Future of Pensions Policy

Debate between Seema Malhotra and Guy Opperman

Tuesday 8th December 2020 Westminster Hall

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Hosie. I welcome this debate in which I speak on behalf of my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). I congratulate the hon. Member for Delyn (Rob Roberts) on securing the debate and on his broad-ranging opening remarks on the need to support pensioners and on the uptake of pension credit, the scourge of pensioner poverty, the sufficiency of pension savings and many other issues.

I thank other Members for their contributions. My hon. Friend the Member for Luton North (Sarah Owen) spoke powerfully about the plight of the WASPI women. I also thank the hon. Member for Southport (Damien Moore), my hon. Friend the Member for York Central (Rachael Maskell), and the hon. Member for North East Fife (Wendy Chamberlain).

Hon. Members are right to say that pensions are all too often seen as a distant, complex topic. It is vital to make them easy and accessible to understand, particularly to engage younger people in savings choices early in their life. A pound saved at 18 is worth much more in retirement than a pound saved at the age of 30 or 40, or later. I welcome the many contributions on the importance of lifelong financial learning and literacy.

Ensuring that everyone, no matter their background, occupation or gender, has dignity and security in old age should be the fundamental objective of pensions policy. However, the complex and long-term nature of pensions policy decisions, and the long-term careful planning of public finances, mean that those ambitions are best realised through political co-operation and consensus. That is why, in government, Labour introduced the Pensions Commission in 2002, to provide a comprehensive analysis of the UK pensions system, assess how it was developing over time, and make recommendations on the long-term funding of pensions. Indeed, the commission charted a new direction in UK pensions policy and gained widespread consensus on reforms that might previously have been regarded as unthinkable.

I am proud that, for instance, it was the last Labour Government who created auto-enrolment, which has transformed the lives of millions, with 10 million more people now saving into a workplace pension. I give credit to the Government who took office in 2010 for their work to drive forward auto-enrolment. However, I think that we are all concerned that an estimated 12 million people may still be under-saving for retirement. We welcome the review of the policy that was commissioned in 2017 and its recommendations that the age threshold for auto-enrolment should be lowered from 22 to 18 and that the lower limit of the qualifying earnings band should be removed so that contributions are payable from the first pound earned by an employee. The Minister told us in Committee that the review will be implemented in the mid-2020s; but could we have confirmation that the intended legislation will enact those two proposals? If possible, can we have further detail on the timeframe?

[Guy Opperman]

I welcome the cross-party tone of the hon. Lady’s speech, and I hope it continues. Automatic enrolment is of course a classic example of a policy instituted by Labour, brought forward under the coalition and finally taken forward under the Conservative Government. We would definitely seek to take the action in question in the current Parliament, because we have said it would be brought forward by the mid-2020s; but many of the other policies that the hon. Lady is talking about, such as the state pension age increase brought in by the Labour Government in the Pensions Act 2007, are cross-party decisions, which I hope she continues to support.

[Seema Malhotra]

The Minister knows, indeed, the importance that we also give to cross-party consensus on such important strategic directions in pensions policy, and that we have worked closely with him on many measures in the Pension Schemes Bill. There could not be a more important time for us to work together to protect people’s financial security in retirement, because even though the Government have refused to publish their dossier on the economic impact of coronavirus, we know that the economic fallout is vast. Indeed, according to the OECD the pandemic has compounded the challenges for retirement savings, including pressures such as ageing populations, slow growth and low returns, which will continue long into the future.

Furthermore, the fall of major employers puts the pensions of entire workforces at risk. An example is the uncertain status of the 10,000 members of the Arcadia defined benefit pension scheme, where there is an eye-watering deficit of about £350 million. The Government must act to ensure that those workers get the pensions that they are owed. It is Labour’s firm view that Sir Philip Green and Lady Green owe a moral responsibility to the employees to fill the pensions shortfall. They must not allow their workers to go into Christmas not only having to deal with the consequences of losing their jobs, but fearing for their pensions.

The pandemic also brings an increased risk from pension scammers preying on people who are worried about the impact of the current economic uncertainty on their savings. That is why Labour fully supported the amendments tabled by my right hon. Friend the Member for East Ham (Stephen Timms) to the Pension Schemes Bill, to protect people better from risky transfers and improve the provision of advice, to stop people falling prey to scammers. We regret that the Government did not support my right hon. Friend’s amendments, but welcomed assurances from the Minister that regulations will be brought in to ensure that trustees should not have to proceed with a transfer where there are good grounds for believing that a proposed transfer involves moving pension savings into a scam.

On auto-enrolling people into pension guidance appointments, Pension Wise is an excellent service with high satisfaction ratings, but only one in 33 of those eligible to use it do so. Surely, it is more important than ever that people make use of impartial guidance appointments and we would welcome concrete proposals by the Government to improve take-up of these appointments.

On pension charges, at a time when millions are struggling, it is vital that pension costs and charges are reasonable and transparent, and that people receive value for money. Research by PensionBee found that 70% of non-advised draw-down customers pay more than 0.75% a year in charges costing them £40 million to £50 million extra a year and more than £175 million since the pension freedoms were introduced. The long-term impact of high costs and charges for income draw-down could be significant. It is argued that putting costs and charges on the simpler annual statement would confuse people. Instead of being provided with specific information about how much they are paying, they would be signposted to what could be pages and pages of information about charges. We note that the Minister has said that costs and charges information will only be displayed on the pensions dashboard in the longer term, but we would welcome any discussions about a guarantee for value for money as well.

I return to climate change, which is a very important area for future pension policy. The investment decisions taken by pensions involve trillions of pounds—the kind of money that can catalyse significant change when used responsibly, from investing in infrastructure to green technologies. Labour’s amendment to the Pension Schemes Bill sought to ask pension funds to demonstrate how they are helping us get to net zero emissions. It is hard to see how the Government can achieve their own climate goals while excluding trillions of pounds of British capital from those efforts. By voting against our amendment, we believe the Government missed a chance to mobilise pension funds to protect the planet and support the drive to net zero. This is despite the fact that there is clear public support for such a move. The Government must use all the tools at their disposal to channel pension funds into investments that benefit people and the planet.

Finally, I highlight the particular challenges faced by specific groups where injustices need further action. On the former ASW steelworkers, the Minister is aware of their desperate plight. Many worked for decades, paying 100% of their pensions, only to find years later that they only received half of what they were entitled to. They have been fighting for their full pensions for 20 years. Will the Minister confirm when he plans to meet the ASW steelworkers, as he has committed to, and will he work to find a cross-party solution?

I once again raise the plight of the WASPI women, about whom my hon. Friend the Member for Luton North (Sarah Owen) spoke so powerfully. Labour also found recently that 15,000 1950s women are claiming universal credit—the pandemic will have made this worse. It is unacceptable that 1950s women have been forgotten by the Conservative Government, both within the crisis and before.

Finally, on the issue of pension underpayment for married women, it feels as if almost every week a new story comes to light of the DWP’s mistakes in paying women their full pension entitlements. It is particularly concerning that many of those affected contacted the Department and were wrongly told that their pensions were correct. This is simply not good enough.

Every single one of the issues I have addressed relies on an effective departmental delivery of pension entitlements, yet this issue raises profound questions about the ability of the DWP to do just that. Labour called for an inquiry into the mismanagement of pensions payments earlier this year. It is time for the Government to take urgent action on this growing scandal, to make sure that every woman affected is paid the pension to which she is entitled and to redress the root causes of the mistakes made.

In conclusion, putting future pension policy on a long-term footing necessitates careful planning and a consensus-driven approach. Labour stands ready to support the Government where they bring forward proposals to protect people’s pensions and savings. However, we urge the Government to take action to address the clear cases of pension injustices that I have highlighted, as well as those likely to emerge through the pandemic. We also call on the Government to take a greater role in ensuring that funds are invested in a socially and environmentally beneficial way.

Pension Schemes Bill [ Lords ] (Third sitting)

Debate between Seema Malhotra and Guy Opperman

Committee stage & Committee Debate: 3rd sitting: House of Commons
Thursday 5th November 2020 Public Bill Committees

[Guy Opperman]

With respect, I do not agree. The proposals in amendment 18 are not in accord with the proposals in the consultation by the regulator. As I have outlined, there are significant problems with such an amendment, and it is not something that this Government, or any Minister in my position, could support.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank the Minister for his opening remarks. He has had considerable dialogue with the hon. Member for Birmingham, Erdington (Jack Dromey), who I know is sorry that he cannot be here today. I will speak to Government amendment 9 and also Labour’s amendment 18 on his behalf. I also thank the hon. Member for Airdrie and Shotts for his interventions.

We regret that the Government seek to remove the amendment made to clause 123 in the Lords. As the Minister is aware, there are grave concerns about the impact of the provisions in the Bill on open DB schemes, which includes many public sector schemes. Labour has been clear all along that we do not accept the premise that good DB schemes are not worth protecting.

[Guy Opperman]

Neither do the Government; we are as one on that.

[Seema Malhotra]

I thank the Minister for his intervention, and I am happy to see that that commitment continues to be made. Nevertheless, it is not least because DB schemes currently have 10.5 million members, with £1.5 trillion under management. The Minister will have noted that the Pensions Regulator recently made clear its desire to

“develop an approach that works well for open schemes”,

stating that it wishes to

“secure a reasonable balance between protection of member benefits, fairness between schemes, and flexibility for schemes to fund and invest as they wish—especially where they have a strong covenant and a long-time horizon.”

The new subsection (2)—as amended with this objective in mind—requires the Pensions Regulator to take a different approach to regulating the funding of open DB schemes, compared with those that are closed. It sets out several factors for the Secretary of State to take into account in regulations regarding scheme funding, which include distinguishing between open and closed schemes, balancing scheme liquidity and scheme maturity, and ensuring that affordability of contributions for employers and members is maintained.

Notwithstanding the Minister’s comments, I want to continue with our argument. A number of peers with considerable authority in the pensions world spoke in favour of the amendment. The Minister said he had spoken with some of them in recent days, including Baroness Altmann, who supported the amendment in the Lords. Baroness Altmann noted that the Pensions Regulator’s funding code seems

“to want to drive DB schemes on a path to so-called de-risking, aiming for a particular date of maturity. This concept is simply inappropriate for an open scheme.”—[Official Report, House of Lords, 30 June 2020; Vol. 804, c. 681.]

However, given that the Government do not wish to retain these provisions, Labour’s amendment 18, in the spirit of constructive engagement that we have maintained throughout this Bill, offers a compromise—as was noted by the hon. Member for Airdrie and Shotts—which aims to address the need for flexibility in the treatment of open schemes with the Government’s aim, which we share, to ensure that schemes plan appropriately for the long-term.

The Minister said that this was not an appropriate compromise, but allow me to lay out our arguments for proposing it. In drafting amendment 18, we sought to address some of the concerns that were raised about clause 123, as amended in the Lords. The present amendment has two core objectives. The first is to support the ability of trustees to decide the funding and investment strategy for schemes, taking into account current and future maturity and liquidity, consistent with the trustees’ duty to invest assets in the best interests of members and beneficiaries. That is intended to protect schemes from any inappropriately risky or risk-averse requirements that would significantly adversely affect the affordability of schemes for employers and members. The second is to recognise that schemes are usefully and beneficially open to new entrants and should be allowed to remain so. The amendment is aimed at avoiding requirements in funding investment strategies that are likely to accelerate the closure of relevant schemes.

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[Seema Malhotra]

I beg to move amendment 17, in clause 124, page 118, line 23, leave out “an occupational pension scheme” and insert—

“(a) an occupational pension scheme, or

(b) a contract-based workplace scheme”.

This amendment would add contract-based workplace schemes to obligations under this clause, as well as occupational pension schemes.

I will keep my remarks on the amendment brief. In a sense, it builds on the positive work in the Lords on climate change by extending the provisions in the clause to contract-based workplace schemes as well as occupational pension schemes. I hope the Minister will agree that it is a common-sense extension of the welcome measures already contained in the Bill, and that it would ensure effective governance of all relevant schemes with respect to the effects of climate change.

[Guy Opperman]

The clause introduces a variety of measures in respect of climate change risk. We believe the clause and the regulations that it allows the Government to make are a huge step forward in the UK’s fight against climate change and mark the first provisions of their kind globally.

We are proud that this Government are the first among the G7 to introduce a target for net zero by 2050. We are among the leaders in environmental, social and corporate governance with the pioneering way that we are transforming the pensions and asset managing processes of the City of London, and the pensions provision, on an ongoing basis. We have the green finance strategy that the Government have introduced. I respectfully suggest that the build-up to COP26, which is one year from today, gives us an opportunity to show the great work that we are doing in this country and to demonstrate how we can show leadership around the world.

I believe we all know and accept that climate change is a pressing and imminent threat not only to our planet, but to our investments and, therefore, to our pensions. Back in August, my right hon. Friend the Secretary of State for Work and Pensions launched the Government’s consultation on the measures they propose to introduce, which include powers to ensure that pensions are properly protected against the risk posed by climate change and can take full advantage of the investment opportunity it presents. I believe that there is an opportunity for this country to lead the way—an opportunity to be the first in the market as we create climate change-friendly investments and an investment strategy that genuinely transforms this country, helps us to get to net zero and provides sustainable long-term pensions.

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[Seema Malhotra]

It is a matter of cross-party pride that we are seeing the commitment to climate change risk come into pensions legislation, and that we are leading the way on this issue. Over the past few years, we have introduced flexibility for trustees to look at non-financial measures in relation to investment decisions, which is an important part of the journey. In the spirit of these legislative provisions, does the Minister agree that, to realise the potential of the Bill and the opportunity for trustees, it is important to continue dialogue and to seek international agreement? Some countries are making progress in the right direction, but others are not—for example, the legislation passed in Australia looks like it is going in the opposite direction.

[Guy Opperman]

The hon. Lady makes a number of good points, all of which I endorse. It was noted in the record of the conversation between the Prime Minister and his Australian counterpart only last week that our Prime Minister tried to make the case to Mr Morrison that Australia should be doing more on climate change. The flipside of that is that, clearly, we should be using our advocacy. It is to his great credit that the right hon. Member for Doncaster North (Edward Miliband), when he was the Secretary of State for Energy and Climate Change in the Labour Government, introduced the Climate Change Act 2008. That work has continued since under the coalition Government and the Conservative Governments. The direction of travel could not be clearer in this county, and I believe our legislation has made clear what we are trying to do.

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[Guy Opperman]

I entirely endorse everything you say, Mr Stringer, and I apologise. I was answering too fully what I would suggest is probably a legitimate question from the hon. Member for Feltham and Heston about a clause entitled “climate change”.

However, to return to amendment 17, I respectfully suggest that that is not necessary. There are two fundamental reasons why. First, action has already begun on that specific issue; I have provided the hon. Lady with the exchange of correspondence between myself and Chris Woolard, the interim chief executive of the Financial Conduct Authority, dated 30 September and 22 September 2020, which specifically addresses the point. The FCA is the appropriate regulator to make proposals for its regulated sectors. The FCA, as Chris Woolard makes clear, will be making proposals on climate change with respect to personal pension schemes, otherwise known as contract-based schemes. The letter has been in the House of Commons Library since Second Reading.

I can assure the Committee that the FCA plans to consult on corresponding climate-related financial disclosures for personal pension schemes in the early months of next year and to finalise the rules by the end of 2021. That will mean that by 2022, subject to consultation and cost-benefit analysis, pension schemes, no matter whether they are occupational or personal, will be subject to TCFD reporting requirements. The whole point of the exchange of correspondence is that the FCA has effectively accelerated the process it has been going through to catch up with what the DWP and regulators are doing in this space. Given that announcement, I urge hon. Members to withdraw amendment 17.

[Seema Malhotra]

I take on board the points the Minister has made. This is an area that may requires further dialogue, and we will reflect on what the Minister has said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 124 ordered to stand part of the Bill.

Clause 125

Exercise of right to cash equivalent

Pension Schemes Bill [ Lords ] (First sitting)

Debate between Seema Malhotra and Guy Opperman

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Guy Opperman]

We will debate DB schemes, which I think have a great future. We have gone to great efforts to support the future of DB schemes. This is an alternative way forward that some organisations—Royal Mail is the classic example, but there are others who are looking at this—will welcome. Under no circumstances should it be implied or in any way taken that the Government will do anything other than support DB schemes on an ongoing basis.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship today, Mr Stringer. May I thank the Minister for the collegiate way in which he has undertaken debate during the progress of the Bill and, indeed, prior to that, on the issues and decisions we are making?

I thank my hon. Friend the Member for Wallasey for her comments on the importance of a continuing cross-party dialogue on the issue of pensions. I was involved in some of the Labour’s Government’s work on addressing pensions inequality for women and the Turner commission. I also pay tribute to the hon. Member for Airdrie and Shotts for his contribution to the collegiate way in which we have all been working together and for raising important issues for debate.

I speak on behalf of the Opposition, along with my hon. Friend the Member for Westminster North. We also speak on behalf of my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is unable to be with us this week. Before I begin, I want to thank the Committee Clerks, who are ever helpful, professional and a true credit to the House.

As the Minister well knows, we have always been clear that we support the Bill, but, as hon. Members can see, we have identified some ways in which we believe it could be made better. We will discuss those areas in detail as we progress.

I turn to the general provisions in parts 1 and 2 of the Bill, on collective money purchase schemes, which is the legislative term for collective defined contribution or CDC schemes. The provisions mark a welcome innovation. I join colleagues in congratulating the CWU and the Royal Mail on their groundbreaking agreement to pursue the creation of a CDC scheme. They have forged an exciting pathway to a better pension for around 141,500 Royal Mail employees. Members will be aware that my hon. Friend the Member for Birmingham, Erdington was closely involved in that process.

CDC schemes offer many potential benefits, as the Select Committee on Work and Pensions concluded in a 2018 report:

“Through the pooling of risk between scheme members, CDC may well…provide more generous pensions on average than standard DC saving…To offer more good choices is entirely consistent with both pension freedoms and promoting retirement saving.”

There could hardly be a more important time to focus on reducing risks to people’s pension savings. As we have seen, the coronavirus crisis poses a serious and significant risk to pension funds. Sadly, many members of defined-contribution schemes have suffered pension reductions of around 8% to 10%, due to the financial market reaction to the pandemic. In many cases, that has led to individuals deferring their retirement.

In that context, it is massively encouraging that the modelling conducted by Willis Towers Watson shows that the Royal Mail CDC scheme would have provided better outcomes for savers through this crisis than traditional DC schemes. According to the modelling, even with the severe level of market shock experienced earlier this year, there would have been no effect on current pension levels for CDC schemes. Future pension increases would have been affected, but only by 0.25% a year. That is in stark contrast to the losses that I have outlined for DC pension savers and is to be welcomed in the light of the turbulent economic circumstances we face for the foreseeable future. It is welcome, too, that supporters of CDC schemes make a wide and varied coalition, including the CBI and the TUC.

In summary, Labour supports part 1 of the Bill and the move to create CDC schemes provided, of course, that they are not used as a means of downgrading good DB schemes, a point that has already been made.

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[Guy Opperman]

With respect, Mr Stringer, I propose to address all these matters together. Clauses 52 to 102 replicate the measures outlined in clauses 1 to 51 and apply them to Northern Ireland, which has a different system. This required us to replicate the measures in their entirety. In discussing clauses 1 to 51, I outlined why CDCs are the appropriate measure, and I ask the Committee to imagine that I made the same speech, at great length, in respect of clauses 52 to 102.

[Seema Malhotra]

I will not make any further comments. I agree with the Minister.

Question put and agreed to.

Clause 52 accordingly ordered to stand part of the Bill.

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[Guy Opperman]

I am grateful to you, Mr Stringer, and to colleagues for the progress we have made in respect of collective defined contributions. We now turn to part three of the Bill, on regulatory powers. The powers are, in broad terms, agreed, as I understand it, subject to debate on clause 107. It is entirely right that we have set those out in defined benefit and regulator consultations over many years and in the preparations for White Papers and Green Papers, and that enhanced powers will be given to the regulator on an ongoing basis. I recommend the regulations to the Committee.

[Seema Malhotra]

We will not be making any further comments. We support the Minister on these clauses.

Pension Schemes Bill [ Lords ] (Second sitting)

Debate between Seema Malhotra and Guy Opperman

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I am grateful to be able to make some comments about clause 107. This morning’s debate gave us the opportunity to put on the record some of our thoughts and to acknowledge our support for part 3 of the Bill. There has been some debate, and I seek some further assurances from the Minister.

On the role of the Pensions Regulator, we support strengthening the existing sanctions regime with the introduction of new criminal offences and higher penalties for wrongdoing. The pensions landscape has been troubled in recent years by scandals, including the BHS and Carillion scandals, which have had catastrophic consequences for the scheme members involved. My right hon. Friend the Member for East Ham and my hon. Friend the Member for Wallasey also made that point. The Minister made the important remark that callous crooks who put at risk other people’s pensions cannot be allowed to get away with it.

It is right that those who intentionally or knowingly mishandle pension schemes or endanger workers’ pensions face severe penalties, which is why we wholeheartedly support the relevant provisions in the Bill. The only note of concern is the scope of the provisions, and I refer to the very helpful and instructive debates in the other place on that issue. We are firm in the view that the offence must apply to unscrupulous employers or directors of companies, but there is fear that it is so wide in scope that pretty much anyone involved in the management of a pension scheme could be exposed to sanctions, including third parties such as advisers, banks and even trade unions. Colleagues from the SNP have made some of those points effectively.

Government representatives have assured us that the courts will have the necessary discretion to ensure that only those who have genuinely been involved in wrongdoing will be caught by the new offences, but I note that pensions lawyers have realised similar concerns to those that we are raising today. It would be helpful to have further confirmation, following the Minister’s comments this morning, of whether there are further plans to review whether the offences work as intended or whether there are any other unforeseen consequences.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

Welcome to the Committee, Mr Robertson. We hope that we will be well behaved under your chairmanship.

I take the hon. Lady’s points on board, and I will repeat, as if I said them all, the comments that I made in respect of amendment 20. I stress that subsection (2)(c) sets out a complete defence to any particular assertion of wrongdoing, namely the

“reasonable excuse for doing the act or engaging in the course of conduct”.

The hon. Lady talks about the future. The regulator, who has rightly been much talked about today, is very mindful of the debates in Parliament and of what is said in this place and the other place. I have discussed the ongoing regulation, and the fact that we are going to have to introduce further regulation on these particular clauses and set out the guidance in more detail. I hope that will reassure her that the comments have been taken onboard and that we are not using a sledgehammer to crack a nut.

We all accept that there are grave and serious incidents, such as those that happened with BHS, Carillion and others, but we also want to ensure that the pensions system functions in a fair way. The hon. Lady will also be aware that, as always, all powers are kept under review. It is certainly my hope that we will introduce another pensions Bill before too long. As with any matter, were there to be any disagreement about the implementation, we can always revisit that.

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[Guy Opperman]

The costs are substantial. There are a variety of ways in which this is being paid for, but first and foremost, it will not be paid for by the individual. Our constituents will be able to access the dashboard, and the facility that we are creating, for free. My hon. Friend will have to forgive me for giving a generalised answer, because I cannot give the pounds, shillings and pence now, but I will be happy to do so in writing before Report.

The cost is fundamentally met in respect of the work on state pension; there was a budget announcement many years ago for the expensive work that is required by Her Majesty’s Revenue and Customs to provide the state pension provision as part of the dashboard, as it is our intention that state pensions will be part of this from day one. I believe that £5 million was set aside to pay for that part.

There is ongoing payment for the Money and Pensions Service, which is through a variety of means. Some is from Treasury funding, but it is paid for primarily through the pension levy, which pays for a variety of things in the usual way, from the regulator to the Pension Protection Fund and the Money and Pensions Service. Ultimately, the cost is borne by individual schemes and members, but not by the individual constituent accessing the dashboard—it is not expected in any way that there should be a cost for doing that.

It is clearly our intention and desire that a commercial dashboard should be available. That leads me to a point that I will come back to in more detail: do we go to where the customer is, or do we make the customer come to us? In this particular example, we strongly believe that we should go to where the customer is.

It is entirely right that we design a system with a data portal that could in no way be utilised for bad purposes, but that could be accessed by an individual, whether they are presently with Aviva, PensionBee or another organisation. They can then work with a particular independent financial advisor—whether my hon. Friend the Member for Delyn in a former life or other independent financial advisors—who would have to be specifically approved to do this work. They already have a relationship with those people and they are already in the position of having an understanding. If we do not have that commercial capability, we will lose out on a significant chunk of the market and there will be a significant deficit in the ability of what we all believe is a great idea to have a practical effect. That is the fundamental point in respect of costs. I am happy to give my hon. Friend the Member for West Worcestershire a detailed breakdown before Report and Third Reading.

I may return to Government amendment 7 but I shall first try to address amendments 1, 2 and 15 on the state pension. I am certain that I will be invited to comment on a variety of matters relating to the women’s state pension increase, but my only comment at the outset is that it is not the Government’s intention to amend the Pensions Acts of 1995, 2007, 2008 or 2011. We intend that the state pension will be part of the original provision of the dashboard. We are working with HMRC, which is responsible for that information, so that we can identify the date of state pension age and the amount that people might be expected to receive at the present stage. We do not intend to take into account what their entitlement would have been with or without the amendments to the 2011Act, as proposed in amendment 1, or what it would have been with or without the benefit of the triple lock, as proposed in amendment 2, or in respect of the 1995 Act, as proposed in amendment 15. I am sure that I will be tempted to cast a view on the future of the triple lock, but I am delighted to say that that is a matter for the Chancellor. As we discussed in the Social Security (Up-rating of Benefits) Bill, the decision has been made in respect of the upcoming year of 2021-22, and that is the extent of the matter at present.

Amendment 14 concerns the extent to which the dashboard should add information on environmental, social and corporate governance matters. I am delighted to have been the Minister who brought ESG into part of this country’s pensions system and drove forward change in the pension and asset management systems, with due credit to Chris Woolard and the Financial Conduct Authority for changing their original views and coming on board with our timetable. I am utterly in support of the principle of ESG and of ensuring that individuals have as much information, on a long-term basis, about what their pension fund is being invested in. However, I shall resist the amendment for several reasons.

First, we intend that the dashboard should start with simple information. We want to ensure that the information available in the dashboard service is easily understood by consumers and that the impact on user behaviour is considered. Trustees must have a policy on ESG and must disclose it in any event, but we do not think that the provision of that information should be prescribed in the Bill, and nor do I want to prejudice the pensions dashboard programme consultation, which began earlier this year, about what information could be shown. The consultation specifically includes signposting users to schemes’ statements of investment principles and implementation documentation, including information on schemes’ ESG policies and work. The programme will publish an initial version of a proposal for data standards by the end of the year, and we will respond in respect of what specific information will flow from that at a later stage.

Amendments 4 and 5 in the name of the hon. Member for Airdrie and Shotts deal with people in vulnerable circumstances. Although I applaud the principles behind them, the matter is slightly more complicated than the amendments necessarily make it appear. I am happy to explain in more detail at a later stage, but it starts with the fundamental principle that the Money and Pensions Service, which oversees the dashboard programme, has a statutory objective to ensure that information and guidance is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances. It must have regard to that in the development of pensions dashboards.

The pensions dashboard programme usability working group—a catchy title, I accept—will explore how best to help users to understand the information being presented to them and where they can get more help, including those who are most vulnerable. That could include making recommendations about mandatory signposting to guidance and/or advice. Money and Pensions Service guiders are trained to recognise that some customers may need additional or different types of help.

The Financial Conduct Authority will seek to introduce a new regulated activity and amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, consulting on rules relating to that activity. That may also include a requirement to signpost users to guidance and to provide information about how to find regulated financial advice. We believe that the best way to do that is through the FCA rules and not in the Bill.

I will make two other points on the vulnerability issue. The Department for Work and Pensions, the FCA and the Money and Pensions Service all have a duty to comply with the public sector equality duty in section 149 of the Equality Act 2010. Although dashboard providers will be regulated, there has also been a recent consultation on guidance on the fair treatment of vulnerable consumers, and that will be responded to in guidance published by the FCA either later this year or in early 2021.

My final comment on the proposals on vulnerable individuals would be on the potential difficulty where, as I explained a dashboard is merely a find-and-view service. Were the amendments taken to their ultimate conclusion, they would require a pension scheme to make further inquiry of the individual themselves before the release of the information. I fear that the practical reality of that in a find-and-view service of this nature is neither appropriate nor in the best interests of all parties. I entirely accept the principle behind the amendments, but I believe that we may be able to navigate the problem in an alternative way.

[Seema Malhotra]

I am grateful to have the opportunity to respond to the Minister, and I thank him for those detailed remarks. I wish to speak against amendment 7, and I will lay out my arguments, and to speak to our amendments 15 and 14 and the reasons why we tabled them. I do not intend to push them to a vote, but we will listen to what the Minister has to say.

It is disappointing to see the Government row back on the positive progress on commercial transactions that was made in the Lords. A serious concern of ours, which was raised in the other place, is that the introduction of commercial dashboards paired with the ability to engage in commercial transaction activities would make it easier for savers to be encouraged into detrimental pensions decisions and inappropriate products.

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[Guy Opperman]

I am certain that the hon. Lady does not want to make an issue of this, but does she not accept that it was the Conservative Government who sat down over Christmas and amended the Bill specifically to address TCFD recommendations and to include climate change in the Bill? We added a new clause on climate change. I totally accept that Labour colleagues worked on a cross-party basis to do that, but it would be wrong to say anything other than that the Government started the process to ensure that climate change was in the Bill and that the TCFD was part of it, and we are doing a consultation on the implications of it. I am sure she does not want to mislead the Committee on that.

[Seema Malhotra]

Indeed, I acknowledged in my opening remarks the Minister’s commitment to this agenda. He has also acknowledged Labour’s working with the Government on this agenda, but also helping to secure the amendments that have led to the new subsections in the Bill. The amendments require trustees and managers to take into account the Paris agreement and domestic climate targets in the overall governance, and disclosure of climate change risk and opportunities. It is a credit to the way in which we have proceeded on this agenda that for the first time climate change has featured in domestic pensions legislation.

The amendment would build on the commitments by providing information relating to the scheme’s performance against environmental, social, and corporate governance targets, adding to the list of information on the dashboard and empowering individuals to better understand the role their savings play in tackling climate change and achieving other social and environmental goals. We are aware that the Government intend to keep the dashboard simple at first—indeed, the Minister commented on that in his opening remarks—but we note that Baroness Stedman-Scott said in the other place:

“We are very interested in how dashboards can support and increase engagement, including whether information on areas such as ESG, which trustees are required to cover as part of their disclosure obligations, may be incorporated into the dashboards. This is to be informed by user testing and may evolve over time.”—[Official Report, House of Lords, 26 February 2020; Vol. 802, c. GC163.]

I know that the Minister has had further conversations on this issue. He also referred to the ongoing consultation about what could be on the dashboard. However, I hope that he will be able to confirm that that is something he hopes to implement as the dashboard is developed further.

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[Guy Opperman]

I am grateful to my hon. Friend for that point. That does not mean to say that we do not have a regulatory system that ensures that there are protections, but the nature of a dashboard and international examples definitely suggest that this is an empowerment and an assistance to individual consumers.

[Seema Malhotra]

Will the Minister give way?

[Guy Opperman]

I will press on, because I am going to answer some of the points that the hon. Lady made. I am mindful that we have spent some time on this particular point and we have a lot to get through.

On matters related to the state pension and triple lock, I leave the triple lock to the Chancellor with good blessing and understanding. I will not get into a rehash of many arguments over the state pension changes made from 1995 and which continued over 13 years of Labour Government. The policy was supported by certain Labour Ministers, including in the DWP. Then, obviously, there was a change of Government and the policy was not necessarily supported. When the hon. Lady talks of the way that people have been treated by the Government, that means all Governments since 1995.

I have persistently defended the actions and the civil servants of the DWP throughout the period between 1997 and 2010. Interestingly enough, so have the courts, because we have recently had the Court of Appeal decision in the BackTo60 claim, which found comprehensively in favour of the Government—not just this Government, but previous Governments—in respect of all matters that apply, including notice.

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[Guy Opperman]

I am not going to comment on his capabilities. The bottom line is that that was a persistent level of policy making made by successive Governments from 1993 onwards and utterly continued by the Labour Government, who, to the best of my recollection, proceeded to raise the state pension age to 65 by 2020 in the 2007 or 2008 Act. It was then clearly increased in the 2011 Act. One can argue about why that was done. Perhaps it was a consequence of the great former Prime Minister Gordon Brown’s efforts at manhandling the economy, or perhaps there were other reasons for taking that approach. However, I make the point that I have consistently defended individual Ministers and the Department for their consistent approach to addressing something that all other western countries have done in respect of state pensions. They have all approached it in broadly the same way.

We want the dashboard, and I accept that there is a desire to have many other things on it. We want it to be a simple interface that is accessible to all and that is not overlaid by many different things. With user testing over time, it is possible that more information will be outlined, but the comparable example I give—namely, simpler statements—is appropriate and right.

[Seema Malhotra]

I seek clarification on the Minister’s position on ruling out and ruling in. He has said that he does not want to rule out financial transactions on the dashboard in the future, but did he also say that they would not be ruled in without primary legislation?

Secondly, the Minister said that some pension schemes may not participate. What will and what will not be compulsory? For those that might not share all the information, will there be an obligation to share some, so that somebody could look at the dashboard and have a complete scan, even if they do not have all the information, in order to know that they have pots out there?

[Guy Opperman]

I will deal with the first point about financial transactions. If we accepted the amendment as drafted by the House of Lords, we would not be able to proceed with financial transactions without future primary legislation. I passionately believe that, with the suitable guidance and protections that we all want, consolidation is appropriate, and that would be a financial transaction. It should definitely be permissible on an ongoing basis, arising out of information proceeded and obtained by a dashboard. It is absolutely that sort of empowerment that the dashboard will offer, and it is entirely the right thing.

Clearly, that is my view. There is a dashboard delivery organisation and the Money and Pensions Service, and a whole host of user groups are also involved. I have communicated my strong view. I certainly do not want to rule it out in the future, which is the desired effect of the amendment. The reality is that if I allow Baroness Drake’s amendment to go ahead, it would restrict the capability of the dashboard massively in the future. That is not something I am prepared to do.

I have addressed many different points. Given the time, I will pause there and let others reflect.

Question put, That the amendment be made.

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[Seema Malhotra]

The Minister is right that there will be no storage of data on the dashboard––in a sense, it is drawing in that data dynamically––but could he explain the role of the integrated service providers?

[Guy Opperman]

I explained this at great length earlier, but I will attempt to repeat what I said. I will jump through the verification hoops. The reality is that an individual gets verification and the information passes from the pension finder service to the connected pension schemes asking them to match the individual’s information. The pension scheme finds a match and confirms it to the pension finder service, which responds to the individual via their chosen dashboard saying that it holds the data. When the individual next logs on to their dashboard, the information from the pension scheme will be viewable by the individual. I drew the analogy of the cashpoint, which, I suggest, is the appropriate analogy, whereby if I bank with Barclays and I withdraw from an HSBC account, Barclays does not know what is in my account. That is the process by which we are trying to proceed.

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[Guy Opperman]

Other countries have done things in different ways—they do not necessarily have the pension system that we have. We have a very substantial private pension system; some other countries will not have such private pension systems—the hon. Lady will have to ask them. It is argued that the right way forward—having looked at what countries such as Israel and Denmark have done—is to have a parallel system and two systems, commercial and public, working together. We already have a public system, whether it is “Check your state pension” or the pension tracing service, that exists with commercial providers. What we do not have is the great capability of dashboard and I believe, with respect, that we are doing the appropriate thing to drive that forward.

[Seema Malhotra]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 8, in clause 122, page 116, leave out lines 38 to 45.—(Guy Opperman.)

Question put, That the amendment be made.