Pension Schemes Bill

John Milne Excerpts

Wednesday 15th April 2026 Commons Chamber

[John Milne (Horsham) (LD)]

First, may I express my support for the words of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) with regard to pre-1997 pensions and that long-standing scandal? It is a great injustice and it feels like successive Governments—including this one, sadly—are just waiting for the problem to literally die away.

I would like to speak to Lords amendment 79, which aims to ensure that pension schemes can offer robust guidance without falling foul of the new regulatory landscape the Bill creates. The Liberal Democrats remain committed to ensuring that the Bill works for individual savers. Of course, it must work for our economy and for industry, but it must, first and foremost, help the “little and less” saver. That requires ensuring that savers have access to decent relevant guidance on their pensions, because without guidance choice does not translate into good outcomes.

The reality is that engagement with pension guidance for the average person is, to put it simply, woeful and worsening. Around 90% of defined-contribution pots are accessed without any engagement with Pension Wise. Uptake of the service has fallen by about 4% since 2018, despite the fact that Pension Wise is demonstrably successful—nine out of 10 users say that they would recommend it to others. That context matters, because in 2015 the introduction of pension freedoms represented a significant opportunity to ensure that guidance could be offered to far more people. Individuals were given the responsibility for spending their pension savings, but that was often without a clear understanding of the tax implications or the consequences for later life. Since then, from 2015 to 2025, many, including the Work and Pensions Committee, have argued that this was precisely the period when an auto-enrolment-style trial for guidance should also have taken place.

The Government recognised the scale of the problem in 2022, when they introduced a stronger nudge towards Pension Wise. That followed a Department for Work and Pensions report that showed a marked increase, rising from 5% to 30%, in drawdown products being accessed without guidance. Over half of transfers were out of pension products, often driven by mistrust, and lower income savers were disproportionately negatively affected by drawdown use compared with higher earners. Yet even then, the opportunity to trial the automatic booking of guidance appointments, which was backed by the Work and Pensions Committee and Age UK, was not taken.

Now, the landscape has changed again. The Bill reshapes the regulatory framework in a significant way, including through the introduction of defaults for pot holders. That makes this moment another opportunity to ensure that as many savers as possible receive good quality guidance, but that chance will be missed if guidance is not properly embedded alongside these reforms. Defaults will fundamentally affect how savers interact with their pensions. That means the Government must provide urgent clarity not just for savers, but for schemes and trustees. Schemes need clear and concise guidance on how defaults operate, and on what advice and guidance they can lawfully provide so that they are protected from future legal challenge, ambulance chasing or scandal.

Equally, savers themselves will need support to navigate what is often a collection of multiple pots with multiple defaults and varying outcomes. What should not happen is for a default system to be put in place without updated and clearly defined guidance alongside it. That would risk encouraging passive defaulting while alternatives are not properly explained or understood, which might act to supercharge the existing problem of disengagement rather than solve it. At the very least, we must ensure that people are given the opportunity to engage. The dashboard’s imminent introduction might address some of these problems, but it is not a silver bullet.

The Department for Work and Pensions and the Minister have set out a road map for reform, but the big glaring hole in that road map is access to guidance. I ask the Government to ensure that guidance is explicitly part of the plan, to set out clearly what role the Money and Pensions Service and free and impartial guidance will play for savers who want it, and to consider whether, alongside the necessary secondary legislation, the Department could publish a clear statement on the role of guidance in both the default and savings journey of pension savers.

[Clive Jones (Wokingham) (LD)]

I wish to speak to Lords amendment 15 and, ultimately, what it still fails to address: the long-standing injustice faced by almost 1 million pensioners.

The Chancellor’s decision last year diverted attention, with her announcement of the restoration of indexation to a quarter of a million pensioners in some of the schemes in the PPF. While 250,000 now have their indexation back, 90,000 in the PPF do not. In addition to the 90,000 who have lost out, there are 139,000 in the financial assistance scheme. Some of those pensioners were once part of the civil service where functions were privatised. I specifically refer to members of the AEA Technology and Carillion public sector pension schemes, who were promised that their civil service pensions would be honoured after privatisation. Imagine being legally cheated out of your pension by your country’s Government and then ignored when you plead your case. Finally, 750,000 people in private defined-benefit schemes, the pre-1997 pensioners, have also lost out. We are talking about 979,000 people—almost 1 million pensioners—who have lost out on the regular increase for part, or for the whole part, of their pension.

The Bill is trying to paper over an enormous crack in our national pension framework. Ministers themselves have acknowledged the problem for pre-1997 pensioners. Most recently, the Minister confirmed that around 17% of defined-benefit pensioners have not received discretionary increases—in some cases, for nearly 30 years. It is not a minor anomaly. Many have lost more than half the real value of the pensions they have earned. Many will not live long enough to see any redress, but their survivors will receive a fraction of the pension at a time when food costs are projected to go up by 9% this year alone, and who knows what will happen with energy costs.

What is particularly difficult to justify is the piecemeal nature and inconsistency of the Government’s approach. They have been entirely willing to mandate how defined-contribution schemes invest, yet they remain unwilling to mandate even basic fairness for the 17% of defined-benefit pensioners whose sponsoring companies are following a law and avoiding doing the right thing. The Lords amendment would return us to a Bill that would make it easier to extract surpluses from defined benefit schemes. The Minister tells us that the trustees will be in the driving seat, but for the pre-1997 pensioners, trustees have never been in the driving seat. In most cases, trustees cannot compel discretionary increases. They cannot even advocate effectively for those who have already lost out, and they cannot override employers’ decisions. The imbalance is clear: employers decide, trustees administer. Trustees are told that it is not their role to seek to change benefits for pre-1997 pensioners. What is the value of a trustee? Surely it is not just to be a rubber stamp for boards of directors, usually based inthe USA.