Pensions Commission

Baroness Spielman Excerpts

Wednesday 22nd July 2026 Lords Chamber

[Baroness Sherlock (Lab)]

I am grateful—I will never be so appreciated ever again, so I am really going to enjoy this session. My noble friend raises an important point. In a sense, it is up to individual schemes what their rules are for indexing their pensions. The minimum legal requirements for indexation have to be appropriate for all DB pension schemes, because they have to strike a balance between what members need and what the employer can afford. In the end, as he will know, the strongest guarantee is a good, strong sponsoring employer. However, there are two things that may help. One is, as he may be aware from the Bill, that the Government have changed the rules to allow a wider range of well-funded schemes to release any surplus that is there, with the agreement of trustees, which could be used to go towards paying for indexation, for example, if affordable and appropriate. At the other end of the scheme, the Government took action in that Bill to look at giving indexation to those who end up in the PPF or FAS for benefits earned before 1997. That will at least help.

[Baroness Spielman (Con)]

My Lords, the Pensions Commission is rightly worried about pension adequacy for a worryingly large and even growing proportion of the population and will of course make its recommendations in due course. But given the urgency of the problem, can the Minister tell us what the Government are doing now to promote greater financial self-sufficiency and reduced welfare dependency in retirement?

[Baroness Sherlock (Lab)]

Yes. The single best guarantee of a happy retirement is a happy working life where people have the opportunity to earn enough money and to save enough money. We absolutely are doing huge amounts—I will not recite it all here as I have done many times before—and investing in all kinds of programmes to get people into work and to get them to progress in work and to be able to move up the income ladder to be able to save. However, one thing we know is that too many people are not working long enough to save or saving enough when they are in work and, in many cases, even if they put the right amount of saving in, the decisions they make at the point they come to retire—decumulation—can be crucial to how much they get to live on. We have to attack it on all fronts; no one of those alone will do it.