Pension Schemes Bill

Lord Kirkhope of Harrogate Excerpts

Committee stage
Tuesday 3rd February 2026 Grand Committee

I also agree with the title of Clause 42, “Regulations restricting creation of new non-scale default arrangements”. Again, I find that very strange; the legislation should encourage the creation of new arrangements to widen choice. Throughout all this, I reiterate that any attempt to interfere with the absolute fiduciary duties of the trustees of pension funds is damaging and very hard to accept. I do not believe it is the right way to achieve the Government’s perfectly valid and admirable intention to increase the amount of pension funds invested in UK infrastructure, but it has to be entirely left to the decision of the trustees of the pension funds. I therefore support my noble friend in her amendment.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I just want to touch on some basic principles here. As we go through the Bill in Committee, I go back to look at the whole basis of what the Government are trying to do, which I broadly support.

However, it essentially says here that members should benefit from these reforms and get better outcomes and greater value for their pension and invested funds. Therefore, although in general I agree with the first of these amendments, if one looks further into Amendments 172, 173 and 174—which I want to concentrate on here—they remind us of the interesting power balance we seem to be developing. I am somewhat concerned, as a trustee of a fund, that my accountability has always primarily been to the members, to achieve the outcomes that the Bill suggests should be achieved.

The noble Lord, Lord Davies, spoke a few minutes ago about responsibility of government. Of course, the responsibility of trustees has been enormous, and is very important as a protection for members but also as a barrier between the way investments take place and the way regulation takes place. I was investigated myself when I first became a trustee because I was appointed by a company and under Section 72—I think it was, at that time—of the Pensions Act, the regulator checked to see whether I was too closely connected to the company. It is true that I was a good friend of the company directors and so on, but I had to prove that I would act in a dispassionate manner and that I would do the very best for members at all times.

Of course, however, in doing that chore, I have had issues regarding the position of the regulator and the relationship between the regulator and the PPF in determining the nature of investment the trustees have made. The balance of trustees’ investments has always been a critical factor in reporting—as has been necessary—to the regulator and to the PPF. This is all essential stuff. Therefore, in view of the mandation proposals and looking at Amendments 172, 173 and 174, all of which refer to important elements, I have one question. How will this future relationship be in existence for the benefit of the members? Amendment 172 talks about informing members, and one of the criticisms of trustees—sometimes coming from members, or sometimes from the regulator—has been that not enough information has been provided to scheme members for things that have been done on their behalf. Is the process we are now looking at really going to allow for that information to be objective and put to the members appropriately by the people who ought to do it—the trustees?

Value for money for anything that is mandated is a decision to be made, and we had that debate in the last group. I am concerned about that, too.

Finally, on the question of the reduction of members’ choices—trustees inevitably inform their members of the options available to them—a genuine and legitimate choice must be available to members at all times. If that is not the case, it is very difficult for trustees to perform their duties and not fall foul of what will still be a very heavy set of regulations on the choices that they make.

[Lord Fuller (Con)]

My Lords, one of the astonishing things about the Bill is that it not only stops choice but puts under statute a connivance between the regulators and that old boys’ club of large operators that run investment money in London.

The effect of this connivance is to weaken returns, increase costs, damage competition among funds and weaken the UK economy. It does that because—although you would not know from the Bill—the City of London is, by any measure, one of the world’s top three financial centres. That did not happen by itself. Three hundred years of innovation, progress, capital and scale, starting in Lloyd’s Coffee House in the 1700s, and continuing with the Rothschilds and the big bang 40 or 50 years ago, made the United Kingdom and the City of London a financial powerhouse. It created a tax gusher. That happened because people were able to use their intellect and talents to innovate to turn small acorns into large oak trees in so far as financial management is concerned.

All that is at risk. That is why I welcome the amendments from my noble friend Lady Noakes, which would re-establish the principle that you have to allow the creative destruction in a market economy to advance returns and service and add competition, all of which this Government would sweep aside. It is that sort of macroeconomic approach.

Of course, it also fetters people’s ability to make their own decisions in an adult way. I accept that after someone’s house, their pension may be their second largest asset. But that is not the same in every case, and there are people with sophisticated needs and requirements who ought to have that choice. That choice should not be foisted upon them, because it gives you those weaker returns, increased costs and damaged competition.

I am entirely in favour of the amendments tabled by my noble friend Lady Noakes and, once again, I call on the Government to have a fresh look at this, not least because the Prime Minister has identified fintech and all those sorts of innovative sectors—those start-ups in Shoreditch—as one of the large opportunities where this country can show competitive advantage. That would be snuffed out if these provisions in the Bill were implemented through regulation or other methods.