Pensions Update

Debate between Thérèse Coffey and Nigel Mills

Tuesday 7th September 2021 Commons Chamber

[Dr Coffey]

The hon. Gentleman may want to speak to his Cabinet Secretary because, at the moment, the Scottish Government are not using the powers that have already been devolved. I am conscious that they intend to but it is taking quite a lot longer. One of the reasons given by them, reasonably, is the impact of covid. However, he may wish to take this up with his colleagues in Holyrood.

I am conscious of the concerns about pensioner poverty. As I mentioned, we have seen a reduction, with about 200,000 fewer pensioners in absolute poverty before and after housing costs than over a decade ago. We want to maintain that. It might be informative to the House if I mention that material deprivation, one of the other measures of poverty, is at an all-time low, with 6% of pensioners considered materially deprived. The overall trend of pensioners living in poverty has seen a dramatic fall in recent decades. That started off with the Conservative Government and then continued with the Labour Government. We have seen that halve since 1990. However, I assure the hon. Gentleman that this measure is for one year only. That will be on the face of the Bill, and I am confident that that will not be amended.

[Nigel Mills (Amber Valley) (Con)]

Will the Secretary of State confirm that this is a one-year change and that she is not taking the various suggestions to scrap the triple lock completely, so it will be restored from next year? Secondly, does she believe that when we have put this rise through, the pension will realistically have roughly kept pace with the rise in earnings over the three-year period from before the start of the pandemic, or does she think that the rise will end up being a bit less than earnings on a real basis for the average worker around the country?

[Dr Coffey]

It would probably not be wise for me to go down that route, because we are still trying to estimate the likely uplifts in the different metrics. We will not actually use the figures until later in the year, but because of how the machinery of benefit upratings works, we need to be in a position to trigger it in November. Given my hon. Friend’s position on the Work and Pensions Committee, he may wish to ask that question a little later once we have some more detailed analysis in that regard, if that is okay.

Pension Schemes Bill [Lords]

Debate between Thérèse Coffey and Nigel Mills

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Dr Coffey]

My hon. Friend is right to say that dashboards could encourage more people to consider consolidating their pension pots. There is guidance out there, and the Pensions Minister assures me that we are continuing to review the costs and charges that can happen in that regard. There is an element of administration cost that comes with such transfers, but I can assure my hon. Friend that we are on the side of the consumers who are saving to ensure that their money goes as far as possible for their future.

The Bill sets out the legislative framework for dashboards and makes provision to compel pension schemes to participate and provide good-quality data in a timely manner. The Pensions Regulator and the Financial Conduct Authority will be responsible for ensuring compliance by schemes. In the other place—this is perhaps covering a little of what has already been said—we introduced Government amendments to make it crystal clear that there will be a public dashboard, which will be overseen by the Money and Pensions Service. As I have already shared with the House, we want to ensure that we increase people’s engagement with their pensions, so it is important that the dashboards are accessible to as many people as possible. Some 52 million UK adults have pensions savings, involving over 40,000 schemes. That is why I believe that having multiple dashboards is the best option, ensuring people can easily access information to manage their financial affairs for today and tomorrow.

Part 5 covers a range of policies. Clause 123 and schedule 10 introduce new provisions with regard to scheme funding. Most sponsors and trustees work well together and use the flexibilities of the current scheme funding regime reasonably, but good practice is not universal. The scheme funding provisions seek to help trustees of defined benefit schemes to improve the way they manage scheme funding and investment. They will also enable the pensions regulator to take action more efficiently to safeguard members’ pensions and to mitigate risks to the Pension Protection Fund.

Climate risk is a key worry and concern for many people in this country. The Government are resolute in how we want to help to tackle emissions to achieve our commitment to net zero by 2050. The Bill will make the pensions system greener and support the commitment to get to net zero by 2050. Clause 124 contains regulation-making powers to require scheme trustees and managers, for the purpose of managing climate-related risks, to take climate change goals, including the Government’s net-zero target and the Paris agreement temperature goal, into account. The clause enables regulations to be made mandating pension schemes to adopt and report against the recommendations of the taskforce on climate-related financial disclosures. This will ensure that occupational pension schemes take into account climate change and the response to climate change in the Government’s risk management and investment strategy, and report on how they have done so. Such measures will ensure that occupational pension schemes take climate change into account and require that trustees disclose progress to their scheme members and the public.

Climate change is one of the defining challenges facing the planet for this and future generations, and the trillions invested in pension funds worldwide offers an enormous opportunity to build back better, greener and sustainably. I am extremely proud that we are at the forefront of efforts to effect real and lasting change. These pension measures are among the first of their kind on the international stage.

[Nigel Mills (Amber Valley) (Con)]

Does the Minister agree that the responsibility for pension scheme trustees goes further than just reporting having a strategy? Once they have invested, they need to engage and to monitor their investments to ensure they actually comply with their obligations to try to drive through that performance change.

[Dr Coffey]

I understand exactly the point my hon. Friend makes. My understanding is that the Financial Conduct Authority is changing its guidance or approach to make sure that asset managers are also getting on board. We are trying to ensure that asset managers, as well as trustees, are aware, so we have that collaborative arrangement to make sure we can make progress on this important use of pension funds.

One big concern people have relates to scams. Clause 125 further protects savers from falling victim to unscrupulous scammers when considering transferring their pension pots. The measures allow us to place conditions on a scheme member’s right to transfer their pension savings to another pension scheme. This will protect members from pension scams by giving trustees of occupational pension schemes a level of confidence that transfers of pension savings are made to safe, not fraudulent, schemes. Regulations will proscribe the circumstances where there is a high risk of a transfer to a fraudulent scheme and could require scheme members to obtain information or guidance before transferring.