Quality Workplace Pensions

Debate between Steve Webb and Mark Durkan

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for his kind comments. The challenge with this market is that the people buying the pensions are essentially the employers of the firm, not the staff. We need to ensure that when firms are shopping around for pensions for their workers they get clear and straightforward information about what the charges will be and that they will be capped. Scheme members clearly need to be able to access information about charges in a straightforward and transparent way. It is a slightly odd market, because people are buying on their behalf and, because of automatic enrolment, scheme members cannot negotiate a different price; they just have to take the price they are given. Our focus is therefore very much on ensuring that the people who make the choices on pensions—in this context, the employers—have clear advice and the cap to ensure that they and their members cannot be ripped off.

[Mark Durkan (Foyle) (SDLP)]

The Minister has indicated that further work will be done to try to tackle the whole ecosystem of charges and combinations of charges. What does he believe will actually trigger a decision in 2017 to capture some of those charges in the cap?

[Steve Webb]

I am grateful to the hon. Gentleman. Our central interest in all this is the well-being and welfare of scheme members. We would not put transaction costs, for example, into a cap if we thought that might result in certain transactions that would benefit scheme members not taking place. On the other hand, if we thought that there was overtrading or that people’s money was being invested in a way that generated income that did not benefit them, we would need to take account of those issues. One of the challenges we face in making policy in this area is that so little is known about what is going on. Step one is therefore to get transparency so that we know the scale of what is going on and what sorts of charges there are out there, and then we can make an informed decision.

Pensions Strategy

Debate between Steve Webb and Mark Durkan

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

The interaction between these measures and the funding of long-term care is important. There are various rules. If someone takes their pension pot as income, it will be counted as income in the means testing for residential care. If they have capital assets, we assess them on a different basis. We have to make sure that these measures are joined up with our policy on long-term care so that we have the right outcome. What we hope will happen is that new financial products will allow people to use their pot to possibly get care insurance as well. The industry has asked for this; now it has to raise its game.

[Mark Durkan (Foyle) (SDLP)]

Beyond the guidance guarantee, will the Minister assure us that when these innovative products are offered for sale, the regulator will be able to guarantee that it will in effect have pre-assured them, not least regarding the transparency of charging schemes?

[Steve Webb]

As the hon. Gentleman knows, we are taking steps to make sure that charges in the pension sphere are made much more transparent. Any new products, particularly if they are sold, will be regulated by the FCA. The guidance is simply a conversation, as it were, with someone who will enable people to get basic information. People will still be able to take regulated independent financial advice, and that will be a regulated process.

State Pension Reform

Debate between Steve Webb and Mark Durkan

Monday 14th January 2013 Commons Chamber

[Steve Webb]

In the past, the state provided a flat basic pension and then an earnings-related second pension. By definition, low earners received low earnings-related pensions. What we propose is simply a flat pension, which means that low earners will, on average, tend to benefit.

[Mark Durkan (Foyle) (SDLP)]

As well as engaging with the devolved authorities as he has promised to do, will the Minister take time to proof his detailed proposals to ensure that no untoward difficulties arise for cross-border workers? I represent a border constituency, and I know that it is quite normal for people to work on a cross-border basis. Their jobs often move across the border. However, that can create a number of difficulties, including some relating to pensions. Will the Minister minimise those difficulties?

[Steve Webb]

The hon. Gentleman is right to raise the issue of cross-border workers, for which we have had to regulate in the automatic enrolment scheme. We are not aware of any specific issues that would arise from our proposals, because they are built on the national insurance contributory principle. They turn contributions into pensions in a different way, but the system is basically the same. However, if the hon. Gentleman becomes aware of any such issues and wishes to draw them to my attention, I shall be happy to look into them.

Oral Answers to Questions

Debate between Steve Webb and Mark Durkan

Monday 5th November 2012 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

T10. The Fair Pensions report, “Whose Duty? Ensuring effective stewardship in contract-based pensions”, highlights the relative lack of quality standards being applied to UK schemes, as opposed to other jurisdictions such as Australia. The Minister referred to active steps being taken in relation to auto-enrolment. Do those steps extend to re-visiting actively the qualifying criteria and the default fund guidance?

[The Minister of State, Department for Work and Pensions (Steve Webb)]

The hon. Gentleman is right to raise the important issue of governance. We do not think that we have a significant problem with the early stages of automatic enrolment for the biggest firms. They are coming in at a low cost and are well governed. The issue will arise further through the process and we are indeed looking at the quality of schemes into which people are auto-enrolled, including charges and governance.

Pensioners and Winter Fuel Payments

Debate between Steve Webb and Mark Durkan

Tuesday 22nd November 2011 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

The Minister told us that by maintaining the cold weather payment of the previous year this Government had given an additional £10 million to pensioners in Northern Ireland. Will he tell us how much money he is denying to pensioners in Northern Ireland by refusing to maintain the level of the winter fuel allowance? Has he done the same calculation?

[Steve Webb]

What we have done is preserve the amount that was scheduled to be spent in Northern Ireland exactly as planned. Clearly, £50 a head in Northern Ireland is probably slightly more than the figure for the cold weather payment. I did some mental arithmetic while the right hon. Member for Belfast North was speaking and I suspect that that figure is slightly larger. The key choice was between doing nothing—taking our baseline and taking £70 billion or £80 billion out—and trying to reverse at least one of the cuts. I think that the right thing to do was address the cold weather payment.

Let me give a slightly cheeky example of why that was our priority. I checked the dates of birth of the hon. Members from Northern Ireland and found that at least one of them would, in principle, qualify for a winter fuel payment—I am not going to name names. [Hon. Members: “Go on.”] I am not even going to look in the direction of the person I am talking about.

State Pension Reform

Debate between Steve Webb and Mark Durkan

Monday 4th April 2011 Commons Chamber

[Steve Webb]

We are not changing the system for current pensioners at all. It will continue as previously budgeted. As for new pensioners, we need to think what paying a pension above the guarantee credit implies for passported benefits, and what sort of system we need. I should be interested to hear people’s ideas, because the issue is important. Hitherto, we have simply assumed that pension credit means poverty and that we must therefore make all the extra payments. We may need a more sophisticated system now, but the role of passported benefits is important, and I am grateful to the hon. Lady for raising it.

[Mark Durkan (Foyle) (SDLP)]

I thank the Minister for his statement and for providing us with the rationale behind it. As he will know, people will want to establish whether the single tier really does offer the platform for fairness and adequacy that he has described. They will want clarity and confidence.

The Minister mentioned the need for people to save money for their pensions. What consideration have he and Treasury Ministers given to their ability to afford that, given the hits that they are taking as a result of the withdrawal of some child benefit, the entry of more people into the 40% tax bracket, and the huge challenge posed by tuition fees?

[Steve Webb]

The hon. Gentleman has raised an important point about people’s ability to afford to save. One of the key aspects of automatic enrolment is the fact that an employee’s contribution will trigger an employer contribution of nearly as much, plus tax relief. If an employee contributes 4% of his salary, the employer’s contribution will raise that to 8%, so this is a very affordable form of saving. Of course we want to ensure that people who make such sacrifices in order to save will be better off as a result, and our reforms will make that outcome far more likely than it is at present.

Benefits Uprating

Debate between Steve Webb and Mark Durkan

Wednesday 8th December 2010 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend. I regularly meet pensioners groups throughout the country, and he will be reassured to know that the restoration of the earnings link has been universally well received.

[Mark Durkan (Foyle) (SDLP)]

The Minister will be aware that some of us who now sit on the Opposition Benches never believed that CPI was a better measure because of the fact that it tended to give a lesser increase. However, we do not deny the worth of the triple guarantee. If his concern is to protect the basic state pension, will he address the needs of those people who do not receive its full value because of the high rate of contracted-out deductions? Many people suspect that the rate of deductions is excessive and punitive, and some say that it represents a marginal tax rate of 80% or 90% on their basic state pension.