Kenyan Civil Service Pensions: Non-payment

Debate between Stephen Timms and Seema Malhotra

Monday 7th December 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I am grateful to Mr Speaker for granting this debate. I thank the Minister and his colleagues for their assistance to me and other Members—a number are in the Chamber this evening—as we seek justice for our constituents. I hope that tonight’s debate might push things a little further.

In April last year, I was approached by my constituent Mr Balbir Singh Sekhon. I have known him since 1984, the year he took up work as a traffic warden with the Metropolitan police and I became his local councillor. He migrated from India to Kenya in 1956. For 18 years, from 1957 to 1975, he was a secondary teacher in Kenya. He was offered and took up British citizenship during that time. For the last 12 of the 18 years, he taught English language and geography at Nairobi Technical High School.

Mr Sekhon retired in the UK 1994. A couple of years later, he asked the Kenyan high commission about his Kenyan civil service pension. He was relieved to learn that he would receive a pension of £1,154.07 per year, paid through Crown Agents. He received monthly payments thereafter—in the year ending 5 April 2019, he received £1,546.45—but then the payments stopped. Crown Agents says it has not been paid by the Kenyan Government.

I wrote to the Kenyan high commissioner in June last year. He replied very quickly, within a couple of weeks, and asked Mr Sekhon to provide “urgently” a number of documents to the high commission. Mr Sekhon did so, but he is still waiting for the money he is owed.

Other Members have constituents in a similar position. My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) has devoted a lot of effort on behalf of two people, both former teachers in Kenya before they came to the UK in 1975. They claimed pensions in the mid-1990s. Later on, they inquired whether their payments would be adjusted for inflation, and at that point the payments stopped.

I pay tribute to my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), who has led this campaign with great energy on behalf of her constituent Mr Sohan Singh. He is in the same position. His Kenyan pension has not been paid since 29 March 2019. Crown Agents says it has not received the payment. My hon. Friend took Mr Singh’s case up with the former Minister, the hon. Member for West Worcestershire (Harriett Baldwin). Her advice—to raise it directly with the pensions department of the Kenyan Treasury—was not very helpful. Both Mr Sekhon and Mr Singh had tried that already, without success.

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

rose—

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[Seema Malhotra]

I thank and congratulate my right hon. Friend on securing this debate, which, as he said, is a matter of great concern for many of our constituents. I want to acknowledge and thank Mr Mangal Chudha in my constituency, who also brought this matter to my attention, along with two others.

My right hon. Friend just made the point that the UK Minister has told our constituents to write to the Kenyan Ministries. May I raise a concern and ask my right hon. Friend’s view on it? When I wrote to the Minister last year, I received this reply:

“While this matter is the responsibility of the Kenyan authorities, the British high commission in Nairobi has written to the Kenyan Ministry of Foreign Affairs and the head of the department for pensions in the Treasury seeking an explanation for non-payment of pensions and lack of increase in line with inflation.”

I was very surprised to see subsequent responses to parliamentary questions—for example, that tabled by our hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). That answer, in February, said:

“This matter is the responsibility of the Kenyan authorities. However, the British High Commission in Nairobi has written to the Kenyan Ministry for Foreign Affairs and the Head of the Department for Pensions in the Kenyan National Treasury seeking an explanation for non-payment of pensions to former Kenyan civil servants and the lack of increase in line with inflation.”

Our hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) received exactly the same response in July. Does my right hon. Friend agree with me that it is for the Government to be doing more to support our citizens?

[Stephen Timms]

My hon. Friend is quite right. There is no evidence of any reply having been received to those inquiries. I do not know how many times the question has been asked, but perhaps the Minister can shed some light on what is going on.

After that initial response, my hon. Friend the Member for Washington and Sunderland West did receive a further letter from the Minister, which explained something that I thought was helpful and worth informing the House of. To quote from the reply to her:

“In very broad terms, HMG accepted responsibility for the pensions of those who were employed in Kenya on expatriate terms (i.e. had paid leave passages outside the country during their employment) and who were not citizens of Kenya on 1st April 1971 or the date of retirement if later. The pension of anyone who did not meet the above criteria above remained the responsibility of the Government of Kenya. This is why some pensions are paid by HMG and others, such as”

the constituent

“by Crown Agents on behalf of the Government of Kenya.”

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[Seema Malhotra]

My right hon. Friend is being very generous in giving way. He raises the very confusing issue of why we have not been able to get an answer to the questions around the non-payment of pensions to former civil servants, but also the lack of the increase in line with inflation, which I understand was part of the agreement many years ago between the British and the Kenyan Government, I think in 1977. A constituent has highlighted to me that he is one of 300 people who have not received an inflationary increase since 1991, and then from last year he has not been receiving his pension, so there has been some confusion over a number of years. Without answers to these questions, it is very difficult for people who are now in their 80s or sometimes in their 90s to be getting these answers directly from the Kenyan Government, which is what our Government are advising them to do.

[Stephen Timms]

My hon. Friend is absolutely right. I must say, I think my constituent has received inflation increases. There does seem to be some variability about who has received them over the last couple of decades. Who knows what the reason for that is?

I was just reading a written answer from 2013, which concludes:

“British high commission staff in Nairobi asked the Kenyan Ministry of Foreign Affairs about public sector pensions on 2 July 2013 and are awaiting a response.”—[Official Report, 9 July 2013; Vol. 566, c. 143W.]

That was seven years ago. Whether any response was received at that time, I do not know, but I certainly do not think any Member here has seen a response to any of these questions, which clearly have frequently been asked.

[Stephen Timms]

My hon. Friend is absolutely right. There is no dispute at all that our constituents are entitled to these payments. A promise has been made to them, and the Government of Kenya need to honour their promise to his constituent and to all the others.

Coming forward to this year, last month, I co-signed a letter to the Minister with my hon. Friends the Members for Washington and Sunderland West (Mrs Hodgson), for Brentford and Isleworth (Ruth Cadbury), for Harrow West (Gareth Thomas), for Slough (Mr Dhesi) and for Feltham and Heston and the hon. Member for Peterborough (Paul Bristow), who I see in his place, asking that the Minister meet us to discuss what further steps the Foreign, Commonwealth and Development Office will take to ensure that these pensions are reinstated and uprated in line with inflation. The Foreign Secretary confirmed to me in Foreign, Commonwealth and Development Office questions last month that he would look to arrange the meeting, so we look forward to that.

I wonder whether the Minister can clarify the following tonight. First, how many people living in the UK does the Foreign Office think are affected by the non-payment of Kenyan pensions and, perhaps separately, by the issue that has been surfaced in this debate about the non-uprating of some of those pensions that have been in payment?

Secondly, can the Minister tell the House what recent discussions he has had about this with his Kenyan counterparts? Clearly the Foreign Office has asked about this on quite a few occasions. Has it received an answer from the Government of Kenya to any of its inquiries? What does the Minister make of it all? Why is it that our constituents have not been paid at all since the spring of last year? Lastly, what is the Department’s plan should the Kenyan Government continue to withhold these payments to which our constituents are entitled?

Our constituents have not received the pension that they are entitled to for almost two years. Some have been waiting longer. Many, as my hon. Friend the Member for Feltham and Heston has said, are elderly. They are entitled to their pension, and there is an issue of dignity here. These people have worked and they are expecting to receive the fair pension that they are entitled to.

[Seema Malhotra]

Does my right hon. Friend agree that, as well as being an administrative nightmare for our constituents, it is also highly distressing for people to have to battle for something to which they have a right? This is something that they have earned through their hard work and commitment to the Kenyan Government and through their public service to the Kenyan nation. They should not have to fight for it in their retirement. This is the time when we need our Government to step in and help them.

[Stephen Timms]

My hon. Friend is absolutely right. She sums up the message of the debate extremely well. I hope that the Minister will provide some hope for our constituents that this matter will finally be resolved, and I look forward to hearing his answers after others have contributed to the debate.

Pension Schemes Bill [ Lords ] (Third sitting)

Debate between Stephen Timms and Seema Malhotra

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

[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

[Stephen Timms (East Ham) (Lab)]

I beg to move amendment 21, in clause 125, page 121, line 11, at end insert—

“(e) the results of due diligence undertaken by the trustees or managers regarding the intended transfer or the receiving scheme.”

This amendment enables regulations under inserted subsection (6ZA) of section 95 of the Pension Schemes Act 1993 to prescribe conditions about the results of due diligence undertaken in relation to a transfer request such as to determine that the statutory right to a transfer is not established if specific “red flags” are identified in relation to the transfer or intended receiving pension scheme. Amendments 22, 23 and 24 are related.

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[Stephen Timms]

I am grateful to the Minister and to everyone who has taken part in this debate. I welcome a lot of what he has said. On guidance, he told us that the FCA writes to everyone at age 50, but it seems to me that what it should do is say, “Your appointment with Pension Wise is at the following time and place”, taking advantage of that opportunity to increase significantly the likelihood of the guidance being taken. I am grateful to him, however, for saying that further information will come forward before Report and that the discussions and deliberations on the four amendments will also carry on between now and Report. At this stage, therefore, I do not propose to press any of the amendments to a vote.

[Seema Malhotra]

I want to make a few comments. I appreciate the exchange between the Minister and my right hon. Friend the Member for East Ham. I recognise the complexity of the different regulators that the Minister alluded to, and the need to join things up. From a consumer perspective, it is very important to join up different regulators, because it is difficult and confusing for individual consumers or citizens to deal with multiple regulators on different issues. Invariably, we end up with multi-year battles that are exhausting for them and their families. Therefore, ensuring that we have stronger remedies in place is critical to reduce some of the risk.

I support my right hon. Friend and appreciate Minister’s comments about not carving out FCA-regulated schemes that still pose a risk for those at risk of scams. The Minister has mentioned further regulations to come and that the exchange between him and my right hon. Friend the Chair of the Select Committee has been placed in the House of Commons Library—it will be important to review that—but the test will be the extent of the improvements to the system and of the tightening of protections. Those who are vulnerable to pension scammers are at serious risk, and gaps in regulation increase their vulnerability. It is not a harm-neutral situation. This is a uniquely difficult time, and it is a sad fact of the pensions world that there are people who seek to capitalise on that.

The hon. Member for Airdrie and Shotts also made some important comments. I want to lend our support, but we also need to keep this under review as we debate the regulations. We support the amendments, although my right hon. Friend the Member for East Ham has chosen not to proceed with them at this stage. They propose a sensible set of measures to counteract the risks that people, particularly those who are especially vulnerable, face right now.

Amendments 21 to 24 could play a part in future stages of the Bill. They would strengthen the protections to prevent individuals from transferring their pensions into scam schemes. We also welcome that the amendments have been tabled on a cross-party basis by members of the Work and Pensions Committee. It would be helpful to see how quickly those concerns move on to the Minister’s radar, and his imperative to act on them. We welcome both the ongoing dialogue with the Chair of the Select Committee and the proposed route map for addressing the issues under existing powers, which we hope will dramatically increase protection against scammers.

New clause 10 is intended to protect people from scams by auto-enrolling pension scheme members in pensions guidance appointments. That principle is extremely important, and the arguments for a much-needed source of information and impartial advice were well made. That would empower individuals to make good pensions decisions, and through that empowerment they would be more resistant to scammers.

We strongly support the intentions of new clause 10 and amendments 21 to 24, tabled by my right hon. Friend the Member for East Ham. I congratulate him on his Select Committee’s work on this crucial issue, which is a serious matter and could become more so for all our constituents. It is important to have the right protections to give savers greater confidence, particularly with continued pension scheme reform. I urge the Minister to act speedily to ensure that the arms of government that he talked about continue to work closely. I am sure that we can encourage and support him, on a cross-party basis, to move that along more quickly.

I would like to acknowledge the work of Pension Wise and Citizens Advice, and the services that they provide. There will, I hope, be ways—perhaps through what we can do here—to raise awareness of the services that those organisations offer, and, importantly, of pre-emptively encouraging people to get advice in what is a difficult area. We all fall prey to that: when something is incredibly confusing, as my right hon. Friend said, it gets put at the bottom of the pile, often until it is too late. These protections will go a long way to giving more people, particularly younger generations, the confidence to save and save early, which makes a difference.

[Stephen Timms]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(James Morris.)

Pension Schemes Bill [ Lords ] (First sitting)

Debate between Stephen Timms and Seema Malhotra

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

[Seema Malhotra]

It is a pleasure to respond to the Minister’s comments. I thank him for laying out the Government’s thinking on the clauses and amendments in this group. I will speak to Government amendment 6 and briefly to amendment 25, tabled by my right hon. Friend the Member for East Ham.

I thank the Minister again for his speech and the arguments that he has laid out for seeking to remove the amendment tabled by the noble Lord Sharkey and cross-party colleagues in the other place, which was agreed by peers in June. The Minister commented that, in his view, some of the concerns could be addressed by the implementation of clause 18. I want to come back to why I am concerned that may not go far enough; perhaps this will be an issue of ongoing debate as the Bill proceeds, and in regulations.

The amendment included by those in the other place was very considered. It spoke about

“the requirement that trustees make an assessment of the extent to which the scheme is operating in a manner fair to all members”.

I believe that is the additional wording in the Bill. It is a very considered amendment, which could only be useful in keeping on the agenda of trustees the important analysis that should take place in relation to decision-making—to be sure about the best possible input and considerations in relation to the performance of the scheme for all its members.

I alluded in my opening remarks to the considerable insecurity that we face as a nation, exacerbated by the impact of covid-19 and its disproportionate impact on different groups and different generations, in terms of the economy and levels of employment and therefore saving into pension schemes. People’s personal finances are likely to be under great strain in the coming years. Not only is there that insecurity, but it is increasingly difficult to encourage young people to save for retirement, with all the other cost pressures in life—paying off debts, for example, or the fact that, at the moment, the average age at which they will purchase their own home is around 34. There are considerable pressures on the personal finances of the next generations, as they plan ahead for their lives.

Thinking about our institutions and how we continue to consider and embed intergenerational fairness should be on Parliament’s radar in all our work. In that context, we see unprecedented public policy challenges in ensuring fairness between different groups in society—from those in hard-hit industries, such as aviation and hospitality, to those affected by the way education is being delivered in the times in which we are living, which could continue beyond the next few months into the next few years, with all that uncertainty. We have also seen that black, Asian and minority ethnic communities have been hit harder by the health and economic impacts of this terrible virus. We can look at income today, but we are really talking about income tomorrow, and the impact on tomorrow of savings today.

It is incumbent on the Government to think about fairness between generations, and how we can stop young people bearing the brunt of the uncertainty and hardship caused by the economic havoc that we are experiencing right now. The impact on them could go unchecked in the medium and longer term. Concern about intergenerational fairness was raised by many respondents to the Government’s consultation on the Bill’s provisions.

Clause 27, as amended in the other place, sought to deal with some of those concerns. It effectively acknowledges that there may be a divergence in interests between different cohorts or sets of members in CDC schemes. Importantly, it does not compel any particular kind of action, but requires trustees to consider fairness and assess the extent to which the scheme is fair to all members. To Opposition Members, that is a very sensible suggestion, and we struggle to understand why it should be controversial for the Government.

I appreciate that the Minister outlined some comments from the CWU and others about the interpretation. He also mentioned treating people in the same way and his interpretation of the current wording of clause 18, which I was just reviewing. If there are different considerations in relation to levels of savings, other ways of joining a scheme or different circumstances, it may be necessary to look differently at different cohorts. Treating people fairly may not always mean thinking of them as the same. When we are thinking about fairness, we may need to be a bit more nuanced in our consideration of different needs and circumstances, and the potential impact of a decision on all cohorts.

Perhaps a different way of interpreting the amendment that was made in the other place would be to see it as enhancing the intention behind clause 18. I repeat that the amendment did not compel any particular kind of action, but made it more explicit what trustees should consider. Baroness Stedman-Scott, the Parliamentary Under-Secretary, said in the other place:

“I welcome the sentiment behind the proposed amendment; it is something to which we want to give further consideration. We need to give careful thought to how such reporting might work in practice and would want to work with trustees, administrators and the regulator to ensure that any such requirement is proportionate, appropriate and clear. We would also want to consult on any such approach to make sure that it is effective. I reassure all noble Lords that we will give this matter careful consideration. Should we need to bring forward such a requirement in regulations, we already have sufficient powers in existing legislation to require schemes to report on fairness in CDC schemes if warranted.”—[Official Report, House of Lords, 30 June 2020; Vol. 804, c. 605.]

I hope that the Minister will continue to keep this issue under review, because we think it is very important for the sustainability of fairness and confidence in schemes. The very considered wording that was proposed and passed in the other place could help the Government in securing the intended outcomes that he described as being behind clause 18. Perhaps he can provide more detail on his plans to incentivise trustees to assess and report on the extent to which CDC schemes are operating in a manner that is fair to all.

My right hon. Friend the Member for East Ham may make a few comments on amendment 25, which is intended to require pension schemes to send information on the diversity of the trustee board to the pensions regulator. We believe in the value of this amendment, which is also supported by other colleagues—the SNP in particular. It is important to ensure that there is a diversity of voices in decision making. The debate about diversity on public and private boards comes in cycles. Diversity on public boards was considered under the last Labour Government, with quotas for diversity in recruitment. This is not a party political matter; a lot of research shows that diversity in decision making leads to better and safer sustained outcomes.

When looking at public funds, for example, the diversity of needs should be understood at the decision-making table. We do not need to rehearse the arguments for ensuring that different voices are represented at decision-making tables, whether that relates to gender, those with disabilities or those from particular minority communities.

The same is true of boards in the private sector. Research undertaken by business schools shows that diversity on decision-making boards has often led to considerably better returns on investment, and indeed shareholder returns. There is no sustained, credible argument that not having diversity on boards leads to better business outcomes.

I do not understand why this would not be an important consideration. Amendment 25 simply says that pension schemes should send information on the diversity of the trustee board to the Pensions Regulator. I am sure my right hon. Friend the Member for East Ham will share more information about how trustee boards are less diverse than other boards. That cannot be right for boards that have an increasingly important role in decisions about funds and investments, and about inclusivity and fairness.

This is not only an important consideration in terms of social justice; it is about the performance of the schemes. It is about recognising the importance of having diverse voices and voices that are representative of those within the schemes and those who may benefit from the schemes in the future. This is a matter of obvious importance that should not raise concerns, and it should be included in the Bill.

[Stephen Timms]

I apologise for raising clause 47 in the previous debate; I probably should have waited until now. I am glad we had that debate and I welcome the Minister’s assurance that regulations to enable multi-employer CDCs will come forward within the next year.

I will confine myself in this debate to clause 46 and amendment 25, which stands in my name on the amendment paper. I am grateful to the hon. Members for Airdrie and Shotts and for Gordon for adding their names to it, and to my hon. Friend the Member for Feltham and Heston for the important points she has just made in favour of it. I thank ShareAction for its work on this topic and for the briefing it has provided.

We are all familiar, as my hon. Friend has just reminded us, with the criticism that there is insufficient diversity among directors of FTSE 100 companies. There has been progress, but the Government targets are going to be missed and there is still a long way to go among major company boards. Some 68% of board members are male and only 7.4% are from black, Asian or minority ethnic backgrounds. That proportion falls to 3.3% in the most senior board positions: chair, chief executive and finance director. Only just over half of boards have any ethnic minority members at all.

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[Seema Malhotra]

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

[Stephen Timms]

This part of the Bill gives new powers to the regulator, so it is worth recapping the problems that gave rise to the need for them. Most of the thinking here came from the joint work of the former Work and Pensions Committee—I pay tribute to my predecessor as its Chair, Frank Field—and the Select Committee on Business, Innovation and Skills, after the awful problems at two firms: BHS and Carillion.

BHS had two defined-benefit pension schemes. They were in a combined surplus of £43 million when Sir Philip Green bought the company in 2000. The surplus gradually declined and the schemes fell into a combined deficit in 2006, following the period when large dividends had been paid to members of the Green family. By the time of the sale of BHS in 2015, the value of the schemes’ assets was almost £350 million short of their liabilities. As the schemes fell into deficit, the BHS board repeatedly resisted requests from the scheme trustees for increased contributions.

In 2012-13, there were negotiations over a deficit recovery plan and they concluded with a 23-year recovery plan. At the time, eight years was the median rate for a recovery plan and 95% of comparable schemes had a recovery plan of less than 17 years. The plan we got in the case of BHS was for 23 years. The payments under that plan barely covered the interest on the scheme’s deficit and so the deficit continued to grow even while that plan was being followed.

The two Select Committees concluded that the Pensions Regulator had acted too slowly. Having received the 23-year plan in September 2013, it did not send the first information request to the trustees until January 2014. The Committee added, however, that the onus for resolving problems was on Sir Philip Green.

In the case of Carillion, it left a pension liability of around £2.6 billion. The 27,000 members of Carillion’s defined-benefit pension schemes will now be paid reduced pensions by the Pension Protection Fund—one of the biggest calls ever on that fund. I agree with what the Minister said earlier about the success of the fund, which was introduced by the previous Labour Government.