Pension Schemes Bill [Lords]

Debate between Tom Tugendhat and Damian Green

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.

Policing

Debate between Tom Tugendhat and Damian Green

Wednesday 4th November 2015 Commons Chamber

[Tom Tugendhat]

I am happy to welcome Labour policies when they work, and PCSOs do work. They are a brilliant innovation. I particularly welcome the efforts of my right hon. Friend the Minister for Policing, Crime and Criminal Justice in supporting them, and the amount of work that he has personally done in ensuring that they have every opportunity not only to serve in their current roles but to be promoted to warrant service if they wish—and, indeed, many do.

I am very grateful that PCSO Harrison will be there. These individuals across Kent—this whole team—have in the last year seen a reduction in crime of 6%. I know that that is not down to them alone; it is down to a network, and that network starts in Kent and spreads to the whole of the United Kingdom. That co-operation, which is led very much by the chief constable, has done an amazing amount to ensure the people of Kent are safe. Chief Constable Pughsley has ensured that we have been innovative in introducing new technologies, and I am grateful that my right hon. Friend the Member for Ashford (Damian Green) has mentioned some of them. I would just like to raise one of them. In January, Kent Police introduced TrackMyCrime which I hope many other police forces will be introducing soon. It has seen the time taken for a crime report fall dramatically. It has also increased the satisfaction of those reporting crime. It is fantastic to say—or, rather, it is a mixed blessing—that 3,000 have been victims of crime and have used it; it is sad that there have been that many victims, but it is great that that many have used it, and the satisfaction levels have been very good.

The presence of police is not just about individuals, nor just about bricks and mortar, although I do know we all take very seriously the important decisions that will be taken over the location of police stations over coming years. The police station in Tonbridge and that in West Malling are extremely important. I welcome the work done in outreach—many policemen are now operating in our communities from council offices and, indeed, from supermarkets and mobile police stations, but it is not just about that; it is also about the work done across our whole nation.

That is why I am going to take a few moments to welcome the Bill introduced to this House earlier today. The draft Investigatory Powers Bill is absolutely essential. It is essential for ensuring that the intelligence the police need to do their job is available to them. It is essential to ensure that our intelligence services can co-operate effectively with the police so that we have the kind of integrated defence network we need to ensure that our communities are safe, not only from terrorism, violent crime and indeed child pornography and paedophilia, but also from more run-of-the-mill crimes that sadly blight the lives of so many of our constituents. I am delighted that the Bill is now before the House and will soon, I hope, become an Act.

Finally, I very much welcome the democratisation of police forces that we have seen under this Government. I know I am probably the only one in Kent who says this, but I welcome the new police and crime commissioner. That is not a universal statement in Kent—there are divergent opinions—but at least we know in Kent now who is taking the decisions.

[Damian Green]

Indeed, we do know who is making the decisions and we can hold the PCC to account. That is particularly important in that before the current PCC became the PCC she chaired the police authority so she was doing roughly the same job only with no public accountability. There cannot be a better example of the democratic improvement of having PCCs.

[Tom Tugendhat]

My right hon. Friend is absolutely right and speaks for me, because that is exactly what I was going to say.

Knowing now who actually takes the decisions on police priorities, the location of police stations, the use of resources and the priority of innovation, it is essential that when we get to the PCC elections—in 2016 in my area—we focus on who we want. These decisions are no longer for anonymous apparatchiks who hold secret sway over our policing; they are for people who are empowered with a huge burden of responsibility, and I greatly welcome the quality of candidates who are stepping forward on the Conservative side. I hope very much there will be excellent candidates from the other sides as well, because we need the best candidates for this job—not party political, but the best candidates. I am delighted to say that we have put forward some of those.

The growth in interest in technology should continue. It is not a process that is going to stop; in fact, it will accelerate as the criminals exploit ever-greater technological innovation, whether through secret messaging on WhatsApp or Facebook Messenger, through exploiting online banking to commit greater fraud or through phishing—in the internet sense—for greater riches. It is therefore absolutely right that our police step into that world and that our security services help them. I welcome the work being done in this area by the Minister for Policing, Crime and Criminal Justice and, in particular, by my right hon. Friend the Home Secretary.