Draft Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016
Simon Kirby Excerpts(8 years, 8 months ago)
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Angela Rayner (Ashton-under-Lyne) (Lab)
It is a pleasure to face the Minister again under your chairmanship, Mr Bone. It is rather unfortunate that, as I think one of the Guardian columnists has said, as soon as people see “pensions” in the title of anything in the media today, they glaze over. However, I hope that the Minister will not glaze over during my contribution today, because although the Opposition will not oppose these measures, we want to touch on several important concerns that are related to these regulations.
To put the measure into context, employers have a choice about the kind of pension they make available for their employees, with some choosing to use schemes based on a trust with trustees. Others choose schemes provided by insurance companies, which result in contracts between the providers and the employees. Such schemes include personal pension schemes and stakeholder pension schemes, which employers use for auto-enrolment or otherwise make available to their employees. There is no board of trustees and no fiduciary duty to the scheme member.
The market for multi-employer schemes, known as master trusts, is relatively new and has undergone rapid expansion in the last couple of years. The major players have been open for business only since 2011 and barriers to entry have historically been low. While no official list of providers exists, Professional Pensions sought to compile a definitive list in August 2015 and identified 57, but there could be as many as 70 or even 80 master trust providers in the UK. Employers have to try to distinguish between many offerings of varying quality, and there are concerns across the sector about regulation and governance.
In its evidence to the Select Committee on Work and Pensions’ current enquiry on auto-enrolment, the Association of British Insurers made the point that trust-based schemes, including master trusts, are not
“subject to the same stringent regulatory standards as contract-based schemes, which are regulated by the FCA.”
Instead, master trusts are supervised from a distance by the Pensions Regulator, which does not have the power to check how the pensions are sold or to shut down companies that fall short of basic standards. The Pensions Regulator highlighted the issue to the Work and Pensions Committee:
“94% of employers who chose a trust-based scheme opted for a master trust. Due to their scale, commercial purpose and design for use by multiple employers, master trusts represent different risks to members and consumer protection when compared to other occupational schemes. Unlike pension providers regulated by the FCA, the master trusts themselves are not authorised prior to market entry and the regulatory framework is not designed for similar levels of ongoing supervision. As a way of mitigating this risk, we introduced the master trust assurance (MTA) in May 2014, developed in partnership with the Institute of Chartered Accountants in England and Wales (ICAEW). However, it is a voluntary arrangement”.
Only five master trusts are part of the master trust assurance framework, meaning that they are independently audited.
Andrew Warwick-Thompson, executive director for regulatory policy at the Pensions Regulator, warned that some of the other schemes were too small and had no safeguards protecting their members. Alarmingly, he added:
“There is a risk of these schemes falling over; there is a risk that members might lose their money.”
He went on to warn that the lack of requirements for qualifications or assets meant that some master trusts
“may not be run by competent people”.
The so-called fit and proper person test appears to be even less stringent than that applied by the Football League. HMRC’s guidance suggests that it will automatically assume that anyone who applies is fit and proper. Perhaps the Minister will tell us whether the Government have any plans to change HMRC’s practice or guidance in that regard. Even when directors are qualified, providers do not always make it clear where the savings are invested and who owns the schemes.
The BBC programme, “The World Tonight”, also discovered that at least one master trust seemed to be providing misleading information online. The website, myworkplacepension.com, claims to have £50 million of pensions under management managed by the City firm, Old Mutual. When the BBC scrutinised the whereabouts of that money, myworkplacepension.com admitted it had no such assets. Subsequently, Old Mutual denied handling the company’s account and asked for its name to be removed from its publicity.
According to Companies House records, My WorkPlace Pension Ltd is 50% owned by Gavin McCloskey, who, with an associate, Anthony Okeke, was previously a director of a firm that sold sports fashion clothing. Incredibly, its trading name was Wide-Boys R Us.
Angela Rayner
We may laugh, but it will hardly be amusing to someone who finds their employer has invested their pension with a dubious scheme and without safeguards. Alarmingly, the programme also cited one industry expert who suggested that only around 10 existing master trust schemes could be considered completely safe and reliable. There is a view, therefore, that strengthening the requirements to enter the market, such as with authorisation or licensing, should filter out the least desirable operators. We would like to know more about the regulatory framework within which the Minister envisages today’s regulations will sit.
This issue was raised by my hon. Friend the Member for Wolverhampton South West (Rob Marris), who, as shadow Financial Secretary to the Treasury, represented the Opposition during the Committee stage of the Bank of England and Financial Services Bill. The Economic Secretary to the Treasury responded that the Government would bring forward regulations as soon as practically possible. Can the Minister tell us today what discussions the Department for Work and Pensions has had with the Treasury about that legislation and give us an update? Perhaps he will tell us how such legislation relates to the comments of his colleague, the Minister of State for Pensions, in the press on 1 March. She complained that the Government would not give the Department parliamentary time for pensions legislation specifically in relation to master trusts. She said:
“We need legislation and have been bidding for a bill, a pensions bill but it has been refused. It was refused at the end of last year and it has still not happened…I am hoping we will get one because we can’t do anything properly without it.”
We seem to be in the extraordinary position of the Minister for Pensions admitting that she cannot do anything properly on this issue because she cannot get parliamentary time from her own Government, whose legislative agenda is hardly full. However, this seems to be flatly contradicted by the remarks of the Economic Secretary, so is the Treasury more up to date on pensions policy than the Minister for Pensions, or is that just where the power lies in this Government? Perhaps none of them knows what is going on.
If the Minister knows anything about his own Department’s legislative agenda, perhaps he would clarify whether we can expect a Bill and, if so, when. There are a number of questions about the regulatory framework on which it would also be helpful to hear his views.
Immigration Statistics
Simon Kirby Excerpts(9 years, 11 months ago)
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Simon Kirby (Brighton, Kemptown) (Con)
People in my constituency are concerned that those who have never paid into the system can come here almost immediately. Can my right hon. Friend assure me and my constituents that we are putting this situation right?
Mike Penning
The only way that can be done is by making sure there is a renegotiation of the treaties. That is what the Prime Minister set out this morning in his speech, and may I reiterate its three main points? Someone would have to be here for four years before they would be entitled to social housing; they would have to be here for four years before they would be entitled to in-work benefits; and they would not be able to send in-work benefits that they receive from the British taxpayer home to their own country.
Oral Answers to Questions
Simon Kirby Excerpts(13 years, 6 months ago)
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Mr Blunt
That is an extremely important part of effecting the rehabilitation of offenders. The number of offenders whose offences are drug-related is very substantial, so in conjunction with the Department of Health we are examining and introducing pilots on the whole treatment of drug addiction in the community. Many offenders will enter those pilots and then, I hope, the scheme when we roll it out system-wide by the end of the Parliament. We are also examining with the Department of Health how we treat people in prison in order to ensure that we are much more focused on abstinence as well. I fear I may exhaust the patience of Mr Speaker if I go on.
Simon Kirby (Brighton, Kemptown) (Con)
14. How much his Department spent on legal aid for cases concerning immigration in the latest period for which figures are available.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The Legal Services Commission’s gross operating expenditure on asylum and immigration legal aid in the financial year 2009-10 was £90 million, of which about £26 million was for immigration matters.
Simon Kirby
Does my hon. Friend agree that the best way to reduce the amount of money spent on legal aid for immigration cases is to resolve those cases as promptly as possible, and that, had we not inherited an immigration system in crisis from the Labour party, the costs would be lower already?
Mr Djanogly
My hon. Friend is quite right. The best way to reduce the amount of money spent on immigration legal aid is to retain taxpayer funding for serious issues only. Our current view is that most individuals involved in immigration cases, such as those applying for study or work visas or making citizenship applications, should not require legal aid to resolve their issues.