Pension Schemes Bill

Rachel Hopkins Excerpts

2nd reading
Monday 7th July 2025 Commons Chamber

[Rachel Hopkins (Luton South and South Bedfordshire) (Lab)]

First, I want to declare an interest. I subscribe to my current parliamentary pension, have preserved benefits in previous occupational pensions and, like the right hon. Member for North West Hampshire (Kit Malthouse), I too have preserved benefits in the local government pension scheme, though I do not propose to say much about that element of the Bill. I suppose that as a worker with a variety of pensions, I am going to benefit from the Bill.

I welcome the Government’s proposals under the Bill, as too many people have their hard-earned cash scattered across pension pots that deliver poor returns on their savings and leave them confused about their future and worse off in retirement. The Bill will deliver more money for savers by making pensions simpler to understand and easier to manage, and they will return better value over the long term. The new rules will bring together defined-contribution small pension pots, to cut costs for savers and industry and help people to view their full pension picture easily. That will protect them from getting stuck in underperforming schemes for years.

The Bill has been welcomed by the pensions industry, as it sets out a long-term plan to create bigger and better pension funds that will boost returns for savers and drive long-term investment across the country. As we have heard, in the UK pensions system there are more small pension pots than there are pensioners. Currently there are 13 million small pots holding £1,000 or less, with the number increasing by around 1 million every year. Small pots are costly for savers and industry, who can lose money through flat-rate charges or administrative costs, and they deliver poor returns because they are not big enough to invest in high-yielding productive assets.

The Bill will introduce a new value-for-money system to improve outcomes for savers. It will assess the DC schemes and the arrangements that they operate, based on cost, investment performance and service quality. This will identify and address poor-performing schemes or arrangements, encourage consolidation and improve member outcomes while promoting investment in a wider range of productive assets. It will also protect savers from getting stuck in underperforming schemes for years.

The Bill’s proposals will also help to unlock about £50 billion for investment in the UK economy. Easing the rules around surplus funds could help unlock billions for employers to invest in their businesses and deliver for scheme members. For many businesses, that may be the financial lifeline they need to free up capital for investment or debt reduction, although it is important to flag that pension scheme trustees working with employers will decide whether to release surpluses and act in the interest of scheme beneficiaries, and trustees will be required to maintain a strong funding position so that they can pay members’ future pensions when they fall due. Will Ministers ensure that member or worker representation on trustee boards is part of the plans?

Like many people, I bring lived experience to this space; I am speaking as someone who worked in human resources. I was often asked questions by employees about their pensions, and I always had to say, “I am not providing advice; this is solely information,” as I dished out their annual pension benefit statements. So I am very aware that most employees just want to understand more about their pensions: what their contributions are and how those will benefit them in the future. I therefore very much welcome the introduction of the long-awaited pensions dashboard, which will provide savers with their whole pensions picture—workplace and state pensions —securely and all in one place online. We hope that it will finally be with us next year. I commend the Bill to the House.