Public Service Pensions and Judicial Offices Bill [Lords]

Baroness Winterton of Doncaster Excerpts

Report stage
Tuesday 22nd February 2022 Commons Chamber

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 1—Guidance to public service pension scheme managers on investment decisions—

“(1) The Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) In schedule 3, paragraph 12(a), at end insert ‘including guidance or directions on investment decisions which it is not proper for the scheme manager to make in light of UK foreign and defence policy’.”

This new clause would enable the Secretary of State to issue guidance to those authorities that administer public sector pension schemes, including the local government pension scheme, that they may not make investment decisions that conflict with the UK’s foreign and defence policy.

New clause 2—Investment decisions in funded schemes—

“(1) Section 3 of the Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) After sub-paragraph (3) insert—

‘(3A) Scheme regulations must require an authority’s investment strategy to ensure that investment decisions are consistent with the Glasgow Climate Pact 2021.’”

This new clause would require public sector pensions schemes to ensure future investments are consistent with the climate science, ambitions and timeframes agreed at the COP26 UN Climate Summit.

New clause 3—Investment decisions in funded schemes: fossil fuel assets—

“(1) Section 3 of the Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) After sub-paragraph (3) insert—

‘(3A) Scheme regulations must require the fund to have removed all investment in fossil fuel assets by 2030.’”

This new clause would require public sector pensions schemes to disinvest from fossil fuels by 2030, by removing fossil fuel assets from their investment portfolios, securities transactions and balance sheets.

New clause 4—Review of the impact of this Act on fairness—

“(1) The Chancellor of the Exchequer must commission a review of the impact of this Act on fairness to members in receipt of pensions to which this Part applies.

(2) The Chancellor of the Exchequer must prepare and publish a report on this review within six months of the passage of this Act and must lay a copy of the report before Parliament.

(3) The review under subsection (1) must include an assessment of the impact of the provisions of this Act on women.

(4) The review under subsection (1) must make recommendations as to whether further legislation should be brought forward by the Government to close the public service pensions gap between men and women.”

This new clause would require the Government to report on the impact of this Part on fairness, especially with regards to women.

New clause 5—Guidance—

“(1) Within six months of the passage of this Act the Chancellor of the Exchequer must lay before Parliament a copy of guidance to members of pension schemes affected by this Part.

(2) The purpose of the guidance under subsection (1) is to ensure members are able to make informed choices about their pensions.

(3) The Government must provide a free helpline or online service which members can use to receive further guidance about their pension.

(4) Within six months of the day on which the guidance is published the Government must lay before Parliament a report on its effectiveness in achieving the purpose in subsection (2).”

This new clause would require the Government to publish guidance to members of pension schemes affected by this Part and allows for provision of a helpline or online service to offer further assistance.

New clause 6—Impact on the recruitment of new holders of judicial offices—

“(1) Within 12 months of the passage of this Act the Government must commission an evaluation of the impact of this Act on recruitment of new holders of judicial offices and on the diversity of the judiciary.

(2) The Chancellor of the Exchequer must prepare and publish a report on this evaluation and must lay a copy of the report before Parliament.”

This new clause would require the Government to publish an annual update on progress on recruiting new members to the judiciary and increasing diversity.

New clause 8—Compensation of losses incurred by closure of legacy schemes—

“(1) The Chancellor of the Exchequer must review how a loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—

(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, and

(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme

could be compensated.

(2) The Chancellor of the Exchequer must prepare and publish a report on this review within two months of the passage of this Act and must lay a copy of the report before Parliament.”

This new clause would require the Government to review how losses arising from the “pension trap” could be compensated, and to report on the review within two months of the passage of the Act.

New clause 9—Equality impact analysis of provisions of this Act—

“(1) The Chancellor of the Exchequer must review the equality impact of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passage of this Act.

(2) A review under this section must consider the impact of those provisions on—

(a) people with protected characteristics (within the meaning of the Equality Act 2010), and

(b) the Government’s compliance with the public sector equality duty under section 149 of the Equality Act 2010.

(3) A review under this section must include a separate analysis of each separate measure in the Act, and must also consider the cumulative impact of the Act as a whole.”

This new clause would require the Government to review the equality impact of the provisions of this Act, and to report on the review within six months of the passage of the Act.

New clause 10—Report on losses incurred by closure of legacy schemes—

“The Chancellor of the Exchequer must consult with the relevant trade unions and other bodies representing pension scheme members and report within 6 months of the passage of this Act on the options available for addressing in a non-discriminatory manner any loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—

(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, but

(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme.”

This new clause would require the Government to consult with the trade unions and other bodies representing members of the pension schemes who are affected by the “pensions trap” and to report on the options available to address this issue without causing discrimination.

Government amendments 1 to 17.

Amendment 24, in clause 92, page 67, line 39, leave out paragraph (c) and insert—

“(c) leave out paragraph (c).”

This amendment removes from the calculation of the employer cost cap the effect of changes in the cost of connected schemes, including the cost of rectifying the unlawful discrimination.

Amendment 22, page 67, line 39, leave out paragraphs (c) and (d).

This amendment removes from the Bill the amendment to Section 12 of the Public Service Pensions Act 2013 that would allow Treasury directions to determine whether the cost control mechanism would operate.

Amendment 23, page 70, line 27, leave out clause 93.

Government amendments 18 to 21.

[Mr Clarke]

It is a pleasure to open this debate. I wish briefly to remind Members why this is such an important piece of legislation that we must ensure we get right. Our public servants provide vital services on which we all rely and their unwavering commitment has been particularly vital during the covid pandemic. We have an obligation to continue to provide guaranteed pension benefits to reward those workers for their dedicated service, and must do so on a fairer basis and in a way that ensures that pensions are affordable and sustainable in future.

Let me turn to the amendments that I have tabled, which are largely technical ones to ensure the Bill works smoothly. New clause 7 makes it possible for the judicial pension scheme 2022 regulations to be subject to the made affirmative procedure rather than the draft affirmative procedure, which is the usual process for judicial scheme regulations. The Bill closes all current judicial pension schemes to future accrual on 31 March this year, so the change is necessary to ensure that the new pension scheme is in place for all judges on 1 April. There will therefore be no gap in judicial pension arrangements.

The provision in the new clause is an exceptional use of the made affirmative procedure in respect of judges’ pensions. It is limited to scheme regulations for the judiciary that are made within 28 days of Royal Assent, so it will be used only to make the judicial pension scheme 2022 regulations. It will not apply to any other public service pension schemes, which are generally made under the negative procedure, nor will it apply to any future amendments to judicial pension schemes.

The remainder of the amendments that I have tabled are minor and technical, with the aim of ensuring that the Bill is applied effectively and consistently. Amendment 19 relates to the commencement provision and simply ensures that different provisions in the Bill can come into force at the appropriate time.

Amendments 1 to 14 simply clarify the wording in various clauses in chapter 1. Together, the amendments give schemes the flexibility to implement the prospective and retrospective remedy in the way that is most efficient for their members.

Amendment 16 ensures that the remedy applies correctly to local government scheme members who were formerly members of other public service pension schemes. In particular, it makes sure that former members of other schemes are not disadvantaged because they previously participated in a scheme with a lower normal pension age.

Amendment 17 provides that the power under clause 81 for local government new scheme regulations to make provision regarding special cases must be exercised in accordance with Treasury directions issued by either Her Majesty’s Treasury or the Department of Finance in Northern Ireland.

On judicial offices, amendment 18 changes the extent of schedule 3 to ensure that if Welsh Ministers or the Department of Justice in Northern Ireland make subsequent changes to the list of devolved offices in schedule 3 using the power conferred on them by clause 125(1), incorrect text will not remain in statute in other parts of the United Kingdom.

Amendments 20 and 21 change a reference to the Special Educational Needs Tribunal for Wales to its new title, the Education Tribunal for Wales, thereby ensuring that a relevant sitting in retirement office is created in the Education Tribunal for Wales.

--- Later in debate ---

[Robert Jenrick]

As a matter of law, what the hon. Member is saying is not correct. Pensions within the public sector, as elsewhere, are regulated. They were regulated by the Public Service Pensions Act 2013, and they will be regulated by this Bill. He has been speaking for more than 15 minutes, and it is not clear to me whether the SNP is in favour or against BDS. It is important that he makes clear his position.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I am keen that we do not just have a whole debate about BDS. I want the amendments to be addressed, and there are a few other speakers trying to get in.

[Peter Grant]

I made the point much earlier that the amendment is not about BDS; BDS is not mentioned anywhere in it. Going back to the question of whose money it is, we can go round in constitutional or legalistic circles, but morally that money belongs to the people who rely on it for their pensions. If members of the pension scheme want to make strong representations to their trustees, saying, “I do not want to profit in my pension from investments that benefit countries that act in breach of international law”, why is it such a bad thing for pension scheme members to be allowed to make those representations to the trustees? Why is it such a bad thing for the trustees to be allowed to say, “At the request of our members, we will take a decision that might not deliver quite such a high yield for the pensioners, but the pensioners are happy to accept that, because they will be comfortable in their consciences about where the money is going and where the profits are coming from”?

We cannot support new clause 1, and we are minded to divide the House on it later. My final point is that every pension fund trustee has a duty entirely to look after the interests of their pensioners and future pensioners. I do not want to see anything being done that gets in the way of that. We will support the Bill on Third Reading, but I hope it will come to Third Reading without new clause 1 included. The fundamental point is that the £17 billion mistake was made by the Government. If we eventually pass the Bill into law to be an Act of Parliament that makes pensioners or their employing authorities pick up part of that tab, it has not done enough. I fear that by tonight we will still have a Bill that has not done enough and that the Government will not be made to take full responsibility for a mistake entirely of their making.