensioners bond coming in next year sounds like good news for savers. New freedoms for pensioners with regard to how they can use their pensions sounds like good news for savers. Perhaps the hon. Gentleman wanted still more, but I quote to him Dr Ros Altmann, who said that yesterday was like London buses—all the good news for savers came at once.

The hon. Gentleman asked the question I thought he might ask. If I paraphrase it loosely, his question, as a former academic, was on “the consistency of the defined ambition framework with liberalised decumulation”. I think that is what he wanted to know about. It is perfectly reasonable for people to have collective provision in accumulation. People can build up pensions collectively and many people will go on buying annuities. Many people will still want an income, but we are giving them new options. Plenty of people will want a scheme in which to go on investing their money into retirement. That will be their choice. Our whole agenda is about new models and new options, not just going from one extreme to another.

The hon. Gentleman asked about action on charges. I assume that he had written his questions before he read my statement. Given that we gave him the statement well before the speech, I am surprised at that. I confirm that next week we will announce the conclusions and the action we are taking—action to tackle problems that were never tackled in 13 years of a Labour Government.

The hon. Gentleman says that guidance is Labour’s policy. I am delighted to hear that, but why was there none in place when his party was running the country? It is good of him to support the plans.

This is bold and radical stuff. People will have guidance for the first time and new flexibilities. Some Labour MPs are saying that this should be blocked because we cannot trust people to spend their own money. I think we should.

[Mr Mark Hoban (Fareham) (Con)]

I welcome the reforms announced by my right hon. Friend the Chancellor yesterday and the further detail my hon. Friend the Minister has given today. I urge him not to overlook the Pensions Advisory Service and the Money Advice Service as potential sources of advice for people approaching retirement. How will he take forward discussions with the industry and the regulator to ensure the availability of good quality products for new pensioners that not only represent good value for money but are properly regulated?

[Steve Webb]

My hon. Friend has great knowledge of these matters from his time at both the Treasury and the Department for Work and Pensions. He is absolutely right to say that we need to make sure that people have guidance that enables them to make informed choices. They will still be able to proceed to formally regulated independent financial advice, but the industry will have to up its game, because now people will have much more choice to take cash, and if they want to take an annuity they will have to be persuaded that it is good value for money. That will be a market impetus to provide better quality products. We have asked the FCA to make sure that a good guidance regime is in place, potentially involving groups such as the excellent Pensions Advisory Service, to which my hon. Friend referred.