Pension Schemes Bill

Tom Tugendhat Excerpts

Consideration of Lords amendments
Wednesday 15th April 2026 Commons Chamber

Finally, I quite often mention final salary pensions when we have such debates in this House, and I apparently made a really good point about them last time. This point was also made by the Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), but so many people in Harlow are unable to save for pensions. We all know about the cost of living crisis, and I am not going to get into a blame game, but we recognise the huge cost of living challenges for constituents in Harlow. They are actually living from day to day, and they cannot even begin to think about saving for a pension. So my big request to the Government is to consider how we can ensure that people who cannot save for a pension are able to do so, because we do not want, as I saw myself when I worked for a homelessness charity in Harlow, people who did not save for their pension having real challenges in later life.

[Tom Tugendhat (Tonbridge) (Con)]

I am grateful to be called to speak in this debate. Sadly, it reflects the interests of Members that so few of us are here for a debate about one of the most important elements affecting the future of our constituents, friends, neighbours and, in fact, ourselves. Pensions are rather more than just a savings scheme; they are the thread that binds generations. They are the remarkable invention of our ancestors, who found a way to make sure that the energy, innovation and force of the young could be tied to the assets, education and experience of the old. It is that bond between generations that makes pension saving so special.

While I welcome much of what this Bill does, I fully align myself with the points made by my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) about mandation. In that one small area, this Bill repeats an error that was made nearly 30 years ago when the Government, for very understandable reasons—it was a very tense moment in pension savings, just after the Mirror Group Newspapers scandal and the Equitable Life scandal—took upon themselves powers, which were entirely reasonable at the time, to de-risk some of the private pension market. That de-risking was about moving savings, very gently at the beginning, from equities into bonds.

In the early days, that did not make much of a difference. It took the percentage of bonds in investment portfolios from 19.1% to 19.3%, and so on. However, although the intention was to de-risk very slightly, the accumulation of time means that the bond element of pensions has grown, so that in the UK the figure is now roughly 60%, whereas in Australia or Canada, which are similar economies, it is roughly 20%. That is a real problem not just because it means pensioners are getting a lower return—they are getting a return based on the debt of the country, not on the energy of young people—but because young people are not getting the energy or the lifeblood they so vitally need when they are starting their lives.

Let us look at the difference between equities and bonds. The truth is that bonds are fundamentally dead money: they are money taken or held by the state in ways that pay back over five, 10, 15, 20 or more years—in fact, a couple of times, over 100 years. Equities are fundamentally different. It is true that they are not predictable and it is also true that they do have risk, but they are a bet on the energy of the young people in our community. They are that bond or ligature between generations that fundamentally makes a community strong, rather than tearing it apart.

Over the past 20 to 30 years, we have seen those bonds erode. What is the result? A slower growing economy. Why? Because there are no assets to invest. There is no water for the crops, if you like; there is no fertiliser for the soil. What else have we seen? Young people have been moving away because they do not have the opportunity to start their business, or when they do start their business, they do not then have the opportunity to go to the next stage. We see an amazing start-up culture here in the UK, but immediately they hit series A and B, people go to America—they go to California or to a Delaware corp and get foreign money. Again and again, that is happening because the state, for very understandable and entirely principled reasons, made a decision to take authority off savers in order to protect them, and I am afraid that that is what the Minister is doing again today.

I understand the Minister’s point. I understand why he feels he needs to take that power. He feels that the Government have a role in ensuring that pensioners get a better deal. I get that. He also feels that the best way to do that is for the state to exercise its authority over a market system. Again, I understand that. But the problem he has is a fundamental one: the only way we achieve the connection between generations and communities, and the only way we get that life flow of the living blood of an economy— the equities market—rather than the dead hand of the state through the bonds, is in a free market. By putting his hand on the tiller and his finger on the scales, he is changing that, and that incremental change over time will do much greater damage than he fully appreciates today, despite his best intentions and despite the intentions of the Bill. That is why I will not be supporting the Government today.

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[Torsten Bell]

I thank the Select Committee Chair for her intervention. The organisation she mentions has been consistently making these cases. In fact, the hon. Member for Wyre Forest (Mark Garnier) has spoken from the Opposition Front Bench about the work of that organisation in these debates, including in a Westminster Hall debate just a few months ago. It is an important thing to think about. Some of it reflects increasing international cross-border investments, but my hon. Friend is right to highlight that we see a lower level of home bias among the UK’s defined contribution schemes.

[Tom Tugendhat]

One of the challenges with defined contribution schemes is that so many of them are parcelled out in much smaller volumes than one would like, and when one compares them with, for example, Canada or Australia, we see superfunds in certain countries and not in the UK. While the Minister is correct that this means slightly lower bias, it also means significantly less growth in the UK market, because there is less capital flowing. This is an argument for both young and old people. I know that the Minister understand this, but it is worth making that link. Pensions are just as much about funding youth as sustaining age.

[Torsten Bell]

I absolutely agree with the last point that the right hon. Member made. I am planning an extensive discursion on his wider point about investment in equities versus gilts shortly, so I ask him to bear with me, but it is an important point to raise. We may not agree on it, but it is important to make sure that we have aired it properly.

The hon. Member for Torbay (Steve Darling) started his speech with a powerful story about his father, which I am sure will have resonated with many hon. Members. The point he made actually makes the case for the diversification that the Mansion House Accord itself aims to drive. That may not have been the intention of the hon. Member’s argument, but that is the point it makes. It also reinforces the importance of default pensions as a way to make sure that we support everybody. We should allow people to make their own choices while ensuring that there is a good option for everybody as they approach retirement.

The hon. Member for Torbay also talked about mandation. I am not going to lie; his words were a combination of disappointing and a bit confusing. He said that what is being proposed in the Bill is anathema to him. In that case, he is will be absolutely horrified to read the Lib Dem manifesto from the last election, which required investment managers to direct investments into particular assets. I leave him and his conscience to wrestle with that tension. The rest of us are not surprised by the Lib Dems’ attempt to sit on a fence, and then fall off it.

More importantly, and usefully, the hon. Member for Torbay raised the case of AEAT pensioners. I absolutely recognise the argument that he made. That particular case and the more broad set of cases of schemes that have entered insolvency and the PPF are exactly why this Government have acted in a way that previous Governments, including the coalition Government, chose not to act.

That issue was also raised by the hon. Member for Wokingham (Clive Jones), who also touched on surplus extraction and the question of its interaction with pre-1997 indexation insolvent schemes that are currently not choosing to pay indexation. I absolutely agree with his problem diagnosis. I have met many of the pensioners who have been affected; I have gone out of my way to meet them locally and nationally, along with many other MPs. All of us would feel the same in their situation.

I am less pessimistic than the hon. Member and, specifically, I think that he underestimates the role of trustees. He is right to say that there is nothing in the Bill that gives trustees the power to override employers—that is true. What is does do is give trustees a veto over any release of surplus. Trustees who want to put at the top of their priorities progress on discretionary pre-1997 indexation in those schemes but who have not done so will now have the potential to do so under this Bill. I recognise the issue that the hon. Member raises, but I think he underestimates the change that the Bill can bring to some schemes. It is important to remember that there are some schemes that are not paying pre-1997 indexation that are not in surplus, but I absolutely recognise that those are different situations.

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[Torsten Bell]

I am not going to commit from the Dispatch Box to writing 50 letters, but I will happily have a conversation with my hon. Friend about it, as I always do.

Turning to my hon. Friend the Member for Harlow (Chris Vince), I was going to welcome his speech, but unfortunately he spent most of his remarks praising the hair of the hon. Member for Wyre Forest, showing both questionable judgment and—[Laughter.] Obviously I am joking; it is some of the finest hair in Parliament, as we all appreciate. When he got passed praising the hon. Member’s hair, he turned to the division between public and private sector pensions. It is an important one to dwell on. There have been big changes in public sector pensions under both the Conservatives and the Liberal Democrats. He rightly made the case that the priority should be making private pensions better. That is what we should be focused on, and that is what we need to see.

That is what the hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) did not quite touch on. She was focusing on levelling down pensions, whereas we want to be able to level up and make sure that the younger generations, who are the ones who are invested in our defined-contribution system, can be confident that it is delivering a comfortable retirement. I think we all agree on that.

That is why the Bill is increasing the returns that are available within the defined-contribution system. It is also why we have the Pensions Commission, which I think is part of the cross-party consensus that we should look at the adequacy that that leaves us with into the middle of this century and return to the question of how we secure that adequacy, particularly for low and middle earners.

My hon. Friend the Member for Harlow rightly mentioned the relevance to pensioners of the NHS, even if that is not of huge relevance to this Bill. If we are honest, the biggest betrayal of today’s pensioners, not tomorrow’s pensioners, is the state of our NHS, and that is what the Government are in the business of turning around. We debate in this House the tax rises that the Conservatives would not like to see, but it is those tax rises and the reforms that the Secretary of State is putting in place that are seeing waiting lists now consistently falling across the country.

I promised a discursion on the remarks of the right hon. Member for Tonbridge (Tom Tugendhat). I particularly liked his opening point that all MPs should care about pensions, not least because I think we all plan to draw our pensions—if we are not already doing so—for as long as we possibly can.

[Tom Tugendhat]

Not yet.

[Torsten Bell]

There are Members of this House who are drawing several pensions, and they are to be encouraged to do so, working past the state pension age and contributing with their valuable expertise.

The right hon. Member then focused on how regulatory changes, partly in the 1990s, have driven changes in investment behaviours. We have discussed that on a number of occasions, and it is important to distinguish between a number of points. The regulatory changes in the 1990s by the then Conservative Government, which, as he said, were motivated by good worries about people trying to rip off their scheme members, introduced more of a safety bias into the investment strategies of those schemes at that point—that will have had an effect over time. When we look at the defined-benefit market—the biggest by asset values at the moment—it is important to recognise that that is not what is driving it today. What is driving it is the maturity of defined-benefit schemes and the fact that the vast majority of them are closed, so they are investing in a different way, and they would not want to be as exposed to equities as I am sure he is.

The question is therefore about the defined-contribution market, which is the future of not the entirety of our pension system but the majority of it. There the story is not the same: none of the regulations that flow from the 1990s Acts relate to the defined-contribution system today. That is why it is important to have had the debates we were able to have—until we heard recently some of the slightly over-the-top views of Conservative Front-Bench Members—about what would be the right thing in savers’ interests. The right hon. Member is absolutely right that this debate is about what is the right investment strategy for savers’ interests for the longer term. I therefore completely endorse what he said on that.

[Tom Tugendhat]

I am grateful to the Minister for his words; it seems that we rather agree. I agree with him that the problem with the defined-benefits system is that it is addressing—let us be frank—an ageing demographic. There is, however, a challenge: because of those changes and the influence that has had on defined benefits, there has also been some influence—I would not overstate it—in the culture that has affected defined contributions, which are therefore overly bond asset-heavy, if you see what I mean, in comparison to Australian and Canadian markets. That is not to the degree that I was talking about earlier of 60%—clearly, that is different—but it does mean that we have got a pensions economy more geared to an ageing demographic and then over-geared in other areas to follow the lead of the defined benefits. That means we see that that removing or strangling, if you like, of live money—turning live money into dead money—which is a net burden on the whole economy. I appreciate that it is not quite as black-and-white as I have painted it, but it is a challenge that is affecting the entire economy.

[Torsten Bell]

I absolutely agree with the right hon. Member’s focus on the generational challenges, but I have a slightly different view on what the biggest challenge is. The biggest issue for younger generations is if they do not have faith in a pensions system because they do not believe it will deliver adequate retirement incomes. That is the most important thing. That is why this Bill will aid the higher returns on those savings through a whole range of measures, and it is also why the Pensions Commission is so important to show those younger generations that we are looking ahead to their futures. I think that will help with some of the issues he raised.

I agree a bit less with the right hon. Member on the defined-contribution side. What stands out in the defined-contribution market is less the difference between bonds and equities—we see a much larger share of asset allocation to equities in defined-contribution systems—and more the exposure to private assets versus public assets. But there is a question about whether, if we do not have what we are trying to put in place with default pensions, we see some people in defined-contribution pensions lifestyling down, which means moving cash from equities into bonds.

[Tom Tugendhat]

I am grateful to the Minister, because this is actually becoming a debate in the Chamber, which is so rare. The Minister is absolutely right, but the reason why I link the two is that the nature of defined-benefit removing assets from UK equity markets has led to much slower growth in the UK stock exchange. That means that the levels of return for UK equities are lower, so defined-contribution trustees do not invest so heavily in shares. We then have a knock-on effect: when pensions need to have UK asset allocations—they want to have their savings in pounds, for understandable reasons—they cannot get the return off the FTSE 100 or 250, so they end up being tied into Government bonds. We therefore get that draw in a slightly different way.

[Torsten Bell]

Yes, basically I recognise the risks that the right hon. Member raises.

I think that I should now turn to the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately). [Interruption.] It is not that I was confused; I was worried, because she used to be a calm and reasonable person, but something weird has happened. I fear that she has been infected by the existential angst of the modern Conservative party, and a leader whose entire political strategy is to focus on being rude rather than being right. This infection has left the shadow Secretary of State desperately trying to tell anyone who will listen—that is not many—that pensions are being raided and that there is a war on savers. Wow—those are strong words.

There are just two problems with those words. First, they are nonsense on stilts, designed to scaremonger good savers. I am afraid that the hon. Member has confused a conspiracy theory with a pensions policy, which is disappointing. The second problem is the lack of consistency and self-respect. If you really thought the Bill was as dangerous as we have been told today, you would have fought it in the trenches. You would have opposed it every single step of the way—

Universal Credit (Removal of Two Child Limit) Bill

Tom Tugendhat Excerpts

2nd reading & Money resolution
Tuesday 3rd February 2026 Commons Chamber

[Steve Darling]

I thank the hon. Member for her non-partisan intervention. The Liberal Democrats opposed the two-child limit. We are on the record as doing that and I am delighted we did so. A Joseph Rowntree Foundation report published last week highlights how tackling poverty has flatlined since 2005, so the Liberal Democrats welcome this step forward in ending the two-child limit.

This measure is not just about children; it is about the future of our country and investing in people and believing in them. The Secretary of State alluded to the fact that youngsters have worse education outcomes, higher levels of mental health challenges later in life, and are unable to contribute to society as strongly as they could. The taxman takes less from them later in life, because their jobs are not so profitable.

[Tom Tugendhat (Tonbridge) (Con)]

I am slightly surprised that the hon. Gentleman is claiming that less is taken off them. Student loans, which could have received this £3 billion that this change will cost, are effectively taxing young people at 70% or 71%. Does he not think that that tax rate is high enough?

[Steve Darling]

I thank the right hon. Gentleman for his thoughts on that. I remind my colleague that shortly after the coalition Government, the Conservatives stripped away an awful lot of the safeguards around student loans, and that continues. It is not a happy situation for many students up and down the country that the Tories robbed them of those safeguards.

On a visit to Torbay hospital, I spoke to one of its senior directors. She sees her role as extremely important, because it is not just about treating people but tackling deprivation in Torbay. She comes across some patients who believe that a lifespan of up to around 60-something is adequate. That reflects the levels of deprivation in my community, which this measure will help to tackle. It will lift 2,000 children out of poverty in Torbay. We should have high ambitions for our country. As Liberal Democrats, we believe the best days of our country are ahead of us. By lifting the two-child limit, we include more people in a brighter future.

--- Later in debate ---

[Tom Tugendhat (Tonbridge) (Con)]

I have heard so many well motivated and moving stories about human misery, and the truth is those are the stories of our country. Those are the stories of a country that has tried for over 100 years to introduce a social welfare service to look after the poorest in our community and to do the best for them, and, in various different ways, all of us—and I do mean all of us—seek to do that. We may have different expressions and different understandings of quite how that works, but we do all try to look after those who are most vulnerable in our society.

But I think the division here comes in a very fundamental way, and it comes in the questions that one has to ask oneself when one looks at the way in which this economy, this society and this community grow. When I say economy, I mean not just the bald rows of figures that accountants and bankers add up, but the way in which the Greeks meant it: the way a home works together, the way people interact to bring about a community and to bring about a whole. How does that work? How do we get growth? How do we get investment and reward at the right point so that we actually see the progress that society can bring?

We have seen societies, time and time again, doing the well-meaning thing, and ending up costing everyone. We can read the constitutions and the promises of Governments and nations over the last century and see the human misery they led to—not because they were evil, but because those intentions were not aligned with the reality of a human economy. We have seen it time and time again.

Sadly, although we are now having a debate about the two-child benefit cap and about £3 billion, we are really having a debate about what it means to grow an economy. Although the Liberal Democrat spokesperson, the hon. Member for Torbay (Steve Darling), made a joke out of it, the reality is that we are seeing young people paying something like 70% tax—and some are therefore making the choice to go to Dubai, to Portugal, to the United States or to Australia. That connection between young and old people is being broken, with families left in need of not only the economic connection but of the human connection between them.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

Will the right hon. Member give way?

[Tom Tugendhat]

I will not.

This debate is not just about cash; it is fundamentally about people. There has been an attempt again to pretend that the only interaction between people is that which is metricked, divined and organised by the state, and that simply is not true. It simply is not true to say that, unless the state provides it, it does not count. Yet, again and again, we hear the same thing.

Yes, I know that the Conservative Government left taxes high, but many people seem to have forgotten that covid seemed to increase the debt enormously, and that when some of us tried to vote against various lockdowns, we were accused of murdering various groups, depending on whoever the then Leader of the Opposition seemed to be siding with.

[Several hon. Members rose—]

[Tom Tugendhat]

I have said I will not give way. It is true that what we are seeing in the UK today is a legacy: of poor decisions on covid that some of us condemned at the time; of promises made in the last year or two; and of debts to those who challenged leadership in the last six to 12 months. We are now seeing, falling on those who are working, a level of burden that is growing and growing, and people are voting with their feet, either by not working or by leaving.

I am afraid that what we are seeing here is a false choice. We are seeing a Government making promises that will never be able to be cashed. We are seeing a Government adding to a debt, not of £2 trillion—the one that they state—but of £12 trillion or £13 trillion, depending on how we count pension liabilities, private finance initiatives and many of the state’s other debts.

The reality is that this country is broke, and to a degree that nobody in this House seems to appreciate—certainly nobody on the Government Benches. We simply do not have the understanding here, among the noble and well-meaning socialists, that the reality is that they are racking up debts for their children that will mean that this state will be impoverished, we will be left weaker and the whole country will be poorer.

Universal Credit Project Assessment Reviews

Tom Tugendhat Excerpts

Tuesday 5th December 2017 Commons Chamber

[Stephen Kerr (Stirling) (Con)]

I am pleased to follow the “to the barricades” speech of the hon. Member for North West Durham (Laura Pidcock). I can assure her that if she joined me in visiting DWP staff at Randolphfield, Stirling, she would find that they are far from supine, as she alleges. They will absolutely tell me what is going on, and I count on that and am grateful for it.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

To suggest that DWP workers, who work with such integrity and courage in Tonbridge and other areas around my constituency, do not speak out when they are asked is to malign them. These are people with integrity and courage who work incredibly hard.

[Laura Pidcock]

On a point of order, Madam Deputy Speaker. I said that members of the Department for Work and Pensions work very, very hard. I did not—

Universal Credit Roll-out

Tom Tugendhat Excerpts

Wednesday 18th October 2017 Commons Chamber

[Mike Amesbury (Weaver Vale) (Lab)]

Just three and a half months ago, I came into this place with two main aims: to make life better for the people I represent; and to stand up for the most vulnerable and those in need. I know that those aims are shared by my hon. Friends on the Labour Benches, and probably by hon. Members on other Benches, too.

Unfortunately, three and a half months into my time as an MP for Weaver Vale, what has become absolutely clear is that, when it comes to universal credit, these aims and values are not shared by the Prime Minister, the Secretary of State or the Government. Indeed, those values are wilfully ignored and, every single day that universal credit is allowed to continue in its current form, there will be considerable problems.

My issue is not with the aim of the policy itself—we can see the value in the basic principles of universal credit and what it is trying to achieve—and nor is our dispute with the staff at our local jobcentres. Yes, I have visited my local jobcentre, and some are doing everything they can to support residents in circumstances that are not of their making or of their choosing. Our argument is with this Government, who are overseeing a shambolic implementation that is causing delays, confusion, distress and debt. Our concern is for the thousands of residents and families who are faced with hardship—and, in some cases, hunger and homelessness—while this Government carry on regardless, ignoring the effects of their policy on the people of Weaver Vale and this nation.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

Will the hon. Gentleman give way?

[Mike Amesbury]

No, I will not.

The Government are ignoring the effects of the policy on people such as Lucy, who was forced to take wage slips to the local jobcentre after a catalogue of errors from Government Departments meant that her payments were miscalculated. Lucy was left in arrears for rent and council tax, with no money for food for weeks on end. Her request for an advance payment—hon. Members have mentioned advance payments—was ignored. Indeed, she was told that

“this is happening to quite a lot of people.”

Lucy said to me:

“I have a daughter, I am a single parent trying to make an honest living, and this is how I am being treated.”

No Government, especially a Government who claim to be building a country “that works for everyone”, should hear those words and refuse to take action.

Pension Schemes Bill [Lords]

Tom Tugendhat Excerpts

2nd reading: House of Commons
Monday 30th January 2017 Commons Chamber

[Damian Green]

The purpose of the regulatory system we are introducing in the Bill is precisely to ensure that there are checks and balances to avoid some of the problems we have seen in traditional schemes. My hon. Friend may be aware that we are about to produce a wider consultation on defined benefit schemes, so some of the problems he rightly identifies will be addressed in that consultation.

There has been very fast growth in the use of master trust schemes. In 2010, there were about 200,000 members in master trust schemes in the UK. By December 2016, there were over 7 million members, and £10 billion of assets in 87 master trusts. The schemes are regulated by the Pensions Regulator in accordance with occupational pensions legislation, but that legislation was developed mainly with single employer pension schemes in mind. The master trust schemes have different structures and dynamics, which give rise to different risks. We have worked closely with the Pensions Regulator and engaged with other stakeholders to see what essential protections are needed. We believe that the measures in the Bill, while proportionate to the risks, will provide those protections.

The Bill introduces a new authorisation regime for master trusts. Under the new regime, the trusts will have to satisfy the regulator that they meet certain criteria before operating, or achieve those criteria if they are already operating. The criteria have been developed in discussion with the industry, and they include the same kind of risks that the Financial Conduct Authority regulation addresses in relation to group personal pensions, with which master trust schemes have some similarities.

Master trusts will now be required to demonstrate five things: that the persons involved in the scheme are fit and proper; that the scheme has financial sustainability; that the scheme funder meets certain requirements; that the systems and processes relating to the governance and administration of the scheme are sufficient to ensure that it is run effectively; and that the scheme has an adequate continuity strategy. The Bill sets out these criteria so that it is clear to master trusts and other stakeholders what the new regime will entail. Schemes will have to continue to meet the criteria to remain authorised. The regulator will also be given new powers to supervise master trusts, enabling it to intervene where schemes are at risk of falling below the required standards.

The Bill also places certain key requirements on master trusts and provides additional powers for the regulator where a master trust experiences key risk events, such as the scheme funder deciding to withdraw from its relationship with the scheme. The Bill requires a scheme that has experienced such an event to resolve the issue or to close. This requirement, along with the regulator’s new powers, supports continuity of savings for members, protects members where a scheme is to wind up or close, and supports employers in continuing to fulfil their automatic enrolment duties.

On the introduction of the Bill in the other place, the Pensions Regulator said:

“We are very pleased that the Pension Schemes Bill will drive up standards and give us tough new supervisory powers…ensuring members are better protected and ultimately receive the benefits they expect.”

In welcoming the Bill, the Pensions and Lifetime Savings Association commented that

“tighter regulation of master trusts is essential to protect savers and ensure that only good master trusts operate in the market”.

It went on:

“This is an important Bill that will provide the appropriate safeguards for the millions of people now saving for their retirement through master trusts.”

As I have said, we continue to engage with stakeholders on aspects of the detail to be made in regulations. We anticipate the initial consultation to inform the regulations will take place in the autumn, and it will be followed by a formal consultation on the draft regulations. Our intention is to lay the regulations during the summer of 2018, and the authorisation and supervision regime is likely to be commenced in full that year.

However, the Bill also contains provisions that, on enactment, will have effect back to 20 October 2016, the day on which the Bill was published. These provisions relate to requirements to notify key events to the Pensions Regulator, and constraints on charges levied on or in respect of members in circumstances relating to key risk events or scheme failure. That is vital for protecting members in the short term and will ensure that a backstop is in place until the full regime commences.

The Bill makes a necessary change in relation to the existing legislation on charges. We are keen to remove some of the barriers that might prevent people from accessing pension freedoms.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

I am pleased that my right hon. Friend has come to the section about charges. He will know of the transparency campaign I have been pushing. I am extremely grateful for the efforts that he and the Under-Secretary of State for Pensions, who is sitting to the left of the Secretary of State, have made in introducing more openness into pensions schemes. I should be grateful to hear more on how he will approach that.

[Damian Green]

I congratulate my hon. Friend on his campaign. Transparency is a key area. Hidden costs and charges often erode savers’ pensions. We are committed to giving members sight of all the costs that affect their pension savings. He asks for more detail. We plan to consult later in the year on the publication and onward disclosure of information about costs and charges to members. In addition to the Bill, other things are clearly required to give greater confidence in the pensions system. Greater transparency is clearly one of the steps forward. I completely agree with him on that.

As I was saying, we are keen to remove some of the barriers that might prevent people from accessing pension freedoms. The Financial Conduct Authority and the Pensions Regulator indicate that significant numbers of people have pensions to which an early exit charge is applicable. The Bill amends the Pensions Act 2014 to allow us to make regulations to restrict charges or impose governance requirements on pension schemes. We intend to use that power alongside existing powers to make regulations to introduce a cap that will prevent early exit charges from creating a barrier for members of occupational pension schemes who are eligible to access their pension savings. The FCA will introduce a corresponding cap on early exit charges in personal and stakeholder pension schemes in April this year.

The Government intend to use that power together with existing ones to make regulations preventing commission charges from being imposed on members of certain occupational pension schemes when they arise under existing contracts entered into before 6 April 2016. We have already made regulations that prohibit such charges under new or amended contracts agreed on or after that date. That will fulfil our commitment to ensure that certain pension schemes used for automatic enrolment do not contain member-borne commission payments to advisers.

In conclusion, we believe that the Bill is an important and necessary legislative step to ensure that essential protections are in place for those saving in master trust pension schemes. With many millions of members enrolled in such schemes, it is important that we act now to ensure that members are protected equally whatever type of scheme they are in. The measures proposed in the Bill have been developed in constructive consultation with the industry and other stakeholders, so we have confidence that they are proportionate to the specific risks in master trusts and will provide that necessary protection. In turn, that helps to maintain confidence in pension savings, and particularly in automatic enrolment. By making it easier for people to save through a workplace pension, the Government are building a culture of financial independence and long-term saving.

The Bill will also ensure that people are not unnecessarily dissuaded from taking advantage of the pension freedoms by high early exit charges. The Government have given people greater flexibility to take their pension savings, rewarding those who have worked hard and saved for their future. This is a focused Bill that specifically concentrates on the action we must take to cement the reforms we have already made, and I commend it to the House.