Pensions Dashboards (Prohibition of Indemnification) Bill

Nick Smith Excerpts

Committee stage
Wednesday 26th October 2022 Public Bill Committees

[The Chair]

I call Nick Smith.

[Nick Smith (Blaenau Gwent) (Lab)]

Mr Sharma, I am not the Labour Front Bencher on this Bill.

[The Chair]

I know, but do you want to contribute at this point?

[Nick Smith]

I will ask some questions later of the Conservative Minister, if that is okay.

[The Chair]

Yes. I call Maggie Throup.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I hope Committee members will forgive me if I keep my remarks relatively short; as they will be able to hear, I am losing my voice. This is my first speech as Minister for Pensions and Growth, and it may be my last. If I survive the day in post, I will have two further speeches to give, and I would like to have the voice to give them.

Luckily, my hon. Friend the Member for Cheadle has said just about everything that there is to say about this excellent and uncontentious Bill, which strengthens the great work that my venerable predecessor, the hon. Member for Hexham, did in his five years in office. It is fair to say that under him and his predecessors, a veritable quiet revolution in pensions has been taking place, to the benefit of tens of millions of people.

The revolution began with auto-enrolment, which, I am pleased to say, celebrates its 10th birthday today. It is difficult to overstate the success of auto-enrolment: it is one of the greatest examples of nudge theory ever seen in public policy. New figures released today show that, in the 10 years that auto-enrolment has been in place, the number of employees participating in workplace pensions has increased from 10.7 million to 20 million, which is an increase of 86%—a truly remarkable achievement. Last year alone, British people saved nearly £115 billion into workplace pensions and pension pots—a 40% increase on where we were before auto-enrolment.

The pensions dashboard is the next step in that revolution. If the first job was to help people to save, the second is to help them to understand what they are saving. We believe that that will create a further nudge of its own, as people understand what they have accumulated in their pots throughout their working life, and what they can expect to have in their retirement. This Government are helping more people to save more so that they can do more in their retirement years. I am very proud to support the latest chapter in that work today.

[Nick Smith]

I congratulate the hon. Member for Cheadle on introducing this important Bill, and I join the Minister in recognising the fantastic success of auto-enrolment, which has changed saving across our country. But I hope the Minister can help me on two points.

First, the hon. Member for Hexham has—for sure—done all the heavy lifting on introducing the pensions dashboard, but when does the Minister anticipate its proper introduction to the marketplace to support pensioners across the country? It is a great idea, but it has been in development for a long time. Secondly, I note that there is no impact assessment or consultation on the introduction of the Bill. I am sure that there are fair reasons for that, but have the FCA and the other regulators involved had any input on the development of the Bill?

[Alex Burghart]

I thank the hon. Gentleman for his intervention. We expect that, during the course of next year, all the requisite data will be pulled together from pension funds and assembled on the dashboard, and that the public will have access to it for the first time in the middle of 2024. As he says, it is major work, and it is important that we get it right. Through the passage of legislation such as this Bill, we will be able to ensure that our pensions system and dashboard are fit for the future. This is a major change, involving a great deal of work by a huge number of outfits, and it will make a major difference to the way people see and participate in the world of pensions.

The hon. Member for Blaenau Gwent had a further question about the FCA. Based on information gathered by sample providers, the regulatory impact assessment considers the costs of all relevant pension schemes and providers in scope of dashboards, connecting to the dashboard digital architecture and supplying pensions information. Although FCA-regulated personal and stakeholder schemes fall outside the scope of Department for Work and Pensions regulation, the Pension Schemes Act 2021 requires the FCA to make corresponding rules covering the requirements of these schemes in relation to pensions dashboards. Therefore, the impact assessment takes into account the costs for both these providers and the occupation scheme trustees.

I turn to the detail of the Bill. Clause 1, as my hon. Friend the Member for Cheadle said, will prohibit trustees and managers of occupational personal pension schemes from being reimbursed out of scheme assets in respect of penalties imposed on them for non-compliance with the pension dashboard regulations. That is obviously an important safeguard for pensions savers. It is achieved by amending section 256 of the Pensions Act 2004, under which if a trustee or manager were to be reimbursed or knew or had reasonable grounds to believe they had been so reimbursed, they would be guilty of a criminal offence, unless they had taken all reasonable steps to ensure they were not so reimbursed. We are talking about a serious crime. The provisions will allow for a maximum sentence of up to two years in prison or a fine or both.

Additionally, were any amount to be paid out of a pension scheme’s assets in such a way, the pensions regulator would have the power to issue civil penalties to any trustee or manager who failed to take all reasonable steps to secure compliance. Section 256 of the 2004 Act already prohibits reimbursement of penalties issued under a number of other pieces of pensions legislation, so the proposed amendment to the 2004 Act is a logical change that the Government welcome.

Clause 1 also makes corresponding changes to article 233 of the Pensions (Northern Ireland) Order 2005. As hon. Members know, all aspects of pensions policy are transferred to the Northern Ireland Assembly; however, there is a convention that the pensions legislation made in Northern Ireland stays in lockstep with that of England, Wales and Scotland, to ensure parity across the whole United Kingdom. The usual procedure in the instance of Parliament making provision of a transferred policy area would be to obtain a legislative consent motion from the Northern Ireland Assembly.

However, as hon. Members will be aware, the Assembly has thus far failed to elect a Speaker, so it is not in a position to grant this consent. I am pleased to say that Deirdre Hargey MLA, Minister for Communities in Northern Ireland, has written to the Department for Work and Pensions and confirmed that she would, in principle, be content to seek agreement for the provisions in the Bill to extend to Northern Ireland. That was, however, conditional on the agreement of a functioning Executive, but there will be further opportunity for this issue to be considered by the Assembly if the current impasse in Northern Ireland is resolved before the Bill has completed its journey through Parliament.

Clause 2, as my hon. Friend the Member for Cheadle stated earlier, sets out the standard information needed for all Bills and includes detail of how provisions will come into force and their territorial extent. The Government are committed to protecting pensions savers and agree that the safeguards in the Bill provide a welcome deterrent against rogue trustees or managers exploiting pension assets for which they are responsible. We commend the Bill to the Committee.