Pension Schemes Bill

Caroline Nokes Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Order. Before I call the next speaker, I just want to be clear that it will be about an hour before the wind-ups. Nine Members are bobbing, so perhaps you can all reflect on that in your contributions so that I do not have to put on a time limit.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to speak on this Bill. Pensions and the regulation of private pensions are increasingly of national interest. I believe that regulation is needed, so I welcome the Bill. Obviously the small print will become more apparent during its passage, but it is good that we are introducing the Bill.

The Government’s intention of ensuring that people have a private pension to supplement their income when they eventually reach retirement is increasingly being realised. By and large, most young people—22 million, I understand—have a pension. The Minister will remember the story I told him about when I was 18. I think I am right in saying that I am the oldest person in this Chamber, so that was not yesterday. The fact is that pension advisers were almost unheard of then. I will tell hon. Members who the best pension adviser I ever had was: my mum. When I was 18, she took me down to the pension man in Ballywalter. She said, “You need a pension.” I said, “Mum, I’m only 18. What do I need a pension for?” She said, “You’re getting a pension.” We know how it is: our mum tells to do something, and we just do it, so I got a pension on her advice.

I ended up with four pensions over my working life, which were all beneficial. I did not understand the value of them until I came to the stage at which I was going to cash some of them in—I realised the value of them then. Today, we have an opportunity to advise young people of the need for a pension. When it comes to pensions, not everybody has my mum, but everybody has somebody, or an equivalent through Government.

Let me give a quick story about my office staff. I employ six ladies and one young fella. They are in their 20s, 30s, 40s, 50s and 60s. I will not get into trouble by naming the staff in each bracket, but their approach to their pension varies by age bracket, and that is a fact; they see it differently. Listening to their discussion highlighted to me the need to educate people on the importance of paying into their pension, because it is so important that we get this right. That is why the Bill is important: it is an opportunity to advise people.

One member of my staff has two children at primary school. She highlighted that she was paying an additional 5% into her pension on the advice of her older colleague, only to find that the tax on her savings this year meant that she actually had less money in her account each month compared with last year. The first thing to go was not the kids’ piano lessons or hockey camp—she said that those experiences shaped her children’s memories. The first reduction was scaling back on her pension additions. People might say, “My goodness me! That was not necessary,” but actually it was, if she wanted to preserve that lifestyle for her children. It seems that the tax on savings means that one mum has made the choice to stop supplementing her pension, and to instead sow the money into her children’s lives just now. That is not the aim of the Government or the Minister, but there is only so much that we can tax the middle class before they make cuts that are not in their best interests.

Apart from a number of clauses, this legislation does not directly affect Northern Ireland, but it should be noted that accompanying legislation and a number of legislative consent motions—statutory instruments—will come to this Chamber that will change the pension schemes in Northern Ireland. Ultimately, what we discuss here and what happens through this Bill will come to us in Northern Ireland, and the Northern Ireland Assembly will bring provisions in Northern Ireland in line with those here. I have therefore considered carefully the aims of this legislation, and whether I believe it will be effective in achieving those aims. The Minister has said that this Bill will fundamentally

“prioritise higher rates of return for pension savers, putting more money into people’s pockets in a host of different ways. For the first time we will require pension schemes to prove they are value for money, focusing their mindset on returns over costs and protecting savers from getting stuck in underperforming schemes for years on end.”

When we look at the issues, we understand the necessity for the Bill.

In his introduction, the Minister referred to 13 million small pension pots floating about in the UK pension system, with £1,000 in each. It seems logical to have a better pension system for people—I think it does, anyway, and maybe we all do. It is essential that the opt-out is iron-clad, and I will give a reason why. One of my office staff members would not be comfortable with her pension paying into any companies that test on animals, for example. Another has said that she wants the highest return, full stop, so we must ensure that the Bill enables people to follow their moral obligations as well as get a return on their work. I am concerned that consumers will be tied down and face difficulty in leaving pots, which is something that must be addressed. With that in mind, I welcome this Bill to regulate the pension market, but we must ensure that it does not become a mechanism for Government to control the private pension industry and direct pension pots into Government investment. We must ensure that this Bill simply protects pensioners, and I very much look forward to watching its progress.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Rebecca Smith (South West Devon) (Con)]

It has been a privilege to hear so many well-informed and considered speeches this evening. I am sure we would all agree that there is clearly significant expertise in the Chamber.

The heart of this Bill is people doing the right thing by preparing for their future and saving into their pension pots. With auto-enrolment having been introduced by the Conservatives in 2012, there are now over 20 million employees saving into a workplace pension. That is 88% of eligible employees saving into a pension and preparing for later in life, which is a great achievement that I hope everyone in this House can celebrate. However, while the number of people who are saving has increased significantly, engagement has remained low, as we have heard this evening. Less than half of savers have reviewed how much their pension is worth in the past 12 months, while over 94% of pension savers are invested in a pension scheme’s default investment strategy. With people taking the right steps and starting to save for their retirement early thanks to our action, we must now ensure that the pensions market is working for them, so that they get the best returns on their savings and ultimately have the comfortable and secure retirement for which they were planning.

We have heard many contributions this evening. I will briefly mention the hon. Member for Tamworth (Sarah Edwards) and my right hon. Friend the Member for North West Hampshire (Kit Malthouse), both of whom gave us lengthy and very detailed speeches presenting both sides of the argument. [Interruption.] They were very enjoyable speeches—that was not a criticism, just an observation of the way things have gone this evening. Both the hon. Member and my right hon. Friend clearly showed the expertise that they garnered earlier on in their careers and expressed some legitimate concerns, particularly about the consensus that there has perhaps been in the Chamber this evening. Some points have been made showing that that consensus is not entirely guaranteed, certainly among Conservative Members. We support the principles behind the Bill—indeed, much of what we have heard builds on the work that the Conservatives were doing while we were in government. We want to ensure that poorly performing pension schemes are challenged, excessive administration costs are removed, and savers receive the best returns on their investments. Ultimately, that is how we will ensure more people have a comfortable retirement.

However, we have concerns about some specific measures in the Bill, which we will scrutinise further as it progresses. In particular, we have significant concerns about the reserve powers that allow the Government to set percentage targets for asset allocation in core defaults offered by defined-contribution providers. In other words, a future Government could tell pension schemes where they must invest their funds, regardless of whether it delivers good returns for savers. This potentially conflicts with their fiduciary duty to act in the best interests of their members. While I know the Minister will stress that the Government do not intend to use those reserve powers, that neither addresses concerns about what a different future Government could do nor explains why those powers are being brought in. It could be asked why the reserve powers are being created at all.

We want to see more investment in the UK market. While this country is one of the largest pension markets in the world, only around 20% of DC assets are invested in the UK. However, the solution should be to make domestic investment more attractive—to create opportunities that deliver better returns for savers—not simply to mandate investment in assets that deliver lower returns. During our last term in office, we worked with the industry to introduce the Mansion House reforms as a voluntary agreement to boost investment in the UK, but this Bill goes further—it could mandate such investment against the wishes of the industry. Similarly, the local government pension scheme will have a new duty to invest in the local economy. While that is understandable at face value, it raises concerns about returns on investments if there are not suitable local opportunities.

We also have questions about some of the Government’s assumptions, and would like to understand more about how they were reached and the evidence used. For example, why is the minimum value for megafunds just £25 billion? Why is having fewer and larger pension providers better? We recognise the benefits of economies of scale, but what about competition and innovation? It has also been raised by the industry that a significant number of details are unknown, as they will come later in the form of regulations. Can the Minister set out some more details on when the various sets of regulations will be published, and whether that will be before the Bill has passed through Parliament?

Finally, the Bill fails to cover a number of areas, and we would like to understand why. Concerns about pension adequacy have been touched on this evening and whether people are saving enough to have the security and dignity in retirement they deserve. Auto-enrolment was a good start, but it will not be the only solution. Indeed, lots of people are still not eligible. When we passed the Pensions (Extension of Automatic Enrolment) Act 2023, the then Conservative Government confirmed their intention to reduce the lower age limit to 18, as has been mentioned this evening. As yet, the current Labour Government have not done so. Auto-enrolment does not apply to self-employed people, despite just 16% of self-employed people actively saving into a workplace or personal pension. The Bill does not look at whether people are saving enough and early enough, and I would be grateful if the Minister could set out whether that is deliberate and whether further action will be taken.

I briefly draw the House’s attention to my declaration in the Register of Members’ Financial Interests as a serving councillor, but I hasten to add that unfortunately I am not a member of the local government pension scheme. Sadly, I was elected after that provision was scrapped, but an entire chapter is given over to the local government pension scheme in this Bill. Indeed, it is a key element, enabling local authorities to use pension schemes to invest in their local economy. However, as with much of the legislation being taken through Parliament at the moment, the who, what and when remain unanswered. Without the English devolution Bill before us, for example, we are not entirely clear on what form local government will take, nor entirely clear on how compatible this Bill is with that forthcoming local government legislation.

We are in effect being asked to legislate on a moveable feast. Indeed, there is likely to be a considerable transition timetable for local government changes, which all raises questions about how the local government reorganisation transition fits in with the plans in the Bill. Following on from the comments of the hon. Member for Truro and Falmouth (Jayne Kirkham), how will asset pools work under local government reorganisation? Who gets the potential investment benefits or spending power, and where does all that investment take place?

The Bill also fails to mention any reforms to the local government pension scheme, which reached a record surplus of £45 billion in June 2024. One reason for that might be that it is being used to offset Government debt under the Chancellor’s current fiscal rule, which uses public sector net financial liabilities to measure that debt. That is a huge amount of money in local government terms, and it is not going towards local services, business support or regional projects. Can the Minister confirm whether the Government intend to reform the local government pension scheme beyond the measures outlined in the Bill? Finally on the local government pension scheme, I look forward to seeing more detail as to how newly created asset pools will work in practice with the local government pension scheme.

Local government treasury management over recent years has seen local authorities taking advantage of the investment opportunities available to them to acquire properties and the like, but often some distance from their local authority. That is something to tease out in Committee, but when the Government state that they wish local authorities to have finance available to invest locally to bring economic growth, what does “local” look like?

Finally, can the Minister confirm that fiduciary rules regarding investments and how they are assessed will prevail going forward? Overall, we will support a Bill that reduces administration costs, removes complexity for savers and maximises value for members, ultimately helping people who took the right action to save for their retirement to live in comfort and dignity. While this Bill makes the start, there is more to do to get it right, and we look forward to working with the Government to achieve that. There is plenty of food for thought for amendments to take us forward.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

Pension Schemes Bill

Caroline Nokes Excerpts

Report stage
Wednesday 3rd December 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Caroline Nokes)]

With this it will be convenient to discuss the following:

Government new clause 31—Indexation of periodic compensation for pre-1997 service: Great Britain.

Government new clause 32—Indexation of periodic compensation for pre-1997 service: Northern Ireland.

Government new clause 33—Financial Assistance Scheme: indexation of payments for pre-1997 service.

Government new clause 34—Exemption from public procurement rules.

Government new clause 35—Funding of the Board of the Pension Protection Fund.

New clause 1—Independent review into pension losses incurred by former employees of AEA Technology—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the pension losses incurred by former employees of AEA Technology who—

(a) transferred their accrued pension benefits out of the UK Atomic Energy Authority (UKAEA) public service scheme to AEA Technology (AEAT) on privatisation in 1996, and

(b) suffered financial losses when AEA Technology went into administration in 2012 and the pension scheme entered the Pension Protection Fund (PPF).

(2) The review must examine—

(a) the extent and causes of pension losses incurred by affected individuals,

(b) the role of Government policy and representations in the transfer of pensions during the privatisation of AEA Technology,

(c) the findings of the Public Accounts Committee and the Work and Pensions Select Committee,

(d) the adequacy of safeguards provided at the time of privatisation,

(e) potential mechanisms for redress or compensation, and

(f) the estimated financial cost of any such mechanisms.

(3) The review must be—

(a) conducted by an independent panel appointed by the Secretary of State, with relevant expertise in pensions, public policy, and administrative justice, and

(b) transparent and consultative, including engagement with affected pensioners and their representatives.

(4) The panel must report its findings and recommendations to the Secretary of State and lay a copy of its final report before Parliament within 12 months of its establishment.

(5) The Secretary of State must, within 6 months of the publication of the report under subsection (4), lay before both Houses of Parliament a statement setting out the Secretary of State’s response to that outcome.”

This new clause would require the Secretary of State to commission an independent review into the pension losses incurred by former employees of AEA Technology.

New clause 2—Transfer of British Coal Staff Superannuation Scheme investment reserve to members—

“(1) Within 3 months of the passing of this Act, the Secretary of State must by regulations make provision for the transfer of the British Coal Staff Superannuation Scheme investment reserve to members of the scheme.

(2) Those regulations must include—

(a) a timetable for transferring the total of the investment reserve to members of the scheme, and

(b) plans for commissioning an independent review into how future surplus will be shared.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require the Secretary of State to set out in regulations a timetable for transferring the whole of the BCSSS investment reserve to members and committing to review how future surplus will be shared.

New clause 3—Terminal illness: means of demonstrating eligibility—

“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.

(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.

(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.

(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”

This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.

New clause 4—Review into investment in defence companies—

“(1) The Secretary of State must, within six months of the passing of this Act, carry out a review into investment in defence companies within Local Government Pension Schemes.

(2) The review must consider how the investment in defence companies—

(a) impacts on, and

(b) aligns with,

the UK Government’s international obligations.

(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to conduct a review into investment in defence companies within Local Government Pension Schemes and how that impacts and aligns with Government international obligations.

New clause 5—Review into defined benefit schemes’ social impact—

“(1) The Secretary of State must, within 12 months of the passing of this Act, carry out a review into the social impact of defined benefit schemes.

(2) The review must include an assessment of—

(a) the efficacy of investment strategies in delivering social good, and

(b) the potential impact of increasing investment in—

(i) social housing, and

(ii) green technology.

(3) For the purposes of this section—

“social good” means something which benefits society as a whole, and

“green technology” means the use of technology and science to create environmentally-friendly products and services.

(4) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to review the efficacy of investment in terms of delivering social good and the benefits of directing more investment towards social housing and green technology.

New clause 6—Indexation of pre-1997 service—

“(1) The Secretary of State must by regulations make provision for indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.

(2) Those regulations must specify that—

(a) pension payments from the PPF and FAS are increased each year in line with Consumer Prices Index (CPI) inflation for pensionable service before and after 6 April 1997,

(b) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with CPI inflation, but which their scheme provided for, the scheme manager must—

(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and

(ii) reimburse the member for the amount determined under paragraph (b)(i), and

(c) increased payments must also apply to transferee members, to ill health payments and to payments to surviving dependants.

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights.

New clause 7—Report on indexation of pre-1997 Pension Protection Fund and Financial Assistance Scheme benefits—

“(1) The Secretary of State must, within 12 months of the passing of this Act, publish a report on options for providing indexation to pension rights relating to pre-1997 service in the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS).

(2) The report must consider—

(a) the current absence of indexation on pre-1997 accrued rights and the financial impact on affected pensioners;

(b) the number of pensioners affected and the mortality rates since the establishment of FAS and PPF, including evidence from the Pensions Action Group;

(c) the feasibility of introducing indexation, in full or in part, for pre-1997 rights;

(d) the potential use of scheme reserves, including residual funds from failed schemes transferred into the FAS, and the implications for taxpayers;

(e) the urgency of reform given the age profile of affected members and the social impact of frozen incomes;

(f) alternative funding mechanisms that could deliver indexation without undermining the sustainability of the PPF; and

(g) comparative approaches to legacy benefit indexation in other jurisdictions.

(3) In preparing the report, the Secretary of State must consult—

(a) the Pensions Regulator,

(b) the Pension Protection Fund,

(c) representatives of Financial Assistance Scheme members,

(d) the Pensions Action Group, and

(e) such other stakeholders as the Secretary of State considers appropriate.

(4) The Secretary of State must lay a copy of the report before both Houses of Parliament.”

This new clause would require the Secretary of State to publish a report examining options for addressing the lack of indexation on pre-1997 pensionable service in the PPF and FAS, with particular regard to evidence provided by the Pensions Action Group, mortality data, scheme reserves, and the urgency of the issue.

New clause 8—Universal Pension Advice Entitlement—

“(1) The Secretary of State must by regulations establish a system to ensure that every individual has a right to receive free, impartial pension advice at prescribed times.

(2) Regulations under subsection (1) must provide for individuals to be offered advice—

(a) at or around the age of 40; and

(b) at a prescribed age, not more than six years before the individual's expected retirement age.

(3) The regulations must make provision about—

(a) the content and scope of the free, impartial pension advice, which may include, but is not limited to, guidance on—

(i) pension types (including both defined contribution and defined benefit schemes),

(ii) investment strategies,

(iii) charges,

(iv) consolidation of pension pots, and

(v) retirement income options;

(b) the qualifications, independence, and impartiality requirements for any person or body providing advice;

(c) the means by which individuals are notified of their entitlement to receive the advice and how they may access it;

(d) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to advice;

(e) the sharing member information with prescribed persons or bodies subject to appropriate data protection safeguards.

(4) Regulations under this section may—

(a) make different provision for different descriptions of pension schemes or different descriptions of individuals;

(b) confer functions in connection with the provision or oversight of the advice on—

(i) the Pensions Regulator,

(ii) the Financial Conduct Authority,

(iii) the Money and Pensions Service, or

(iv) other prescribed bodies;

(c) require the provision of funding for the advice service from prescribed sources.

(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause makes provision by regulations for everyone to receive free, impartial pension advice at age 40 and again around five years before their expected retirement.

New clause 10—Independent review of forfeiture of survivor pensions in police pension schemes—

“(1) The Secretary of State must commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions on the grounds of—

(a) remarriage or entry into a civil partnership by the surviving partner of a deceased scheme member; or

(b) cohabitation with another person as if married or in a civil partnership.

(2) The review must examine—

(a) the legal and policy basis for such provisions;

(b) the financial, social, and emotional impact on affected individuals and families;

(c) consistency with other public sector pension schemes, including schemes for—

(i) the Armed Forces,

(ii) the NHS, and

(iii) the civil service;

(d) potential options for reform, including retrospective reinstatement of pensions;

(e) any other matters the Secretary of State considers relevant.

(3) The Secretary of State must—

(a) appoint an independent person or panel with relevant legal, pensions, and public policy expertise to conduct the review; and

(b) publish the terms of reference no later than three months after this Act is passed.

(4) The person or panel appointed under subsection (3) must—

(a) consult with relevant stakeholders, including—

(i) the National Association of Retired Police Officers (NARPO),

(ii) survivor pension recipients,

(iii) police staff associations, and

(iv) pensions experts;

(b) consider written and oral evidence submitted by affected individuals; and

(c) publish a report of its findings and recommendations within 12 months of appointment.”

This new clause would require the Secretary of State to commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions.

New clause 11—Independent review into state deduction in defined benefit pension schemes—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit pension schemes.

(2) The review must consider—

(a) the origin, rationale and implementation of state deduction in the Midland Bank Staff Pension Scheme,

(b) the clarity and adequacy of member communications regarding state deduction from inception to present,

(c) the differential impact of state deduction on pensioners with varying salary histories, including an assessment of any disproportionate effects on—

(i) lower-paid staff, and

(ii) women,

(d) comparisons with other occupational pension schemes in the banking and public sectors, and

(e) the legal, administrative, and financial feasibility of modifying or removing state deduction provisions, including potential mechanisms for redress.

(3) The Secretary of State must ensure that the person or body appointed to conduct the review—

(a) is independent of HSBC Bank plc and its associated pension schemes;

(b) possesses relevant expertise in pensions law, occupational pension scheme administration, and equality and fairness in retirement income; and

(c) undertakes appropriate consultation with—

(i) affected scheme members,

(ii) employee representatives,

(iii) pension experts, and

(iv) stakeholder organisations.

(4) The person or body conducting the review must—

(a) submit a report on its findings to the Secretary of State within 12 months of the date the review is commissioned; and

(b) the Secretary of State must lay a copy of the report before Parliament and publish the report in full.

(5) Within three months of laying the report before Parliament, the Secretary of State must publish a written response setting out the Government’s proposed actions, if any, in response to the report’s findings and recommendations.

(6) For the purposes of this section—

“state deduction” means any provision within a defined benefit occupational pension scheme that reduces pension entitlements by reference to the member reaching state pension age or by reference to any state pension entitlement;

“defined benefit pension scheme” has the meaning given in section 181 of the Pension Schemes Act 1993;

“Midland Bank Staff Pension Scheme” includes all associated legacy arrangements and any successor schemes administered by HSBC Bank Pension Trust (UK) Ltd.”

This new clause would require the Secretary of State to commission an independent review into clawback provisions in occupational defined benefit pension schemes, in particular, the Midland Bank staff pension scheme.

New clause 12—Section 40 commencement—

“(1) The provisions in section 40 shall not come into force except in accordance with regulations made by the Secretary of State.

(2) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require that the provisions in clause 40 could only be enacted once agreed through secondary legislation.

New clause 13—Targeted Advice Access for Under-Saving Cohorts—

“(1) The Secretary of State must make regulations to provide enhanced access to pension advice or guidance for cohorts identified as under-saving for retirement.

(2) Regulations may make provision for—

(a) identifying under-saving groups, including but not limited to—

(i) women,

(ii) ethnic minority groups, and

(iii) others affected by long-term pay or pension gaps;

(b) mechanisms to fund and deliver targeted support;

(c) reporting and evaluation requirements to assess take-up and effectiveness.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause allows for the creation of targeted pension advice or guidance interventions for groups at risk of under-saving for retirement.

New clause 14—Cap on cost of advice for pension holders—

“(1) The Secretary of State may by regulations introduce a cap on the cost recoverable for providing pension advice per pension holder under any scheme operating free or subsidised advice.

(2) The cap may vary depending on—

(a) the value of the pension pot;

(b) the type of pension scheme;

(c) the complexity of advice required.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause enables the introduction of a cost ceiling for advice provision to members of pension schemes.

New clause 15—Independent review into the British Coal Staff Superannuation Scheme—

“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme (BCSSS).

(2) The review must consider—

(a) the origin and operation of the Government’s surplus-sharing arrangements with the BCSSS since 1994,

(b) the adequacy of communication to scheme members regarding the use of surpluses,

(c) the impact of the Government’s retention of scheme reserves on members’ retirement income,

(d) representations made by the Trustees of the BCSSS calling for reserves to be released to members, and

(e) options for reforming how any future surpluses in the BCSSS are shared between the Government and scheme members.

(3) The person or body appointed to conduct the review must—

(a) be independent of the Government and the BCSSS Trustees,

(b) possess relevant expertise in pensions law and scheme administration, and

(c) consult with affected members, Trustees, pension experts, and stakeholder organisations.

(4) The review must report to the Secretary of State within 12 months of being commissioned, and the Secretary of State must lay the report before Parliament and publish it in full.

(5) Within three months of publication, the Secretary of State must publish the Government’s response to the review’s findings.”

This new clause would require the Secretary of State to commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme, including the handling of scheme reserves and future surplus-sharing arrangements.

New clause 16—Report on Pension Scheme Eligibility and Access—

“(1) The Secretary of State shall, within 12 months of the passing of this Act, lay before Parliament a report into the operation of occupational pension schemes where certain categories of employees have been excluded on the basis of job classification or employment start date.

(2) The report must examine the case of employees and former employees of Fife Joinery Manufacturing (a subsidiary of Velux), including—

(a) whether affected workers were provided with opportunity to join existing pension schemes,

(b) the adequacy of record-keeping and employer accountability, and

(c) potential remedies to ensure equal access to workplace pensions.”

This new clause would require the Secretary of State to report on the Velux Pensions case.

New clause 17—Clarification of pension scheme investment duties—

“(1) The Pensions Act 1995 is amended as follows.

(2) In section 36 (Choosing investments), after subsection (9), insert—

“(10) Regulations under subsection (1) must provide—

(a) that when interpreting the best interest or sole interests of members and beneficiaries for the purposes of this section and the regulations, the trustees of a trust scheme may (amongst other matters) take the following into account—

(i) system-level considerations,

(ii) the reasonably foreseeable impacts over the appropriate time horizon of the assets or organisations in which the trust scheme invests upon prescribed matters, including upon members’ and beneficiaries’ standards of living, and

(iii) the views of members and beneficiaries;

(b) that investment powers or discretions must be exercised in a manner that considers and manages the matters specified in subsection (10)(a)(i) and (ii) where they are financially material; and

(c) a prescribed definition of the term “appropriate time horizon” for these purposes.

(11) For the purposes of this section, “system-level considerations” means, over the appropriate time horizon, risks and opportunities relevant to the scheme that—

(a) cannot be fully managed through diversification alone, and

(b) arise from circumstances at the level of one or more economic sectors, financial markets or economies, including but not limited to those relating to environmental or social matters.

(12) Regulations under subsection (1) must come into force no more than one year after the passing of the Pension Schemes Act 2025.

(13) In complying with requirements imposed by this section and regulations, a trustee or manager must have regard to guidance prepared from time to time by the Secretary of State.”

(3) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.

(4) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.

(5) The rules and regulations under subsections (3) and (4) must come into force no later than the date on which regulations pursuant to section 36(10) of the Pensions Act 1995 (as amended by this Act) come into force.”

This new clause gives the Secretary of State a duty to make regulations clarifying investment duties of occupational pension schemes, including system-level considerations and other matters including impacts of investee firms, beneficiaries’ standards of living and views. It also imposes duties on the FCA and the Secretary of State to make corresponding rules and regulations for workplace personal pension schemes and the Local Government Pension Scheme respectively.

New clause 18—Report on indexation of pre-1997 benefits—

“(1) The Secretary of State must, within 6 months of the passing of this Act, publish a report on whether the Pension Protection Fund and the Financial Assistance Scheme should provide indexation on compensation in respect of pre-1997 rights, where pension schemes provided for that.

(2) The report must consider—

(a) the potential benefits for affected pensioners;

(b) approaches of occupational pension schemes to indexation of pre-1997 benefits;

(c) the impact on compensation schemes’ surpluses and on public finances;

(d) international approaches to indexation of legacy pension benefits.

(3) The Secretary of State must lay a copy of the report before both Houses of Parliament.”

This new clause requires the Secretary of State to report on whether the PPF and FAS should provide indexation on compensation in respect of pre-1997 rights, where scheme rules provided for that.

New clause 19—Fossil fuels and climate change risk—

“(1) The Pensions Act 1995 is amended as follows.

(2) In section 41A (Climate change risk), after subsection (6) insert—

“(6A) Regulations under subsection (1) must, within 1 year of the Pension Schemes Act 2025 receiving Royal Assent, prohibit the trustees or managers of schemes of a prescribed description from holding relevant assets.

(6B) The relevant assets in subsection (6A) are issuance by issuers which, in relation to thermal coal—

(a) derive 10% or more of annual revenue from its production, transport or combustion,

(b) produce annually 10 million tonnes or more, or

(c) have 5GW or more of power generation capacity.

(6C) Within 2 years of the Pensions Act 2025 receiving Royal Assent, and every 3 years thereafter, the Secretary of State must carry out and publish a review on whether the definition of relevant assets should be extended to include—

(a) issuance by issuers which, in relation to thermal coal, derive a smaller proportion of revenue, produce a smaller amount or have a smaller amount of power generation capacity than the proportion and amounts specified in (6B),

(b) some or all new issuance by issuers of a prescribed description deriving a prescribed proportion or amount of their revenue from the extraction, transport, trading or combustion of prescribed fossil fuels, or

(c) some or all new or existing issuance by issuers of a prescribed description investing a prescribed proportion or amount in exploring for, or expanding the extraction of, prescribed fossil fuels.

(6D) Regulations under subsection (1) may implement the conclusions of the review referred to in (6C).”

(3) In subsection (8), at end insert—

““thermal coal” means coal and lignite used in the generation of electricity and in providing heat for industrial or residential purposes;

“issuance” means all investable assets, including equity and debt.”

(4) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.

(5) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.

(6) The rules and regulations under subsections (4) and (5) must come into force no later than the date on which regulations pursuant to section 41A(6A) of the Pensions Act 1995 (as amended by this Act) come into force.”

This new clause would require Government and the FCA to make regulations and rules restricting exposure of some occupational and workplace personal schemes to thermal coal investments and to regularly review whether the restrictions should be extended to other fossil fuel investments.

New clause 20—Pensions and savings advice allowance—

“(1) The Secretary of State must by regulations make provision for a tax-free pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pensions to access financial advice.

(2) Regulations must specify—

(a) the maximum amount for the pensions and savings advice allowance,

(b) the content and scope of the pensions and savings advice,

(c) the qualifications and independence requirements of any person or body providing pensions and savings advice,

(d) the means by which individuals are notified of their entitlement to the pensions and savings advice allowance and how they may access—

(i) the allowance, and

(ii) advisers who meet the requirements under subsection (2)(c),

(e) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to the pensions and savings advice allowance, and

(f) whether the pensions and savings advice allowance counts towards the Individual Lump Sum Allowance.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause requires the Secretary of State to introduce, by regulations, a pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pension savings tax-free to access appropriate financial advice.

New clause 21—Significant life event lump sum—

“(1) The Secretary of State must by regulations make provision for a significant life event lump sum of up to £5,000 which a person is entitled to before they attain normal pension age.

(2) The regulations may prescribe circumstances in which, and conditions subject to which, a person may become entitled to a significant life event lump sum, including—

(a) purchasing a first home;

(b) getting married;

(c) unexpected loss of employment.

(3) The regulations must specify that the significant life event lump sum counts towards the Individual Lump Sum allowance.

(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This new clause would require the Secretary of State to introduce, by regulations, a significant life event lump sum of up to £5,000 tax-free which individuals can take from their lump sum allowance prior to reaching pension age.

New clause 22—Indexation of pre-1997 pensions—

“(1) The Pensions Act 1995 is amended as follows.

(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).

(3) In subsection (2), leave out from “pensionable service,” to “or”.

(4) In subsection (2), leave out from “commencement day]” to “—".

(5) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.

(6) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.

(7) In subsection (5)(a), leave out “6 April 1997 or”.

(8) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.”

This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 in order to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997.

New clause 23—Indexation of pre-1997 service—

“(1) The Secretary of State must by regulations make provision for the use of Pension Protection Fund surplus/reserve funds for the indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.

(2) Those regulations must specify that—

(a) pension payments from the PPF and FAS are increased each year in line with Retail Prices Index (RPI) inflation for pensionable service before and after 6 April 1997,

(b) the cap on the annual increase is raised to 7%,

(c) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with RPI inflation, the scheme manager must—

(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and

(ii) reimburse the member for the amount determined under paragraph (c)(i), and

(d) payments made to reimburse members under paragraph (c)(ii) must be made from Pension Protection Fund surplus funds and future funds.

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights, for indexation to follow RPI inflation with a cap of 7%, and for retrospective payments to be funded from PFI surplus and/or reserve funds.

New clause 24—Indexation of pre-1997 pensions—

“(1) The Pensions Act 1995 is amended as follows.

(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).

(3) In subsection (2), after “52” insert “52A”.

(4) In subsection (2), leave out from “pensionable service,” to “or,”.

(5) In subsection (2), leave out from “commencement day]” to “—”.

(6) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.

(7) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.

(8) In subsection (5)(a), leave out “6 April 1997 or”.

(9) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.

(10) After Section 52 (Restriction on increase where member is under 55) insert—

“52A Restriction on increase where a pension scheme is not in surplus

No increase under section 51 in the annual rate of a pension shall not be paid or shall not be paid in full unless the pension scheme is in surplus.””

This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997, with the restriction that annual increases would only be paid if the pension scheme is in surplus.

New clause 25—Review of impact of this Act—

“(1) Within five years of the passing of this Act, the Secretary of State must carry out a review of the impact of the provisions of this Act on actual and projected retirement incomes.

(2) The review must consider—

(a) the impact of the provisions of this Act on actual and projected retirement incomes, and

(b) whether further measures are needed to ensure that pension scheme members receive an adequate income in retirement.

(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”

This new clause would require the Secretary of State to review the impact of this Act on retirement incomes and whether additional measures are needed to ensure the adequacy of retirement incomes.

New clause 26—Establishment of targeted investment vehicles for pension funds—

“(1) The Secretary of State may by regulations make provision for the establishment or facilitation of one or more investment vehicles through which pension schemes may invest for targeted social or economic benefit.

(2) Regulations under subsection (1) must specify the descriptions of targeted social or economic benefit to which the investment vehicles are to contribute, which may include, but are not limited to, investment in—

(a) projects that revitalise high street areas;

(b) initiatives demonstrating social benefit;

(c) affordable or social housing development;

(d) capital projects that meet essential public needs, such as care homes;

(e) clean, renewable energy projects.

(3) The regulations must make provision for—

(a) the types of pension schemes eligible to participate in such investment vehicles;

(b) the governance, oversight, and reporting requirements for the investment vehicles and participating pension schemes;

(c) the means by which the contribution of such investments to targeted social or economic benefit is measured and reported;

(d) the roles and responsibilities of statutory bodies, including the Pensions Regulator and the Financial Conduct Authority, in authorising, regulating, or supervising such investment vehicles and the participation of pension schemes within them.

(4) The regulations may—

(a) make different provision for different descriptions of pension schemes, investment vehicles, or targeted social or economic benefits;

(b) provide for the pooling of assets from multiple pension schemes within such vehicles;

(c) require pension scheme trustees or managers to have regard to the availability and suitability of investment vehicles when formulating investment strategies, where consistent with—

(i) their fiduciary duties, and

(ii) the long-term value for money for members.

(5) In this Chapter, "pension scheme" has the same meaning as in section 1(5) of the Pension Schemes Act 1993.”

This new clause would allow the Secretary of State to establish investment funds to encourage investment in areas such as high streets, social housing, care homes, clean renewable energy, and other investments with clear social benefits.

New clause 27—Review of proposed mandated investment powers and their impacts—

“(1) The Secretary of State must, before making any regulations under this Act relating to mandated investment requirements for pension schemes, lay before Parliament a report reviewing the potential impacts of such powers.

(2) The report under subsection (1) must include an assessment of—

(a) the extent to which any mandated investment requirements may conflict with the fiduciary duties of trustees and managers of occupational and personal pension schemes;

(b) the potential effects of such requirements on the long-term financial returns of scheme members, including—

(i) risks relating to illiquid or politically directed assets,

(ii) risks to diversification, and

(iii) any expected increase in costs borne by savers;

(c) the risk that mandated investment requirements could lead to politicisation of pension scheme decisions or undermine public confidence in the private pension system;

(d) the adequacy of parliamentary oversight and scrutiny of the exercise of powers to mandate investment allocations, including whether additional safeguards are required;

(e) the question of accountability in circumstances where mandated investments perform below expectations, including whether liability would rest with trustees, fund managers, or the Government;

(f) the potential for market distortion arising from requirements that schemes invest in specific UK-based assets, including the risk of asset inflation or the creation of investment bubbles; and

(g) alternative policy measures that could encourage pension scheme investment in the United Kingdom without the use of mandatory requirements, including the removal of regulatory barriers and the creation of suitable investment opportunities.

(3) The report must include a summary of views received from—

(a) industry bodies representing pension schemes, trustees, and fund managers;

(b) relevant financial regulators; and

(c) any other persons the Secretary of State considers appropriate.

(4) The Secretary of State must publish a response addressing the findings and any recommendations contained in the report.

(5) No regulations requiring pension schemes to meet mandated investment allocations may be made under this Act until the report under subsection (1) has been laid before Parliament and the response under subsection (4) has been published.”

This new clause requires the Secretary of State to review the potential effects of mandated investment powers including on risks to returns, fiduciary duties, market distortion, and accountability before any powers can be exercised.

New clause 28—Pension Protection Fund: members who have not attained normal pension age at assessment date—

“(1) Schedule 7 of the Pensions Act 2004 is amended in accordance with subsections (2) to (7).

(2) In sub-paragraph 3(3), for “the appropriate percentage” substitute “100%”.

(3) Omit sub-paragraph 3(4).

(4) In sub-paragraph 11(3), for “90%” substitute “100%”.

(5) In sub-paragraph 14(3), for “90%” substitute “100%”.

(6) In sub-paragraph 15(3), for “90%” substitute “100%”.

(7) In sub-paragraph 19(3), for “90%” substitute “100%”.

(8) The Secretary of State must by regulations make provision for the retrospective payment of compensation to PPF members, as if the amendments made by this section to Schedule 7 of the Pensions Act 2004 had had effect on the day on which that Schedule came into force.”

This new clause would provide that pension scheme members who have not reached Normal Pension Age by the Pension Protection Fund assessment date receive compensation at a rate of 100% instead of 90%, and provides for retrospective application.

New clause 29—Pension Protection Fund: estimate of cost of increasing compensation for surviving spouses or partners of members—

“(1) The Pension Protection Fund (PPF) must prepare and publish an annual estimate of the cost of increasing the value of compensation paid to surviving spouses or partners of PPF members to a sum equivalent to the value of any payments to which they would have been entitled had the scheme not entered the PPF.

(2) The first assessment under this section must be published before the end of the 2025/26 financial year.”

This new clause would require the Pension Protection fund (PPF) to publish annually an assessment of the costs of increasing compensation to the spouses or partners of PPF members to equal the amount they would have received if the pension scheme had not entered the PPF.

New clause 36—Local Government Pension Scheme: expenses and duties of administering authorities—

“(1) The Secretary of State must by regulations make provision for—

(a) a cap on the management expenses that can be claimed by administering authorities, such that they do not exceed ten basis points of the asset base of the pension fund,

(b) a cap on the investment management expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund,

(c) a cap on the general administrative expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund.

(2) Regulations under this section must also require administering bodies to provide to the Local Government Pension Scheme Advisory Board—

(a) evidence that they have considered and acted on any guidance issued by the Local Government Pension Scheme Advisory Board, and

(b) evidence of the steps that they have taken to comply with their fiduciary duties in respect of pension scheme members and Scheme employers.

(3) In making regulations under this section, the Secretary of State must consult the Local Government Pension Scheme Advisory Board.

(4) In this section—

“administering authorities” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013, and

“Scheme employer” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013.”

Amendment 1, in clause 1, page 3, line 7, at end insert “, or

(b) secure employee representation on the company’s board.”

This amendment would add employee representation on boards as a requirement on asset pool companies for Local Government Pension Schemes within the scheme regulations under clause 1.

Government amendments 20 and 21.

Amendment 2, in clause 2, page 4, line 7, at end insert—

“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) should be invested in a way that is compliant with the UK’s duty not to aid or assist serious breaches of international law, including genocide and other atrocity crimes, and illegal military occupation.”

This amendment would require that investments of the local government pension scheme should be compliant with the UK’s duty not to aid or assist serious breaches of international law.

Amendment 3, page 4, line 7, at end insert—

“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) must be divested from any oil and gas companies within 5 years of the passing of this Act.”

This amendment would require that local government pension schemes divest from oil and gas companies within 5 years.

Government amendments 22 and 23.

Amendment 17, in clause 9, page 9, line 25, leave out from “does” to the end of line 25 and insert

“apply to a scheme that is being wound up unless the trustees determine by resolution that it shall not apply.”

This amendment would ensure that the principles for surplus extraction shall also apply to surplus release after further wind-up, so that employers are not incentivised to wind-up funds rather than release surplus to pensioners.

Amendment 18, in clause 10, page 10, line 21, after “notified” insert “and consulted”

This amendment would ensure that members of pension funds have to be consulted on surplus extraction.

Amendment 4, page 10, line 36, at end insert—

“(e) about the proportion of any surplus that may be allocated, or the manner in which it may be determined, for the purpose of contributing to the provision of free, impartial pension advice and guidance services for scheme members.”

This amendment enables a proportion of surplus funds to be used to fund free pension advice.

Amendment 19, page 10, line 36, at end insert—

“(e) that the trustees are satisfied that it is in the interests of the members that the power to pay surplus is exercised in the manner proposed;

(f) that the trustees have taken full account of—

(i) the extent to which members’ pensions have kept up with the cost of living and inflation (as defined in the relevant rules and deeds), and

(ii) any previously rejected requests for discretionary pension increases.”

This amendment would reinstate the current requirement that ensures trustees consent to the paying of surplus as proposed, and creates an obligation on trustees to take account of any erosion in members’ standards of living.

Amendment 5, in clause 11, page 11, line 38, at end insert—

“(aa) make, publish and keep under review the consistency of—

(i) regulated VFM schemes, or

(ii) regulated VFM arrangements,

with the goals of the Paris Agreement on climate change and clean energy;”

This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 6, page 11, line 38, at end insert—

“(aa) make, publish and keep under review the compliance of—

(i) regulated VFM schemes, or

(ii) regulated VFM arrangements,

with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers,”

This amendment would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.

Amendment 7, page 12, line 10, at end insert—

“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “climate alignment metric data”) regarding the scheme’s exposure to climate-related financial risks and the alignment of its investments with the goals of the Paris Agreement on climate change and clean energy.”

This amendment, with Amendment 5 would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 8, page 12, line 10, at end insert—

“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “sewage discharge compliance data”) regarding the scheme’s exposure to, and investment in, companies holding permits to discharge sewage, including those companies’ performance against statutory and regulatory targets for reducing sewage discharges.”

This amendment, with Amendment 6, would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.

Amendment 9, page 12, line 41, leave out “that provides money purchase benefits”

This amendment, together with Amendment 10, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.

Amendment 10, page 13, line 5, at end insert—

“(14) Value for money regulations may make different provision for different descriptions of relevant pension schemes and must make provision for the application of the value for money assessment with a VFM rating to defined benefit occupational pension schemes.”

This amendment, together with Amendment 9, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.

Amendment 11, in clause 13, page 14, line 13, at end insert—

“(iv) the consistency of the investment portfolio with the goals of the Paris Agreement on climate change and clean energy, including metrics for assessing climate-related financial risks and opportunities;”

This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.

Amendment 12, page 14, line 13, at end insert—

“(iv) the compliance of the investment portfolio with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers, including metrics for assessing related environmental and financial risks and opportunities;”

This amendment would require pension funds and managers to monitor and report on the performance of water and sewerage companies they invest in against targets for reducing sewage discharges.

Government amendments 24 to 49.

Amendment 16, in clause 40, page 43, line 38, leave out from beginning to end of line 27 on page 46.

This amendment would remove the ability of the Government to set mandatory asset allocation targets for certain pension schemes, specifically requiring investments in UK productive assets such as private equity, private debt, and real estate.

Amendment 15, page 46, line 9, leave out from “Before” to the end of the subsection and insert

“implementing the first set of regulations under subsection (1) the Secretary of State must—

(a) prepare and publish a report regarding—

(i) what barriers pension funds, based in the United Kingdom, are facing that are preventing them from investing back into the United Kingdom due to—

(A) legislation introduced after The Pensions Act 1995;

(B) regulations introduced by the Financial Conduct Authority, Prudential Regulation Authority, HM Treasury, or Bank of England;

(C) cultural and market behaviours;

(ii) how financial interests of members of relevant Master Trusts and group personal pension schemes would be affected by the proposed regulations;

(iii) what effects the proposed measures could be expected to have on economic growth in the United Kingdom;

(iv) any other matters the Secretary of State considers appropriate; and

(b) respond to any recommendations or issues raised in the report.”

This amendment prevents use of the reserved mandation powers in this Bill until the Government produces a report on the reasons why the powers are needed and the effects of the use of the powers and resolves any issues raised in the report.

Amendment 14, page 48, line 15, leave out paragraphs (a) to (c) and insert—

“(a) The scheme in question demonstrates strong potential for growth and an ability to innovate, and”

This amendment would revert the text of section 28F(2) on the eligibility conditions for new entrant pathway relief to its form in the Bill as introduced.

Government amendments 50 to 85.

Amendment 13, in clause 117, page 120, line 19, leave out “2035” and insert “this Parliament”

This amendment provides that if section 40 is not commenced before the end of the current Parliament in respect of the insertion of certain provisions, then the insertion of those provisions would be automatically repealed at that time.

Government amendments 86 to 89.

[Torsten Bell]

I start by thanking all hon. Members for their valuable contributions during the Bill’s passage to date. In particular, I thank members of the Public Bill Committee who offered line-by-line scrutiny. They have challenged the Government, but always constructively—that includes the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), who is not with us today. That reflects the broad consensus across the House that the Pension Schemes Bill is an important piece of legislation, and it is a consensus for which I am very grateful. The same consensus underpinned the introduction of automatic enrolment under the previous Government.

It is exactly because we as legislators have more than gently nudged people into pension savings that the Bill’s most fundamental job is to drive up returns on those savings. The case for this focus is clear: those retiring in 2050 are currently set to do so with lower private pension income than those retiring today. The Bill also recognises that, with the second largest pension system in the world, pensions matter not just to deliver an income in retirement but for the whole economy as the largest source of domestic capital. With those goals in mind, this Bill builds a solid foundation on which we can build, not least via the Pensions Commission over the next year, exactly as several hon. Members called for on Second Reading.

The vast majority of the amendments tabled by the Government are minor technical amendments, and there are two substantial areas on which I would like to dwell. The first is on pre-1997 indexation within the Pension Protection Fund and the financial assistance scheme.

The PPF is one of the most important legacies of the last Labour Government, but we have all heard about the challenges caused by the lack of indexation of compensation related to pre-1997 pensions. I am grateful for the time that affected pensioners have given me in discussing their experiences directly. I have listened carefully to them and to hon. Members who have kept attention on this issue.

I particularly acknowledge the contribution of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) and her Work and Pensions Committee, as well as my hon. Friend the Member for Basingstoke (Luke Murphy) and the hon. Member for Aberdeen North (Kirsty Blackman) who raised this matter in Committee. I am also grateful to the hon. Members for Didcot and Wantage (Olly Glover), for Caerfyrddin (Ann Davies), for Torbay (Steve Darling) and for Belfast South and Mid Down (Claire Hanna), and my hon. Friend the Member for Poole (Neil Duncan-Jordan), for their proposed new clauses and amendments related to this matter.

--- Later in debate ---

[Dame Nia Griffith]

I thank the Minister for that, but it is a matter of action and ensuring that it really happens. We are too used to regulators not having the powers they are supposed to have or not being effective in using them. We need some action, and hopefully the Minister will help us to see how it could be done.

There is a bitter irony that the Pension Protection Fund is funded by a levy on the very same companies that are refusing to index-link their own pensioners’ pensions. We know from lots of evidence that the only way the companies will listen is through legislation. These companies are multinationals, and in countries where there is legislation, they pay up—so they do respond if there is a law.

As I was saying, saying that the trustees have the powers is sadly very far removed from the reality. Trustees of various countries have asked repeatedly for indexation, and before handing over any surplus to the companies, they will be very wary because they do not trust them at all. They will want cast-iron guarantees on indexation.

Let us look at the scale of the problem. Seventy-five per cent of UK defined-benefit schemes already provide pre-1997 indexation. The remaining 25% represents approximately 1.5 million members, including some 734,000 pensioners, with 80% of all pensioners concentrated within just 200 large schemes with strong employers. As we have seen, employer discretion has failed in practice, and many pensioners have had years of zero increases.

New clause 22 would set the statutory principle that there should be indexation. The Government can then design proportionate safeguards—for example, phasing in, exemptions and triggers—in order to protect genuinely weak schemes and to ensure, as the Society of Pension Professionals says, that schemes are not pushed into having to be picked up by the Pension Protection Fund.

We want action on this. We are talking about a small, manageable number of schemes, but we want the trustees really to be given the powers to force those companies to make that indexation. If the Minister is not minded to put this provision into the legislation, as we want, we want to see some concerted action and a genuine way forward. If that proves not to work, there needs to be an opportunity to come back and put this into secondary legislation instead.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Steve Darling]

For people who are lucky in the lottery of life, their pension can be one of their biggest assets, but, sadly, we know that 12 million people across the United Kingdom are not saving enough. That is around the population of Belgium. Talking more broadly, there is much about the legislation to be welcomed. I am sure the Minister had his best birthday ever by spending it in the Bill Committee. I am sure that as a 14-year-old, he dreamed of that day, on Committee corridor—sadly I am not joking.