Pensions

Matt Rodda Excerpts

Tuesday 9th February 2021 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I thank the Minister for his generous introductory comments and for setting out the Government’s proposed approach. I thank DWP staff and, indeed, all those supporting pensioners for their work at this difficult time.

Britain should be the best country in the world in which to grow old. One of the first responsibilities of Government is to ensure that there is a proper state pension, as a central part of the welfare state, and that people are able to look forward to a decent income in retirement. That is why we support the triple lock.

This statutory instrument addresses the needs of a particular group of state pensioners—those who paid into the state earnings-related pension scheme—and offers them an increase in line with inflation. Labour supports the measure and will not oppose the Government’s proposals; nevertheless, I wish to put those proposals into a wider context.

First, we should bear in mind the fact that huge numbers of pensioners in the UK rely on the state pension for their income. Figures from the Office for National Statistics show that in recent years we have seen the highest proportion of pensioners who are reliant solely on the state pension since the 1990s. In that light, it is clear that decisions made in this House about the state pension, including SERPS, have wide-ranging repercussions for people’s quality of life in retirement and should not be taken lightly.

As Labour has pointed out before, today’s retirement landscape is a challenging one, and we will have to work hard to find new ways to meet those challenges, including by ensuring that there is real regulation of profit-making consolidation vehicles for defined benefit pension schemes, which are often referred to as pension superfunds. They are currently subject only to an interim regulatory regime announced by the Pensions Regulator this summer.

We also need to create the conditions to support defined benefit schemes more widely. Part of that work involves listening carefully to experts and organisations on the funding requirements of both open and closed defined benefit schemes. We received assurances from the Government during the final stages of the Pension Schemes Bill in the other place, and an important dialogue will take place over the coming months to ensure that the emerging regulatory framework works for all schemes.

Furthermore, although we welcome the approval of the new pensions dashboard as a great opportunity for people to see all the information about their pension in one convenient location, it is vital that we protect consumers from the risk of exploitation. As the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), told this House when the dashboard was being discussed in relation to the Pension Schemes Bill:

“The last thing we want is for people to make bad choices, prompted, for example, by market disruptions or unscrupulous operators, until they are more accustomed to that level of access.”—[Official Report, 16 November 2020; Vol. 684, c. 106.]

I reiterate his call to safeguard the public dashboard by giving it a head start and keeping commercial transactions off the dashboard until protections can be guaranteed.

Labour also believes that there must be accessible and transparent fee information on the dashboard. We have seen how complexity can make it difficult for those saving for their pensions to understand transaction costs. We should now take the opportunity to fix this problem. In the same light, the Government must do more to end pension scams. Although progress has been made, we must none the less stamp out this behaviour, as the consequences of people falling victim to scammers can be utterly devastating and can turn their lives upside down.

I welcome the growing interest in the assessment and disclosure of climate risk in pension investments. This is a very important issue and we must not rest on our laurels. Pension funds represent trillions of pounds in value and, as such, have huge potential for good if properly directed.

It is important to see today’s announcement in terms of what it means here and now as many pensioners face a hard and difficult winter due both to the coronavirus and the current very cold weather. Over 1 million pensioners who are entitled to pension credit are not claiming it, with very serious consequences, including tens of millions of pounds-worth of linked support for home heating being denied to those who have not claimed. The story is similar for pensioners who are entitled to a free TV licence. I challenge the Government to do much more to make people aware of pension credit entitlements and to encourage far greater take-up.

It is also important to raise the issue of those with concerns about their occupational pensions. For example, in the immediate term, what assessment have the Government made about the viability of Arcadia’s pension scheme and the impact that the sale of the high street businesses will have on staff and pensioners?

While this motion might appear on the surface to be a technical measure that affects only a proportion of pensioners, it is important that we understand the context in which we pass it. I hope that the points I have made emphasise how important it is that in the longer term we consider the pension system as a whole when making any decision that has the potential to affect so many people. As Members of this House, we make decisions that shape not just the lives of millions of current pensioners but the lives of millions of hard-working people who are yet to retire. If we are to make Britain the best place to grow old in, then we must work hard to address the issues that we have discussed today.