Draft Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023

Matt Rodda Excerpts

Wednesday 8th March 2023 General Committees

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairship, Ms McVey. I welcome the Minister to her post and thank her for her recent work on auto-enrolment.

The dashboard is clearly an important aspect of pensions policy, and we support it. We understand why the Government are proposing these changes, but I have a series of questions about the specifics of the charge cap and related matters. I will also say a brief word in support of illiquid investments, which are hugely beneficial to the country in terms of the transition to net zero in the future. I visited a solar farm with the former pensions Minister, the hon. Member for Hexham (Guy Opperman), and I put on the record my thanks to him for the cross-party way in which he worked with me on the issue.

I support greater illiquid investment, but to what extent have the Minister and her colleagues considered the interests of savers in this change? Clearly, higher charges have an impact on pension savers. I am also interested in what the Government are doing in other aspects of pensions policy to encourage greater illiquid investments, whether in green energy infrastructure or other matters that come under the same heading. There may well be a range of other policy levers that could be used to encourage this type of investment.

In addition, I have concerns about the progress of the dashboard following consultation with the pensions industry and previous updates from the Minister about this important area of policy. I am thinking in particular about the pace of the roll-out and how the Government have had to increase their involvement in the direct management of the scheme. There is a long history of Government IT projects being over-ambitious and having difficulty delivering. I hope that the Minister can reassure the Committee about this, because the dashboard is a hugely important step forward for the country. There have been delays, and there may well be further delays. It is important that the Government are honest with the pensions industry and pension savers. People would clearly like to be able to access further information about their pensions in one place; there is a huge advantage in that. However, there are significant challenges to rolling that out, as with many other complex IT programmes. The industry itself is concerned about this series of delays from the Government.

I would like to raise a specific technical point that indicates the challenge. One pensions organisation raised with me concerns about pension savers not being able to use their national insurance number as an identifier. One would think that that would be a practical way of accessing information and exactly the sort of security measure that such an IT programme would warrant, yet the organisation tells me that, for some reason, it is no longer possible. That worries me. An individual’s national insurance number could be an important part of accessing personal information and a safeguard against anybody with an untoward intent.

I look forward to an update from the Minister on those important matters,. We support the roll-out of both the dashboard and the other measures to encourage illiquid investment. I hope that she will be able to reassure the Committee, the pensions industry and savers about these important points.

--- Later in debate ---

[Laura Trott]

I am grateful for the cross-party support for the auto-enrolment work we are taking forward. I look forward to participating in a similar Committee, with a similar cast list, next week.

In the interests of savers, we have ensured that fees are payable only where there is a return. The exact schedule of the return and its rates will be a discussion between trustees, scheme members and investment managers. We brought that into the regulations to ensure that the interests of savers are at the heart of everything we are trying to do.

Green energy infrastructure is exactly what we are trying to promote as part of the illiquids reform. To be clear, I do not think that will be the be-all and end-all of trying to get more investment in illiquids, but it will take us a large degree further forwards. Again, I am grateful for the cross-party support for moving in this direction. Not only is it important for the UK economy as a whole but, from my perspective most important, it is in the interests of pension savers.

The dashboard is a complex project, which had a long history before I came into this post. When I got the job, I asked for a look into how it was going and whether we thought we could meet the deadlines that were set out. I have some concerns about what I saw, and that is why a reset programme is in place at the moment.

Members were all absolutely right to say that we need to get this correct the first time round. I have committed to come back to the House to put new deadlines in place, and I would like to be able to do that before the summer recess—that is certainly what I am working towards. I will be able to confirm that nearer the time. It is important that we get this right, and get it right first time, so that we do not have to do this again. What the dashboard will do is incredibly important and will make a massive difference. We know that lots of people have lost their pots. It is vital that we increase adequacy for pension savers, and the regulations are a vital part of that.

I am pushing as hard as I can to ensure we keep to the deadlines as much as possible. We can move around the upload deadline, but I would like to keep as close as possible to when savers should be able to access this. I will come back to the House before summer recess to hopefully give more detail on that.

[Matt Rodda]

I appreciate the Minister’s candour. It is indeed vital that we get this right. It is an important piece of pensions infrastructure for the future and hugely important to both savers and the pensions industry. Will she be able to update the House on the Government’s spending on the project as well? There are also concerns that the Government may have overspent on some aspects of the project, and the wider project management and governance might need to be tweaked and improved.

[Laura Trott]

Yes, absolutely. When I come back with the regulations, I can provide an update on the spending. I reassure the hon. Gentleman that part of what the reset is doing is looking at the expenditure to ensure that it is in hand. I will have more to say about that when we come back.

The shadow Minister mentioned NI numbers, and that is one of the things we need to look at again. It is really important. I have had representations from industry about this, and I had a meeting on it this week. It should potentially be incorporated, and that is part of what we are looking at as part of the reset programme.

[Laura Trott]

We are definitely taking this a step further now. In my time as pensions Minister, I have tried to really focus on the value for money, rather than the charges, and that is a shift. We are a step further into our automatic enrolment journey. We now see that we have the coverage, which is really positive, but we need to improve adequacy. In my time as pensions Minister, I will really focus on that and getting returns to savers so they can build up their pot. It can make a massive difference to how effective someone’s ultimate retirement pot is in giving them the retirement they want, and this is another step in that direction. It has been a journey, and this is additional to what we have done previously.

[Matt Rodda]

I think the right hon. Member for Camborne and Redruth makes an excellent point in asking the Minister about the number of revisions of the programme. Has the Minister discussed with the Cabinet Office and other Departments across Whitehall how the programme benchmarks against what is known about good practice in managing complex IT programmes?

[Laura Trott]

The Cabinet Office has been involved in this. Every big project goes through a major project review process, so the Cabinet Office has been involved.

Automatic enrolment has been a huge success. It has led to nearly 11 million people, as of January 2023, joining a pension scheme, many for the first time. However, being enrolled in a pension scheme is not enough; pension schemes must continue to ensure they are delivering the maximum return for their savers, and illiquid investments will be a huge part of that. I commend the regulations to the Committee.

Question put and agreed to.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 6th March 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

The Government seem to be trying to pat themselves on the back after years of failure on pension credit. As we just heard, hundreds of thousands of pensioners are still missing out on a vital top-up benefit that is needed to get them through the cost of living crisis. Why has the Government’s response been so ineffective, and what on earth will the Government do about their dismal failure to help pensioners during their hour of need?

[Mel Stride]

I am very surprised to hear the hon. Gentleman pose that question, first, because of his party’s record on this matter when they were in government; and secondly, because of the clear progress that I have outlined to the House today and on previous occasions about the increase in take-up that the Government are securing.

Saving for Later Life

Matt Rodda Excerpts

Tuesday 7th February 2023 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hosie, and I commend my right hon. Friend the Member for East Ham (Sir Stephen Timms) and the other members of the Work and Pensions Committee for their excellent work and their report.

People who work hard and save all their lives deserve to expect a decent income in retirement. It is vital that the Government support pension saving as well as providing a decent state pension, and I hope that the debate will be a starting point as we discuss some of those issues. First, however, I want to put the debate in context.

We are living through difficult and challenging times with families and pensioners facing a cost of living crisis the like of which has not been seen for 40 years. Food prices are up, fuel prices are up and the cost of living is rising dramatically. That is having an enormous impact on households across the country, and there is, as has been mentioned, a real risk that some people might either stop saving for a pension or dip into their pension savings early and unsustainably, simply because they cannot afford the cost of living.

To make matters worse, the wider economic context is, to say the least, extremely challenging. Last week, the International Monetary Fund reported that the UK faces the worst economic outlook of any major economy. After 12 years of economic mismanagement by the Government, we seem to be stuck in a persistent period of low growth and high inflation. As a result of that mismanagement, the Government are trying to cut public spending. They have reduced spending on the state pension by failing to increase pensions in line with inflation until April, which means that pensioners, for some months, have been trying to keep up with the huge increase in the cost of living. They have been let down by the Government in attempting to do that.

Saving for a pension takes time and regular contributions, and, as we have seen, there is an issue of pensions adequacy. I note that the Committee’s report found that many savers did not realise that they were not on track for the retirement they had envisaged. This, sadly, is a tragedy waiting to happen. I hope the Minister will address that, and I encourage her to focus on it because Ministers must do more to avoid a terrible problem in future and to show they are taking the issue seriously. Sadly, I am not convinced that the point was adequately addressed in the Government response to the report, and I hope the Minister will find time to discuss it more properly.

Saving for the future remains sustainable only if pensions are kept safe, and increased pensions freedoms, which were introduced in 2015, gave many hundreds of thousands of people choice as to how to invest their savings. However, the Government need to do more to help them, including providing better advice, as we heard earlier, and helping to tackle fraud, such as pension scams. I am afraid that the evidence so far is that Ministers, unfortunately, are failing on both counts. As we heard earlier, not enough people are accessing free, impartial advice, and it seems as though those with the largest pension pots might be somewhat more likely to seek such advice, rather than those in greatest need.

On fraud, there are also deeply worrying indications of Government failure. In 2022, there was a 75% increase in online searches for scam help and a large increase in searches for pension scams. In 2018, the Financial Conduct Authority published data showing that hundreds of people had been scammed out of their pensions, losing on average the enormous total of £82,000 per person. Research by the Money Advice Service suggests that there could be as many as eight scam calls every second, and Citizens Advice found that 8.4 million consumers had been offered unsolicited pensions advice between 2015 and 2016.

On a similar note, we need to ensure that the regulator and the ombudsman are given the tools they need to take swift and effective action in cases of mis-selling or unethical behaviour, and the serious ongoing problems with the British Steel pension scheme show the need to improve regulation. Much of the damage in that case could—and indeed should—have been avoided if tougher action had been taken at the time. I am glad to say, however, that steps can be taken. The law was changed in 2020 to ban cold calling from UK numbers, thanks to Labour pressure. The Government should act on our calls to take further steps, such as banning fraudulent online advertisements, which remain an option for scammers.

Let me move on to speak more about the structures to help people save. As was mentioned earlier, auto-enrolment, which was created by the previous Labour Government, has become an undisputed success. We must maintain the ambitions of the previous Labour Government and do more to ensure that everyone benefits, including, as colleagues mentioned earlier, women, low-paid people and minority groups. I remind the Minister that the Government promised to look at expanding auto-enrolment by the mid-2020s. I hope she will address that point when she responds.

There is, as the hon. Member for Amber Valley (Nigel Mills) and others have mentioned, scope for other innovations. I urge the Government to think more creatively about new ways of encouraging saving—for example, by considering pensions sidecars and other ways to address the wider challenge of encouraging saving, which we have heard so much about today.

I am aware that time is limited, so I will finish by urging the Minister to do more. There is scope for pensions to contribute to protecting the future of the planet. I welcome the work of the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), and her plans to support green start-up companies’ links with pension funds. I look forward to the Minister’s response.

--- Later in debate ---

[Laura Trott]

My hon. Friend makes a typically excellent point. He is right that we have a lower investment in illiquids than many of our European counterparts. We are at 7%, and they are at 15% or 16%. Last week, I announced a change in regulations, which I believe will come to the House in around March. It will mean that the performance charges can be passed on for the first time, which will hopefully take away a barrier to investment in those types of asset. It is of course for the pension trustees to make investments in the best interest of pension savers, but it is important that we do not put any barriers in the way of that. My hon. Friends the Members for Grantham and Stamford (Gareth Davies) and for Amber Valley are right that we need to focus on returns. If we are going to deal with adequacy, we need to ensure that investments in pension schemes return the maximum amount that they can for savers. Illiquids are part of the story in making that happen.

[Matt Rodda]

I was lucky to enjoy a very interesting visit to a solar farm with the Minister’s predecessor, the hon. Member for Hexham (Guy Opperman). One of the issues there—this relates to the point made by the hon. Member for Grantham and Stamford (Gareth Davies)—is that the obstacles to pension funds investing in illiquids are quite considerable. Does the Minister agree that there is an issue with work across Government on that matter? The delays in that case were to do with electricity connectivity to the site, and there may be other similar delays that are holding pension funds back from investing in illiquids in the UK.

[Laura Trott]

If there is a specific issue with that, I am of course happy to talk to the hon. Gentleman about that separately.

I want to give the right hon. Member for East Ham time at the end to sum up, so I will try to get through the rest of my speech quite quickly. On the generation X issue, we have an issue with the people who fell into the gap between the mid-1990s and 2010, when auto-enrolment was introduced. I praise the work of the Work and Pensions Committee, but I hope the right hon. Gentleman and the hon. Member for Reading East (Matt Rodda) would accept that not enough was done between 1997 and 2010. I cannot wave a magic wand and make that right, but I can raise awareness through pension dashboards and help boost returns through value for money, as discussed. In addition, the state pension has been boosted significantly under this Government.

I thank the Committee for all its work on the stronger nudge. It is important to recognise, as my hon. Friends the Members for Amber Valley and for North Norfolk (Duncan Baker), and the hon. Member for Glasgow East (David Linden), have done, that Pension Wise is consistently given very high feedback. About 47% of pots in 2021-22 were accessed for the first time with Pension Wise guidance. It is important to look at the amounts. If the pot is very small, say £100, it is potentially less valuable to have a Pension Wise appointment, than it would be for a pot of multiple thousands. I note that 73% of pots larger than £100,000 were accessed using Pension Wise guidance. It is important to look at that graduation.

[Matt Rodda]

I thank the Minister for giving way again. Does she agree that it is important for people with very modest pension pots to get access to high-quality advice? They are financially vulnerable in some cases. There have been instances of people approaching retirement taking their pension early, when that is not necessarily in their best long-term interests.

[Laura Trott]

It is absolutely the case that people who want or need guidance should get it. As I was coming to, we are seeing a positive impact with stronger nudge, which we should continue to evaluate. I am conscious of time, so I will wrap up. It is vital that we put pension savers at the heart of everything we do. I am grateful for the comprehensive and thoughtful discussion today, which I look forward to continuing in future.

Social Security and Pensions

Matt Rodda Excerpts

Monday 6th February 2023 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I thank all hon. Members who have taken part in this debate on uprating benefits. Today, Members have the chance to vote on Government spending on supporting the vulnerable, and this debate takes place at a time when families and pensioners across the country face an unprecedented cost of living crisis. We have an important opportunity to debate the Government’s response. However, I am afraid that, based on the Government’s actions and what we have heard today, that response has let down both families and pensioners. As my hon. Friend the Member for Westminster North (Ms Buck) said, this year’s uprating will at best maintain the severely reduced real-terms value of benefits, which has been eroded over the last decade.

The inadequate safety net provided by the Government has, as expected, contributed to an increased number of children living in poverty, to a deepening poverty, and to an increasing need for food banks. It has also led to pensioners having to wait months for the state pension to be increased in line with inflation, and to those approaching retirement being placed under unnecessary stress and uncertainty as the Government have floated the idea of bringing forward the increase in the state pension age to 68. That has been suggested in the media but without proper consultation, breaking the long-standing convention that pension policy is developed by consensus.

The Government’s response to the cost of living crisis has been deeply disappointing. While I have the opportunity, I will ask the Minister a question about a particular aspect of policy. When one member of a couple is on universal credit and the other receives the state pension, the pensioner is not allowed to claim pension credit, which may have a significant impact on the couple’s income. Will the Minister explain that to me, and write to me about it? Will he also consider changing that harsh and unnecessary policy?

It was clear in contributions made by Members from across the House that there was a great deal of feeling about and interest in this matter. We have discussed the cost of living crisis, child and pensioner poverty, the prices of food and fuel rising faster than the uprating of benefits, and pensioners needing more support. Many speakers criticised the Government for disapplying the triple lock, and called on them to speed up the take-up of pension credit.

Let me be clear: we will, of course, support the motion, but the Government deserve no praise for their actions, as my hon. Friend the Member for Westminster North said. I urge the Minister to rethink the Government’s approach both to the annual uprating and more generally. The Government have let down some of the most vulnerable people in the country, at a time of great financial pressure. I hope that the Minister will reflect on that when he responds.

Raising the State Pension Age to 68

Matt Rodda Excerpts

Wednesday 1st February 2023 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

Pensions are an incredibly important issue. People who have worked hard and contributed all their lives deserve a decent pension in retirement. The state pension has been a crucial part of all our lives in this country for a very long time. I thank the Backbench Business Committee for securing today’s debate, and the hon. Member for Amber Valley (Nigel Mills) and Members across the House for their contributions.

I am sorry to say that there has been a certain amount of unhelpful briefing in the media about a possible change to Government policy on state pension age. I urge the Government to stop that, and to raise issues in this House rather than in the media. If Ministers are serious, they should discuss the future of pensions policy with the public and the pensions industry in a proper public consultation. The current speculation fuelled by off-the-record briefings is hugely unsettling for people who are saving for a pension and trying to plan for their future. Ministers should remember that families and pensioners are living through an unprecedented cost of living crisis and facing huge pressures on household budgets. The last thing that people need is further stress and uncertainty.

We are living in challenging times, with inflation rates that the country has not seen for more 40 years. To make matters worse, as the IMF reported earlier this week, the UK faces the worst economic outlook of any major economy. After 12 years of economic mismanagement by the current Government, we are stuck in a period of persistently low growth and, unfortunately, persistently high inflation. As a direct result of that mismanagement, the Government are now trying to cut public spending. They have reduced spending on the state pension before by failing to increase pensions in line with inflation until April this year. That means that pensions have failed to keep up with the huge rise in the cost of food and fuel that has hit pensioners in the last six months.

Independent research by the Pensions and Lifetime Savings Association using data from Loughborough University showed the scale of the Government’s failure. It showed that the basic state pension has now fallen below the cost of living. The PLSA put the basic cost of living for a single pensioner at £12,800, more than £2,000 above the basic state pension, which will be £10,600 in the financial year 2023-24.

The Government’s mismanagement of the economy and their desperate attempts to cut public spending form the backdrop to today’s debate. This is made even worse by Ministers’ disregard for pensioners, the House and the public. The Government’s pattern of behaviour is in stark contrast to the way in which Governments have conducted themselves in the past. As I mentioned earlier, there has been a long-standing convention that pensions policy is based on evidence and agreed by consensus. For example, when the evidence showed that life expectancy was increasing, there was a discussion about the impact on the state pension age, and it was agreed that it should be gradually increased. The UK already has one of the higher state pension ages among OECD countries.

Following extensive consultation about the impact of increased life expectancy in the 2000s, the Government established the Pensions Commission to look into the issue. As a result, and after a great deal of discussion, it was agreed that the state pension age should be raised. The Pensions Act 2007 provided for it to be increased from 65 to 68 in stages over the period between 2024 and 2046. I should stress that those increases were agreed at a time of steady rises in life expectancy. The current situation is somewhat different, to say the least. As we heard earlier, there is clear evidence of a stalling of the increase in life expectancy. Data from the Office for National Statistics on healthy life expectancy between 2018 and 2020 shows a downward trend in most regions of the UK, and the situation for some pensioners seems to be even worse, with a fall in life expectancy among some groups since 2010. We have heard several examples of that today, and there are others.

There is also clear and, in my view, deeply troubling evidence of local disparities, with gaps of about 10 years between the average life expectancy of some people—often those living in better-off areas—and that of their neighbours living in less well-off areas comparatively nearby. The full impact of the pandemic on long-term health is unclear, and there seem to be a growing number of older people of working age who are suffering from serious health conditions. That evidence needs to be considered carefully.

I appreciate that time is limited. Let me end by saying that the Government are letting down both pensioners and people saving for pensions. They have broken with the long-standing convention that pensions policy is developed on the basis of evidence, through consultation and discussion. I hope the Minister will address these issues in her speech. I know that she does prefer to consult, even if some of her colleagues do not always follow that approach.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 23rd January 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

Nearly 1 million pensioners are not receiving pension credit to which they are entitled. To make matters worse, each of those 1 million pensioners is also missing out on a £900 payment from the Government to help them with heating, as the payment is available only to those on pension credit. Why have the Government been so ineffective at raising the take-up of pension credit? Will she also explain why on earth they linked help with heating to pension credit when they knew that 1 million pensioners would miss out as a result?

[Laura Trott]

I appreciate the hon. Gentleman’s interest in pension credit. I hope he will have heard my previous answer about all we are doing to boost take-up and indeed the success that we had before Christmas. I have spoken to him previously about the work we are doing to automate it and make greater use of data; this is an absolute priority for me and for this Government.

Pensions Dashboards (Prohibition of Indemnification) Bill

Matt Rodda Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I congratulate the hon. Member for Cheadle (Mary Robinson) on her work on the Bill. I thank hon. Members across the House who have contributed to our debates during its passage.

This is an important Bill. People who work hard and save all their lives should have every right to expect a decent pension in their retirement. The Bill will play an important role in helping to protect the interests of people who are saving for a pension, as we have heard. The Opposition agree with the principle that pension scheme trustees should be responsible if they fail to meet their legal requirements, rather than responsibility falling on people who are saving for a pension.

Without the provisions in the Bill, there is a real risk that fines could fall on scheme members. That problem was highlighted recently by the Pensions Regulator—I take note of the concerns that the hon. Member for North East Bedfordshire (Richard Fuller) raised about regulators—which warned that many trustees are at risk of failing to meet their legal pensions dashboard responsibilities. There is a very real risk that fines could be issued as a result. The regulator has made it clear that it will take a dim view of trustees who fail to prioritise their pensions dashboard responsibilities.

People saving for a pension should not be let down by the actions of fund managers and trustees. That is why the Opposition support this important Bill. Indeed, we would have liked the Government to take action earlier; we would have liked Ministers to include the Bill’s provisions in the original dashboard legislation. I wish the hon. Member for Cheadle every success with her Bill, but it would be very helpful if the Minister explained whether the omission of those measures from the original legislation was a mistake or whether there was an element of deliberate policy. I look forward to the Minister addressing that point.

Pensions policy is a long-term issue and a very important one. Legislation introduced in this Parliament and the last Parliament will have implications for many years to come. The dashboard is an important attempt to make information more easily accessible to pension scheme members. I welcome it—I think it will play an important role in explaining pensions, as we have heard from colleagues across the House, and in helping to encourage people to save more for their retirement—but the Government cannot rely on the dashboard alone to address all the issues in the UK pensions system. I believe that Ministers should be doing more both to encourage saving and to support pensioners at this difficult time. We must all do more in this country to ensure that people are saving enough for their retirement.

[The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)]

I am very grateful to my hon. Friend the Member for Cheadle (Mary Robinson) for promoting the Bill and I congratulate her on navigating it through to this stage. I have done a private Member’s Bill so I know that that is no mean feat. It requires a huge amount of work, which has been on display today, as have her skills in getting this through. I also thank the Opposition for their support for the Bill, and I thank all of those who have spoken today: my hon. Friends the Members for Clwyd South (Simon Baynes), for Watford (Dean Russell), for North Devon (Selaine Saxby), for Wantage (David Johnston) and for North East Bedfordshire (Richard Fuller). I will endeavour to deal with as many of his questions as I can, but I will write to him on any I am unable to address. I also pay tribute to my predecessors in this role, my hon. Friends the Members for Hexham (Guy Opperman) and for Brentwood and Ongar (Alex Burghart), who spoke in support of the Bill on Second Reading and in Committee respectively. I am proud to complete the trio.

Private pensions have undergone a quiet revolution in recent decades. It used to be the case that retirement income was guaranteed by the employer via a defined benefit pension. That started to change with the introduction of defined contribution schemes in the early 1990s. Those types of schemes put the risk of the eventual outcome entirely at the feet of the employees, with no guaranteed contribution from employers. That clearly has a huge potential impact on the adequacy of someone’s private pension for retirement, and introduced a huge new complex financial world for individuals to navigate. The intergenerational impact of this is stark. One group of people is able to retire on a guaranteed pension provided by their employer and have protections—provided by the financial assistance scheme and, latterly, the Pension Protection Fund— in respect of the employer going bust. The second group of people are given no guarantees on the value of their pension, if indeed they have one at all, and they are exposed to market conditions, are reliant on the performance of their individual fund, and wildly different levels of contribution are made by the employer—in some cases, none are made at all.

That is why the introduction of automatic enrolment in 2012 was so important. My hon. Friend the Member for Cheadle is right to say that automatic enrolment has been an incredible success and has achieved a transformational effect on retirement savings in the UK, both by employers and by employees. It has seen millions more people working to contribute to their workplace pension and has normalised workplace pension saving. Automatic enrolment is re-establishing a culture of retirement saving for a new generation, with more than 10.8 million workers enrolled into a workplace pension to date and an additional £33 billion more saved in real terms in 2021 than in 2012.

[Matt Rodda]

Will the Minister pay tribute to the work of the Pensions Commission and, indeed, the last Labour Government, who designed the policy? Obviously, it was implemented in 2012.

[Laura Trott]

The Pensions Commission did a great piece of work. As the shadow Minister rightly pointed out, it was implemented by the Conservatives.

Automatic enrolment was designed specifically to help groups who have historically been less likely to save, such as women and lower earners. My hon. Friend the Member for North Devon referred to women, and automatic enrolment has particularly helped them; millions more have been saving into a pension for the first time. Workplace pension participation among eligible women working in the private sector has risen from 40% in 2012 to a brilliant 87% in 2021—that is the same level as for eligible men in the private sector. We absolutely know that there is more to do, particularly to enable young adults, lower earners and part-time workers to achieve greater security in later life. The 2017 review of automatic enrolment sets out the Government’s ambition to enable people to save more and to start saving earlier by abolishing the lower earnings limit and reducing the qualifying age for automatic enrolment to 18. We are committed to implementing these measures in the mid-2020s.

However, the success of automatic enrolment in increasing the number of pension savings and the number of pension pots people have comes with policy problems that we have to solve. People have an average of 11 jobs in their lifetime. With automatic enrolment, they will often have a new pension pot every time they move job. Research in 2021 suggested that 73% of people have multiple pension pots, and research by Scottish Widows suggests that almost half of workplace pension holders do not know how many pension pots they hold with previous employers. Indeed, they will frequently forget about their pension pots from previous employers altogether.

The first policy issue with automatic enrolment that we therefore need to address is ensuring that pots are reunited with people. While estimates and definitions of lost pension pots vary, the latest survey from the Pensions Policy Institute suggests that the value of lost pots in the UK may have grown from £19.4 billion in 2018 to £26.6 billion in 2022.

The second issue that my hon. Friend the Member for Cheadle alluded to is that many people have multiple pension pots, and it can be difficult for people to keep track of what they have saved for retirement. Having lots of pension pots can be confusing. The Financial Conduct Authority’s recent survey showed that 54% of defined contribution pension holders aged 45 to 64 say they have little or no idea of how much annual income they expect to have from their defined benefit contributions.

Members will be pleased to know that we have a solution to these issues: pensions dashboards. Dashboards will allow individuals to view information about their multiple pensions, including their state pension, in one place, online—even pots they had forgotten they had in the first place. As my hon. Friend the Member for Watford said, it will tell us what our future looks like.

Numerous Members asked about timings. The Pensions Dashboards Regulations 2022, which set out the requirements for relevant occupational pension schemes to be connected to the pensions dashboards digital system, were approved by the House in November 2022 with cross-party support, and they have now come into force. We hope to see the first schemes connecting to the dashboards infrastructure in the coming months.

Members also asked when individuals will be able to access these dashboards. We refer to this as the dashboards available point. As set out in the Pensions Dashboards Regulations 2022, the dashboards available point will be when the Secretary of State for Work and Pensions is satisfied that the dashboards are ready to support widespread use by the general public. The Government consulted last year, and in response to the consultation we set out a broad framework of relevant matters that will be considered before the Secretary of State announces the dashboards available point. That will include consideration of the level of coverage; ensuring the safety, security and reliability of the service; and testing the user experience.

[Matt Rodda]

Could the Minister tell the House what plans the Department has to publicise the roll-out of the dashboards? Clearly many pension savers are already not aware of their full entitlement, and there is a risk that they may not be aware of the dashboard itself.

[Laura Trott]

The timetable set out in the regulations is about pension providers uploading the information to the dashboard. When that is available for individuals is a decision that the Secretary of State then has to take, but the timetable for information being uploaded is public and is the one agreed in the regulations. I hope that that answers the hon. Gentleman’s question.

As my hon. Friend the Member for Cheadle said, in order to ensure compliance with dashboards regulations, the Pensions Regulator has been given power to take enforcement action for non-compliance with any of the requirements in part 3 of the Pensions Dashboards Regulations 2022. That includes the possibility that the regulator may, at its discretion, issue penalty notices of up to £5,000 for individuals or up to £50,000 in other cases, such as corporate trustees. My hon. Friend the Member for North East Bedfordshire asked me lots of questions, and I will write to him, because I need to hurry up.

In conclusion, it is to the huge credit of my hon. Friend the Member for Cheadle that she successfully brought the Bill forward on a cross-party basis and navigated its passage. I am delighted to restate that the Government support the Bill and will continue to support it as it moves through Parliament. I wish it every success.

State Pension

Matt Rodda Excerpts

Monday 12th December 2022 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Robert. I thank my hon. Friend the Member for Battersea (Marsha De Cordova) for her work on this important issue. I also thank other hon. Members who have spoken in the debate. Above all, I want to thank the hundreds of thousands of people from across the country who signed the petition that led to this debate. Constituents have expressed their concern for older people, so it is right that we consider this matter today.

Pensioners face the worst cost of living crisis for over 40 years. The cost of food and fuel is up, and the cost of living as a whole is going up. Yet, at the same time, support for pensioners is failing to keep up with the severe pressure on older people. Those who have worked hard and contributed all their lives deserve to receive a decent state pension in retirement. The official Opposition support the triple lock and have repeatedly called for the state pension to rise in line with it during the last two years, but the Government’s approach has fallen well short of what is expected by pensioners and the country as a whole.

I will set out the scale of the cost of living crisis and then address the Government’s failure in this regard. It is clear that this crisis is the worst squeeze on the incomes of families and pensioners since the 1970s. Sadly, inflation has hit over 10%—something unheard of in living memory. The situation facing people on low and fixed incomes is particularly difficult. Pensioners and others on modest incomes spend more of their disposable income on food and fuel, the prices of which have increased to a far greater extent than those of other goods. The prices of staples such as bread, cereals, tea, meat, dairy produce and eggs have all risen rapidly, and some have increased by far more than the headline rate of 10%. As is well known, the same is true of energy. Not only has the price of gas risen dramatically, but so has the price of electricity and heating oil. In the meantime the Government have dithered and delayed, and put off addressing these important issues.

I turn to the Government’s poor record and to the lack of—indeed, the delays to—support for poor pensioners. Despite raising the state pension in line with the triple lock being a manifesto pledge, Ministers repeatedly failed to meet that commitment. Last year the Government said that earnings appeared to have grown by a larger amount, because the return to work after furlough created the impression that earnings had increased by 8%. They used that as an excuse for disapplying the triple lock, preventing pensioners from getting the rise in the state pension that they clearly deserved. We repeatedly challenged the Government, but they simply would not listen to our concerns.

To make matters worse, this year Ministers refused for months to commit to increasing the state pension in line with inflation. Campaigners repeatedly pressed them on the issue, and the official Opposition raised the matter in Parliament a number of times. As a result of the Government’s dither and delay, pensioners were left wondering what would happen to them at a time when they were facing a very difficult winter. After months of delay, and considerable pressure and stress for older people, Ministers eventually confirmed at the autumn statement that the state pension would rise in line with inflation. Those failures and persistent delays let pensioners down badly, so I hope the Minister will find time to apologise for them when she replies.

The Government have failed pensioners on a number of other matters relating to the state pension—for example, pension credit and some of the problems relating to the energy price guarantee. I want to raise those related issues, because both policies should be offering far more help than they do at present.

Pension credit tops up the incomes of some of the most vulnerable pensioners, who receive a particularly modest income. However, about 1 million pensioners who are entitled to the benefit are not claiming it. Will the Minister explain why the Government are still failing on this matter? What more can be done to ensure that pensioners claim pension credit to raise their incomes, as they deserve?

Although help is now available with heating costs, there are gaps in the scheme—not least that it will be scaled back next year. In the meantime, payments for some pensioners in rented accommodation are still not being passed on by landlords. Concerns have been raised in my constituency, and I am sure Members across the House have experienced the same issue. I hope the Minister will respond to that point.

Time is pressing, but I want once again to thank the members of the public who signed the petition, as well as my hon. Friend the Member for Battersea, who spoke so eloquently, and other Members from across the House. I look forward to the Minister’s reply.

--- Later in debate ---

[Laura Trott]

We know that claims for pension credit have tripled since the summer. On average, we used to get 2,000 claims a week—that has gone up to 6,000. The seven out of 10 figure that everybody uses comes from the family resources survey, which was last done in 2019-20, which has caused the difficulty with exact details on eligibility. Because of the pandemic, the survey has not been repeated, and there is an 18-month delay on the figures. It is very difficult to get up-to-date data on actual eligibility levels, which is something that we need to address over the longer term. In the interim, though, we have the numbers of people who are making the claims through the line, which, as I have said, have gone up threefold.

[Matt Rodda]

Could the Minister explore the issue of pensioners who do not have English as their first language and other hard-to-reach groups whom Government information often struggles to reach? There have been success stories in the past where particular approaches have worked with some minority groups. Perhaps the Minister could write to me and other colleagues present on that matter.

[Laura Trott]

I am very happy to do so. If there are any specific approaches the hon. Gentleman thinks the Government should be taking, I am very open to any ideas he may have and would happily take them forward.

The £650 cost of living payment is one of a number of measures in the Government’s £37 billion cost of living support package, which will ensure that the most vulnerable households will receive at least £1,200 this year. The package also includes a £400 reduction on energy bills for all domestic electricity customers over the coming months, plus a £150 council tax rebate for 85% of all UK households.

In addition to the steps we have taken to address the cost of living for pensioners, we have also made long-term reforms to the state pension and introduced automatic enrolment to boost private saving. In 2016, the Government introduced the new state pension, which forms a clear foundation for individuals’ private savings to provide the retirement they want. At the heart of its design, we sought to correct some historic unfairness in the previous system, in particular for women, self-employed people and lower-paid workers. More than 3 million women are set to receive an average of £550 more a year by 2030. State pension outcomes are also expected to equalise for men and women by the early 2040s—more than a decade earlier than they would have aligned under the old system.

I want to pause here to mention pensioner poverty, which was brought up by a number of hon. Members. I know it is something we all care deeply about. The Government are committed to action that helps to alleviate the levels of pensioner poverty. We are forecast to spend more than £134 billion on benefits for pensioners in 2022-23, which amounts to 5.4% of GDP and includes spending on the state pension that is forecast to be over £110 billion in 2022-23. Thankfully, there are 400,000 fewer pensioners in absolute poverty, both before and after housing costs, than in 2009-10, but there is, of course, always more to do.

Automatic enrolment, as mentioned by the hon. Member for Cynon Valley (Beth Winter), is transforming private saving. More than 10.7 million people have been automatically enrolled into a workplace pension and more than 2 million employers have complied with their duties to date. This has helped to supply around an additional £33 billion into pensions savings in real terms in 2021 compared to 2012. I want to bring up the findings of the 2017 review of measures for automatic enrolment, as the hon. Member for Battersea mentioned her support for the lower earnings limit. The 2017 review of automatic enrolment set out the ambition to enable people to save more and to start saving earlier by abolishing the lower earnings limit and reducing the qualifying age for automatic enrolment to 18 by the mid-2020s. We have always been clear that changes would be made in a way and at a time that are affordable, balancing the needs of savers, employers and taxpayers, and the Government are absolutely still committed to that.

Together, the new state pension, automatic enrolment to workplace pensions and the safety net of pension credit will provide a robust system for pensioners for decades to come. A number of Members talked about international comparisons; OECD rankings show that, thanks to this Government’s reforms, the UK pensions systems will provide future workers with income replacement rates comparable to the OECD average and higher than countries such as Switzerland, Norway and Germany.

Let me turn to the second suggestion: decreasing the state pension age to 60. The Government have no plans to reverse changes to the state pension age. Previous reforms have focused on maintaining the right balance between affordability, the sustainability of the state pension and fairness between generations. Changes to state pension age were made through a series of Acts, and by successive Governments, from 1995 onwards. Those reforms followed public consultations and extensive debates in both Houses of Parliament. The state pension is funded through the national insurance and tax contributions of the current working-age population. Like increasing the state pension, reducing the state pension age to 60 would massively increase the tax burden on the current working-age population and carry significant cost.

Child Support (Enforcement) Bill

Matt Rodda Excerpts

2nd reading
Friday 9th December 2022 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

We wholeheartedly support the principle that non-resident parents should pay child maintenance, and that there should be enforcement when absent parents fail to pay. I thank the hon. Member for Stroud (Siobhan Baillie) for her work on the Bill and, indeed, for her wider work on this complicated and important matter.

Too many absent parents fail to pay child maintenance, often leaving children and families in desperate need and emotional distress, which, as we heard earlier, can have very serious consequences for them. I pay tribute to those families who are suffering as a result of terrible backlogs and delays, and the whole House is deeply concerned about them. Many Members have tried to help constituents facing these dreadful problems, and will have responded through their casework. I also want to put on record my support for the work of charities such as Gingerbread that support parents, and to thank the Child Maintenance Service for its efforts in this important area. It continues to chase non-payment despite a series of difficult challenges, to which I shall refer later in my speech.

Turning to the substance of the Bill, as I said at the outset, we completely support the principle that non-resident parents should meet their responsibilities for child maintenance, and where they fail to do so the state must step in to enforce payment. The CMS manages over 500,000 arrangements for child support, affecting 750,000 children. Maintenance payments are very important in reducing child poverty, as the hon. Member for Newbury (Laura Farris) mentioned, and it has been estimated that as many as one in five single-parent families on benefits are lifted out of poverty by receiving child maintenance payments; that is an important point for us to consider. Not only do we support the principle, therefore, but we recognise that the enforcement of child maintenance obligations needs to be improved.

Enforcement action was affected by the pandemic. CMS staff were redeployed to manage the surge in universal credit claims, and the courts were closed. The number of liability orders in process fell from 6,900 in March 2020 to 2,400 in September 2020. That was a considerable drop, but since 2020 there has been only a partial recovery, and the most recent figures, for June 2022, are not only far lower than before the pandemic at 4,200, but are lower than in June 2021 by over 1,000 cases. The CMS therefore clearly faces some serious issues. The number of enforcement agency referrals now in process is less than half the number before the pandemic. The system for ensuring that child maintenance is paid needs to be efficient and fair, and we must address these points and discuss them thoroughly in this House.

Although I understand the principles behind the Bill, I therefore have some questions. As I understand it, the purpose of the Bill is to make changes to powers introduced in the Child Maintenance and Other Payments Act 2008, but it seems that some of the powers—those that allow the Secretary of State or Department to make an order without having to go to the courts—have not been used by the Government. I realise this is a detailed point, but I ask the Minister to address it in her reply and to reassure me on it.

The Bill makes provision for the Secretary of State to issue regulations governing appeals, and the powers granted are wide-ranging. For example, the Secretary of State will be able to make

“provision with respect to the period within which a right of appeal under the regulations may be exercised”

and

“provision with respect to the powers of the court to which the appeal under the regulations lies.”

This wording seems to give the Secretary of State a great deal of power to limit the grounds on which appeals can be made and the opportunity to appeal. Why are these powers being sought?

Time is limited today, so I will conclude. We whole-heartedly support the principle that non-resident parents should pay child maintenance and that there should be enforcement for absent parents who fail to pay. I again take this opportunity to thank the hon. Member for Stroud for her excellent work on this; she has a great deal of expertise and the House and country is benefiting from it. I also pay tribute to parents and families affected by this terrible problem, as well as charities and campaigners, and to CMS staff working on those parents’ behalf. I hope the Minister will address my questions; they are somewhat technical, however, and I would be happy for her to write to me with further detail on them.

--- Later in debate ---

[Mims Davies]

I thank my hon. Friend for raising that. He is right to say that. We have seen this in our constituency surgeries: there are always two sides to every story. It is right that we have processes that are able to respond to that and that parents are able to see and engage with their children. I reiterate that my hon. Friend in the other place, who has day-to-day policy responsibility for this matter, is very much focused on reducing parental conflict. Above all, this is about supporting children, getting them the best start and ongoing support to thrive in life.

Let me make some progress on the importance of today’s Bill. Child maintenance payments provide vital support to separated parents. Approximately 140,000 fewer children are growing up in poverty as a result of child maintenance payments. This includes payments through the family-based process and through the service. As my hon. Friend the Member for Stroud has already stated, in the past 12 months, more than £1 billion-worth of support was arranged and collected through the Child Maintenance Service. That exemplifies the intent of the service, which is to promote collaboration between separated parents and encourage parents to meet their responsibilities in providing for their children, meaning that youngsters get the financial support that they need for that good start in life.

Research shows that children tend to have better emotional wellbeing and higher academic attainment growing up with parents who, together or indeed separated, have that good-quality relationship and are able to manage conflict well. Child maintenance cases are managed by two processes, as we discussed earlier. The collect and pay caseloads are more challenging. That is where a collaborative arrangement has either failed or not been possible. Therefore, these parents are considered less likely to meet their payment responsibilities.

We know the difference that child maintenance can make in people’s day-to-day lives, so unpaid child maintenance should be paid immediately. We know that the vast majority of parents want to do the right thing to support their children financially. Where a parent fails to pay on time or in full, our strategy is to tackle payment breakdowns at the earliest opportunity and to take action to re-establish compliance and collect any unpaid amounts where they have been accrued.

The Child Maintenance Service is able to deduct £8.40 a week towards ongoing maintenance or arrears from certain prescribed benefits, as I have discussed. Where measures prove ineffective or inappropriate in collecting arrears, the CMS will apply to the court service or the sheriff court for the liability order.

The liability order enables the use of more stringent powers, as we have heard, and we are able to take more serious action. Since June 2022, the Child Maintenance Service has collected £2.7 million from paying parents with the court-based enforcement action in process. We regularly review processes and policies in line with best practice to deliver the best outcomes for parents and children, and I note the point made by my hon. Friend the Member for Devizes.

[Matt Rodda]

rose—

[Mims Davies]

I just wanted to turn to the hon. Gentleman’s point. I would like to write to him on that as I am not the Minister responsible for that day to day. I hope that he will understand.

The details of these powers will be set out in secondary legislation, with the right for a liable parent to appeal against an administrative liability order. Regulation powers and other provisions will be included. That means that proper scrutiny can be undertaken by the Government and the relevant Committee. We can then make sure that the regulations include the right to appeal. Those regulations will also be subject to the affirmative procedure.

The Bill is of great importance for the Child Maintenance Service. It will make sure that we make the necessary improvements we have heard about today to the enforcement process and, above all, that we get the money to children more quickly. I am pleased that the Bill has been introduced, and I commend my hon. Friend the Member for Stroud for bringing it to the House.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 5th December 2022 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

Pensioners who have worked hard and saved all their lives face an unprecedented cost of living crisis. Meanwhile, the Government dithered and delayed, but after considerable pressure from the Opposition side of the House, they eventually agreed to increase the state pension to offer some help with fuel bills. However, these delays have left pensioners angry, confused and, as we heard earlier, frustrated. Can the Minister please tell the House how many pensioners will be left freezing and cold with no heating on this winter?

[Laura Trott]

I am grateful to the hon. Member for highlighting the record rise in state pension brought forward by this Government. We are, as ever, on the side of pensioners as we go through this winter, and I would point out that the state pension has doubled from the level we were left by Labour in 2010.