National Employment Savings Trust (Amendment) Order 2026

Viscount Younger of Leckie Excerpts

Monday 13th April 2026 Grand Committee

I support this order but I hope that the Minister will answer these questions because more is possible. The members of Nest, who tend to be among the least well-resourced savers in our pension scheme, deserve no less.

[Viscount Younger of Leckie (Con)]

My Lords, the Opposition broadly welcome this order. I thank the Minister for her clear outlining of the measures and the detail that she put forward.

This seems a straightforward and genuinely important modernisation of Nest; we are glad to see it being brought forward. Allowing Nest members to access drawdown pensions and scheme pensions—as well as extending broader and more flexible death benefit options to their dependants, nominees and successors—has to be a good thing. However, it also marks a significant shift in responsibility from the system to the individual, which makes the questions of guidance and support all the more important.

At the heart of this change is a principle that we support: people should have genuine control over how they access and use their own money. The pension freedoms introduced in 2015 were built on exactly that principle. Members should not be forced into products that do not suit their circumstances. They should be able to keep their funds invested, draw income at a pace that works for them and pass on what remains to those whom they love. Nest members deserve no less than that, so this order rightly brings them into line with the wider market—so far, so good. However, regardless of that, we have some questions for the Minister; she has touched on some of them.

It is clear to me that greater choice is genuinely valuable only if people are equipped to exercise it wisely. Drawdown is more complex as a product than annuity. It requires members to make judgments on investment risk, longevity and income sustainability—judgments that are not straightforward and which have real, lasting consequences if they go wrong. The introduction of these options for Nest members brings with it, therefore, a serious obligation on the part of the Government.

First, on financial education and support, Nest serves a membership that is, by design, composed largely of lower and moderate earners—people who were auto-enrolled, often for the first time, and who may have had little prior engagement with pension saving. These, in the main, are not members who have financial advisers; the Minister will know that, of course. They are precisely the people for whom the difference between a well-informed and a poorly informed decision at retirement is the most consequential. The Minister covered a number of my queries in her opening remarks, but can she tell us what specific steps the Government are taking to ensure that Nest members are properly supported in understanding these new options? That is more a question of communication. What guidance will Nest itself be required to provide? How will Pension Wise and MoneyHelper be resourced and promoted to reach this membership? What assessment have the Government made of the adequacy of the current financial guidance provision for those who are approaching retirement through auto-enrolment schemes?

Secondly, I know that the Minister spent some time on dependants in her opening remarks, but I want to say this: although the extension of drawdown and flexible death benefit options to dependants, nominees and successors is welcome, it creates its own complexities. A surviving spouse or dependant who suddenly becomes responsible for managing an inherited drawdown pot is in a very different position to someone who has spent years building up their own retirement savings. They may be grieving; they may have little or no experience of investment decisions. Can the Minister give some further information on what support will be available to those who inherit benefits under Nest in these circumstances? What obligations will Nest have to contact, inform and guide beneficiaries at the point when they come into an inherited pension? As the Minister will know, this is not a small matter; for many families, this will represent one of the most significant financial decisions that they have ever had to make.

Thirdly—I make no apology for raising this—this order does not exist in isolation. It has been made against the backdrop of the Pension Schemes Bill currently before the House and the two must therefore be read together. The principle that runs through this order is one of member choice and autonomy. People should be able to access their money in the way that best suits them. We agree with that principle unreservedly, but it is directly and fundamentally in conflict with the mandation provisions that the Government are seeking to introduce in the Pension Schemes Bill. We have made this point in Committee and on Report, and we make it again today.

You cannot, on one hand, expand member choice through instruments such as this and, on the other hand, propose to compel members through mandation into investment in particular outcomes or products not of their own choosing. The two positions are inconsistent. If the Government genuinely believe, as this order suggests, that members should be empowered to make decisions about their own retirement savings, they must abandon the mandation provisions in the Pension Schemes Bill. We will continue to press that case.

I close by raising a point that was highlighted by the Secondary Legislation Scrutiny Committee in respect of this order, which is that a call for evidence was announced in 2022 around these measures. However, they have only just been laid before Parliament. Can the Minister please confirm that she is confident that the evidence submitted is still relevant to the instrument that we are discussing today? Has any additional evidence been sought on this particular question since?

It is right that Nest members have the same freedoms that others in the market have long enjoyed. We are glad to see that that parity is being extended. However, the value of that freedom depends entirely on the quality of support and guidance that surrounds it and on the Government applying the same principle of member autonomy consistently across their wider pensions policy.

We look forward to the Minister’s response on all the points that I have raised. I have also noted all the points that the noble Lord, Lord Davies, raised on CDCs, which were interesting. We will be watching the progress of the Pension Schemes Bill with close attention, with Commons consideration of Lords amendments on Wednesday; I know that the noble Baroness herself will be doing the same.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their questions and I will try to answer most of them if I can. I will respond first to my noble friend Lord Davies and thank him for his support for this order and its aims. In relation to CDC, this order is obviously focused on certain benefits that Nest will be able to offer; principally, that is flexi-access drawdown. However, the Government are exploring how retirement CDC schemes could broaden options available to trustees and managers of pension schemes when developing default pension plans. It would be the responsibility of Nest trustees, like other schemes, to consider the needs of their members and to provide appropriate default plans. For Nest to offer CDC, the scheme would of course need to meet the relevant authorisation.

More broadly, we have been clear that CDC or retirement CDC could be used by schemes to meet their guided retirement duties but, again, it would be for the scheme trustees to consider the needs of their membership to determine appropriate retirement solutions, including the option of CDC. I may come back to my noble friend if anything else occurs to me.

The noble Viscount, Lord Younger, asked an important question about the particular composition of the Nest saver population. Many of these are low-income savers who would not otherwise have previously been involved in saving. Of course, one great advantage of these changes is that Nest is able to offer a wider range of choice and, crucially, through that, to meet its requirements under guided retirement. As he knows from our debates on the Pension Schemes Bill, guided retirement is the means by which the Government can make sure that schemes offer a default option to people, without them having to make complex decisions, which has an income element into retirement. That is the greatest source of the protection there.

It is also a protection against people simply making the choice to take cash, which may not be the right thing for them to do. Nest set out its blueprint about what its default option would look like, which was in different sections. There were the options of different pots: a drawdown pot, a cash pot and an income in later life. That is therefore the direction in which one would expect them to move. I do not think that there is anything else I can say at this stage, but I will go through Hansard and, if there is anything specific that I have not responded to, I would be very happy to do so.

The amendment that this instrument makes to the Nest order is crucial to the Government’s wider ambition to strengthen and modernise the pensions system, making it simpler and more attuned to the needs of today’s workforce. Obviously, I completely reject the case made by the noble Viscount, Lord Younger, that anything the Government are doing here contradicts anything in the Pension Schemes Bill, but since we have had many conversations about that subject and many more joyfully beckon to us, I may leave that for another day if he will permit me to do so.

Before I wind up entirely, another thought occurs to me. I was asked whether the Government have engaged with Nest. The Government hold regular meetings with Nest in relation to guided retirement and CDC provision. As with other workplace trust-based schemes, in terms of offering CDC it would be for the trustees to determine suitable retirement options for members, consistent with guided retirement. As I said, the Government are exploring how retirement CDC schemes can broaden the options available to trustees. If I have anything further on the timing of the regulations that would be needed in that direction for deaccumulation-only CDC schemes, I will come back to my noble friend.

By delivering this instrument, the Government are ensuring that 14 million people, many of them lower-income workers, can access an enhanced range of products to support them in retirement, giving them greater confidence and a clearer pathway towards financial security in later life. I commend this instrument to the Committee and I beg to move.