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.