Quality Workplace Pensions

Debate between Steve Webb and Thérèse Coffey

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

I understand why the hon. Gentleman wants to talk about energy and income tax rather than pensions: he has nothing to say on the pensions announcement.

The hon. Gentleman said that we have adopted Labour’s policy. I thought he might say that, so I thought I would have a little look at what Labour’s policy was. The first evidence we have is their record in office, when they had 13 years to cap charges and did precisely nothing. But we do have more recent evidence—he mentioned the leader of the Labour party and his views on the subject, so I have a done a bit of research. Clearly, The Guardian was briefed by Labour, and the leader of the Labour party called it an “all-out attack” on rip-off pension charges, so that is good. Patrick Wintour said in September 2012:

“Ed Miliband will promise to end rip-offs in the pensions industry”—

that is good, is it not?

—by putting a 1% cap on pension charges”.

I wonder whether he has moved a bit because he saw what we were doing. I get a slight sense that might be the case.

The hon. Gentleman asked about the timetable. Our consultation document made it clear that every scheme would have a cap in place by April 2015. We are today delivering on that timetable. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) says, “What about April 2014?” If they are seriously suggesting that we should apply a charge cap with a few days’ notice, it shows how little they understand about how employers work and how the pensions industry works. Unless they are calling for us to announce a cap at a few days’ notice, which would be pretty irresponsible, we are delivering on the timetable that we set out.

The hon. Gentleman asked me some specific questions. The independent governance committees will have to be in place by April 2015, but the Association of British Insurers and the Office of Fair Trading have agreed that they will put them in place before that date. The legal requirement is April 2015, but we expect to see them in place before that.

The hon. Gentleman asked who the costs have to be revealed to. The trustees or the independent governance committees, who will act on behalf of the members and will have the technical expertise to understand all the detail, get the information, but they will form a judgment about the format in which they pass it on to scheme members. Scheme members need to understand about charges, but probably not in the full gory detail that trustees and governance committees would. The point is that for the first time there will be people in every pension scheme acting on behalf of the scheme member, and that is a radical step forward.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I welcome the statement, which is good news for the savers of Suffolk Coastal. Will my hon. Friend say a little more about how he is tackling the unfair active member discounts in workplace pension schemes?

[Steve Webb]

I certain will, and it was very much the savers of Suffolk Coastal we had in mind. Active member discounts have been going on far too long. They are one of the hidden charges, and people are ignorant enough already of the charges in their pension schemes, through no fault of their own, even when they are active members, but when they move on to a new firm and a new scheme they probably have no clue what the charges are in the scheme they have left. Therefore, from April 2015 even schemes that retain active member discounts will be unable to go above 0.75%, which will stop many of them, and by April 2016 they will have to have been worked out of the system altogether.

Pensions Strategy

Debate between Steve Webb and Thérèse Coffey

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

As the hon. Lady knows, there are redress mechanisms for people who receive poor quality independent financial advice. It is a regulated process. [Interruption.] I cannot hear what she is shouting at me. When there is a process of regulated advice, there are compensation mechanisms, which is right and as it should be.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I have to thank my hon. Friend because the statement and what was announced in the Budget yesterday take pensions to a whole new level. Now we have the single-tier state pension, we can free people to make their retirement decisions. Frankly, the Opposition do not seem to recognise the issues that people on defined contribution schemes have had or how annuities have fallen, so I really welcome what he has said today. In particular, will he tell us a bit more about when pensioner bonds will come into effect?

[Steve Webb]

Certainly. My understanding is that National Savings and Investments will bring forward pensioner bonds next January. The Chancellor has indicated that the gross interest rate will be about 2.8% for a one-year bond and about 4% for a three-year bond, but that will be reviewed later in the year. It depends on market movements between now and then, but it is designed to be a market-leading rate to recognise that people who have worked hard and saved hard should get a decent return on their money.

Oral Answers to Questions

Debate between Steve Webb and Thérèse Coffey

Monday 18th October 2010 Commons Chamber

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

14. What options he has considered for future support for mortgage interest payments for those out of work.

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

We are in discussions with mortgage lenders about the scope for them to freeze benefit claimants’ mortgage accounts and apply a standard interest rate for a fixed period. In return for lenders receiving up-front interest payments from the Government, claimants getting help with their payments would not accrue any arrears or face the threat of repossession.

[Dr Coffey]

I thank my hon. Friend for that answer. Does he agree that, in these times, when perhaps there will be a lag in finding jobs, speed is of the essence, particularly for vulnerable people in our society, when making decisions about future support for mortgage interest?