Pension Schemes Bill

Neil Duncan-Jordan Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[Neil Duncan-Jordan (Poole) (Lab)]

The Bill represents a timely attempt to create a system whereby fewer and bigger pension funds can provide better value for members and do more to support the UK economy. Key to this, though, will be ensuring that pensioners get a decent income in retirement, alongside creating the conditions that allow pension funds to invest in ways that benefit the UK, support good jobs and finance a just transition to a low-carbon economy.

The Bill needs to acknowledge, in the direction it takes, the scale of the task that we face. One in six pensioners today lives in poverty. Only 62% of pensioners receive an occupational pension of any kind, and those who do get an average of just £210 a week. Half of defined-contribution savers—around 14 million people—are not on track for the income they expect, and the 2017 auto-enrolment review recommendations have still not been implemented. Those challenges need to be addressed, along with the unfairness of the current rules around tax relief, which benefit higher earners and need reform.

As has been mentioned this evening, the Bill does not consider the specific issue of adequacy, and how the state pension interacts with defined-benefit and defined-contribution schemes. Given that the aim of a pension is to provide an income in retirement, it is vital that we look at pensions in the round, not just those associated with occupational or private schemes. A statutory review into retirement incomes every five years would give this and future Governments the oversight needed to regularly assess the adequacy of our pension system, including the opportunity to look at contribution rates for employers and employees. I am aware that the second stage of the pensions review will consider those points, but I would be grateful if the Minister gave a little more clarity on when that is likely to begin.

The Bill needs to be strengthened on the issue of climate change and the destruction of nature. UK pension schemes continue to hold around £88 billion in fossil fuel companies, including those involved in new coal, oil and gas exploration, and have investments in companies linked to deforestation around the globe. Over 85% of leading schemes lack a credible climate action plan. Consolidating smaller pension pots into larger megafunds provides the ability to invest in long-term infrastructure projects, but that must not be at the expense of the environment.

[Caroline Voaden (South Devon) (LD)]

Does the hon. Member agree that there is an opportunity here to do something transformational for our local communities by enabling funds, particularly local government pension funds, to invest in much-needed infrastructure like care homes, special schools or even our high streets, which would provide a secure long-term return and could be transformational for local communities that need investment?

[Neil Duncan-Jordan]

I think that what the hon. Member raises is the creativity that we need on this issue, so that we look beyond the obvious investments towards some that perhaps have more social worth. I hope that the Bill will allow for that.

For pension savers to have a secure future, we will need to phase out investments in fossil fuels. As the Chancellor has recognised, all financial sector regulation and legislation should integrate climate and nature. I would be grateful if the Minister could therefore address whether there will be legislative action, not just voluntary commitments, to phase out the destructive environmental investments that pension funds currently make, and to introduce an element of the Bill that acknowledges the connection between green investments, environmental protection and decent pensions.

Turning to the local government pension scheme, governance structures vary widely across the existing pools, and reporting has been inconsistent. Pooling arrangements have not always provided the power to influence investments, which is why the TUC, for example, is calling for a thorough review of the performance of existing pools to identify best practice in the relationship between funds and pools, as well as in governance arrangements, and for the introduction of clear and consistent reporting requirements before any acceleration and further consolidation takes place.

It is also important to point to the democratic deficit that exists within the scheme as a whole. While the role of member representatives within the LGPS is a great strength, they are largely absent from pool governance structures at present, and this legislation does not specify a role for those people. Given that pension funds are the deferred wages of the workforce, we must ensure that there is greater member engagement and democratic oversight by those involved in the scheme. Not only should this stretch to having guaranteed places on boards with full voting rights, but it must ensure that scheme members can have their say as to where their money is invested. There will undoubtedly be occasions when members are concerned about investments in particular industries, or, I would add, in particular countries, and they should have a mechanism by which those views can be expressed.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does my hon. Friend agree that it is good that, in the local government pension scheme, representatives of both employers and employees can sit on the pension committees, and that we often have trade union representatives on the committees as well?

[Neil Duncan-Jordan]

My hon. Friend is quite right. Trade unions do sit on many of the LGPS committees. I was making the point that it is on the pools where there is less representation for those member voices to be heard, and that is extremely important.

Finally, I want to talk about the pre-1997 pensioners. We know that those who have seen the biggest drop in income are those who built up pensions before 1997. They have not received an annual inflation-linked increase to their pension and, over time, particularly when inflation is high, the value of their pension is eroded. Some 80,000 Pension Protection Fund members, mostly older people and disproportionately women, including some of my constituents, find themselves in this position. I hope the Government will therefore consider legislating to provide inflation protection on pre-1997 benefits, and to give the PPF greater flexibility to use its surplus to give discretionary improvements to members.

In conclusion, the idea that workers’ pension funds can be used to build much-needed social housing and invest in green technology and jobs is something that a progressive Labour Government should be proud of, and I hope we can ensure that the Bill delivers a win for pensioners, a win for our environment and a win for society as a whole.

Pension Schemes Bill

Neil Duncan-Jordan Excerpts

Report stage
Wednesday 3rd December 2025 Commons Chamber

[Steve Darling]

I wholeheartedly agree with my hon. Friend. I am sure that the Pensions Minister is listening. Politics is all about calling out injustice, and my hon. Friend does a good job of that for his constituents.

[Neil Duncan-Jordan (Poole) (Lab)]

I will speak to a number of amendments tabled in my name. I thank the Pensions Minister for discussing them with me yesterday. I look forward to his comments later in the debate.

I spent a number of years as a regional trade union official with responsibility for the local government pension scheme, and I think it is important that we see pensions as a force for social good. My amendments aim therefore to make our occupational pensions more progressive. We should remember that such funds represent the deferred wages of millions of workers, and directing pension funds toward socially beneficial projects is one way in which the Government can rewire our economic model, so that it delivers for ordinary people.

In my view, workers’ money should be invested in sectors such as green technology and social housing—stable, reliable sectors that build a better future for the very people whose contributions fund them. Whether this is done through an expanded National Wealth Fund, which could direct investment into socially useful projects, or some other mechanism, it would clearly boost much-needed growth and GDP. What could be more progressive than using workers’ pension funds to build the council houses we so desperately need? That would be a tremendous step forward which not only ensured a solid investment for the funds, but provided decent homes at affordable rents. I designed new clause 5 to address this issue, and I hope the Minister will do more to encourage schemes to redirect their investments in that way.

Likewise, amendment 3 recognises that the voluntary approach to disinvestment in fossil fuels has not worked. The LGPS currently invests over £16 billion in fossil fuels, while 85% of all pension schemes lack a credible climate action plan. The environmental crisis is the great challenge facing us all. Workers’ wages should not be fuelling the climate catastrophe. Fundamentally, there is no retirement without our environment, and I hope the Government will emphasise that position to trustees more forcefully. We need a commitment from all LGPS schemes and pools to having a five-year plan to end their relationship with these harmful investments.

The overwhelming majority of the public would also be horrified to learn that their savings were invested in illegal wars abroad, such as the genocide in Gaza. We know that over £12 billion of LGPS funds are invested in companies that support the illegal settlements in some way, or produce arms or fuel for fighter jets used in the war. We must ensure that pension funds are not complicit in war crimes and human rights violation, whether in Gaza or elsewhere in the world.

The Minister will have noticed the strong cross-party support for my amendment 2, and I urge him to give a statement in the strongest possible terms that the LGPS should not be involved in funding breaches of international law in any form. I understand that many of the pools have money in tracker funds that are connected to arms companies, but that needs to be challenged. If that means disinvesting from arms manufacturers implicated in these breaches, so be it.

That brings me to the important matter of worker representation. Having a seat at the table is one way in which we can influence how money is invested. That is why it is important that we ensure trade unions have a voice on all future pension boards and committees, as outlined in my amendment 1. There is currently no requirement for worker representation on the boards of LGPS pools; the Government reducing the number of pools to six gives us an ideal opportunity in law to guarantee proper worker representation. Fundamentally, it is vital that the workers who pay into the funds have a fair voice in decisions on how their money is invested. I hope the Minister will begin talks with local government trade unions to see how we can bring that about.

Last week’s budget announcement on the pre-1997 pension indexation was welcome, and many have already quoted that this afternoon, but only those whose schemes were eligible for indexation and are members of the Pension Protection Fund and financial assistance scheme will see the benefit. Hundreds of thousands of retired workers whose pension funds were taken over by other companies, such as Hewlett Packard in the case of some of my constituents, and are still in operation will not be protected as was intended in the Budget for that other group; and the money they put into their company pensions before 1997 will continue to be frozen. I know the Minister recognises that over this period their pensions have become virtually worthless. That is why the Government must put pressure on trustees of all schemes to pay some of their surplus funds and ensure that their former staff get the pensions they deserve.

The Pension Schemes Bill offers a once-in-a-lifetime opportunity to help the environment and society more generally by the way we invest. The £3 trillion in UK pension funds could be used to address the historical transfer of wealth away from ordinary working people toward the wealthiest individuals and corporations in our society. Given that pensions account for 40% of wealth in this country, change must include consideration of how this vast pool can be used to improve the lives of those whose payslips created it. The call to use our money and make pensions more progressive is therefore overwhelming. I look forward to hearing the Minister set out in the strongest possible terms the commitments the Government are making to bring that about.

--- Later in debate ---

Amendments 2 and 3 and new clause 4 relate to what the LGPS should or should not invest in. As hon. Members will all be aware, the Government’s general position is that investment strategies are set locally by each pension fund. Importantly, that includes decisions on how environmental, social and governance issues are to be taken into account. I encourage LGPS authorities to take such matters incredibly seriously, as my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) did from her own experience.

[Neil Duncan-Jordan]

I want to press the Minister slightly more on the need for UK pension funds not to invest in companies that could be guilty of war crimes and breaking international law. Would he like to reflect on that?

[Torsten Bell]

Specifically on the question of having regard to international law, I emphasise that compliance extends far beyond the LGPS, and it obviously reaches right across Government. That said, the LGPS, as a public sector scheme, has particularly high expectations on responsible investment, and I have heard the points my hon. Friend has made.

The hon. Members for Torbay (Steve Darling), for Horsham (John Milne) and for Stratford-on-Avon (Manuela Perteghella) broadened this debate beyond the LGPS, not least on questions of climate change and the wider social impact of investments. The Department for Work and Pensions is currently conducting a review of the task force on climate-related financial disclosures requirements, and we have also asked the Pensions Regulator to assess the practicalities of transition plans for pension schemes. As I mentioned in my opening remarks, we will also bring forward legislation to clarify that trustees can take systemic factors into account when making their investment decisions. I hope this provides hon. Members with significant reassurance on those points.

The hon. Members for North West Norfolk and for Torbay returned to the issue, which we discussed extensively in Committee and on Second Reading, on the limited reserve or backstop asset allocation power. As I have repeatedly made it clear to this House, we do not currently anticipate it will need to be used. That is precisely because of the industry’s commitment to the Mansion House accord and wider support from the pension industry for greater investment in private assets.

I welcome the recognition of the importance of the pipeline of projects by the hon. Member for Horsham, and I encourage him to make sure that no Liberal Democrat anywhere opposes construction projects—I have seen the leaflets—be they for energy, roads, housing or anything else.

A crucial point was raised in Committee about the importance of monitoring these commitments, and I can confirm that since then the ABI and Pensions UK have committed that they will work together to track progress. I hope that helps answer some of the questions raised in Committee.

The proposals to add to the matters on which the Government must report are, I believe, unnecessary, as any exercise of the power would be subject to a wide range of safeguards—not only the production of a report about the impacts on savers and growth, but a savers’ interest test.

The hon. Member for Stratford-on-Avon spoke powerfully to her new clause 3, as did the hon. Member for Mid Dorset and North Poole (Vikki Slade). I believe the PPF works hard to make sure that it can deal quickly with payments for people with terminal illness, and the Bill contains other measures that mean it can do that at an earlier point in someone’s prognosis. The SR1 form would already be sufficient for the PPF to provide the certainty that the hon. Member for Stratford-on-Avon is looking for. I have checked with the PPF to ensure that currently within the PPF and the FAS we do not currently have any outstanding requests for such payments where they have been unable to make them, for example for the reasons of not having sufficient evidence. That said, she has spoken powerfully on that point and I will speak to the PPF at my next meeting with the chief executive and the chair to see what more can be done. I thank her for raising those issues.

I also thank the hon. Member for Horsham for bringing us back to the question of advice and guidance. Most of us do need help in preparing for retirement. However, I take a slightly more positive view of the current provision of free guidance through the Money and Pensions Service. I also agree a bit more with the hon. Member for Mid Dunbartonshire (Susan Murray) that the task of Government is to reduce the complexity in our pensions system, rather than just hoping that ever more advice will help savers to navigate it. That is exactly why the parts of the Bill on guided retirement and small pots are so important as we move forward.

I would just like to cover some of the commitments I made in Committee. [Interruption.] I know this is going to be electric for all Members. That is the kind of enthusiasm I hope to see from more Members across the House. I will make a quick update on pensions dashboards, which at least one Member will appreciate. User testing on pensions dashboards has begun. I know that will thrill everybody in this House. [Hon. Members: “Hear, hear.”] That is the attitude we need! [Laughter.] It will ramp up over the course of the next year, with greater volumes and more focus on consumer behaviour. We will be conducting a full evaluation of pensions dashboards over the coming years as the service goes live. That will include the impact of dashboards on engagement with pensions. I commit to update the House on that work in due course.

Following on from other issues raised in Committee, I am pleased to report that following the findings of the curriculum and assessment review, the Government will make financial education compulsory in primary schools in England.

One issue raised in Committee was the Department’s monitoring and evaluation plans for the policy programme set out in the Bill, not least the guided retirement measures. Those comments have been taken on board; an updated impact assessment this week lays out how we intend to approach monitoring impact.

I have endeavoured to do justice to the very wide range of different issues raised during the debate today. I hope hon. Members will support Government amendments that build on policies that will make a real difference to all our constituents in the decades to come.

Question put and agreed to.

New clause 30 accordingly read a Second time, and added to the Bill.

New Clause 31

Indexation of periodic compensation for pre-1997 service: Great Britain

“(1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is amended in accordance with subsections (2) and (3).

(2) In paragraph 28—

(a) for sub-paragraph (2) substitute—

“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—

(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);

(c) in any other case, the amount mentioned in sub-paragraph (2E).

(2A) This sub-paragraph applies where, immediately before the assessment date—

(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.

(2B) This sub-paragraph applies where—

(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and

(c) immediately before the assessment date the admissible rules of the scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2D) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2E) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.

(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.

(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.

(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”

(b) in sub-paragraph (3)—

(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;

(ii) for both definitions of “underlying rate” substitute—

““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;

(c) in sub-paragraph (5)—

(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;

(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;

(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or

(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;

(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.

(3) In paragraph 29, for sub-paragraph (2) substitute—

“(2) The Board may also determine the percentage that is to be—

(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;

(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,

(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”

(4) Schedule 5 to the Pensions Act 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).

(5) In paragraph 17—

(a) for sub-paragraph (2) substitute—

“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—

(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);

(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);

(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).

(2A) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 7 to the Pensions Act 2004 (“the relevant Schedule 7 provisions”), and

(b) immediately before the assessment date—

(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.

(2B) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions,

(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,

(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and

(d) immediately before the assessment date the admissible rules of that scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions, and

(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.

(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 7 provisions.

(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.

(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”

(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;

(c) after sub-paragraph (3) insert—

“(3A) For the purposes of sub-paragraphs (2A) to (2C)—

(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”

(d) in sub-paragraph (4)—

(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;

(ii) for the definition of “the underlying rate” substitute—

““the general underlying rate” , as at an indexation date, is the aggregate of—

(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;

(e) omit sub-paragraphs (5) and (6);

(f) before sub-paragraph (7) insert—

“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Secretary of State.

(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 7 to the Pensions Act 2004 under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.

(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.

(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;

(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;

(h) in paragraph (9)—

(i) before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;

(ii) in the definition of “post-1997 service” for “has” substitute “, “pre-1997 service” and “GMP indexed service” have”;

(iii) after that definition insert—

““the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule);”.

(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—

(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;

(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;

(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)

This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to England and Wales and Scotland to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 32

Indexation of periodic compensation for pre-1997 service: Northern Ireland

“(1) Schedule 6 to the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (pension compensation provisions) is amended in accordance with subsections (2) and (3).

(2) In paragraph 28—

(a) for sub-paragraph (2) substitute—

“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—

(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);

(c) in any other case, the amount mentioned in sub-paragraph (2E).

(2A) This sub-paragraph applies where, immediately before the assessment date—

(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.

(2B) This sub-paragraph applies where—

(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and

(c) immediately before the assessment date the admissible rules of the scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2D) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2E) The amount mentioned in this sub-paragraph is—

(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or

(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.

(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.

(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.

(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.

(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”

(b) in sub-paragraph (3)—

(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;

(ii) for both definitions of “underlying rate” substitute—

““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and

(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;

“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—

(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,

(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and

(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;

(c) in sub-paragraph (5)—

(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;

(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;

(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—

““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or

(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);”;

(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.

(3) In paragraph 29, for sub-paragraph (2) substitute—

“(2) The Board may also determine the percentage that is to be—

(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;

(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,

(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”

(4) Schedule 4 to the Pensions (No.2) Act (Northern Ireland) 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).

(5) In paragraph 17—

(a) for sub-paragraph (2) substitute—

“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—

(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);

(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);

(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);

(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).

(2A) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 6 to the 2005 Order (“the relevant Schedule 6 provisions”), and

(b) immediately before the assessment date —

(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.

(2B) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions,

(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,

(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and

(d) immediately before the assessment date the admissible rules of that scheme—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) This sub-paragraph applies where—

(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions, and

(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.

(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 6 provisions.

(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.

(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.

(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”

(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;

(c) after sub-paragraph (3) insert—

“(3A) For the purposes of sub-paragraphs (2A) to (2C)—

(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub- paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”

(d) in sub-paragraph (4)—

(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;

(ii) for the definition of “the underlying rate” substitute—

““the general underlying rate” , as at an indexation date, is the aggregate of—

(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);

“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—

(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,

(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and

(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;

(e) omit sub-paragraphs (5) and (6);

(f) before sub-paragraph (7) insert—

“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Department.

(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 6 to the 2005 Order under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.

(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.

(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;

(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;

(h) for sub-paragraph 9 substitute—

“(9) In this paragraph—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);

“post-1997 service” , “pre-1997 service” and “GMP indexed service” have the same meaning as in paragraph 28 of Schedule 6 to the 2005 Order (annual increase in periodic compensation);

“the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule).”

(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—

(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;

(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;

(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)

This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to Northern Ireland to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 33

Financial Assistance Scheme: indexation of payments for pre-1997 service

“(1) The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are amended as follows.

(2) In paragraph 7(1)(b) of Schedule 2 (determination of annual and initial payments), after “(b)(i)” insert “, (ia) and (ib)”.

(3) Paragraph 9 of that Schedule is amended in accordance with subsections (4) to (6).

(4) In sub-paragraph (2)—

(a) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—

“(ia) where sub-paragraph (2A) applies, the product of X multiplied by so much of the expected pension as is attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the product of X multiplied by the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;

(b) in paragraph (b) of the definition of “underlying rate”—

(i) omit the “and” at the end of sub-paragraph (i);

(ii) after that sub-paragraph insert—

“(ia) where sub-paragraph (2A) applies, so much of the expected pension as is, proportionally, attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the expected pension as is, proportionally, attributable to pre-1997 service; and”;

(c) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or

(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”.

(5) After sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where, immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2B) and (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period.”

(6) In sub-paragraph (3)—

(a) after “attributable to” insert “pre-1997 service or”;

(b) for “that amount” substitute “the amount in question”.

(7) In paragraph 7(1)(b) of Schedule 2A (determination of ill health and interim ill health payments), after “(b)(i)” insert “, (ia) and (ib)”.

(8) Paragraph 9 of that Schedule is amended in accordance with subsections (9) to (11).

(9) In sub-paragraph (2)—

(a) after the definition of “E” insert—

““EA” means so much of the expected pension as is attributable to pre-1997 service;

“EB” means the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;

(b) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or

(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(c) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—

“(ia) where sub-paragraph (2A) applies, the product of X multiplied by (C x EA);

(ib) where sub-paragraph (2B) applies, the product of X multiplied by (C x EB);”;

(d) in paragraph (b) of the definition of “underlying rate”—

(i) omit the “and” at the end of sub-paragraph (i);

(ii) after that sub-paragraph insert—

“(ia) where sub-paragraph (2A) applies, so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service;

(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service; and”;

(10) After sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”

(11) In sub-paragraph (3)—

(a) after “attributable to” insert “pre-1997 service or”;

(b) for “that amount” substitute “the amount in question”.

(12) In paragraph 6 of Schedule 3 (determination of certain annual payments)—

(a) in sub-paragraph (2)—

(i) in the definition of “underlying rate”, after paragraph (a) insert—

“(aa) where sub-paragraph (2A) applies, the product of X multiplied by—

(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or

(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and

(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;

(ab) where sub-paragraph (2B) applies, the product of X multiplied by—

(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or

(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and

(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;

(iii) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(b) after sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;

(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.

(13) In paragraph 6 of Schedule 5 (determination of certain ill health payments)—

(a) in sub-paragraph (2)—

(i) in the definition of “underlying rate”, after paragraph (a) insert—

“(aa) where sub-paragraph (2A) applies, the product of X multiplied by (C x VA);

(ab) where sub-paragraph (2B) applies, the product of X multiplied by (C x VB);”;

(ii) after the definition of “post-1997 service” insert—

““pre-1997 service” means—

(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;

“relevant percentage” means such percentage as may be determined by the Secretary of State;”;

(iii) after the definition of “V” insert—

““VA” means—

(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or

(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and

(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;

“VB” means—

(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—

(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or

(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and

(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;

(b) after sub-paragraph (2) insert—

“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—

(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,

(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and

(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.

(2B) This sub-paragraph applies where—

(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,

(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and

(c) immediately before the scheme began to wind up the scheme rules—

(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or

(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.

(2C) For the purposes of sub-paragraphs (2A) and (2B)—

(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;

(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;

(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;

(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.

(2D) In sub-paragraphs (2A) to (2C)—

“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;

“GMP indexed service” means—

(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or

(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;

“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;

(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.”—(Torsten Bell.)

This new clause makes provision for certain assistance paid under the Financial Assistance Scheme Regulations 2005 in respect of a person’s pre-1997 pensionable service to be increased annually.

Brought up, read the First and Second time, and added to the Bill.

New Clause 34

Exemption from public procurement rules

“(1) After paragraph 2 of Schedule 2 to the Procurement Act 2023 (general vertical arrangements exemption from public procurement rules) insert—

2A “(1) A contract between a local government pension scheme manager and an asset pool company providing for the company—

(a) to manage the funds and other assets for which the scheme manager is responsible,

(b) to make and manage investments on behalf of the scheme manager, and

(c) if the contract so provides, to carry out other investment management activities for or on behalf of the scheme manager,

if each of the conditions set out in sub-paragraph (2) is met.

(2) The conditions are—

(a) that more than 80% of the activities of the company are investment management activities carried out for or on behalf of local government pension scheme managers;

(b) that no person exercises a decisive influence on the activities of the company (either directly or indirectly) other than—

(i) the participating scheme managers in the company, acting in their capacity as local government pension scheme managers, and

(ii) where the only shareholder in the company is another company (see section 1(9)(a) of the Pension Schemes Act 2025), that other company;

(c) that the company does not carry out any activities that are contrary to the interests of—

(i) the participating scheme managers in the company, in their capacity as local government pension scheme managers, or

(ii) where the only shareholder in the company is another company, that other company.

(3) The contracts covered by this paragraph include a contract where the local government pension scheme manager concerned is already a participating scheme manager in the company (as well as one where the scheme manager concerned will become a participating scheme manager in the company as a result of entering into it).

(4) An appropriate authority may by regulations make provision about how a calculation as to the percentage of activities carried out by an asset pool company is to be made for the purposes of sub-paragraph (2)(a).

(5) For the purposes of sub-paragraph (2)(b), a person does not exercise a decisive influence on the activities of the asset pool company only by reason of—

(a) being a director, officer or manager of the company, acting in that capacity, or

(b) where the only shareholder in the company is another company, being a director, officer or manager of that other company.

(6) In this paragraph—

“asset pool company” has the meaning given by section 1(7)(a) of the Pension Schemes Act 2025;

“investment management activities” means activities involved in or connected with the management of funds or other assets for which a scheme manager is responsible (including making and managing investments on behalf of the scheme manager);

“local government pension scheme manager” means a person who is, by virtue of section 4(5) of the Public Service Pensions Act 2013, a scheme manager for a pension scheme for local government workers in England and Wales;

“participating scheme manager” , in relation to an asset pool company, means a local government pension scheme manager who participates in the company within the meaning of section 1(9)(b) of the Pension Schemes Act 2025.””—(Torsten Bell.)

This new clause amends the Procurement Act 2023 to create a new category of exempted contract covering certain investment management contracts between a local government scheme manager and the asset pool company. This is intended to replace Clause 4 in the current print of the Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 35

Funding of the Board of the Pension Protection Fund

“(1) The Pensions Act 2004 is amended in accordance with subsections (2) to (5).

(2) Omit section 116 (power of Secretary of State to pay grants to Board of Pension Protection Fund).

(3) Omit section 117 (power of Secretary of State to impose administration levy on pension schemes).

(4) In section 173 (Pension Protection Fund), in subsection (3), before paragraph (a) insert—

“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Pension Protection Fund,”

(5) In section 188 (fraud compensation fund), in subsection (3), before paragraph (a) insert—

“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Fraud Compensation Fund,”

(6) No amount is payable to the Secretary of State by virtue of section 117 of the Pensions Act 2004 (administration levy) in respect of the financial years beginning with 1 April 2023 and 1 April 2024.

(7) In the Pensions Act 2008, in Schedule 10 (interest on late payment of levies), omit paragraph 3 (which makes an amendment about interest for late payment of the administration levy that has not been brought into force).”—(Torsten Bell.)

This new clause (which is intended to be added after clause 112) enables administrative expenses of the Board of the Pension Protection Fund to be paid out of the Pension Protection Fund and the Fraud Compensation Fund, and removes the existing administration levy mechanism; it also clarifies that no administration levy is payable for 2023/24 or 2024/25.

Brought up, read the First and Second time, and added to the Bill.

New Clause 3

Terminal illness: means of demonstrating eligibility

“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.

(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.

(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.

(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”—(Manuela Perteghella.)

This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Pension Schemes Bill

Neil Duncan-Jordan Excerpts

Consideration of Lords amendments
Wednesday 15th April 2026 Commons Chamber

Colleagues have alluded to the size and scale of these pensions. That is mostly to be welcomed, but it should not stifle innovation and opportunities for people to invest in new projects and disruptors that could lead to positive change. There are three Government motions that we will vote against later, to make sure that there is an opportunity for those disruptors to come forward in a positive way and drive new ways of investing for our pensioners up and down the United Kingdom.

[Neil Duncan-Jordan (Poole) (Lab)]

I would like to focus my remarks on Lords amendments 1 and 27, which I believe limit the Government’s ability to direct pension schemes away from what I regard as high-risk assets with an uncertain future. Ministers will recall that I put forward a series of proposals as the Bill passed through this House, including on divestment from fossil fuels, which is what I will focus on this afternoon.

The local government pension scheme currently invests over £16 billion in fossil fuels, so we can see quite clearly that the voluntary approach to divestment has failed. Even now, ordinary working people’s wages—their hard-earned savings—are being channelled into accelerating a climate crisis that hits the global working class the hardest. Lords amendments 1 and 27 prevent the Government from setting down binding targets on certain investments, which makes it politically harder to bring down investments in fossil fuels. We know there is no retirement for any of us without a liveable environment. It sounds obvious, but that reality is not reflected in how pensions are currently managed, and the Government know this. Ministers in the other place acknowledge that investments in thermal coal—one of the most harmful fossil fuels—are high risk from both a climate and financial viewpoint. They are bad for the planet and bad for pension holders, who need stable, long-term investments.

This country removed thermal coal from the grid in 2024, because it has no future. Alarmingly, however, we know from written questions that neither the Government nor the Pensions Regulator have a clear picture of how much is still invested in this soon-to-be stranded asset. Even funds that are held up as leaders on climate, such as Border to Coast and the universities superannuation scheme, have hundreds of millions of pounds invested in thermal coal. That is why we need to get a grip on this issue. There are no existing requirements on schemes to report on any fossil fuel investment, and hardly any do so voluntarily. The first step is to provide full transparency on such investments, followed by decisive action to phase them out. Will the Minister commit to writing to the biggest 50 pension schemes to get more detail on their level of thermal coal exposure, and will he follow it up by setting a time-bound expectation for schemes to exit such assets, starting with thermal coal? That may seem like a distant issue, but if workers are left exposed to stranded assets in their pensions, they will not forget the politicians who chose to look the other way.

This Bill was a major opportunity to redirect billions of pounds in workers’ pensions away from arms manufacturers and fossil fuel giants, and into investments that benefit the very people who are paying in. That means green energy.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

The hon. Gentleman is making an eloquent and serious speech. Does he agree that, in addition to fossil fuels, local government pension schemes are exposed to industries and assets that our constituents rightly consider deeply unethical? They include tobacco companies, arms producers that are complicit in genocide, and other companies that are exploiting nature or our constituents for profit. Does he agree that there should be an ethical investment policy that covers all unethical investments?

[Neil Duncan-Jordan]

In fact, I raised something very similar when the Bill passed through this House.

The investments that we could make through our pension funds could go into green energy, which is the growth engine of the future, as well as into affordable and social housing, which is so needed in this country. That should be underpinned by greater democracy in our pension funds, so that workers have a say in where their money is invested. I believe that if that was the case, they would certainly choose to put it not into arms manufacturers or fossil fuels, but into decent homes for them and their communities.

The crisis in the middle east has exposed the fragility of our dependence on fossil fuels. A break in the supply chain thousands of miles away has a catastrophic cascading effect here, driving up costs and deepening the cost of living for our constituents.

[Mark Garnier (Wyre Forest) (Con)]

What about Rosebank and Jackdaw?

[Neil Duncan-Jordan]

Would the hon. Gentleman like to make an intervention?

[Mark Garnier]

indicated dissent.

[Neil Duncan-Jordan]

Okay.

We must accelerate the transition away from fossil fuels, even though some Members on the other side of the House seem to disagree with that. We must deliver long-term energy security and bring down bills through domestic green energy, but not only that. In this moment of deep crisis, the Government must pull every lever they can to lift the weight of the cost of living crisis, and that must include gearing our pension funds towards a fairer, more prosperous future.

[Katie Lam (Weald of Kent) (Con)]

As my hon. Friend the Member for Faversham and Mid Kent (Helen Whately)—my constituency neighbour—has repeatedly and effectively highlighted, the mandation power in this Bill is a shocking power grab. She is also right to say that, regardless of the apparent guardrails that the Government have now introduced, it is still totally indefensible. Those in the other place are absolutely right to return the Bill to us to reconsider, and it is in support of Lords amendment 15 that I will speak today.

The power to direct investments is not just flawed in its implementation; it is wrong in principle. When people put aside money for their retirement and entrust it to a company to manage, they very reasonably expect their savings to be invested by whatever company they have chosen, and in line with whatever instructions they have given about their preferences and risk tolerance. Shockingly, but perhaps not surprisingly, this Government do not agree. Instead, they think that Government Ministers should have the power to direct pension investments. They want to give themselves the right to direct private pension providers to make decisions that are not in the best interests of their clients.

If Ministers think that people’s money should be invested in British assets, even if doing so will leave them with less money in their retirement, this Bill will give them the right to force private companies to invest accordingly. You can work hard for a lifetime and save a little at the end of every month, but at the stroke of a pen, Ministers will be able to decide where that money goes, even if that means that you will end up with less. The Government are right to identify that British assets are not always the most attractive investments, but the solution is not to force people to invest in them anyway; it is to make the British economy a better place to operate and grow, to allow people to take risks and to allow businesses to do what they are good at, so that people choose of their own free will to invest here.

The money that people earn belongs to them, and it is theirs to do with as they wish. It is not simply a tool that this Government or any Government can use to achieve their ideological aims, and that should be true of every pound that people earn. It is a complete farce to suggest that, by limiting the extent to which Ministers can mandate how people’s money is invested, the Government have addressed concerns about this mandation power. These so-called guardrails will be cold comfort to people across the country who are worried about whether they will have enough money to retire comfortably, and who are worried that their efforts will be frustrated by Ministers pursuing ideological aims.

I hope that Members across the House will reject this power grab altogether. It cannot be right to punish those who work hard and save what they can.

--- Later in debate ---

Secondly, I am also more optimistic because we see significant disclosures now being made by pension schemes—partly because of Government regulation, but also because they are choosing to do so on their own behalf. I would say that the ability to invest in a wider range of private assets that will come with bigger pension schemes of the kind that the right hon. Member for Tonbridge has just mentioned, and which are important, will aid the investment in the kind of infrastructure that my hon. Friend the Member for Poole is talking about. I should spell out for transparency that the reserved power does not allow the focus on specific projects or sectors that he is encouraging. I know that he is aware of that, and I can feel his disappointment raining down on me, but that is the position of the Front Bench.

[Neil Duncan-Jordan]

In my speech I asked the Minister a very specific question: whether or not he would write to the top 50 pension schemes to ask them about the scale of their investment in thermal coal. I wonder if he might consider that.

[Torsten Bell]

I am not going to commit from the Dispatch Box to writing 50 letters, but I will happily have a conversation with my hon. Friend about it, as I always do.

Turning to my hon. Friend the Member for Harlow (Chris Vince), I was going to welcome his speech, but unfortunately he spent most of his remarks praising the hair of the hon. Member for Wyre Forest, showing both questionable judgment and—[Laughter.] Obviously I am joking; it is some of the finest hair in Parliament, as we all appreciate. When he got passed praising the hon. Member’s hair, he turned to the division between public and private sector pensions. It is an important one to dwell on. There have been big changes in public sector pensions under both the Conservatives and the Liberal Democrats. He rightly made the case that the priority should be making private pensions better. That is what we should be focused on, and that is what we need to see.

That is what the hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) did not quite touch on. She was focusing on levelling down pensions, whereas we want to be able to level up and make sure that the younger generations, who are the ones who are invested in our defined-contribution system, can be confident that it is delivering a comfortable retirement. I think we all agree on that.

That is why the Bill is increasing the returns that are available within the defined-contribution system. It is also why we have the Pensions Commission, which I think is part of the cross-party consensus that we should look at the adequacy that that leaves us with into the middle of this century and return to the question of how we secure that adequacy, particularly for low and middle earners.

My hon. Friend the Member for Harlow rightly mentioned the relevance to pensioners of the NHS, even if that is not of huge relevance to this Bill. If we are honest, the biggest betrayal of today’s pensioners, not tomorrow’s pensioners, is the state of our NHS, and that is what the Government are in the business of turning around. We debate in this House the tax rises that the Conservatives would not like to see, but it is those tax rises and the reforms that the Secretary of State is putting in place that are seeing waiting lists now consistently falling across the country.

I promised a discursion on the remarks of the right hon. Member for Tonbridge (Tom Tugendhat). I particularly liked his opening point that all MPs should care about pensions, not least because I think we all plan to draw our pensions—if we are not already doing so—for as long as we possibly can.