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Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Pension Schemes Bill, has consented to place his interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Member’s explanatory statement
This amendment removes a cross-reference to section 26(7B) of the Pensions Act 2008, left out by a report stage amendment in the name of Baroness Bowles of Berkhamsted.
Baroness Bowles of Berkhamsted (LD)
My Lords, I did not expect to be back moving amendments quite so quickly, but despite the 20 consequential amendments that I moved on Report, four more have come to light. They are printed on the Marshalled List. They are entirely consequential on Amendment 52, which deleted mandation. All I seek to do with Amendments 1 to 3 and 8 is to move them formally when the time comes. I beg to move.
Baroness Hayman (CB)
My Lords, I will say a word or two at this stage about government Amendment 4, because I understand it relates to Amendment 156, which the Minister moved on Monday. That Amendment 156 had wide Cross-Bench support, coming as it did after an amendment in the other place that was supported across parties and particularly by the Liberal Democrats. It gave the Government the responsibility and ability to issue statutory guidance on the fiduciary duty of trustees in relation to systemic issues, including climate change and many more.
In response to that, the Minister in the Commons said that the Government would bring forward plans to ensure that the guidance reflected the views of all within the sector and that it could be useful to trustees. All I have ever been interested in is bringing forward something that would help those involved with investment decisions for pensioners to be able to take into account with confidence the long-term systemic issues that they found. I am sure the Whip would not want me to repeat their arguments, which I am in danger of doing.
Following the vote on Amendment 156 on Monday, which I still do not understand, I am concerned about what the Government will now do. They are committed to this course of action and have taken a great deal of effort in setting up the technical working group and getting views from across the sector. It would be a real shame if that work were somehow to be halted by the procedural issues of how we get the legislative base to do this.
I should pay tribute here to the Minister and her officials, who moved at great pace and put a lot of effort into coming up with a solution that unfortunately was not accepted by the House on Monday. I would very much appreciate some understanding from the Minister, when she winds up, of how this issue will go forward. Because it was a government amendment, we do not have the opportunity of asking the Commons to think again; it is dead in this House. I would very much value an understanding that the need for this guidance has not gone away. As I understand it, the Government’s commitment to the guidance has not gone away, so it would be very interesting to know how we take the next steps.
Viscount Thurso (LD)
My Lords, my Amendment 6 is entirely consequential on the amendment your Lordships agreed to. I am very grateful to the Public Bill Office for its advice in helping me to correct this, and I will move it formally when the moment comes.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, the amendments here are minor and technical following Report, and the Government will not oppose them today. Amendment 4 in my name is also minor and technical. This amendment was tabled to correct an error concerning Amendment 178, which was moved by mistake on Report on Monday 23 March. As the noble Baroness, Lady Hayman, said, that amendment relates to the commencement of Amendment 156 on investment duties guidance, which was disagreed by the House. The amendment now removes the commencement clause to honour the usual channels’ agreement on the package, as it was a missed consequential amendment.
In response to the questions from the noble Baroness, Lady Hayman—I commend her on her work on this important issue—the Government introduced their amendments to this House to honour the commitment given by my honourable friend the Minister for Pensions in the other place. Since the House disagreed with those amendments, obviously that cannot proceed. They were removed from the Bill in this House. Therefore, the other place will not get to consider them again. However, she is right that the need for guidance and clarity does not go away.
The Government remain committed to improving clarity around trustees’ existing investment duties, including how schemes consider long-term and financially material factors such as climate and systemic risks, while maintaining their core duty to act in members’ best interests. We will press ahead with this important work. We are currently reviewing next step options to ensure this objective continues to be progressed in the most important way in the light of the decision of the House on this matter.
The technical working group, which was discussed at some length in our proceedings, bringing together legal, actuarial and investment experts, will continue to play a central role in helping government develop high-quality guidance and ensuring it is workable, proportionate and valuable to schemes. Further updates will be provided in due course. I hope that gives enough information; it is all I am able to say at the moment. In the meantime, Amendment 4 is a necessary step, and I hope the House will support it.
Member’s explanatory statement
This amendment is connected to another amendment in the name of Baroness Bowles of Berkhamsted to the commencement clause.
Member’s explanatory statement
This amendment removes a cross-reference to section 26(7B) of the Pensions Act 2008, left out by a report stage amendment in the name of Baroness Bowles of Berkhamsted.
Baroness Sherlock
Member’s explanatory statement
This amendment corrects a mistake.
Baroness Neville-Rolfe
“(g) section 130 comes into force on the day on which this Act is passed.”Member’s explanatory statement
This amendment makes provision for the commencement of clause 130, which was inserted by an amendment in Baroness Neville-Rolfe’s name at report stage.
Viscount Thurso
“(g) section 131 comes into force on the day on which this Act is passed.”Member’s explanatory statement
This amendment makes provision for the commencement of clause 131, which was inserted by an amendment in Viscount Thurso’s name at report stage.
Baroness Stedman-Scott
“(g) section 132 comes into force on the day on which this Act is passed.”Member’s explanatory statement
This amendment makes provision for the commencement of clause 132, which was inserted by an amendment in Baroness Stedman-Scott’s name at report stage.
Member’s explanatory statement
This amendment removes a cross-reference to section 28G of the Pensions Act 2008, left out by a report stage amendment in the name of Baroness Bowles of Berkhamsted.
Baroness Sherlock (Lab)
My Lords, I am grateful to the House for its scrutiny of the Pension Schemes Bill. The Bill will make a real difference for people saving for their retirement. It will help their money to work harder by improving how pension schemes operate, reducing unnecessary costs and enabling larger, better-governed schemes to secure stronger long-term returns. It will also make pensions easier to follow by tackling the growth of small dormant pots, and it will give people clearer and more dependable support when they come to draw their pension so they can make choices that meet their needs. For those in defined benefit schemes, the Bill strengthens long-term security through a well-regulated superfund regime. It brings clarity to areas that have caused uncertainty for savers, including historic scheme alterations and support for those facing a terminal illness.
Taken together, these reforms help build a system that is easier to navigate, better run and more supportive of people as they move towards retirement. During the passage of the Bill, the House voted for amendments that the Government did not support. I can assure the House that we will reflect carefully on these as the Bill moves to the other place.
I thank noble Lords who have contributed to the debates. I thank the noble Baroness, Lady Stedman-Scott, the noble Viscount, Lord Younger, and the noble Lord, Lord Palmer, for their engagement throughout proceedings. I thank my noble friend Lord Katz, my Whip, for doing so much work on the Bill and being such a great source of support.
I am also grateful to all those who worked so hard on the legislation, including the excellent Bill managers, Jo and Amanda, for advice, encouragement and the provision of excellent cupcakes; our officials, Sam, Rob and Anna, and their brilliant teams; and my private office, especially Hussein and Ollie, who have worked incredibly hard and kept me upright, well briefed and organised as time has gone on. I beg to move.
Lord Davies of Brixton (Lab)
I am pleased that the Bill is to pass. It is a good and welcome Bill because it deals with administrative and bureaucratic complexities in the present system. I have to admit that it is not quite as good as it would have been if it had adopted some of the amendments I tabled in relation to people who were denied pre-1997 pension increases, and the release of surplus, but we have to accept that. I am therefore pleased that on Report my noble friend the Minister gave an assurance that the Government will closely monitor how the powers of surplus release will be used and will keep that very much under review. This was reinforced in the House of Commons Adjournment debate last Thursday, when the Minister for Pensions made clear the extent to which they will closely monitor how the Bill will be operated in the context of surplus release.
Lord Palmer of Childs Hill (LD)
My Lords, if only we had dealt with all the amendments during the passage of the Bill as quickly as we have today, we would not have been here quite so late on many occasions.
I thank my noble friends Lady Bowles—whose expertise has been amazing—Lord Sharkey and Lord Thurso, and our hard-working political adviser, Ulysse Abbate. I also thank profusely those on the Conservative Front Bench, with whom we have worked very well on things on which we agreed. When we disagreed, we did not come to a bunfight. I thank the noble Baroness, Lady Altmann, a former Pensions Minister, whose expertise has been valuable in dealing with the Bill. I also thank the Minister and the noble Lord, Lord Katz, and their team, for their superb work on a very technical Bill with high-stakes issues. I realise that there are pressures from the other end as well as here, but we think we have worked well and come out with something pretty reasonable.
On these Benches we recognise and welcome some of the measures in the Bill, such as the value-for-money framework and the superfunds legislation. We have also noted large gaps in the regulation, including on pension scandals such as the AEAT pension scandal and injustices that no one seems to want to face up to, such as the pre-1997 indexation issues. The Liberal Democrats will continue to challenge the Government on going further.
We have worked hard to expose the flaws in the Government’s plans on mandation. This is probably one of the most important issues. Not only is a reserve power dangerous, in that it gives this and future Governments huge powers, but the clause itself has flaws, which my noble friend Lady Bowles and others across the Chamber have pointed out extensively in our debates.
We have had a very good run with this Bill. I again thank the Minister for engaging with us and, I hope, coming up with something that maybe, as time goes on, we can tweak in some ways, but not necessarily in primary legislation.
Baroness Stedman-Scott (Con)
My Lords, I warmly acknowledge the collegiate and genuinely cross-party approach that has characterised the passage of the Bill through your Lordships’ House. I know I also speak for my noble friend Lord Younger of Leckie in expressing our sincere thanks to colleagues across the House for their constructive engagement. It has been a pleasure to work alongside them, and our collective efforts have ensured that this important Bill has been subject to the careful and thorough scrutiny it deserves.
This is a fundamentally important Bill, and I am pleased that we have agreed several amendments to address some of the concerns that together we have identified. I had one amendment on the Marshalled List today, a technical amendment necessary to commence Amendment 169 passed by your Lordships’ House on Report. The Government accepted this amendment today.
I will not rehearse an exhaustive list, but the Government now have an obligation to return with clear answers to the concerns we have raised, including in particular: the Local Government Pension Scheme and whether it is truly fit for purpose for its members; whether the proposed consolidation timetable is workable in practice for ordinary working people; whether the scale requirements risk undermining innovative and high-performing schemes; and the scope, rationale and implications of the mandation power—there was a resounding view that it should be removed entirely.
Many noble Lords have made valuable contributions to our deliberations on this policy through amendments, speeches and constructive engagement both inside and outside the Chamber. It is not possible to thank everyone, but I place on record my particular gratitude to the noble Baronesses, Lady Altmann, Lady Neville-Rolfe, Lady Noakes and Lady Penn, and the noble Lords, Lord Fuller and Lord Lucas. I also extend my thanks to the noble Baroness, Lady Bowles of Berkhamsted, the noble Lords, Lord Palmer and Lord Sharkey, and the noble Viscount, Lord Thurso, from the Liberal Democrat Benches, with whom it has been a genuine pleasure to work. I am grateful to the noble Lord, Lord Vaux of Harrowden, for his thoughtful engagement on the Bill.
Finally, I thank the Minister for her work in steering the Bill through the House, and the noble Lord, Lord Katz, for his support. The Minister has responded to a great many questions, often highly technical and searching ones, and has given considerable time both in Committee and on Report to what is, in many respects, a dense and complex piece of legislation. I thank noble Lords for their engagement, particularly in Committee, which has been helpful and much appreciated.
This Bill contains a number of significant flaws and shortcomings. Your Lordships’ House has offered the Government a clear opportunity to make necessary and timely improvements. I very much hope that we will continue to work together with the Minister and her colleagues in the department to take that opportunity.