Pension Schemes Bill

Debate between Kirsty Blackman and Torsten Bell

2nd reading
Monday 7th July 2025 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

Obviously that can happen only where there are surplus funds, and there may not be surplus funds in all circumstances. I just want to give the Minister a heads-up in relation to the questions about employee benefits. It would be useful in Committee to have more information about the Government’s analysis of how many of these surplus releases will directly benefit the employees rather than the employers. I understand that the Government, with their mission for growth, want investment in growing the company as well, but what kind of split does he expect to see? I do not expect an answer to that today.

[Torsten Bell]

It is nice to sometimes be able to surprise on the upside. I would expect employees to benefit in most cases, because trustees are in the driving seat and I am sure they will want to consider how employers and employees will benefit from any surplus release. Obviously, the exact split between the two will be a matter for the individual cases, but I am sure we will discuss that further in Committee.

I want to reassure the House that this is not about a return to the 1990s free-for-all. DB regulation has been transformed since then, and schemes will have to remain well funded and trustees will remain in the driving seat. They will agree to a release only where it is in members’ interests and, as I said, not all schemes are able to afford to buy out members’ pensions with insurers.

The Bill also introduces the long-awaited permanent legislative regime for DB superfunds, which is an alternative means to consolidate legacy DB liabilities. This supports employers who want to focus on their core business, and, as the superfunds grow, they will have the potential to use their scale to invest in more productive ways. Crucially, trustees will be able to agree to a transfer into a superfund only where buy-out is not available and where it increases savers’ security.

The Pension Protection Fund is, of course, the security backstop for DB members. It celebrates its 20th anniversary this year, and it now secures the pensions of over 290,000 people. The Bill updates its work in three important ways: first, by lifting restrictions on the PPF board so that it can reduce its levy where appropriate, freeing schemes and employers to invest; secondly, by ensuring that PPF and financial assistance scheme information will be displayed on the pensions dashboard as it comes onstream, which my hon. Friend the Member for Blaenau Gwent and Rhymney (Nick Smith), who is now not in his place, is keen to see; and thirdly and most importantly, by making a change to support people going through the toughest of times. As several hon. Members have called for, we are extending the definition of terminal illness from a 6-month to a 12-month prognosis, providing earlier access to compensation for those who need it most.

Pensions are complex beasts, and so are the laws that surround them. That complexity is inevitable, but not to the extent that some recent court cases risk creating. The Bill also legislates to provide clarity that decisions of the Pensions Ombudsman in overpayment cases may be enforced without going to a further court. I have been clear that the Government will also look to introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historical benefit changes met the necessary standards at the time.

Governments are like people in one important respect: they can easily put off thinking about pensions until it is too late. I am determined not to do that. We are ramping up the pace of pension reform. The past two decades have delivered a big win, with more people saving for their retirement, but that was only ever half the job. Today, too many are on course for an income in retirement that is less than they deserve and less than they expect. The Bill focuses on securing higher returns for savers and supporting higher income in retirement without asking any more than is necessary of workers’ living standards in the here and now.

The Bill sits within wider pension reforms as we seek to build not just savings pots but a pensions system that delivers comfortable retirements and underpins the country’s future prosperity. Legislation for multi-employer collective defined-contribution schemes will be introduced as soon as possible after the summer recess, and we will shortly launch the next phase of our pensions review to complete the job of building a pensions system that is strong, fair and sustainable. It is time to make sure that pension savings work as hard for all our constituents as our constituents worked to earn them. I commend the Bill to the House.

Pensions: Expatriates

Debate between Kirsty Blackman and Torsten Bell

Tuesday 20th May 2025 Westminster Hall

[The Parliamentary Secretary to the Treasury (Torsten Bell)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for opening today’s debate, which was granted by Backbench Business Committee, and for setting the scene so well, in a way that others then followed.

I thank all hon. Members who made the time to speak and set out their cases. They covered issues that are important to many state pension recipients living abroad. I recognise that those who are affected, who obviously cannot speak today, feel strongly about this issue; many of us, in their shoes, would feel the same. On that basis alone, it is right to debate this subject and to hear from hon. Members about their constituents, including my hon. Friend the Member for West Dunbartonshire (Douglas McAllister), the hon. Member for Aberdeen North (Kirsty Blackman) and others who are not in Scotland.

Late last year, my predecessor, now the Economic Secretary to the Treasury, met Anne Puckridge and others from the End Frozen Pensions campaign to discuss the policy’s impact. We have listened, and I read case studies every week, either from hon. Members who have written in about them or in letters directly from pensioners themselves. We are all aware that there are many countries where high inflation has posed particular challenges in recent years, so I recognise the salience of today’s subject matter.

We all recognise the importance of the state pension, as the UK’s foundation of support for older people. In 2025-26, the Government will spend over £174 billion on benefits for pensioners. That represents 5.8% of the UK’s GDP and includes £145 billion spent on the UK state pension, including for those living abroad. I raise those facts because they are important; they sit behind the debates that we often have here or in the main Chamber about the size of the state and the level of taxation.

As hon. Members are very aware, the state pension is uprated abroad only when there is a legal basis for doing so, which is why we are here today.

[Kirsty Blackman]

On that, the state pension is uprated abroad only when there is a legal requirement to do so. There is no legal bar to the UK uprating those pensions in countries where there is not a reciprocal agreement in place.

[Torsten Bell]

There must be a legal basis for making payments. However, the hon. Member is right to say that under the specific policy I am setting out, payments are made only when there is a legal requirement to do so. As the hon. Member for Farnham and Bordon set out right at the beginning, that is a long-standing policy that has lasted for 70 years. For many years, the priority for successive Governments of all parties has been to prioritise those living in the UK when making difficult spending decisions on pensioner benefits. That was true of the coalition Government, when a Lib Dem Pensions Minister chose for five years not to make any progress on this issue. He did that under a Conservative Government and a Conservative Prime Minister all the way through.

The hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick)—my constituency neighbour—mentioned Lloyd George, who introduced a state pension with no uprating whatever. The first uprating of the contributory state pension in 1946, under the Attlee Government—again, I am making a point about the cross-party basis of some of these decisions—was not paid to pensioners living abroad. So since the beginning, policy on pension uprating has been consistent.

As we have discussed, people move abroad for many reasons—to be with their family, as the hon. Member for Strangford (Jim Shannon) set out, enjoy a particular climate or return to their country of birth. It is for individuals, not the Government, to make those decisions, but when they make them, they will of course consider the impact on their finances, alongside a wide range of other factors. As the hon. Member for South West Devon (Rebecca Smith) set out, our duty is to ensure that information regarding the effect of living abroad on the state pension entitlement is available. These days, that is on gov.uk, and includes information on where the uprating does and does not occur.

Pensioners who have retired to other countries will obviously take into account the UK state pension position, but they will also look at the wider provision for pensioners in those countries. Many countries will have a means-tested provision that is similar to the UK pension credit. It is true that the real-terms value of some people’s state pension will fall over time, but in most cases, particularly in the countries that have been mentioned today, that will be compensated for by higher means-tested payments when they are living abroad.

It is also important that further advice can be obtained from the International Pension Centre or the Pension Service. The hon. Member for South West Devon asked whether there is more we can do, and I want to be clear that I am always open to new ideas about what more we can do to communicate what happens to the state pension if people choose to retire abroad. More generally, I am happy to meet with any hon. Members who have suggestions in that area.