Pension Schemes Bill

Debate between Baroness Sherlock and Baroness Janke

Committee stage
Thursday 5th February 2026 Grand Committee

[Baroness Janke (LD)]

I belatedly state my interest: I am a member of the LGPS. I apologise; I should have said that at the beginning of my speech, so I just put it on the record.

[Baroness Sherlock (Lab)]

My Lords, I thank all noble Lords for introducing their amendments. On top of the usual suspects, it is nice to welcome my noble friend Lord Hendy and particularly my noble friend Lord Pitt-Watson, who was brave enough to come to Committee and speak on these kinds of topics when he has only just made his maiden. We should all be delighted to have him here, and I especially thank him for his kind words about the Committee. It is a joy, and I look forward to having him here for many more pension debates.

Amendment 204 from the noble Baroness, Lady Stedman-Scott, gives me an opportunity briefly to update the Committee on how the Government are unlocking pension fund investment in projects with social and environmental benefits. We have talked quite a bit about the Mansion House Accord in recent Committees—for newcomers, this is the commitment by 17 major workplace pension providers to invest at least 10% of their default DC funds in private markets by 2030, with a minimum of 5% ring-fenced for UK-based assets.

The Government welcome this initiative because it is going to see funds flow into major infrastructure projects and clean-energy developments. The Sterling 20, set up in October 2025, is a new investor-led partnership between 20 of the UK’s largest pension providers and insurers and will be channelling billions into affordable housing, regional infrastructure and broadband. Initiatives such as the £27.8 billion National Wealth Fund will help increase the UK pipeline of investable opportunities. It is a UK government-created public finance institution designed to crowd in private capital, including pension investment, towards clean energy, low-carbon infrastructure and social housing projects.

This is already happening. Pension schemes have the flexibility to invest in bonds, social housing and green technology where such investments are in members’ best financial interests. Industry is clearly acting. Legal & General has pledged $2 billion by 2030 to deliver 10,000 affordable homes and create thousands of jobs. Nest has committed £500 million to Schroders Capital, including £100 million for UK investments and £40 million for rural broadband. The measures in the Bill, especially those relating to scale and governance for occupational and local government pension schemes, are intended to ensure that pension schemes reach the levels of scale and expertise to be able to invest more in a broader range of assets, including social infrastructure. The Government will be able to monitor those commitments.

It is always a delight to hear the noble Baroness, Lady Stedman-Scott, being passionate about the issues in which she has such experience. I understand the intentions behind the amendment, but the Government are worried that the proposed statutory review-and-fix framework could make the system more complex and costly to operate without a clear enough indication it would deliver better results for savers. However, I am with my noble friend Lord Pitt-Watson that we should all keep talking about these issues. It is one of the debates in which we share so many objectives. We are just talking about the best way in which to do this.

I turn to Amendment 218C from my noble friend Lord Hendy. Again, I fully recognise the intentions behind it and the concerns about human rights issues and investment decisions. UK pension schemes are, in general, not just passive holders of capital but long-term responsible investors required by the regulatory framework to assess environmental, social and governance—ESG— factors across policy setting, integration, stewardship and reporting, all grounded in their statutory duty to consider financially material risks. In many schemes, responsible investment policies set clear expectations on human rights standards. For example, the People’s Partnership policy explicitly sets out how it identifies, manages and mitigates these risks.

UK pension funds invest globally, as my noble friend Lord Pitt-Watson said, but within strict fiduciary duties, requiring them to prioritise members’ long-term interests, rather than simply chasing the highest return. Ethical considerations, including human rights, therefore increasingly shape capital allocation decisions as trustees weigh financial returns alongside reputational, social and sustainability risks. That role carries a significant responsibility for thorough due diligence across the portfolio. Fund managers will typically undertake screening to ensure companies meet minimum ESG standards, including sectors such as weapons, tobacco or fossil fuels and identifying weak labour rights or sustainability practices. Such screening helps manage long-term financial and reputational risks.

A core part of this is human rights due diligence assessing company policies, supply chain practices, labour standards and processes for addressing risks such as modern slavery. Managers also consider controversy histories, sanctions lists and engagement records to identify systemic concerns that may warrant action or divestment. Governance factors, board effectiveness, anti-corruption controls, executive incentives and transparency are also examined, as weak governance signals elevated long-term risk. Investors increasingly expect companies to provide meaningful ESG and human rights data consistent with UN recommendations placing risks to people and planet at the centre of decision-making.

We have seen internationally, most notably in the Netherlands, that funds will divest from companies linked to UN-identified human rights violations. UK schemes, too, are acting. We heard mention of LGPS funds. Southwark has divested itself from companies linked to conflict and genocide. In the private sector, People’s Pension withdrew £28 billion from State Street over reduced ESG and human rights engagement, reallocating the assets to managers with stronger stewardship commitments. These actions demonstrate a clear readiness to adjust strategies where human rights issues affect long-term value or reputational risk. To support such decisions, UK investors draw on respected international frameworks, including the UN guiding principles on business and human rights and the OECD guidelines. Evidence from the 2024 DWP call for evidence shows that trustees actively using these standards and the UN Global Compact to guide their management of social risks.

The DWP and the Pensions Regulator also provide guidance on social factors. The 2024 Taskforce on Social Factors offers practical support on risks such as modern slavery and child labour. As part of our forthcoming statutory guidance on trustee investment duties, we will consider how to embed further practical examples of good practice, from schemes such as Nest, Brunel and People’s Partnership, ensuring that trustees of schemes of all sizes can draw on proportionate, real-world illustrations of effective human rights risk management.

UK Poverty 2025

Debate between Baroness Sherlock and Baroness Janke

Monday 10th March 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, the noble Baroness has been around the game long enough to know that no matter how she tempts me to comment on speculation out there in the papers, if I did that I would at the very least be sacked, if not actually transported. So I hope she will bear with me when I say that the Government will always be aware of and consider the impact of their actions on people across society.

[Baroness Janke (LD)]

My Lords, what is the Minister’s response to findings in the report that the two-child limit is the biggest driver of rising child poverty in the UK today? Scrapping it would lift 300,000 children out of poverty and mean that 700,000 children were in less deep poverty. Does she agree that voters in the last election reasonably expected a Labour Government to end this catastrophic Conservative policy, and, if she does agree, when are they going to get rid of it?

[Baroness Sherlock (Lab)]

My Lords, Labour voters in the last election did not expect this Government to inherit the mess of an economy that we did.

Social Security Benefits Up-rating Order 2025

Debate between Baroness Sherlock and Baroness Janke

Tuesday 25th February 2025 Grand Committee

[Baroness Janke (LD)]

Can I ask about the record levels of deductions in universal credit that have been made in half of last year, which hit record numbers? I have been reading reports about them. Could we have some insight into that?

[Baroness Sherlock (Lab)]

I do not have an insight on that at the moment. It is something I have asked about and have not yet got clear data on, but we are hoping that the changes we will make around things such as the fair repayment rate will help to rebalance that at the bottom, but I will have a look and, if I have any more data, I will write to the noble Baroness, if that is okay.

I turn briefly to the guaranteed minimum pensions increase order. I am grateful for the support for it. It simply aims to ensure that members who have a guaranteed minimum pension earned between 1988 and 1997 receive a measure of protection against inflation.

My noble friend Lady Drake asked a good question, as ever—in this case, about whether all buyout contract providers have to take on GMP liabilities in full when they accept the original transfer from the defined benefit pension scheme. I am happy to say that the Pension Schemes Act 1993 and associated regulations require all bulk annuity contracts to provide GMP benefits where applicable. From the point of view of scheme trustees, if a scheme was contracted out and still contains GMPs, both its trust deed and rules, and the legislation, will require the trustees to make sure that the bulk annuity contract provides those GMPs. From the point of view of the buyout contract provider, if a buyout contract includes GMPs, the provider is under a contractual obligation to provide those benefits. If the correct benefits somehow are not properly reflected in the bulk annuity contract, the scheme trustees, I am afraid, will remain liable for any additional liability, and that would include any GMPs. A question has been raised about whether there should be additional guidance, but the schemes and providers already have a clear legal duty or requirement that they have to follow and that they should be familiar with before they consider a buyout.

To conclude, through these orders, the Government are increasing the basic state pension and new state pension in line with earnings growth by 4.1%, meeting our commitment to the triple lock. We are increasing the pension credit standard minimum guarantee in line with earnings growth by 4.1% to support pensioners on the lowest incomes, increasing benefits to meet additional disability needs, and increasing carers benefits and working-age benefits in line with prices by 1%, and we are ensuring indexation on guaranteed minimum pensions earned between 1988 and 1997 that are in payment. I commend these orders to the Committee.

State Pension: Triple Lock

Debate between Baroness Sherlock and Baroness Janke

Tuesday 21st January 2025 Lords Chamber

[Baroness Sherlock (Lab)]

That was a little ungracious, I fear, but I will unpick those points one at a time. First, on poverty, let us have a little statistics duel. The last Labour Government lifted a million pensioners out of poverty. Meanwhile, relative pensioner poverty saw a slight increase in the decade between 2010-11, when Labour was last in power, and 2022-23, the period for which we have the latest statistics. We all have challenges to face here, but this Government are determined to work on that.

On the pensions review, as I have explained to the noble Viscount before, stage 1 was focused on making sure that the market was working properly. Stage 2, which follows next, will focus on making sure that we have the appropriate levels of saving in the market and that people have the vehicles in which to invest. We are determined to do this but we cannot fix the entire pensions market overnight. If we tried to do that, we would make mistakes and the noble Viscount would take me to task, rightly, for those. We will do this in the right time, not the fastest time.

[Baroness Janke (LD)]

My Lords, 1.2 million pensioner households are dependent on the state pension. This includes three times more women than men in single-pensioner households. Does the Minister agree that to abandon the triple lock guarantee would plunge the poorest of pensioners into even deeper poverty and inflict hardship on many others who do not have the security of generous additional pensions?

[Baroness Sherlock (Lab)]

My Lords, I have made our position very clear on the triple lock: this Government are committed to the triple lock for the entirety of this Parliament. I am glad to be able to confirm that again today. However, underneath the noble Baroness’s question is something important about the gender pensions gap. I know that the noble Baroness has raised this before; I commend her for her commitment to this issue, which I share.

There are two things that I would say on this. First, the gender pensions gap starts with the gender pay gap, and this Government are determined to tackle that. For example, we have brought in gender pay audits. Once they come into place, we will be able to see what is happening on the ground, then address it and make it better. Secondly, the new set-up is better. Under the new state pension, we are finding that women pensioners are getting about 98% of what their male counterparts are getting; this was not the case under the old system.

Between these two things, and the review to make sure that private pensions work, as well as making sure that we get people into auto-enrolment, and that they get enough return on their investments, I hope that, bit by bit, we will improve the system for all pensioners, including women. I thank the noble Baroness for continuing to raise this in the House; it is an incredibly important issue.

Food Banks

Debate between Baroness Sherlock and Baroness Janke

Thursday 31st October 2024 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, the strategy came through loud and clear in my right honourable friend Rachel Reeves’s Budget yesterday. We have to get this country back to work and get it growing. If we are to reach a point where we can not only repair the damage done to our public services but rebuild our country, we have to make it work. The foundations were laid really well and clearly in the Budget yesterday. The Government have a plan to make work pay. We have a White Paper coming out on that and are reforming the whole of employment support. We want people to be able to get into jobs, keep them and progress in them—not just to make a difference to themselves but to rebuild our country.

[Baroness Janke (LD)]

My Lords, to pay for the Government’s healthy eating recommendations, the poorest 10% of UK households would need to spend 74% of their post-housing disposable income on food. The consideration of healthy eating is not a factor in calculating benefit rates. Do the Government believe that the poorest and most vulnerable people should have access to healthy food and, if so, how will calculations about benefits in the future reflect this?

[Baroness Sherlock (Lab)]

I absolutely agree about the importance of access to healthy food and there are schemes out there to help the lowest-income families access it, particularly pregnant women and the parents of younger children. Having been asked by a noble Baroness previously about breakfast clubs in primary schools, I went off to check and discovered that they are to be covered by the school standards for food, so we will make sure that there are nutritious breakfasts there. But in the end the noble Baroness, Lady Janke, raises a really important point: we have to tackle the child poverty at the root of this if families are to be able to feed their kids appropriately. That brings us back again to the child property strategy but I am delighted that, in the short term, there were some down payments. One small thing, which will not have gone widely noticed, is that we will introduce a fair repayment rate for universal credit. It sounds really technical but reduces the total cap on deductions from universal credit from 25% to 15%. That means that 1.2 million of the poorest households have £420 a year more to spend, which makes a real difference.

Pensioners: Winter Support

Debate between Baroness Sherlock and Baroness Janke

Tuesday 29th October 2024 Lords Chamber

[Baroness Sherlock (Lab)]

Approximately 1.4 million pensioner households receive pension credit. We received around 74,400 pension credit claims in the eight weeks following the announcement about the winter fuel payment on 29 July—which is probably what has triggered the noble Baroness’s question. In the eight weeks after the announcement, there were 74,400 applications, while in the eight weeks before it, there were 29,500. That represents a 152% increase in pension credit claims received over that period. That period finished in the week starting 16 September, so more have come in since then and more will come in between now and the deadline of 21 December for when people can apply and still have their winter fuel payment backdated for this year.

[Baroness Janke (LD)]

A large majority of low-income pensioners are not on pension credit and therefore will lose the winter fuel payment, although they are living below the poverty line. What emergency measures have been put in place to support those pensioners? What are the Government doing to refine their targeting policies to make sure that full winter fuel support goes to all poor pensioners who are desperately in need of it?

[Baroness Sherlock (Lab)]

My Lords, the first thing would I mention once again is the household support fund. That is £421 million provided specifically for local authorities to support those in need, especially with the cost of living, such as food and fuel, so that is somewhere for people to go. We realise there is still a significant number of people who could claim pension credit, and if they get pension credit, they will get the winter fuel payment. It also opens up a gateway to other potential support with rent or council tax and passporting to a range of other benefits. We are running a campaign, and we will shortly be writing to 12 million pensioners. We will soon be writing also to 120,000 pensioners who get housing benefit who we think might be entitled to pension credit as well, so we are doing huge amount to make sure all that those in that space can claim it. The final point is that there are two bits to pension credit. The main bit tops up income to a certain level. There is also the savings guarantee, so people who have more savings and may think that they are not entitled to the slightly higher income could still be entitled to some pension credit. If they get any at all, they get the winter fuel payment, so please spread the word.

Women’s State Pension Age: PHSO Report

Debate between Baroness Sherlock and Baroness Janke

Monday 28th October 2024 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, we understand the human impact felt behind the issues raised in this report. Retirement is a significant milestone that should, one hopes, be greeted with excitement rather than surprise. But I say to my noble friend that I do not think this Government could be accused of kicking the can down the road; the ombudsman published its report in March, we became the Government only in July and it is now October. Although I fully understand that he would like me to articulate a response here, I am sorry that I am not able to do so. However, I assure him that the Minister for Pensions met WASPI representatives recently—the first Minister to do that since 2016.

[Baroness Janke (LD)]

My Lords, by the time they reach 65, women will typically have £69,000 in their pension pots compared with the £205,000 the average man will have by the same age. What practical measures will the Government take to address the injustice of the pensions gender gap and enable proper security for women in retirement and old age?

[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness for raising a really important point. The gender pensions gap starts with the gender pay gap. Therefore, the first thing the Government need to do is address the gender pay gap and we are committed to doing that. The national pay gap still stands at over 14%, which is really shocking. We know that most employers understand that, when women succeed, so does their business. We are committed to making sure reports are given. For example, gender pay gap action plans will be mandatory and will reflect the hard work of outsourced workers as well as employees.

The kinds of reforms that have taken place under successive Governments are beginning to change at least the way the state pension addresses the gap between men and women. In the new state pension, there is less of a difference because the old state pension was much more dependent on national insurance contributions and pay-related additional pensions, whereas the new one does not have that. The gap is closing, but in private pensions it is still significant, and we need to do more about that.