Pensions Dashboards (Prohibition of Indemnification) Bill

Darren Henry Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[Darren Henry (Broxtowe) (Con)]

I thank my hon. Friend the Member for Cheadle (Mary Robinson) for bringing forward the Bill, and for allowing me to participate in the debate.

On Third Reading of the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill, I stressed the importance of pensions and how they provide a sense of security that individuals can enjoy later in their lifetime. The hope is that a pension will allow us to have economic freedom in our old age. My understanding is that paying into a pension pot, which many see as a long-term savings plan, is becoming more frequent as the years go by. In addition, it seems as if changing jobs has become more frequent in recent times. Those two increases have resulted in an issue: it has become more common for individuals to get the end of their career and not be able to locate all their pension pots with the ease they would have before, and that they would like. Individuals may struggle to find that figure, because they will have moved jobs and therefore paid into lots of different pension pots over their lifetime. That is not to mention the hassle of having to remember which companies they have paid into and having to find their most recent pension statement.

Pensions dashboards will allow people to see online what they have in various pension pots, including their state pension. A dashboard is a great tool because it is convenient to have the relevant information in one place, and it will ensure that pension pots do not get lost. Some people will even be able to track how much money they will have in their pension and realise sooner rather than later the changes they will need to make. That will ensure that they will be able to achieve the desired outcome for their retirement.

Under the current provisions, there will be an issue when dashboards come into force, so we need to make the changes to avoid these brilliant tools being abused by trustees or managers of occupational pension schemes. An occupational pension scheme is set up by an employer to provide retirement benefits to its employees. There is currently nothing to prevent a trustee or manager of an occupational pension scheme from reimbursing themselves from members’ pension pots if they are issued with a financial penalty by the Pensions Regulator for a compliance breach. The Bill seeks to make that exact practice a criminal offence, and that is why I support it.

The bottom line is that we need to protect people’s retirement funds. The maximum penalty for a failure or contravention of the pensions dashboards regulations will be £5,000 for an individual or £50,000 for a body corporate, including corporate trustees. As I have said before, pensions are so important to planning for the future, and I want to make sure that the pensions of the constituents of Broxtowe are safe from the abuse of others. I congratulate my hon. Friend the Member for Cheadle on introducing the Bill.

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Darren Henry Excerpts

3rd reading
Friday 25th February 2022 Commons Chamber

[Darren Henry (Broxtowe) (Con)]

I congratulate the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) on bringing forward this Bill and I thank her for allowing me to participate in her debate.

Pensions are integral to our society; they are a means whereby individuals can reap the benefits of their hard work throughout their life, in old age. When someone reaches an age where they are no longer earning, they need an income to survive, and this is where a pension kicks in. It is a payment that, we hope, allows a retired individual to have economic freedom. It is a point in our lives we should all be looking forward to. People often fall into the trap of thinking that they are able to save enough money to comfortably live when they are no longer earning. Unfortunately, a lot of the time they do not save enough to enjoy the standard of living they hoped for in retirement.

A state pension is a great starting point but if, like me, they want to enjoy the luxuries of old age, they would need to think about investing in a pension scheme. It is a long-term savings plan with additional benefits. There are many benefits of pension schemes such as tax relief, contributions made by the employer and tax-free lump sums when the person retires. If they pay contributions into a pension scheme, some of the money that they would have had to pay the Government in tax is in fact paid into the pension instead. The employer may match or pay more than the person contributes to the pension scheme. That is money that they would not have gained had they put their money into a savings account. Finally, they will usually be able to take up to a quarter of their pension savings as a tax-free sum.

Having expressed the importance of pensions, it is integral that both men and women can benefit from them equally. That is why I am very pleased that hon. Lady has brought this Bill to the House. It is recognised that there were disparities between pensions on the basis of sex, as a result of differences in retirement age. As she mentioned, a GMP is a pension that a workplace normally provides, and it applies only to people who contracted out of the additional state pension scheme. A GMP is usually the same, if not more, than the additional state pension had the person not contracted out of it. Previous legislation required GMPs to be determined on an unequal basis. A woman’s GMP is normally accrued at a greater rate than that of a man, to ensure that there is recognition of a woman’s working life being five years shorter than that of a man.

It is important to understand the terms “revaluation” and “indexation”. Revaluation is an increase in the value of someone’s pension before they start drawing it, whereas indexation is the rise in value of their pension while they draw it. The Government have set a rate of revaluation that schemes can use at 3.5% and there is a minimum indexation rate of 3%. Therefore, some pension schemes’ revaluation rate is higher than their indexation rate. Women used to have an earlier retirement age, and therefore they were getting indexation while men were receiving revaluation. In this instance, a woman would usually get a higher pension rate until they started claiming their pension, which would remove their revaluation rise and replace it with an indexation rise, whereas a male would be entitled to a revaluation rate for a further five years until their rate, too, was switched to an indexation rate.

Schemes are required to remedy that through equalisation, but it has never been clear how to go about that. The Bill seeks to clarify that. The current situation is the perfect example of de facto change but not necessarily de jure change. The Bill clarifies that the legislation is to remedy the disparity as it applies to survivors as well as earners. That is important, because the sad reality is that it is common for individuals to become widowed and it is vital that the surviving spouse can claim the disparity for which the deceased spouse was eligible.

The Bill provides a power to set out in regulations the conditions that must be met in relation to the survivor’s benefits, making it clearer and easier for survivors to claim the remedy. It provides for a power to set out in regulations detail about who must consent to the conversion, giving further clarification on what is needed to claim the remedy. Finally, it will remove the requirement to notify HMRC. I am told that HMRC needs to be notified but may not be doing anything with that information. It therefore makes sense to remove that bit of red tape which, in practice, makes no material difference.

My constituents in Broxtowe will benefit from the Bill, which will allow them remedy on the disparity to which they are entitled. That will be achieved by removing red tape around pension regulation and providing further clarity. Through that, we will ensure that more individuals understand the logistics of their pensions. It should not be necessary to be an expert in finance to understand the rights and responsibilities that come with pensions, and I hope that these changes will go some way towards beginning to make that happen. I congratulate the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) on introducing the Bill.

Oral Answers to Questions

Darren Henry Excerpts

Monday 29th June 2020 Commons Chamber

[Dr Coffey]

I too have a coastal constituency with a significant tourism economy. As my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport said, we are looking to get the tourist sector up and running as strong as possible, and extending it for as long as we can. That is a key part of the campaign. When it is back, we will invest heavily and ensure that we have a major campaign to encourage British people to take British staycations.

[Darren Henry (Broxtowe) (Con)]

What steps her Department is taking to support pensioners affected by the covid-19 outbreak.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]]

I congratulate my hon. and gallant Friend on his outstanding maiden speech last week, for which credit is due. The Government are committed to ensuring that older people are able to live with the dignity—[Inaudible.]

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

To echo my hon. Friend, the Government are committed to ensuring that older people are able to live with the dignity and respect that they deserve. The state pension is a foundation of state support. In April, full amounts of the basic and new state pensions increased by 3.9% to £134.25 and £175.20 per week respectively. We continue to work with the Post Office to ensure that vulnerable customers have access to cash when shielding.

[Darren Henry]

People in Broxtowe affected by the closure of Equitable Life are increasingly worried as they approach retirement age. Can my right hon. Friend tell me what measures the Government will take to ensure that soon-to-be pensioners get the compensation they deserve and are supported in their old age?

[Dr Coffey]

My hon. Friend raises a long-standing issue. I am aware that during the 2010 Administration, extra money was put in after the original proposal in order to support those on Equitable Life, but this is a matter for my right hon Friend the Chancellor and I would encourage my hon. Friend to follow up with him directly.