Automatic Enrolment: Earnings Trigger and Qualifying Earnings Band Review 2026-27
Torsten Bell Excerpts(4 days, 1 hour ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
Automatic enrolment has transformed workplace pension saving for millions of workers. However, despite this success, the Government recognise that millions are still under-saving for their retirement. That is why we have revived the landmark Pensions Commission to finish the job that we started 20 years ago. The commission will examine why tomorrow’s pensioners are on track to be poorer than today’s and make recommendations for change.
It is against the backdrop of the commission’s work that I have considered and completed this year’s annual statutory review of the automatic enrolment thresholds, which are the earnings trigger and lower and upper earnings limits of the qualifying earnings band. The main focus of this year’s annual statutory review has been to ensure the continued stability of automatic enrolment for employers and individuals, particularly during the ongoing work of the Pensions Commission, which will explore long-term questions of adequacy and how to improve retirement outcomes, especially for those on the lowest incomes and at the greatest risk of poverty or under-saving.
The thresholds review has therefore concluded that all automatic enrolment thresholds for 2026-27 will be maintained at their 2025-26 levels.
The 2026-7 annual thresholds are as follows:
The automatic enrolment earnings trigger will remain at £10,000.
The lower earnings limit of the qualifying earnings band will remain at £6,240.
The upper earnings limit of the qualifying earnings band will remain at £50,270.
The publication supporting the review will be published on the www.gov.uk website and a copy placed in the Library of the House.
[HCWS1206]
National Insurance Contributions (Employer Pensions Contributions) Bill
Torsten Bell ExcerptsWednesday 17th December 2025
(5 days, 1 hour ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move, That the Bill be now read a Second time.
This is a short and simple Bill. It is a stocking filler to yesterday’s Finance Bill. [Interruption.] There are just three clauses for the chuntering Opposition Members to enjoy. They focus on amending the Social Security Contributions and Benefits Act 1992, and they do so to create a power to apply national insurance contributions to salary sacrifice pension contributions above £2,000 a year from April 2029.
I will focus my remarks on three areas: first, why Government action in this regard was inevitable; secondly, the case for the pragmatic, balanced approach that we propose to take; and thirdly, how this sits with wider, crucial questions about pension savings on which the House rightly focuses.
Jim Shannon (Strangford) (DUP)
My intervention will be very brief. The Federation of Small Businesses in Northern Ireland has told me of its concerns about national insurance contributions, but it has also told me that utility prices are up by 52.7%, labour costs by 51.5%, and taxes by 47.2%. I ask the Minister respectfully how he and the Government can expect small businesses to survive increases at that level.
Torsten Bell
I will come to the exact point that the hon. Gentleman raises. The main answer to his question is that we are introducing this change with a very long implementation period—it will not come in until 2029—in order to give businesses and others time to adjust. Businesses have welcomed that across the board, but I will come on to it shortly.
It is always important to keep the effectiveness and value for money of tax reliefs under review; after all, their cost is estimated to be over £500 billion a year. That is always true, but it is especially true when we see the cost explode. That is why we acted in the Budget to reform employee ownership trust capital gains tax relief, because the cost was set to reach more than 20 times what was intended at its introduction.
That is what we see happening in the case of pension salary sacrifice: its cost is on course to almost treble between 2017 and the end of this decade. That would take it to £8 billion a year. For some context, that is the equivalent of the cost of the Royal Air Force. I will repeat that: the cost of pension salary sacrifice was due to rise to the equivalent of our spending, in real terms, on the Royal Air Force. The growth has been fastest among higher earners, with additional rate payers tripling their pension salary sacrifice contributions since 2017. While those on higher salaries are most likely to take part, many others are unable to do so at all.
James Naish (Rushcliffe) (Lab)
I understand the justification for making changes to the salary sacrifice arrangements. The Minister mentions higher earners. Can he explain a bit more about the breakdown of those who are benefiting under the current system as a percentage of the whole? I do not know whether he has that data with him.
Torsten Bell
I will come on to some statistics that might answer my hon. Friend’s question.
While those on the highest salaries are most likely to take part in salary sacrifice, others are completely excluded. This goes to the question from the hon. Member for Strangford (Jim Shannon).
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the Minister give way?
Torsten Bell
I will make some progress before giving way again.
The majority of employers do not offer salary sacrifice at all, including many small businesses. Workers on the national living wage are excluded entirely, and so are the 4.4 million self-employed people across the UK. On grounds of cost and fairness, it is near impossible to defend the status quo.
Of course, a major part of the job of the Opposition is to oppose some things that the Government are doing. I do not want to prejudge the remarks that the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), will offer shortly, but I am confident that we will hear some opposition—maybe a word or two—to the Bill.
Dr Murrison
I am grateful to the Minister for arguing for more money for the Royal Air Force, and I very much hope that his colleagues in the Ministry of Defence and the Treasury are listening. We were told a little over a year ago that we had wiped the slate clean and that the Government would not be coming back to demand more money to fill various non-existent black holes. What has changed over the past several months that means he is now coming back to levy this very large sum of money?
Torsten Bell
I think I have already answered the right hon. Member’s question: it is important to keep tax reliefs under review. The cost of pension salary sacrifice is growing very fast indeed, so we have reviewed this tax relief and think it is important to bring in pragmatic changes, as I will come on to.
As I was saying, I am confidently looking forward—
Torsten Bell
I am going to make a bit of progress, and then I will give way to the hon. Member.
The truth is that reform was inevitable. Although Conservative Members are not saying it now, they know this is true, because it is what they said in government. In the 2015 summer Budget, they said:
“Salary sacrifice arrangements…are becoming increasingly popular and the cost to the taxpayer is rising”—
[Interruption.] I will come on to what the last Government wanted to do in the pensions space in a second. I am glad that the hon. Member for North Bedfordshire (Richard Fuller) is so keen to hear this; he is setting me up nicely for what is coming in a second.
The summer Budget of 2015 went on to say:
“The government will actively monitor the growth of these schemes and their effect on tax receipts”,
which is the same argument that I just made to the right hon. Member for South West Wiltshire (Dr Murrison). That monitoring led, a year later, to the then Chancellor—now Baron Hammond of Runnymede—announcing benefit-in-kind restrictions. He told this House:
“The majority of employees pay tax on a cash salary, but some are able to sacrifice salary…and pay much lower tax… That is unfair”.—[Official Report, 23 November 2016; Vol. 617, c. 907.]
He was right then, and the same argument holds today.
Former Conservative Ministers should certainly agree, because in government they were planning exactly the kind of change to pensions that we are now introducing. By way of proof, in 2023 the Conservatives commissioned research on restricting salary sacrifice arrangements for pensions, which is exactly the same measure they are opposing today. What was the proposed cap on pension salary sacrifice in that report? It was £2,000 a year, which is exactly the same cap they are opposing today.
Lincoln Jopp
The Minister seems to have co-opted the amount of money spent on the Royal Air Force into his argument. Is he aware that absent the defence investment plan—it was promised in the autumn, and the House rises tomorrow—we have no idea about the size, shape and cost of the Royal Air Force, because the Government are late with their homework?
Torsten Bell
I thank the hon. Gentleman, as I always do, because he always makes interesting points, but my larger point is this: if the Conservative party refuses ever to support any increases in taxation, increases in such spending—I think there is cross-party support for the Ministry of Defence, as the right hon. Member for South West Wiltshire mentioned—cannot be funded and cannot happen.
Almost every tax expert in the country has noted the need for change, and most have called for pension salary sacrifice to be ended entirely. However, we are taking a more pragmatic approach by recognising that change will affect many employers and employees. Our balanced approach has two key parts. The first is time. As I said to the hon. Member for Strangford, nothing will change overnight. We are providing over three years’ notice of the reform’s implementation. What did the previous Government provide to employers? One year’s notice of their reforms to salary sacrifice. This will give everybody involved time to prepare and adjust, which is widely welcomed by firms and business groups. Employers and payroll providers have already been working with His Majesty’s Revenue and Customs to ensure that this change operates in the most effective way, and that process will continue as we approach implementation.
The second key design choice is the cap of £2,000. This cap protects ordinary workers and limits the impact on employers, while ensuring that the system remains fiscally sustainable. The cap means that the majority of those currently using salary sacrifice will be unaffected. It means that almost all—95%—of those earning £30,000 or less, who work disproportionately for small businesses, will be entirely unaffected, and 87% of affected salary sacrifice contributions above the cap are forecast to be made by higher and additional rate taxpayers. This is a pragmatic and fair approach, as well as the fiscally responsible one.
Some will claim—I am sure we will hear this from the Opposition—that salary sacrifice arrangements drive aggregate levels of pension savings. That is simply wrong. After all, salary sacrifice arrangements existed through the 2000s and into the early 2010s, and what happened to pension savings during that period? There were not rises, but big falls in private sector participation in pension savings. The existence of salary sacrifice did nothing to prevent a situation in which, by 2012, only one in three private sector workers were saving into a pension.
What made the difference was not the complicated national insurance reliefs available to some employees, but automatic enrolment, the groundwork for which was laid under the last Labour Government and which was continued by Conservative and Liberal Democrat Ministers. That reversed the collapse in workplace pension saving, and it means that over 22 million workers are now saving each month.
We also see that contributions have risen in line with regulatory requirements, not with the growth of salary sacrifice. Pension salary sacrifice relief doubled between 2019 and 2023. Was that associated with a surge in average pension contribution levels? No, they have remained entirely stable as a proportion of pay, because all the evidence indicates that it is largely automatic enrolment that drives changes in pension savings. That should not surprise anybody, because the research commissioned by the Conservative party that I mentioned earlier pointed in the same direction. It found that the majority of employers reducing their tax bill by offering pension salary sacrifice did not use the savings to increase pension contributions.
More importantly for any member of the public listening—and it is important for all of us to be clear about this throughout this debate—pension saving will remain highly tax-advantaged after these changes. I have seen some deeply misleading comments in the media and otherwise on wider changes to pension tax relief, saying that people will not be saving as much as they previously were. The public should be clear that we are spending over £70 billion per year on pension tax relief, and that will be entirely unaffected by these changes. Employer contributions will continue to be the most tax-advantaged part of the pension tax system, being made entirely national insurance contribution-free.
These are necessary changes that everyone who has thought about this subject knew would be needed, and they are changes being implemented in a pragmatic and balanced way. They are also consistent with the longer-term approach to reforming the pension system that is now in train.
There is cross-party agreement that the work of the Pensions Commission is important as it examines questions of adequacy and fairness. We all know too many people are under-saving. Many commentators have called for higher minimum saving rates within automatic enrolment, including some on the Opposition Front Bench. The commission is crunching the numbers and talking to employers, trade unions and the pensions industry. We should not prejudge its work so I would now simply note that higher savings rates means pension tax relief costs rising further. If we combine that with the reality that if pension salary sacrifice remains unreformed, the end point could be all employee contributions being funnelled through this route, it implies costs at least doubling again to well over £15 billion a year, which means £15 billion in higher taxes elsewhere or cuts to public services. That is the logical conclusion of the arguments from those opposing today’s Bill.
Then we come to the real problem of some groups disproportionately under-saving, which, again, Members on both sides of this House have rightly raised in debates on pensions in recent months. The Pensions Commission is focused on groups we know are most exposed, including low earners, some ethnic minorities, women and the self-employed. This is a real challenge for our pension system but the data is entirely clear that today’s salary sacrifice is not the answer. That is true whichever group we look at. Let us take them in turn. The self-employed are a top concern, with only one in five saving into a pension, but they are entirely excluded from pension salary sacrifice. Low earners are most likely not to be saving, but it is higher earners who are most likely to be using salary sacrifice. And many more women are under-saving for retirement, but many more men use pension salary sacrifice.
These are fair and balanced reforms. They protect ordinary workers, they give employers many years to prepare, and they ensure both our pension system and the public finances are kept on a sustainable footing. Opposing them is not cost-free: the savings from this measure are equivalent to over 250,000 knee and hip operations every year. The truth is that they are inevitable, which is why at least one party opposite was planning to introduce them. I gently suggest to some Members that they can, of course, take the easy route of opposing this change, but the truth is that they will be doing so with their fingers crossed behind their backs, because many know this change needed to come one day, and I suspect not one of the parties opposite will promise to undo it in the years ahead—but we will see.
The Budget delivered badly needed tax reforms ducked for too long by previous Chancellors. Whether it is the pragmatic reform in front of us today or ensuring that everyone driving on the roads contributes to their upkeep, these reforms are what it takes to keep cutting waiting lists, cutting borrowing and cutting energy bills, and I commend them and this Bill to the House.
Mark Garnier
Indeed—our report, though it was published in May this year. It is a weighty tome. Even its title is pretty dry: “Understanding the attitudes and behaviours of employers towards salary sacrifice for pensions”. The Minister proudly told us that this document underscored the rationale for—[Interruption.] Oh—because it is important stuff. He told us that it underscored the rationale for capping salary sacrifice. However, having read the report, I can tell the House that it actually concludes that:
“All the hypothetical scenarios explored in this research”,
including the £2,000 cap, “were viewed negatively” by those interviewed. The changes would cause confusion, reduce benefits to employees and disincentivise pension savings. The report the Minister is using tells him not to do this.
The report also goes into why salary sacrifice for pensions is used by employers in addition to the incentive of paying into a pension, stating that extra benefits include: savings for employees, so that they have more to spend on essentials, tackling the cost of living crisis; savings for employers, which they can then invest back into their business and staff; and incentives for recruitment and retention. These are all good things—this is the stuff of delivering growth and the basis of creating a savings and investment culture. Why would this Government want to take it away?
The report came to the conclusion that of the three proposed options for change, the £2,000 cap is no more than the least terrible option. [Interruption.] The Minister talks about it being a secret plan—it is a published document. What is he talking about? It is the most extraordinary thing. He refers to it in terms that none of us recognises. But he has brought this in—this is the point. Is the Minister chuffed that his choice comes down to the least worst option for everyone? Here is the truth: it was the Chancellor’s choice to introduce this policy, and this Government are the ones implementing it—they are the ones who are in government.
Let us get to the measures and the impact of the Bill. To be fair, it is a very even Bill; there is something in it for everybody to hate. Take middle-income earners, who are typically in their 30s, and who earn on average a touch under £42,000 a year. This is the target area where the attack on savings starts. This is right at the point in life where people should be doing their very best for their future retirement. It is a perfect target market for the Government’s savings ambitions. However, it does not stop there. In total, at least 3.3 million savers will be affected, which is 44% of all people who use salary sacrifice for their pension. These are all people who work hard—people on whom the Chancellor promised not to raise taxes.
In fact, middle-income employees will be affected more than higher earners. According to the Financial Times, under the Bill, an employee who earns £50,000 and sacrifices 5% of that will pay the same amount in national insurance contributions as an employee on £80,000. If the contribution rate is doubled to 10% of their salary, the disparity grows even further, meaning that an employee earning £50,000 will pay the same amount in national insurance contributions as an employee on £140,000. How is that fair? The Government keep telling us that this policy will affect top earners, but the reality is that those on middle incomes will be disproportionately hit—the very people we should be encouraging to save more.
The Bill will also potentially hit low earners. Somebody who is lucky enough to get a Christmas bonus will not be able to add it to their salary sacrifice, taking advantage of any headroom, because the accounting looks at regular payments, not one-offs. [Interruption.] I am slightly worried, Madam Deputy Speaker, that the pairing Whip has a rather bad cough; I hope he gets better. This will potentially hit the 75% of basic rate taxpayers the cap supposedly protects.
Finally, the Bill hits employers. In the previous Budget, the Government absolutely hammered business. They increased employer national insurance contributions to 15% and, at the same time, reduced the starting threshold to £5,000. Businesses reacted and adapted. They were reassured by the Chancellor’s promise that she would not come back for more, yet here we are discussing further tax rises on businesses.
Let us look at the actual impact this raid on pensions will have on employers. According to the Government’s own impact assessment, it will hit 290,000 employers. A business highlighted in the 2025 report that
“If salary sacrifice were to go away, it would be additional cost of £600,000 to £700,000 per annum to the company in national insurance”.
While the Government are not abolishing it altogether, 44% of people currently using salary sacrifice—[Interruption.] I am worried; the pairing Whip is coughing. Anyway, there is going to be a cost, and that money will be taken away from businesses. This is going to be—[Interruption.] The Minister is chuntering from a sedentary position; he is obviously proud of what he is doing to the pensions industry.
Furthermore, the change will create administrative burdens for employers. With the current system, there are few administrative issues; the only thing that businesses have to bear in mind is ensuring that their employees’ pay does not fall below the national living wage—that is it. So what do the Government do? They go for the most complicated option that the report considered. That was explicitly stated by those involved in the research. As a pensions administration manager for a large manufacturing employer said,
“We’d have to reconfigure all our payroll systems and all our documentation. It would be a big job.”
The National Audit Office estimates that the annual cost on business just to comply with this Government’s tax system is £15.4 billion, yet the Government feel that the time is right to put more costs on businesses. I have to ask, what happened to the Chancellor’s pledge to cut red tape by a quarter?
I think I will move on to my conclusion in order to save people. [Laughter.] There was some great stuff in this speech, but I understand that people want to get away and wrap their Christmas stockings—particularly the Pensions Minister who, like the Grinch, is taking a lot of money away. To conclude, the Government should think again on this policy. People are simply not saving enough for their retirement. We need to do more to encourage them to save for their retirement. I know that the Minister would agree with that, so I hope that he hears the genuine concerns I have raised on behalf of a lot of people. Many people and businesses and are very worried about this policy, and he needs to take it away and think carefully about it.
Fundamentally, we are taking away something that is beneficial to the individual while also being tax efficient for business. Instead of encouraging the creation of incentives such as salary sacrifice or pensions, we are reducing the number. It is the wrong policy, and it sends the wrong message at the wrong time. All it does is add to the ongoing narrative that, “If you work hard to make a decent income, you will lose out. If you work hard as an employer to grow your business, you will lose out. If you try to save towards dignity and retirement, you will lose out.” It is the wrong policy to pursue and we will definitely vote against it tonight.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
It strikes me that it should not be particularly controversial that a Government should be encouraging people to save for their retirement, to take responsibility for their future and to feel secure in later life. Therefore, although we are dealing with a short Bill that appears to be purely procedural in nature, its practical consequences are profound, because it takes us in precisely the wrong direction.
Beneath the layer of technical language lies a troubling choice. It is a choice to tax aspiration, penalise prudence and chip away at the very habits that ensure financial security in our later years. The Government have sought to assure us that this only affects high earners and that most will not be affected, but that is not how it will feel to the majority of people in the real world. One in five people—approximately 20%—rely on salary sacrifice. Those are people who are doing the right thing; they are choosing long-term security over short-term consumption. Yet under the Bill, to save means to pay more. That is not positive pension reform; it is a stealth national insurance rise, dressed up in the cloak of technicality.
At a time when businesses are struggling under huge wage bills, regulatory uncertainty and sluggish growth, the Bill quietly imposes on them yet another burden. I remind Government Members that fairness cuts both ways. It is not fair to tell people to save for their future and then tax them more for doing so, it is not fair to talk of fiscal responsibility when penalising prudence, and it is not fair to build long-term public finances on short-term revenue grabs.
There is a moral component to this, because women will be disproportionately affected. Many women, on returning from maternity leave, increase their contributions to cover for that career break. The proposals as drafted will result in those who plan responsibly being encumbered with higher additional national insurance charges.
Torsten Bell
I am reluctant to intervene, but I just want to pick up on two points that the hon. Member has just made. Men are much more likely to use salary sacrifice than women, so I offer him the chance to reconsider his last point about women being disproportionately affected. Before that, he said that the Bill meant that people were being encouraged to save but that they would be penalised if they did so. Given that there are members of the public listening who will make choices about their savings, I invite him to remind everyone that saving into their pension is still a very tax-advantaged thing to do. All Members on both sides of the House should encourage people to save into their pension, as the tax system will continue to do.
Dr Shastri-Hurst
The Minister is right that people should be putting into their pensions and we should encourage them to do so, but we should not put forward legislation that disincentivises that. In respect of women, it is a fact that they are more likely to take career breaks and, by virtue of that, they may want to make up their contributions. This legislation will disadvantage those individuals.
The salary sacrifice scheme has become the bedrock of the modern pension system in the workplace. By decreasing gross pay, it decreases employer national insurance contributions and allows firms to invest more in their people. That is a positive step. My fear is that, as a consequence of this piece of legislation, many employers may scale back those contributions, cut other benefits associated with work or even discontinue schemes entirely. If we want a country that values responsibility and rewards work, and in which people make long-term plans for their economic security, I am afraid that the Bill takes us in entirely the wrong direction.
Budget 2025: Impact on Graduates
Torsten Bell Excerpts(6 days, 1 hour ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Secretary to the Treasury (Torsten Bell)
It is always a pleasure to serve under you in the Chair, Mr Turner. I congratulate the hon. Member for Windsor (Jack Rankin) on securing this important debate. Budget discussions, which there have been lots of in the past month, tend to focus on economic statistics, GDP and borrowing. Those are very important, but they can sound abstract. What ultimately matters is what happens to people, including young people, and their wages and bills, the firms they work for and the public services they rely on.
I welcome the hon. Member’s focus on young people and what is happening to their wages, homes and student finance, as well as apprenticeships actually, which he did not touch on much. I also welcome his honesty about a number of the trends and policies put in place by the previous Government. I would add to his critique of the previous Government the 40% fall in youth apprenticeship numbers, which has had a real effect on the volume of routes available to young people.
Across all the fronts that he mentioned, the Government are supporting graduates and, for that matter, non-graduates. I know he would agree that the most important thing we can do for them is to make sure our economy overall is strong, because in the end, that is what provides graduate opportunities. He will be aware that Britain outperformed the growth forecast this year, with growth upgraded from 1% to 1.5%. Lots of things in the long run matter to economic growth, but raising Britain’s investment levels is high up the list. That is why public investment is up by £120 billion and why we place so much emphasis on the old-fashioned idea of actually getting things built in this country. He raised the issue of housing, which I will return to shortly. We have also seen real wages rise more in the first year of this Government than in the first 10 years of the Conservative Government, but there is a lot further to go, and the Budget does go further.
Let me touch on some of the areas that the hon. Member mentioned. On the microeconomic policy side, Britain is already the best place to start a business in Europe. That can be seen clearly in all the statistics, but it needs to be the best place to scale up a business and for a business to stay. That is exactly what we dealt with in the Budget, with tax breaks to make it easier to grow and keep attracting capital and workers. In the long run, that is what creates more graduate jobs, which he rightly focused on.
On the macroeconomic strategy, we aim to support growth by cutting borrowing and inflation. That in turn helps the Bank of England to keep interest rates falling—they have already been cut five times since the election—and that is crucial to give businesses the confidence to invest and to directly cut mortgage bills for millions of Henrys, Henriettas and everybody else, because those with mortgages are disproportionately graduates.
The hon. Member rightly raised the question of assets. He touched on housing but in my day job dealing with pensions, the same thing applies, because the young people he referenced will also be saving for pensions in a very different environment from those who came before them.
Briefly on housing, what are the Government doing? We aim to tackle two things: first, the security of rental accommodation through the Renters’ Rights Act 2025, making sure that if people are renting, whether that is for a temporary period or an extended period, they cannot be evicted at short notice, with no certainty. Secondly, we have to tackle housing costs, and in the long run that means building houses. There is no substitute for that. It means building affordable housing and market housing. The hon. Member mentioned London, where a package of measures has been announced to deal with the building trend over the last few years towards lower building levels than we would like, but we also need to see this around the country. We need to see all enthusiastic MPs not opposing planning permissions when that is their easiest path to take.
On pensions, I will add two things that I think matter for today’s younger generations. The first is the adequacy of the system that they are saving into, largely via defined contribution pension schemes. We have launched the Pensions Commission—I think that has cross-party consensus—to make sure, when we look ahead to 2050, that young people are on course for an adequate retirement. But we also need to address the fact that it is not just the amount of the pension, but the level of risk that younger generations are being asked to bear—in longevity, investment, inflation and other risks. That is exactly what the Pensions Commission is doing.
I agree with most of the comments about young people in the labour market. It is a disgrace that one in eight young people are not in education, employment or training—I think we would all agree about that. Of course, it is a disgrace that we inherited from the Conservatives, as the hon. Member for Windsor is well aware. It is good that the number of NEETs has not continued to rise, but I absolutely agree that it is far too high, and that is on all of us. That is why we have committed to tackling it, not least through a youth guarantee. That needs to continue, as does the work on mental ill health. We have committed to expanding the use of talking therapies in the NHS, delivering an additional 384,000 courses of treatment by 2028-29. There is one thing that I would gently add, in thinking about some of these issues, and mental health is a good example. We must not forget that the long-lasting effects of mental ill health, for example in the labour market, tend to be felt among those with fewer qualifications, even though, on the health side, that affects a very wide range of people.
Turning to tax, we are certainly not hiding from the fact that the Budget asked everybody to make a contribution. The reason for that is simple: people have had enough of failing public services that are not doing the basics, and they know that borrowing levels must be brought down. The hon. Member will know that the Budget reduces borrowing in every single year of the forecast, because spending £1 in every £10 on debt interest rather than on schools and hospitals is already quite enough. The Budget included the freeze on the repayment threshold for plan 2 student loans from April ’27—where the threshold remains above that for other student loans, such as the plan 5 loans.
The hon. Member mentioned some details of the plan 2 rules, which, again—I gently say—were introduced by the Conservatives, who looked to rebalance the system away from having as much taxpayer funding of students in the university system as there had been, with the cost being passed on to individuals. The measures are part of a wider package of reforms, including in relation to higher-value properties, electric vehicles and changes to income tax rates on income from assets. Those are part of the Budget so that we make sure that the wider contributions we are asking for from everybody can be kept to an absolute minimum.
More broadly, there has been a cross-party consensus that a fairer system of university funding will require a lower net contribution to universities from the taxpayer, particularly from taxpayers who did not go to university—I think that the hon. Member still agrees with that. In 2025, 34% of loan debt for full-time plan 2 graduates was forecast not to be repaid, so what we are talking about is still substantive. I agree with him more broadly on the need for other higher-quality qualifications in greater numbers; he will have heard the Prime Minister referring to that in his conference speech earlier this autumn.
We must also not lose sight of something that is still very true, despite the call for more and a wider range of qualifications: graduates still genuinely benefit from higher earnings and higher employment rates. We have talked about NEET numbers, and a degree still provides a very high level of protection against that. That does not mean that we should not continue to focus on ensuring that we get the best value for money for everything that young people go on to do.
It is important that we have a sustainable student finance system, and also one that is fair to students and to the taxpayer. Students will pay nothing back unless they earn above the threshold, as they do now, and no one whose salary remains the same will see their monthly repayments change as the years of the freeze continue. Of course, we will keep the system under review.
I again thank the hon. Member for securing the debate. It is vital that we secure the best possible future for graduates and, I think we all agree, for all young people and the younger generations. We will do that by tackling inflation and making sure that we bring down debt, as well as by ensuring that this is a country where wages and living standards are rising, where people can get things built again and where firms are able to grow. The Budget goes about delivering exactly that.
Question put and agreed to.
Oral Answers to Questions
Torsten Bell Excerpts(2 weeks ago)
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Gill Furniss (Sheffield Brightside and Hillsborough) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
To tackle pensioner poverty, we are both increasing the state pension and running the biggest ever pension credit take-up campaign. Raising the new state pension in line with the triple lock over this Parliament is set to increase it by over £2,000 a year, while 60,000 extra pension credit awards were made in the year to July compared with the previous 12 months.
Gill Furniss
More than a quarter of a million pensioners received compensation from the Pension Protection Fund and the financial assistance scheme, but those who accrued their income before 1997 have suffered a real-terms cut of 24% in the past five years alone. I welcome the Chancellor’s commitment to provide indexation on these accruals, but many of those who will benefit are elderly and in ill health. Can the Minister confirm that he will implement this much-welcomed change as quickly as possible?
Torsten Bell
I thank my hon. Friend for that important question. I, like her, have met and listened to lots of those affected by the lack of indexation on pre-1997 accruals within the PPF and the FAS. I can assure her that, assuming the Pension Schemes Bill receives Royal Assent, the uprating will take place at the next PPF uprating, which means January 2027 on current estimates.
Sir Edward Leigh (Gainsborough) (Con)
I am very grateful to the Minister to be in receipt of the triple lock, but it is not an effective way of tackling pensioner poverty and it is bankrupting the country. I am sorry not to be party political, but can we not have a consensus between the parties that we should phase out the triple lock, concentrate resources on pensioners in real poverty and have an agreement on dealing with benefits generally to get people back into work? We should work together.
Torsten Bell
I am always keen to work together with the Father of the House. He mentions the triple lock, but we are doing far more things to tackle pensioner poverty. There were 900,000 pensioners eligible for pension credit under the Conservatives who were not claiming, and that is why we have brought forward the biggest take-up campaign ever seen. The marketing campaign this year will run from September to the end of the financial year, we are carrying out research on what works to encourage take-up of pension credit and we are stepping up data sharing across Departments, including between His Majesty’s Revenue and Customs and the Department for Work and Pensions.
Anna Dixon (Shipley) (Lab)
Mark Garnier (Wyre Forest) (Con)
The Chancellor’s Budget put a cap on salary sacrifice for pension savers at just £2,000. That was to raise an extra £4.8 billion in 2029, and it will affect 3.3 million savers and 290,000 employers. What research has the Pensions Minister done to understand and quantify the negative effects that this will have on pension savings?
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I thank the hon. Gentleman for his question because it gives me a chance to bring the House’s attention to research published after the general election in 2024 but commissioned under the last Conservative Government—I have the document here. What was the research into? It was into capping salary sacrifice pension contributions at £2,000. The hon. Gentleman can read the research published and commissioned by his own party about putting back under control this tax relief, which had got out of hand.
Mark Garnier
Well, it was not us who put it in place; it was Labour.
This policy hits the private sector disproportionately: 14 times as many people save through salary sacrifice in the private sector as they do in the public sector. Whether it is kite-flying about lump sum withdrawal or taxing inherited pension pots, in a week when Labour Together is canvassing Labour members about a new Labour leader, is it not the case that the Chancellor is more interested in throwing red meat to her sad and unfortunate Back Benchers in a vain attempt to save her job than she is in the interests of the savings of our hard-working constituents?
Torsten Bell
There is nothing sad about Labour Members watching wages rise faster under this Government than they did under the Conservatives. There is nothing sad about our Back Benchers seeing the end of austerity and seeing public services being improved right across this country.
Mohammad Yasin (Bedford) (Lab)
Lincoln Jopp (Spelthorne) (Con)
Following the Budget, a furious Labour voter, 30 years old, texted me to say, “I am furious about the salary sacrifice thing. I give up a lot of things to put 20% of my salary into my pension. That’s going to cost me almost two grand a year for being responsible.” Why are the Government so keen on punishing savers?
Torsten Bell
We are taking a pragmatic approach to reforming pension contributions made via salary sacrifice, the costs of which are set nearly to triple to £8 billion between 2017 and the end of this decade. The case for change was made powerfully by a previous Chancellor:
“The majority of employees pay tax on a cash salary, but some are able to sacrifice salary…and pay much lower tax… That is unfair”.—[Official Report, 23 November 2016; Vol. 617, c. 907.]
So said Baron Hammond of Runnymede.
Danny Beales (Uxbridge and South Ruislip) (Lab)
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
I recognise, as do so many Members across the House, the injustice and maladministration suffered by the so-called WASPI women born in the 1950s. I welcome the recent development announced by the Secretary of State, but will he give an undertaking that if compensation is agreed, it will take into account the poverty suffered by so many of these women and include recompense for their significant legal costs?
Torsten Bell
As the Secretary of State set out to the House a few months ago, the decision to which the hon. Member refers is being retaken by the Department, and we have committed to updating the House on that decision in due course.
Tom Hayes (Bournemouth East) (Lab)
Nan Roberts is 92. She was widowed this year and is facing her first Christmas without her husband of 64 years, and she is feeling utterly fobbed off by a creaking DWP system. She is waiting for her “choices letter”, despite having ingoing state pension payments dating back to 1994. The threat of asking this question has already led to some action by the DWP, but will the Secretary of State outline how I can do more to support my constituent?
Torsten Bell
The hon. Gentleman is a powerful champion for his constituents and I am sure that all hon. Members will be unhappy to hear about this case. I know that staff from the Department for Work and Pensions have already been in touch with his office, and I am happy to follow up myself.
Torsten Bell
I thank the hon. Gentleman for his brief question. Pensioner poverty halved under the last Labour Government. It went up under the previous Conservative Government, but it is going to come down again under this Government.
Rachael Maskell (York Central) (Lab/Co-op)
On Friday, I learned of an 81-year-old constituent who had had to return to work because of the cost of living in York. Will the Government take a deep dive and carry out an inquiry into poverty in later life, so that we can ensure that we deal with pensioner poverty once and for all?
Torsten Bell
I thank my hon. Friend for her important question. We have seen poverty rates fall less fast among people approaching the state pension age, rather than those over it. We need to look across the range of policy levers to address that, which includes growing the economy so that wages are rising and building houses so that people’s housing costs come down.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Cornwall Marine Network in my constituency is a small and medium-sized enterprise members association that provides training and apprenticeship support. It recently celebrated providing 5,000 new jobs and apprenticeships. It will welcome the Government’s youth guarantee and the news that SMEs will not have to pay for apprenticeship training for under-25s. Will the Minister confirm how this Government will increase the capacity of such training providers?
Pension Schemes Bill
Torsten Bell ExcerptsWednesday 3rd December 2025
(2 weeks, 5 days ago)
Commons ChamberRead Full debate Pension Schemes Bill 2024-26 View all Pension Schemes Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 3 December 2025 - large print - (3 Dec 2025)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Caroline Nokes)
With this it will be convenient to discuss the following:
Government new clause 31—Indexation of periodic compensation for pre-1997 service: Great Britain.
Government new clause 32—Indexation of periodic compensation for pre-1997 service: Northern Ireland.
Government new clause 33—Financial Assistance Scheme: indexation of payments for pre-1997 service.
Government new clause 34—Exemption from public procurement rules.
Government new clause 35—Funding of the Board of the Pension Protection Fund.
New clause 1—Independent review into pension losses incurred by former employees of AEA Technology—
“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the pension losses incurred by former employees of AEA Technology who—
(a) transferred their accrued pension benefits out of the UK Atomic Energy Authority (UKAEA) public service scheme to AEA Technology (AEAT) on privatisation in 1996, and
(b) suffered financial losses when AEA Technology went into administration in 2012 and the pension scheme entered the Pension Protection Fund (PPF).
(2) The review must examine—
(a) the extent and causes of pension losses incurred by affected individuals,
(b) the role of Government policy and representations in the transfer of pensions during the privatisation of AEA Technology,
(c) the findings of the Public Accounts Committee and the Work and Pensions Select Committee,
(d) the adequacy of safeguards provided at the time of privatisation,
(e) potential mechanisms for redress or compensation, and
(f) the estimated financial cost of any such mechanisms.
(3) The review must be—
(a) conducted by an independent panel appointed by the Secretary of State, with relevant expertise in pensions, public policy, and administrative justice, and
(b) transparent and consultative, including engagement with affected pensioners and their representatives.
(4) The panel must report its findings and recommendations to the Secretary of State and lay a copy of its final report before Parliament within 12 months of its establishment.
(5) The Secretary of State must, within 6 months of the publication of the report under subsection (4), lay before both Houses of Parliament a statement setting out the Secretary of State’s response to that outcome.”
This new clause would require the Secretary of State to commission an independent review into the pension losses incurred by former employees of AEA Technology.
New clause 2—Transfer of British Coal Staff Superannuation Scheme investment reserve to members—
“(1) Within 3 months of the passing of this Act, the Secretary of State must by regulations make provision for the transfer of the British Coal Staff Superannuation Scheme investment reserve to members of the scheme.
(2) Those regulations must include—
(a) a timetable for transferring the total of the investment reserve to members of the scheme, and
(b) plans for commissioning an independent review into how future surplus will be shared.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause would require the Secretary of State to set out in regulations a timetable for transferring the whole of the BCSSS investment reserve to members and committing to review how future surplus will be shared.
New clause 3—Terminal illness: means of demonstrating eligibility—
“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.
(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.
(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.
(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”
This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.
New clause 4—Review into investment in defence companies—
“(1) The Secretary of State must, within six months of the passing of this Act, carry out a review into investment in defence companies within Local Government Pension Schemes.
(2) The review must consider how the investment in defence companies—
(a) impacts on, and
(b) aligns with,
the UK Government’s international obligations.
(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”
This new clause would require the Secretary of State to conduct a review into investment in defence companies within Local Government Pension Schemes and how that impacts and aligns with Government international obligations.
New clause 5—Review into defined benefit schemes’ social impact—
“(1) The Secretary of State must, within 12 months of the passing of this Act, carry out a review into the social impact of defined benefit schemes.
(2) The review must include an assessment of—
(a) the efficacy of investment strategies in delivering social good, and
(b) the potential impact of increasing investment in—
(i) social housing, and
(ii) green technology.
(3) For the purposes of this section—
“social good” means something which benefits society as a whole, and
“green technology” means the use of technology and science to create environmentally-friendly products and services.
(4) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”
This new clause would require the Secretary of State to review the efficacy of investment in terms of delivering social good and the benefits of directing more investment towards social housing and green technology.
New clause 6—Indexation of pre-1997 service—
“(1) The Secretary of State must by regulations make provision for indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.
(2) Those regulations must specify that—
(a) pension payments from the PPF and FAS are increased each year in line with Consumer Prices Index (CPI) inflation for pensionable service before and after 6 April 1997,
(b) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with CPI inflation, but which their scheme provided for, the scheme manager must—
(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and
(ii) reimburse the member for the amount determined under paragraph (b)(i), and
(c) increased payments must also apply to transferee members, to ill health payments and to payments to surviving dependants.
(3) Regulations under this section—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”
This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights.
New clause 7—Report on indexation of pre-1997 Pension Protection Fund and Financial Assistance Scheme benefits—
“(1) The Secretary of State must, within 12 months of the passing of this Act, publish a report on options for providing indexation to pension rights relating to pre-1997 service in the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS).
(2) The report must consider—
(a) the current absence of indexation on pre-1997 accrued rights and the financial impact on affected pensioners;
(b) the number of pensioners affected and the mortality rates since the establishment of FAS and PPF, including evidence from the Pensions Action Group;
(c) the feasibility of introducing indexation, in full or in part, for pre-1997 rights;
(d) the potential use of scheme reserves, including residual funds from failed schemes transferred into the FAS, and the implications for taxpayers;
(e) the urgency of reform given the age profile of affected members and the social impact of frozen incomes;
(f) alternative funding mechanisms that could deliver indexation without undermining the sustainability of the PPF; and
(g) comparative approaches to legacy benefit indexation in other jurisdictions.
(3) In preparing the report, the Secretary of State must consult—
(a) the Pensions Regulator,
(b) the Pension Protection Fund,
(c) representatives of Financial Assistance Scheme members,
(d) the Pensions Action Group, and
(e) such other stakeholders as the Secretary of State considers appropriate.
(4) The Secretary of State must lay a copy of the report before both Houses of Parliament.”
This new clause would require the Secretary of State to publish a report examining options for addressing the lack of indexation on pre-1997 pensionable service in the PPF and FAS, with particular regard to evidence provided by the Pensions Action Group, mortality data, scheme reserves, and the urgency of the issue.
New clause 8—Universal Pension Advice Entitlement—
“(1) The Secretary of State must by regulations establish a system to ensure that every individual has a right to receive free, impartial pension advice at prescribed times.
(2) Regulations under subsection (1) must provide for individuals to be offered advice—
(a) at or around the age of 40; and
(b) at a prescribed age, not more than six years before the individual's expected retirement age.
(3) The regulations must make provision about—
(a) the content and scope of the free, impartial pension advice, which may include, but is not limited to, guidance on—
(i) pension types (including both defined contribution and defined benefit schemes),
(ii) investment strategies,
(iii) charges,
(iv) consolidation of pension pots, and
(v) retirement income options;
(b) the qualifications, independence, and impartiality requirements for any person or body providing advice;
(c) the means by which individuals are notified of their entitlement to receive the advice and how they may access it;
(d) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to advice;
(e) the sharing member information with prescribed persons or bodies subject to appropriate data protection safeguards.
(4) Regulations under this section may—
(a) make different provision for different descriptions of pension schemes or different descriptions of individuals;
(b) confer functions in connection with the provision or oversight of the advice on—
(i) the Pensions Regulator,
(ii) the Financial Conduct Authority,
(iii) the Money and Pensions Service, or
(iv) other prescribed bodies;
(c) require the provision of funding for the advice service from prescribed sources.
(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause makes provision by regulations for everyone to receive free, impartial pension advice at age 40 and again around five years before their expected retirement.
New clause 10—Independent review of forfeiture of survivor pensions in police pension schemes—
“(1) The Secretary of State must commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions on the grounds of—
(a) remarriage or entry into a civil partnership by the surviving partner of a deceased scheme member; or
(b) cohabitation with another person as if married or in a civil partnership.
(2) The review must examine—
(a) the legal and policy basis for such provisions;
(b) the financial, social, and emotional impact on affected individuals and families;
(c) consistency with other public sector pension schemes, including schemes for—
(i) the Armed Forces,
(ii) the NHS, and
(iii) the civil service;
(d) potential options for reform, including retrospective reinstatement of pensions;
(e) any other matters the Secretary of State considers relevant.
(3) The Secretary of State must—
(a) appoint an independent person or panel with relevant legal, pensions, and public policy expertise to conduct the review; and
(b) publish the terms of reference no later than three months after this Act is passed.
(4) The person or panel appointed under subsection (3) must—
(a) consult with relevant stakeholders, including—
(i) the National Association of Retired Police Officers (NARPO),
(ii) survivor pension recipients,
(iii) police staff associations, and
(iv) pensions experts;
(b) consider written and oral evidence submitted by affected individuals; and
(c) publish a report of its findings and recommendations within 12 months of appointment.”
This new clause would require the Secretary of State to commission an independent review into the impact and fairness of provisions within police pension schemes that result in the forfeiture, reduction, or suspension of survivor pensions.
New clause 11—Independent review into state deduction in defined benefit pension schemes—
“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit pension schemes.
(2) The review must consider—
(a) the origin, rationale and implementation of state deduction in the Midland Bank Staff Pension Scheme,
(b) the clarity and adequacy of member communications regarding state deduction from inception to present,
(c) the differential impact of state deduction on pensioners with varying salary histories, including an assessment of any disproportionate effects on—
(i) lower-paid staff, and
(ii) women,
(d) comparisons with other occupational pension schemes in the banking and public sectors, and
(e) the legal, administrative, and financial feasibility of modifying or removing state deduction provisions, including potential mechanisms for redress.
(3) The Secretary of State must ensure that the person or body appointed to conduct the review—
(a) is independent of HSBC Bank plc and its associated pension schemes;
(b) possesses relevant expertise in pensions law, occupational pension scheme administration, and equality and fairness in retirement income; and
(c) undertakes appropriate consultation with—
(i) affected scheme members,
(ii) employee representatives,
(iii) pension experts, and
(iv) stakeholder organisations.
(4) The person or body conducting the review must—
(a) submit a report on its findings to the Secretary of State within 12 months of the date the review is commissioned; and
(b) the Secretary of State must lay a copy of the report before Parliament and publish the report in full.
(5) Within three months of laying the report before Parliament, the Secretary of State must publish a written response setting out the Government’s proposed actions, if any, in response to the report’s findings and recommendations.
(6) For the purposes of this section—
“state deduction” means any provision within a defined benefit occupational pension scheme that reduces pension entitlements by reference to the member reaching state pension age or by reference to any state pension entitlement;
“defined benefit pension scheme” has the meaning given in section 181 of the Pension Schemes Act 1993;
“Midland Bank Staff Pension Scheme” includes all associated legacy arrangements and any successor schemes administered by HSBC Bank Pension Trust (UK) Ltd.”
This new clause would require the Secretary of State to commission an independent review into clawback provisions in occupational defined benefit pension schemes, in particular, the Midland Bank staff pension scheme.
New clause 12—Section 40 commencement—
“(1) The provisions in section 40 shall not come into force except in accordance with regulations made by the Secretary of State.
(2) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause would require that the provisions in clause 40 could only be enacted once agreed through secondary legislation.
New clause 13—Targeted Advice Access for Under-Saving Cohorts—
“(1) The Secretary of State must make regulations to provide enhanced access to pension advice or guidance for cohorts identified as under-saving for retirement.
(2) Regulations may make provision for—
(a) identifying under-saving groups, including but not limited to—
(i) women,
(ii) ethnic minority groups, and
(iii) others affected by long-term pay or pension gaps;
(b) mechanisms to fund and deliver targeted support;
(c) reporting and evaluation requirements to assess take-up and effectiveness.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause allows for the creation of targeted pension advice or guidance interventions for groups at risk of under-saving for retirement.
New clause 14—Cap on cost of advice for pension holders—
“(1) The Secretary of State may by regulations introduce a cap on the cost recoverable for providing pension advice per pension holder under any scheme operating free or subsidised advice.
(2) The cap may vary depending on—
(a) the value of the pension pot;
(b) the type of pension scheme;
(c) the complexity of advice required.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause enables the introduction of a cost ceiling for advice provision to members of pension schemes.
New clause 15—Independent review into the British Coal Staff Superannuation Scheme—
“(1) The Secretary of State must, within three months of the passing of this Act, commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme (BCSSS).
(2) The review must consider—
(a) the origin and operation of the Government’s surplus-sharing arrangements with the BCSSS since 1994,
(b) the adequacy of communication to scheme members regarding the use of surpluses,
(c) the impact of the Government’s retention of scheme reserves on members’ retirement income,
(d) representations made by the Trustees of the BCSSS calling for reserves to be released to members, and
(e) options for reforming how any future surpluses in the BCSSS are shared between the Government and scheme members.
(3) The person or body appointed to conduct the review must—
(a) be independent of the Government and the BCSSS Trustees,
(b) possess relevant expertise in pensions law and scheme administration, and
(c) consult with affected members, Trustees, pension experts, and stakeholder organisations.
(4) The review must report to the Secretary of State within 12 months of being commissioned, and the Secretary of State must lay the report before Parliament and publish it in full.
(5) Within three months of publication, the Secretary of State must publish the Government’s response to the review’s findings.”
This new clause would require the Secretary of State to commission an independent review into the treatment of members of the British Coal Staff Superannuation Scheme, including the handling of scheme reserves and future surplus-sharing arrangements.
New clause 16—Report on Pension Scheme Eligibility and Access—
“(1) The Secretary of State shall, within 12 months of the passing of this Act, lay before Parliament a report into the operation of occupational pension schemes where certain categories of employees have been excluded on the basis of job classification or employment start date.
(2) The report must examine the case of employees and former employees of Fife Joinery Manufacturing (a subsidiary of Velux), including—
(a) whether affected workers were provided with opportunity to join existing pension schemes,
(b) the adequacy of record-keeping and employer accountability, and
(c) potential remedies to ensure equal access to workplace pensions.”
This new clause would require the Secretary of State to report on the Velux Pensions case.
New clause 17—Clarification of pension scheme investment duties—
“(1) The Pensions Act 1995 is amended as follows.
(2) In section 36 (Choosing investments), after subsection (9), insert—
“(10) Regulations under subsection (1) must provide—
(a) that when interpreting the best interest or sole interests of members and beneficiaries for the purposes of this section and the regulations, the trustees of a trust scheme may (amongst other matters) take the following into account—
(i) system-level considerations,
(ii) the reasonably foreseeable impacts over the appropriate time horizon of the assets or organisations in which the trust scheme invests upon prescribed matters, including upon members’ and beneficiaries’ standards of living, and
(iii) the views of members and beneficiaries;
(b) that investment powers or discretions must be exercised in a manner that considers and manages the matters specified in subsection (10)(a)(i) and (ii) where they are financially material; and
(c) a prescribed definition of the term “appropriate time horizon” for these purposes.
(11) For the purposes of this section, “system-level considerations” means, over the appropriate time horizon, risks and opportunities relevant to the scheme that—
(a) cannot be fully managed through diversification alone, and
(b) arise from circumstances at the level of one or more economic sectors, financial markets or economies, including but not limited to those relating to environmental or social matters.
(12) Regulations under subsection (1) must come into force no more than one year after the passing of the Pension Schemes Act 2025.
(13) In complying with requirements imposed by this section and regulations, a trustee or manager must have regard to guidance prepared from time to time by the Secretary of State.”
(3) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.
(4) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.
(5) The rules and regulations under subsections (3) and (4) must come into force no later than the date on which regulations pursuant to section 36(10) of the Pensions Act 1995 (as amended by this Act) come into force.”
This new clause gives the Secretary of State a duty to make regulations clarifying investment duties of occupational pension schemes, including system-level considerations and other matters including impacts of investee firms, beneficiaries’ standards of living and views. It also imposes duties on the FCA and the Secretary of State to make corresponding rules and regulations for workplace personal pension schemes and the Local Government Pension Scheme respectively.
New clause 18—Report on indexation of pre-1997 benefits—
“(1) The Secretary of State must, within 6 months of the passing of this Act, publish a report on whether the Pension Protection Fund and the Financial Assistance Scheme should provide indexation on compensation in respect of pre-1997 rights, where pension schemes provided for that.
(2) The report must consider—
(a) the potential benefits for affected pensioners;
(b) approaches of occupational pension schemes to indexation of pre-1997 benefits;
(c) the impact on compensation schemes’ surpluses and on public finances;
(d) international approaches to indexation of legacy pension benefits.
(3) The Secretary of State must lay a copy of the report before both Houses of Parliament.”
This new clause requires the Secretary of State to report on whether the PPF and FAS should provide indexation on compensation in respect of pre-1997 rights, where scheme rules provided for that.
New clause 19—Fossil fuels and climate change risk—
“(1) The Pensions Act 1995 is amended as follows.
(2) In section 41A (Climate change risk), after subsection (6) insert—
“(6A) Regulations under subsection (1) must, within 1 year of the Pension Schemes Act 2025 receiving Royal Assent, prohibit the trustees or managers of schemes of a prescribed description from holding relevant assets.
(6B) The relevant assets in subsection (6A) are issuance by issuers which, in relation to thermal coal—
(a) derive 10% or more of annual revenue from its production, transport or combustion,
(b) produce annually 10 million tonnes or more, or
(c) have 5GW or more of power generation capacity.
(6C) Within 2 years of the Pensions Act 2025 receiving Royal Assent, and every 3 years thereafter, the Secretary of State must carry out and publish a review on whether the definition of relevant assets should be extended to include—
(a) issuance by issuers which, in relation to thermal coal, derive a smaller proportion of revenue, produce a smaller amount or have a smaller amount of power generation capacity than the proportion and amounts specified in (6B),
(b) some or all new issuance by issuers of a prescribed description deriving a prescribed proportion or amount of their revenue from the extraction, transport, trading or combustion of prescribed fossil fuels, or
(c) some or all new or existing issuance by issuers of a prescribed description investing a prescribed proportion or amount in exploring for, or expanding the extraction of, prescribed fossil fuels.
(6D) Regulations under subsection (1) may implement the conclusions of the review referred to in (6C).”
(3) In subsection (8), at end insert—
““thermal coal” means coal and lignite used in the generation of electricity and in providing heat for industrial or residential purposes;
“issuance” means all investable assets, including equity and debt.”
(4) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.
(5) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.
(6) The rules and regulations under subsections (4) and (5) must come into force no later than the date on which regulations pursuant to section 41A(6A) of the Pensions Act 1995 (as amended by this Act) come into force.”
This new clause would require Government and the FCA to make regulations and rules restricting exposure of some occupational and workplace personal schemes to thermal coal investments and to regularly review whether the restrictions should be extended to other fossil fuel investments.
New clause 20—Pensions and savings advice allowance—
“(1) The Secretary of State must by regulations make provision for a tax-free pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pensions to access financial advice.
(2) Regulations must specify—
(a) the maximum amount for the pensions and savings advice allowance,
(b) the content and scope of the pensions and savings advice,
(c) the qualifications and independence requirements of any person or body providing pensions and savings advice,
(d) the means by which individuals are notified of their entitlement to the pensions and savings advice allowance and how they may access—
(i) the allowance, and
(ii) advisers who meet the requirements under subsection (2)(c),
(e) the roles and responsibilities of pension scheme trustees, managers, and providers in facilitating access to the pensions and savings advice allowance, and
(f) whether the pensions and savings advice allowance counts towards the Individual Lump Sum Allowance.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause requires the Secretary of State to introduce, by regulations, a pensions and savings advice allowance which individuals between the ages of 30 and 50 can withdraw from their pension savings tax-free to access appropriate financial advice.
New clause 21—Significant life event lump sum—
“(1) The Secretary of State must by regulations make provision for a significant life event lump sum of up to £5,000 which a person is entitled to before they attain normal pension age.
(2) The regulations may prescribe circumstances in which, and conditions subject to which, a person may become entitled to a significant life event lump sum, including—
(a) purchasing a first home;
(b) getting married;
(c) unexpected loss of employment.
(3) The regulations must specify that the significant life event lump sum counts towards the Individual Lump Sum allowance.
(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause would require the Secretary of State to introduce, by regulations, a significant life event lump sum of up to £5,000 tax-free which individuals can take from their lump sum allowance prior to reaching pension age.
New clause 22—Indexation of pre-1997 pensions—
“(1) The Pensions Act 1995 is amended as follows.
(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).
(3) In subsection (2), leave out from “pensionable service,” to “or”.
(4) In subsection (2), leave out from “commencement day]” to “—".
(5) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.
(6) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.
(7) In subsection (5)(a), leave out “6 April 1997 or”.
(8) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.”
This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 in order to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997.
New clause 23—Indexation of pre-1997 service—
“(1) The Secretary of State must by regulations make provision for the use of Pension Protection Fund surplus/reserve funds for the indexation on compensation in respect of pre-1997 rights for members of the Pension Protection Fund and the Financial Assistance Scheme.
(2) Those regulations must specify that—
(a) pension payments from the PPF and FAS are increased each year in line with Retail Prices Index (RPI) inflation for pensionable service before and after 6 April 1997,
(b) the cap on the annual increase is raised to 7%,
(c) where a PPF or FAS member has pensionable service prior to 6 April 1997 which has not increased each year in line with RPI inflation, the scheme manager must—
(i) determine the annual increase attributable to that service for each year since the date on which the annual payment was first payable, and
(ii) reimburse the member for the amount determined under paragraph (c)(i), and
(d) payments made to reimburse members under paragraph (c)(ii) must be made from Pension Protection Fund surplus funds and future funds.
(3) Regulations under this section—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”
This new clause would require the Secretary of State to provide, through regulations, for indexation on PPF and FAS compensation in respect of pre-1997 rights, for indexation to follow RPI inflation with a cap of 7%, and for retrospective payments to be funded from PFI surplus and/or reserve funds.
New clause 24—Indexation of pre-1997 pensions—
“(1) The Pensions Act 1995 is amended as follows.
(2) In Section 51 (Annual increase in rate of pension), omit subsections (1)(b) and (1)(c)(ii).
(3) In subsection (2), after “52” insert “52A”.
(4) In subsection (2), leave out from “pensionable service,” to “or,”.
(5) In subsection (2), leave out from “commencement day]” to “—”.
(6) In subsection (2)(b), leave out from “pensionable service” to “, so much of”.
(7) In subsection (4ZE), leave out from “pensionable service” to “in subsections (3) to (4ZD)”.
(8) In subsection (5)(a), leave out “6 April 1997 or”.
(9) In subsection (8)(a) and (b), leave out “at any time on or after 6 April 1997”.
(10) After Section 52 (Restriction on increase where member is under 55) insert—
“52A Restriction on increase where a pension scheme is not in surplus
No increase under section 51 in the annual rate of a pension shall not be paid or shall not be paid in full unless the pension scheme is in surplus.””
This new clause would remove references to 6 April 1997 from section 51 of the Pensions Act 1995 to require that annual increases to pension payments in line with CPI and RPI apply to pensionable service both before and after 6 April 1997, with the restriction that annual increases would only be paid if the pension scheme is in surplus.
New clause 25—Review of impact of this Act—
“(1) Within five years of the passing of this Act, the Secretary of State must carry out a review of the impact of the provisions of this Act on actual and projected retirement incomes.
(2) The review must consider—
(a) the impact of the provisions of this Act on actual and projected retirement incomes, and
(b) whether further measures are needed to ensure that pension scheme members receive an adequate income in retirement.
(3) The Secretary of State must prepare a report of the review and lay a copy of that report before Parliament.”
This new clause would require the Secretary of State to review the impact of this Act on retirement incomes and whether additional measures are needed to ensure the adequacy of retirement incomes.
New clause 26—Establishment of targeted investment vehicles for pension funds—
“(1) The Secretary of State may by regulations make provision for the establishment or facilitation of one or more investment vehicles through which pension schemes may invest for targeted social or economic benefit.
(2) Regulations under subsection (1) must specify the descriptions of targeted social or economic benefit to which the investment vehicles are to contribute, which may include, but are not limited to, investment in—
(a) projects that revitalise high street areas;
(b) initiatives demonstrating social benefit;
(c) affordable or social housing development;
(d) capital projects that meet essential public needs, such as care homes;
(e) clean, renewable energy projects.
(3) The regulations must make provision for—
(a) the types of pension schemes eligible to participate in such investment vehicles;
(b) the governance, oversight, and reporting requirements for the investment vehicles and participating pension schemes;
(c) the means by which the contribution of such investments to targeted social or economic benefit is measured and reported;
(d) the roles and responsibilities of statutory bodies, including the Pensions Regulator and the Financial Conduct Authority, in authorising, regulating, or supervising such investment vehicles and the participation of pension schemes within them.
(4) The regulations may—
(a) make different provision for different descriptions of pension schemes, investment vehicles, or targeted social or economic benefits;
(b) provide for the pooling of assets from multiple pension schemes within such vehicles;
(c) require pension scheme trustees or managers to have regard to the availability and suitability of investment vehicles when formulating investment strategies, where consistent with—
(i) their fiduciary duties, and
(ii) the long-term value for money for members.
(5) In this Chapter, "pension scheme" has the same meaning as in section 1(5) of the Pension Schemes Act 1993.”
This new clause would allow the Secretary of State to establish investment funds to encourage investment in areas such as high streets, social housing, care homes, clean renewable energy, and other investments with clear social benefits.
New clause 27—Review of proposed mandated investment powers and their impacts—
“(1) The Secretary of State must, before making any regulations under this Act relating to mandated investment requirements for pension schemes, lay before Parliament a report reviewing the potential impacts of such powers.
(2) The report under subsection (1) must include an assessment of—
(a) the extent to which any mandated investment requirements may conflict with the fiduciary duties of trustees and managers of occupational and personal pension schemes;
(b) the potential effects of such requirements on the long-term financial returns of scheme members, including—
(i) risks relating to illiquid or politically directed assets,
(ii) risks to diversification, and
(iii) any expected increase in costs borne by savers;
(c) the risk that mandated investment requirements could lead to politicisation of pension scheme decisions or undermine public confidence in the private pension system;
(d) the adequacy of parliamentary oversight and scrutiny of the exercise of powers to mandate investment allocations, including whether additional safeguards are required;
(e) the question of accountability in circumstances where mandated investments perform below expectations, including whether liability would rest with trustees, fund managers, or the Government;
(f) the potential for market distortion arising from requirements that schemes invest in specific UK-based assets, including the risk of asset inflation or the creation of investment bubbles; and
(g) alternative policy measures that could encourage pension scheme investment in the United Kingdom without the use of mandatory requirements, including the removal of regulatory barriers and the creation of suitable investment opportunities.
(3) The report must include a summary of views received from—
(a) industry bodies representing pension schemes, trustees, and fund managers;
(b) relevant financial regulators; and
(c) any other persons the Secretary of State considers appropriate.
(4) The Secretary of State must publish a response addressing the findings and any recommendations contained in the report.
(5) No regulations requiring pension schemes to meet mandated investment allocations may be made under this Act until the report under subsection (1) has been laid before Parliament and the response under subsection (4) has been published.”
This new clause requires the Secretary of State to review the potential effects of mandated investment powers including on risks to returns, fiduciary duties, market distortion, and accountability before any powers can be exercised.
New clause 28—Pension Protection Fund: members who have not attained normal pension age at assessment date—
“(1) Schedule 7 of the Pensions Act 2004 is amended in accordance with subsections (2) to (7).
(2) In sub-paragraph 3(3), for “the appropriate percentage” substitute “100%”.
(3) Omit sub-paragraph 3(4).
(4) In sub-paragraph 11(3), for “90%” substitute “100%”.
(5) In sub-paragraph 14(3), for “90%” substitute “100%”.
(6) In sub-paragraph 15(3), for “90%” substitute “100%”.
(7) In sub-paragraph 19(3), for “90%” substitute “100%”.
(8) The Secretary of State must by regulations make provision for the retrospective payment of compensation to PPF members, as if the amendments made by this section to Schedule 7 of the Pensions Act 2004 had had effect on the day on which that Schedule came into force.”
This new clause would provide that pension scheme members who have not reached Normal Pension Age by the Pension Protection Fund assessment date receive compensation at a rate of 100% instead of 90%, and provides for retrospective application.
New clause 29—Pension Protection Fund: estimate of cost of increasing compensation for surviving spouses or partners of members—
“(1) The Pension Protection Fund (PPF) must prepare and publish an annual estimate of the cost of increasing the value of compensation paid to surviving spouses or partners of PPF members to a sum equivalent to the value of any payments to which they would have been entitled had the scheme not entered the PPF.
(2) The first assessment under this section must be published before the end of the 2025/26 financial year.”
This new clause would require the Pension Protection fund (PPF) to publish annually an assessment of the costs of increasing compensation to the spouses or partners of PPF members to equal the amount they would have received if the pension scheme had not entered the PPF.
New clause 36—Local Government Pension Scheme: expenses and duties of administering authorities—
“(1) The Secretary of State must by regulations make provision for—
(a) a cap on the management expenses that can be claimed by administering authorities, such that they do not exceed ten basis points of the asset base of the pension fund,
(b) a cap on the investment management expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund,
(c) a cap on the general administrative expenses that can be claimed by administering authorities, such that they do not exceed five basis points of the asset base of the pension fund.
(2) Regulations under this section must also require administering bodies to provide to the Local Government Pension Scheme Advisory Board—
(a) evidence that they have considered and acted on any guidance issued by the Local Government Pension Scheme Advisory Board, and
(b) evidence of the steps that they have taken to comply with their fiduciary duties in respect of pension scheme members and Scheme employers.
(3) In making regulations under this section, the Secretary of State must consult the Local Government Pension Scheme Advisory Board.
(4) In this section—
“administering authorities” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013, and
“Scheme employer” has the meaning given by Schedule 1 to the Local Government Pension Scheme Regulations 2013.”
Amendment 1, in clause 1, page 3, line 7, at end insert “, or
(b) secure employee representation on the company’s board.”
This amendment would add employee representation on boards as a requirement on asset pool companies for Local Government Pension Schemes within the scheme regulations under clause 1.
Government amendments 20 and 21.
Amendment 2, in clause 2, page 4, line 7, at end insert—
“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) should be invested in a way that is compliant with the UK’s duty not to aid or assist serious breaches of international law, including genocide and other atrocity crimes, and illegal military occupation.”
This amendment would require that investments of the local government pension scheme should be compliant with the UK’s duty not to aid or assist serious breaches of international law.
Amendment 3, page 4, line 7, at end insert—
“(ba) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) must be divested from any oil and gas companies within 5 years of the passing of this Act.”
This amendment would require that local government pension schemes divest from oil and gas companies within 5 years.
Government amendments 22 and 23.
Amendment 17, in clause 9, page 9, line 25, leave out from “does” to the end of line 25 and insert
“apply to a scheme that is being wound up unless the trustees determine by resolution that it shall not apply.”
This amendment would ensure that the principles for surplus extraction shall also apply to surplus release after further wind-up, so that employers are not incentivised to wind-up funds rather than release surplus to pensioners.
Amendment 18, in clause 10, page 10, line 21, after “notified” insert “and consulted”
This amendment would ensure that members of pension funds have to be consulted on surplus extraction.
Amendment 4, page 10, line 36, at end insert—
“(e) about the proportion of any surplus that may be allocated, or the manner in which it may be determined, for the purpose of contributing to the provision of free, impartial pension advice and guidance services for scheme members.”
This amendment enables a proportion of surplus funds to be used to fund free pension advice.
Amendment 19, page 10, line 36, at end insert—
“(e) that the trustees are satisfied that it is in the interests of the members that the power to pay surplus is exercised in the manner proposed;
(f) that the trustees have taken full account of—
(i) the extent to which members’ pensions have kept up with the cost of living and inflation (as defined in the relevant rules and deeds), and
(ii) any previously rejected requests for discretionary pension increases.”
This amendment would reinstate the current requirement that ensures trustees consent to the paying of surplus as proposed, and creates an obligation on trustees to take account of any erosion in members’ standards of living.
Amendment 5, in clause 11, page 11, line 38, at end insert—
“(aa) make, publish and keep under review the consistency of—
(i) regulated VFM schemes, or
(ii) regulated VFM arrangements,
with the goals of the Paris Agreement on climate change and clean energy;”
This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.
Amendment 6, page 11, line 38, at end insert—
“(aa) make, publish and keep under review the compliance of—
(i) regulated VFM schemes, or
(ii) regulated VFM arrangements,
with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers,”
This amendment would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.
Amendment 7, page 12, line 10, at end insert—
“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “climate alignment metric data”) regarding the scheme’s exposure to climate-related financial risks and the alignment of its investments with the goals of the Paris Agreement on climate change and clean energy.”
This amendment, with Amendment 5 would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.
Amendment 8, page 12, line 10, at end insert—
“(d) publish or share with prescribed persons, for the purpose of enabling VFM assessments to be made, prescribed categories of information (referred to as “sewage discharge compliance data”) regarding the scheme’s exposure to, and investment in, companies holding permits to discharge sewage, including those companies’ performance against statutory and regulatory targets for reducing sewage discharges.”
This amendment, with Amendment 6, would require pension funds and managers to monitor and report on the compliance of water and sewerage companies they invest in with targets for reducing sewage discharges.
Amendment 9, page 12, line 41, leave out “that provides money purchase benefits”
This amendment, together with Amendment 10, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.
Amendment 10, page 13, line 5, at end insert—
“(14) Value for money regulations may make different provision for different descriptions of relevant pension schemes and must make provision for the application of the value for money assessment with a VFM rating to defined benefit occupational pension schemes.”
This amendment, together with Amendment 9, would ensure that the value for money provisions introduced by this Bill apply to all occupational pension schemes.
Amendment 11, in clause 13, page 14, line 13, at end insert—
“(iv) the consistency of the investment portfolio with the goals of the Paris Agreement on climate change and clean energy, including metrics for assessing climate-related financial risks and opportunities;”
This amendment would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.
Amendment 12, page 14, line 13, at end insert—
“(iv) the compliance of the investment portfolio with statutory and regulatory targets for reducing sewage discharges by water and sewerage undertakers, including metrics for assessing related environmental and financial risks and opportunities;”
This amendment would require pension funds and managers to monitor and report on the performance of water and sewerage companies they invest in against targets for reducing sewage discharges.
Government amendments 24 to 49.
Amendment 16, in clause 40, page 43, line 38, leave out from beginning to end of line 27 on page 46.
This amendment would remove the ability of the Government to set mandatory asset allocation targets for certain pension schemes, specifically requiring investments in UK productive assets such as private equity, private debt, and real estate.
Amendment 15, page 46, line 9, leave out from “Before” to the end of the subsection and insert
“implementing the first set of regulations under subsection (1) the Secretary of State must—
(a) prepare and publish a report regarding—
(i) what barriers pension funds, based in the United Kingdom, are facing that are preventing them from investing back into the United Kingdom due to—
(A) legislation introduced after The Pensions Act 1995;
(B) regulations introduced by the Financial Conduct Authority, Prudential Regulation Authority, HM Treasury, or Bank of England;
(C) cultural and market behaviours;
(ii) how financial interests of members of relevant Master Trusts and group personal pension schemes would be affected by the proposed regulations;
(iii) what effects the proposed measures could be expected to have on economic growth in the United Kingdom;
(iv) any other matters the Secretary of State considers appropriate; and
(b) respond to any recommendations or issues raised in the report.”
This amendment prevents use of the reserved mandation powers in this Bill until the Government produces a report on the reasons why the powers are needed and the effects of the use of the powers and resolves any issues raised in the report.
Amendment 14, page 48, line 15, leave out paragraphs (a) to (c) and insert—
“(a) The scheme in question demonstrates strong potential for growth and an ability to innovate, and”
This amendment would revert the text of section 28F(2) on the eligibility conditions for new entrant pathway relief to its form in the Bill as introduced.
Government amendments 50 to 85.
Amendment 13, in clause 117, page 120, line 19, leave out “2035” and insert “this Parliament”
This amendment provides that if section 40 is not commenced before the end of the current Parliament in respect of the insertion of certain provisions, then the insertion of those provisions would be automatically repealed at that time.
Government amendments 86 to 89.
Torsten Bell
I start by thanking all hon. Members for their valuable contributions during the Bill’s passage to date. In particular, I thank members of the Public Bill Committee who offered line-by-line scrutiny. They have challenged the Government, but always constructively—that includes the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), who is not with us today. That reflects the broad consensus across the House that the Pension Schemes Bill is an important piece of legislation, and it is a consensus for which I am very grateful. The same consensus underpinned the introduction of automatic enrolment under the previous Government.
It is exactly because we as legislators have more than gently nudged people into pension savings that the Bill’s most fundamental job is to drive up returns on those savings. The case for this focus is clear: those retiring in 2050 are currently set to do so with lower private pension income than those retiring today. The Bill also recognises that, with the second largest pension system in the world, pensions matter not just to deliver an income in retirement but for the whole economy as the largest source of domestic capital. With those goals in mind, this Bill builds a solid foundation on which we can build, not least via the Pensions Commission over the next year, exactly as several hon. Members called for on Second Reading.
The vast majority of the amendments tabled by the Government are minor technical amendments, and there are two substantial areas on which I would like to dwell. The first is on pre-1997 indexation within the Pension Protection Fund and the financial assistance scheme.
The PPF is one of the most important legacies of the last Labour Government, but we have all heard about the challenges caused by the lack of indexation of compensation related to pre-1997 pensions. I am grateful for the time that affected pensioners have given me in discussing their experiences directly. I have listened carefully to them and to hon. Members who have kept attention on this issue.
I particularly acknowledge the contribution of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) and her Work and Pensions Committee, as well as my hon. Friend the Member for Basingstoke (Luke Murphy) and the hon. Member for Aberdeen North (Kirsty Blackman) who raised this matter in Committee. I am also grateful to the hon. Members for Didcot and Wantage (Olly Glover), for Caerfyrddin (Ann Davies), for Torbay (Steve Darling) and for Belfast South and Mid Down (Claire Hanna), and my hon. Friend the Member for Poole (Neil Duncan-Jordan), for their proposed new clauses and amendments related to this matter.
Olly Glover (Didcot and Wantage) (LD)
I welcome that the Government have tabled these amendments to strengthen the Pension Protection Fund arrangements. However, that will be of little use to those such as the AEA Technology pension campaigners, about whom I have met the Minister. Despite many Select Committee reports and National Audit Office findings, they were badly advised by past Governments and have not been given a route to redress. I invite the Minister to reconsider his past decision and consider new clause 1.
Torsten Bell
I do not agree with the premise of the hon. Gentleman’s question, because I think that members of the scheme he mentions will benefit from the improvement in pre-1997 indexation within the PPF, albeit I am sure they would rather not be within the PPF, which applies to most people who have fallen into it. All I would gently say is that the change we are introducing was refused by Liberal Democrat Pension Ministers during the coalition Government, so this is a big step forward and will make a difference to others.
Sean Woodcock (Banbury) (Lab)
I am delighted by the Chancellor’s announcement in last week’s Budget, having had decades of Tory Governments dithering and delaying while pensioners lost out. It is a great sign of what this Labour Government are delivering on pensions. Could the Minister confirm how much, or by what amounts, those affected are likely to benefit from the changes he has incorporated into this Bill?
Torsten Bell
My hon. Friend has been a powerful campaigner on this issue in the run-up to the Budget, and he brings me on to my next point. We are not just listening; we are acting. We have tabled new clauses 31 to 33 and Government amendment 87 to introduce prospective indexation of Pension Protection Fund and financial assistance scheme payments that relate to pensions built up before 6 April 1997. And directly to his question, these will be consumer prices index linked, capped at 2.5% and apply to members whose former schemes provided for such increases. I thank the Pension Protection Fund for its support on this measure and its implementation, which rests with the PPF.
Dr Al Pinkerton (Surrey Heath) (LD)
I have been contacted by many Surrey Heath constituents who often worked for very large American companies such as Atos. These companies are refusing to offer the pre-1997 uplift, and from what I understand, the pensions fall outside both the PPF and the FAS. Can the Minister offer any reassurance to those pensioners today and explain how they can continue to survive on such diminishing returns from the pensions they paid into?
Torsten Bell
The hon. Gentleman asks an important question, and I shall come to exactly that issue when I finish discussing the changes within the PPF, because as he rightly notes there are wider indexation questions for solvent pension schemes.
On the PPF itself, this issue has been long running and many campaigners have long campaigned on it. Our changes aim to bring the matter to a conclusion. It is a step change that will make a meaningful difference to over 250,000 members. Over five years, the average PPF compensation will be boosted by £400 a year. Of course, I recognise that this does not go as far as some affected members would have wanted, but this change is real progress and rightly balances the interests of eligible members, levy payers, taxpayers and the Pension Protection Fund’s ability to manage future risk. I hope all hon. Members will support this step forward, and on that basis, that those with related amendments will feel content not to press them today.
New clauses 22 and 24 and amendment 19 concern that issue of discretionary increases or pre-1997 indexation in solvent defined-benefit pension schemes more generally. I put on record that we all recognise the impact of the high inflation in recent years on the value of some pensioners’ retirement income in exactly the way that has just been set out.
I want to be straightforward with the House that we do not support retrospectively changing scheme rules. Neither did previous Conservative or Liberal Democrat Governments, given that contribution levels were set on the basis of the scheme rules at the time they applied. As I have said before, and as I discussed recently with my hon. Friends the Members for Llanelli (Dame Nia Griffith) and for Ayr, Carrick and Cumnock (Elaine Stewart), wider changes in the Pension Schemes Bill relating to surplus release will put trustees in the lead in a way that will help on this issue.
Dame Nia Griffith (Llanelli) (Lab)
The Minister will understand just how sceptical pensioners are because, quite frankly, they have seen their trustees try to make the companies do the right thing time and again. Will he agree to meet me and trustees from companies such as 3M and Hewlett Packard Enterprise to explain what mechanism he thinks will be available to them that will actually force the companies to give a decent, index-linked rise to their pensioners?
Torsten Bell
Absolutely, is the short answer. I am always very happy to meet my hon. Friend and near constituency neighbour. I will explain how the change may help in that situation, but I am very happy to take that meeting.
The changes give those trustees overseeing schemes without pre-’97 indexation greater leverage in discussions with employers on discretionary increases, should those trustees see fit. I would encourage them to do so.
The other substantial amendments are on the Pension Protection Fund administration levy paid by DB schemes, allowing the Secretary of State to recover the PPF’s administration costs. It also covers the costs of administering the Fraud Compensation Fund. The levy was initially introduced to allow transparency when these administration costs were significant relative to the PPF’s reserves, but this is no longer the case, with the levy standing at around £18.5 million while the PPF manages over £10 billion-worth of reserves. The PPF is now more than able to cover its administration costs, and transparency can be achieved in the normal way through annual reports and accounts. These amendments therefore abolish the levy, simplifying the pension levy landscape.
I will now briefly cover some minor amendments, starting with those on the local government pension scheme. Amendment 22 exempts the Environment Agency, as a national body, from the requirement on other administering authorities to co-operate with strategic authorities on local investment opportunities.
New clause 34 introduces new wording to clause 4, with amendment 23 deleting the existing wording. Rather than stating in this Bill how procurement law affects the LGPS, new clause 34 will instead move the LGPS exemption directly into schedule 2 to the Procurement Act 2023, future-proofing the exemption from future changes to that Act.
Amendment 28 is the central amendment on small pots. It introduces the concept of a destination proposer. This allows for either a single entity or multiple entities to be designated as the proposer of pot transfers. This reflects recent work by the DWP and Pensions UK to consider a federated model as a potential alternative to a centralised data platform for delivering the small pots policy. I want to add that there is no change to the desired policy intent; this is about the mechanism by which we deliver it. We are committed to exploring both models in full.
Amendments 37 to 53, on the scale clauses, are minor in nature. They include clarifying the circumstances in which schemes may count assets held in other schemes towards the scale condition—the requirement to have at least £25 billion-worth of assets under management by 2030—and clarifying when the transition pathway relief will end. On guided retirements, amendment 54 simply removes a redundant interpretation provision. Government amendments 55 to 86 relate to clauses 100 and 107 of the Bill, on the validity of certain alterations to salary-related contracted-out pension schemes—more often referred to as the Virgin Media case.
Steve Darling (Torbay) (LD)
Would the Minister be kind enough to share the timescale he is working to for these proposals?
Torsten Bell
I thank the hon. Member, who was one of the contributors to our debates on this matter in Committee. I hope to bring forward clarity on the next steps in a matter of months.
Peter Swallow (Bracknell) (Lab)
I thank the Minister for making this important announcement about a consultation on the role of trustees. As part of that consultation, will he keep in mind the important issue of pre-1997 indexation so that we can ensure that trustees are acting in the best interests of their pensioners?
Torsten Bell
My hon. Friend has discussed this challenge with me many times and is a powerful campaigner for his affected constituents. I give him absolutely that assurance, and I extend to him the same offer I have given to other hon. Friends: I will be happy to meet him and affected constituents, or trustees who have been affected by this issue.
Sir Julian Lewis (New Forest East) (Con)
The Minister has indeed been most accessible, and I am extremely grateful to him for the meeting he held with members of the ExxonMobil pensioners group. I am still being lobbied very hard by ExxonMobil pensioners who are concerned that whereas changes introduced in the Budget will benefit members of the FAS and PPF schemes, private defined-benefit scheme members will not benefit. He knows far more about the subject than I do, but can he not see that there is a feeling that they are being discriminated against? Is there nothing he can offer to make them feel somewhat more included in the beneficial steps being taken for members of other schemes?
Torsten Bell
I thank the hon. Gentleman for that and for our conversations on this matter in recent months. Although I think it is completely reasonable that people would feel like that—so would many of us if we had seen the high inflation of recent years eat into our non-index-linked pension payments—let me explain the consistency of the Government’s position. We are providing pre-’97 indexation on compensation relating to pensions now held within the PPF to those who were in schemes that did provide for indexation. There is no question of retrospectively changing the entitlement within the schemes; we are simply requiring that the compensation within the PPF and the FAS recognises that the schemes that people were in did previously recognise the need for indexation.
Other schemes within PPF and outside the PPF, including the one that the right hon. Member for New Forest East (Sir Julian Lewis) mentioned, did not provide for indexation in their scheme rules. He is right to say that, on those matters, the changes that I have outlined today on the PPF do not provide relief. I have gone on to say that because of the changes we are bringing forward in the surplus rules, I think the trustees—as was discussed with some of his trustees—do have more ability and more leverage with which to ask for those discretionary increases, but I completely appreciate that that is different in form from the compensation indexation that we are providing within the PPF.
Sir Julian Lewis
The problem, as the Minister knows from our meeting, is that the trustees are rather hemmed in by not having the leverage or the freedom to act if the company itself—particularly if it is headquartered abroad—is disinclined to pass on any surpluses that it might have available.
Torsten Bell
I recognise the right hon. Member’s point. I think the level of pessimism may be overstated. My view is that our changes on surplus, which put trustees clearly in the driving seat, provide for more ability for trustees to seek to change that balance of power within their relationship. I do not want to prejudge the individual discussions between all trustees and their employers—those will be different in different circumstances—but trustees are in a stronger position given the changes on surplus release that we are introducing through this Bill. But I am not pretending for a second that that solves overnight the points that the right hon. Member is making.
Kirsty Blackman (Aberdeen North) (SNP)
To take us back to the consultation and action to provide guidance for trustees, we all think that is a good thing, as trustees have a difficult job to do and providing them with more guidance is incredibly helpful. On the timeline for the consultation and the legislation arising from it, it would be incredibly helpful if the Minister could, as soon as possible, provide us with a road map for what that will look like when it returns to the House and, in particular, set out whether it will involve primary or secondary legislation.
Torsten Bell
The hon. Member brings me back to the part of my speech I was coming to. The direct, quick answer to her question is that I would envisage taking powers in primary legislation and then consulting on the statutory guidance relating to the powers provided to the Government. That is the order in which I would think about it, but, exactly as she has asked for, I will endeavour to provide more clarity on the timeline.
As I said, I think there is good support for such a change across the industry—actually, I heard calls for it long before I became Pensions Minister—and it is time that we get on with setting out more details and providing that clarity to trustees so that, rather than debating whether trustees have the ability to invest with these longer-term structural or systemic factors in mind, they can get on with doing so, if they so wish. I should say that this is about giving trustees that ability and not specifying that they must do so.
I hope I have usefully set the scene for the debate. Let me close my opening remarks by reiterating my thanks to everyone who has engaged with the Bill so far. I look forward to hearing hon. Members’ further contributions this afternoon.
James Wild (North West Norfolk) (Con)
Before speaking to new clauses 24 and 25 and amendments 14, 15 and 16, I shall begin by reiterating the position adopted by my hon. Friend the Member for Wyre Forest (Mark Garnier), the shadow Economic Secretary to the Treasury—he is not here today, as the Minister acknowledged—which is that we support many of the planned changes in the Bill because, fundamentally, we all want a pensions system that is more accessible to the average person and gives all our constituents dignity in retirement. We want to see a Bill that helps make the system work better, and some of its measures will undoubtedly do that.
Equally, the higher-tax Budget, of which the Minister was a controlling mind, is relevant. We know from media reports that he feels passionately about the Budget—he used industrial language that is perhaps more expected from industry than from a think-tanker, and it is certainly not for the Chamber. We also know that, because of the briefings that appeared in the press, hundreds of thousands of people drew down their pensions prematurely, damaging their savings income as a result. The Budget also increases taxes on pension contributions. Taxing people’s incomes, savings and pensions more is the wrong political choice.
There is much in the Bill that we agree with, but some fundamental issues remain. Arguably the most pressing issue is the fact that the Bill does not address pensions adequacy. Research from Pensions UK shows that over 50% of savers will fail to meet the retirement incomes set by the Pensions Commission. The simple, uncomfortable truth is that this will affect millions of people, and that is despite the introduction of auto-enrolment and the triple lock introduced under the last Conservative Government.
The Bill was an opportunity to do more, but it does not currently do so. We are therefore giving the Government another chance through new clause 25, which would require the Secretary of State to conduct a review within five years and to recommend further measures. We recognise that the second phase of the pension review is ongoing, and we have faith in Baroness Drake to lead that review, but we have concerns that it will not report until 2027. We maintain that this part of the pensions review should be fast-tracked, so could the Minister at least clarify in which quarter of 2027 we can expect that report to be published?
Amendment 14 would change the wording on the eligibility conditions for new entrant pathway relief back to the form it was in when the Bill was first introduced. This means that schemes would qualify for relief if they simply demonstrated strong growth potential and an ability to innovate. All of us on these Benches understand the economies of scale and agree on the need for them, but we have concerns about the changes to the eligibility requirements. The benefit of the existing market is that its diversity provides choice, creates competition and incentivises innovation. As it stands, though, the Bill will disadvantage niche or boutique funds. Specifically, if the amendment made in Committee is enacted, existing companies that previously qualified for the pathway will now be excluded.
An example is Penfold, whose workplace pension was launched in 2022 and has grown quickly to over £1 billion of assets under management, tripling the rate since the start of 2024. Even with this trajectory, the timing of the scale test gives insufficient time to reach the £10 billion threshold for the transition pathway. We therefore agree with the chief executive officer of Penfold when he said:
“The original drafting created the scale that everyone agrees is vital, while still leaving room for challengers to innovate without the threat of a hard scale deadline that deters private investment”.
He is right. These are exactly the type of businesses that the Government should be supporting.
I shall turn now to the issue of indexation to pre-1997 pensionable service. We all want pensioners to have dignity in retirement, but when people have done the right thing by putting money in their pension and it is not followed through, that does not give pensioners the dignity they deserve. The issue around the pre-1997 indexation is also time-sensitive, like the infected blood scandal, and the longer the can is kicked down the road, the smaller the problem will become, sadly. We therefore broadly welcome the Minister’s commitment to taking primary powers through Government new clauses 31, 32 and 33. Our new clause 24 was seeking to achieve a similar outcome.
We pay tribute to the lobbying from groups including the Pensions Action Group and the Deprived Pensioners Association. Also, my hon. Friend the shadow Economic Secretary to the Treasury wanted to acknowledge our right hon. Friend the Member for Herne Bay and Sandwich (Sir Roger Gale) for his continued representations on this issue. The Minister has already been pressed by a number of Members about the concerns of organisations, such as the Esso Pensioners Working Group, that want to understand further how the Government will ensure that these groups are not forgotten.
Finally, I want to turn to the part of the Bill with which we have our most fundamental disagreement: namely, the part that deals with mandation. Amendment 15 would prevent the use of the reserve mandation powers until the Government produced a report on the reasons why the powers were needed and the effects of the use of such powers, and resolved any issues raised in that report. It simply asks the Government to undertake an analysis of the barriers that pension funds are facing, rather than rushing to use mandation as perfectly reasonable. Amendment 16 would remove the power altogether.
Dame Nia Griffith
The problem is that many of the trustees are trying to get these increases, but the difficulty they are encountering is that the power structure is such that the company has the last word. Sometimes trustees are actually appointed by the company; sometimes it is a unanimous decision that is then rejected by the company, as I mentioned with the 3M trustees. We see time and again the efforts of trustees totally decimated.
I was interested in what the Minister said in his opening speech about the new powers. What we really want from the Front Bench is some support to help these trustees to use the legislation to which the Minister refers—that is, part of this Bill—and to try to make it work.
Torsten Bell
Just reflecting on the excellent speech that my hon. Friend is making, I should add that the Pensions Regulator will be bringing forward guidance to provide exactly that kind of clarity to trustees.
Steve Darling
For people who are lucky in the lottery of life, their pension can be one of their biggest assets, but, sadly, we know that 12 million people across the United Kingdom are not saving enough. That is around the population of Belgium. Talking more broadly, there is much about the legislation to be welcomed. I am sure the Minister had his best birthday ever by spending it in the Bill Committee. I am sure that as a 14-year-old, he dreamed of that day, on Committee corridor—sadly I am not joking.
Ayoub Khan (Birmingham Perry Barr) (Ind)
I hope to devote a large portion of my speech to new clause 36, which stands in my name, but let me first swiftly acknowledge the new clauses tabled by the hon. Member for Poole (Neil Duncan-Jordan), the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), the hon. Member for Stratford-on-Avon (Manuela Perteghella) and the hon. Member for Llanelli (Dame Nia Griffith).
While pension fund managers should no doubt ensure that they deliver sufficient returns to their clients, they must also reflect on the duties that they have not only to those who make contributions, but to society at large. That means not using public money to prop up industries that rail against our primary objectives, be they preventing violations of human rights, upholding our commitment to net zero or delivering unfettered justice for those who have been wronged, as in the case of those whose pension contributions made before 1997 have not risen with inflation. I wholeheartedly align myself with the hon. Member for Mid Dunbartonshire (Susan Murray) on the need for ethical parameters.
In tabling new clause 36, I hoped to bring a focus to the practices relating to pension funds that fall under the local government pension scheme—those that make provision for the employees of schools, universities, local authorities and police forces, to name just a few. Those pension fund managers preside over £390 billion in assets, under the management of members of the investment banking sector. Given that much, if not all, of the funding that flows from our schools, councils and the like comes from taxpayers’ money, we have a right to ensure that none of it is being put to waste. I regret to report, however, that these local government pension funds are heading for an absolute embarrassment of riches. While public money sits idle in a vault, lining the pockets of the investment bankers who manage the funds, we are experiencing deep funding crises in our schools, our universities and our local councils.
Year after year, since the moment when these pension funds were established, we have seen the same tactics deployed by those who preside over them. Councils, schools and others end up putting too much of their budgets towards employer contributions, leaving them with less money to spend on the things that matter, while obscene amounts of money are left to be used as a lucrative plaything for the investment banking sector.
When calculating the money that councils, schools and the like must pay into their employees’ pensions, the pension fund managers first estimate the annual rate of return that they expect to get from their assets. To do that, they enlist the work of an actuary firm—usually one of the “big four”—which takes into account market conditions and various risk factors in order to come up with a figure. The work of these actuaries is incredibly precise, yet every year they end up drastically underestimating the amount by which the local government pension funds will grow over the next year. Why? Because the local pension boards set the assumptions and parameters on the basis of which they make such calculations, often with the intention of overstating elements that may hit the fund’s assets, such as market volatility and uncertainty. From there, by default, they then skim a substantial percentage off the fund’s assets, usually about 0.5%. While that may not seem a lot, given that, for example, West Midlands Pension Fund holds £21.2 billion-worth of assets, it means that at least £1 billion is being scraped off the top every year.
When a highly conservative estimate for growth is combined with lofty management expenses, the result is one thing, and one thing only: our councils, schools and key institutions end up putting more than they need into the banking sector, under the guise of securing their employees a comfortable retirement. Then, once they get to the end of the year and have mysteriously exceeded their artificially conservative projections for growth, the pension fund managers are left with an even bigger pot of money, from which they take their mandatory percentage fee.
It is this repeated cycle of grossly inflating the contributions of our state institutions that is resulting in more and more taxpayer money being used not to fix our crumbling public services that benefit society as a whole, but for city bankers to make big bets on the market and make profits. It is the equivalent of pension funds setting the rules of the game, marking their own homework and keeping the proceeds for themselves, rather than refunding those who put into the system. It has got to the point that even the LGPS Scheme Advisory Board, which advises local pension boards, has said that they need to stop overcharging their clients and underestimating their growth. Unfortunately, however, all the power lies in the hands of the Secretary of State to make the changes that would put much-needed investment back into our schools, councils and the like.
I will give an example. Research by David Bailey, of the University of Birmingham, and John Clancy, of Birmingham City University, has shown that Birmingham city council has handed over £1.2 billion in employer contributions to the West Midlands Pension Fund in the past 10 years. By 2022 the council was being asked to pay an extra 37% on top of its standard bill, whereas the nine other core city councils in the UK were asked to pay an average of around 17%. Birmingham city council is calculated to have overpaid the West Midlands Pension Fund by roughly £547 million. In 2023 the council declared section 114 bankruptcy, and this year it has approved council tax rises of 21% and £300 million in cuts to vital services.
Hypothetically, had that payment never been made, Birmingham city council would have needed neither to declare bankruptcy, nor to approve budget cuts that reduced its offer to bare-bones skeleton services. The implications that clamping down on the excesses of local pension boards would have for local councils, schools and universities, and for the British taxpayer, are truly incomprehensible, yet as things stand we are shying away from rebalancing the books and from deploying as much of the Government’s investment into public services as we can.
That leads me to my new clause 36, which would put a cap on the investment expenses that can be claimed on LGPS pension funds. In the case of the West Midlands Pension Fund, the management expenses that are charged amount to an increase of four percentage points in employer contributions. Because the fund charges 60 basis points in management fees, Birmingham council tax payers are paying £13.4 million to the investment managers, which works out at £50 on every band D council tax payer’s bill. However, if new clause 36 were to be put in place, only £3.30 would be charged to every council tax payer’s bill. In the same period, the pension fund has consistently failed to report where the investment management expenses that it charges go, and whom they benefit.
As I say, my new clause 36 would implement a cap on the fees that investment bankers can take from pension funds. While that would certainly mark a great step forward in ensuring that excessive wealth gets put into the hands of the private sector, we must also do more to ensure that our schools and councils pay no more in employer contributions than they must, so that they can put more investment into things that really matter—whether that is local government funding for adult social care or for schoolchildren with special education needs, or being able to put more teaching staff in our classrooms.
Torsten Bell
With the leave of the House, I will respond to as many of the points raised as I can manage.
I thank hon. Members for their speeches today. They have shown not only the depth of knowledge in this House, but the breadth of pensions issues that matter to all of us and to our constituents. I start by thanking those who have welcomed some of the changes that we have introduced and set out today. My hon. Friends the Members for Oldham East and Saddleworth (Debbie Abrahams) and for Edinburgh South West (Dr Arthur) spoke about the PPF, and I appreciate their remarks. On the changes we have set out on the statutory guidance for trustees, the speech by my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) is much appreciated, as is that from the hon. Member for Aberdeen North (Kirsty Blackman).
Claire Hanna (Belfast South and Mid Down) (SDLP)
Like others, I was delighted to see in the Budget the pre-1997 indexing. The Minister will know that that softens but does not correct a wrong, and it leaves tens of thousands of former employees of Harland & Wolff and Visteon, including my constituents, without indexation. New clauses 28 and 29, in my name, would address that, and I hope the Minister might be able to incorporate them in the future.
Torsten Bell
I thank my hon. Friend for her intervention. I covered that extensively in my opening remarks.
I want to mention two points raised in the debate. The hon. Member for North West Norfolk (James Wild) asked about the timeline for the Pensions Commission. I can assure him that nothing is going slowly, so the final report will be delivered in early 2027, which is significantly quicker than the last one in the 2000s. I will update the House as soon as I have more to say on that front. The hon. Member for Caerfyrddin (Ann Davies) asked how many people will benefit from the change to the PPF indexation and how many will not benefit. The answer is that 250,000 members will benefit and 90,000 will not benefit, because their schemes did not provide for indexation in the scheme rules in the first place. I hope that answers the question she raised.
Neil Duncan-Jordan
I want to press the Minister slightly more on the need for UK pension funds not to invest in companies that could be guilty of war crimes and breaking international law. Would he like to reflect on that?
Torsten Bell
Specifically on the question of having regard to international law, I emphasise that compliance extends far beyond the LGPS, and it obviously reaches right across Government. That said, the LGPS, as a public sector scheme, has particularly high expectations on responsible investment, and I have heard the points my hon. Friend has made.
The hon. Members for Torbay (Steve Darling), for Horsham (John Milne) and for Stratford-on-Avon (Manuela Perteghella) broadened this debate beyond the LGPS, not least on questions of climate change and the wider social impact of investments. The Department for Work and Pensions is currently conducting a review of the task force on climate-related financial disclosures requirements, and we have also asked the Pensions Regulator to assess the practicalities of transition plans for pension schemes. As I mentioned in my opening remarks, we will also bring forward legislation to clarify that trustees can take systemic factors into account when making their investment decisions. I hope this provides hon. Members with significant reassurance on those points.
The hon. Members for North West Norfolk and for Torbay returned to the issue, which we discussed extensively in Committee and on Second Reading, on the limited reserve or backstop asset allocation power. As I have repeatedly made it clear to this House, we do not currently anticipate it will need to be used. That is precisely because of the industry’s commitment to the Mansion House accord and wider support from the pension industry for greater investment in private assets.
I welcome the recognition of the importance of the pipeline of projects by the hon. Member for Horsham, and I encourage him to make sure that no Liberal Democrat anywhere opposes construction projects—I have seen the leaflets—be they for energy, roads, housing or anything else.
A crucial point was raised in Committee about the importance of monitoring these commitments, and I can confirm that since then the ABI and Pensions UK have committed that they will work together to track progress. I hope that helps answer some of the questions raised in Committee.
The proposals to add to the matters on which the Government must report are, I believe, unnecessary, as any exercise of the power would be subject to a wide range of safeguards—not only the production of a report about the impacts on savers and growth, but a savers’ interest test.
The hon. Member for Stratford-on-Avon spoke powerfully to her new clause 3, as did the hon. Member for Mid Dorset and North Poole (Vikki Slade). I believe the PPF works hard to make sure that it can deal quickly with payments for people with terminal illness, and the Bill contains other measures that mean it can do that at an earlier point in someone’s prognosis. The SR1 form would already be sufficient for the PPF to provide the certainty that the hon. Member for Stratford-on-Avon is looking for. I have checked with the PPF to ensure that currently within the PPF and the FAS we do not currently have any outstanding requests for such payments where they have been unable to make them, for example for the reasons of not having sufficient evidence. That said, she has spoken powerfully on that point and I will speak to the PPF at my next meeting with the chief executive and the chair to see what more can be done. I thank her for raising those issues.
I also thank the hon. Member for Horsham for bringing us back to the question of advice and guidance. Most of us do need help in preparing for retirement. However, I take a slightly more positive view of the current provision of free guidance through the Money and Pensions Service. I also agree a bit more with the hon. Member for Mid Dunbartonshire (Susan Murray) that the task of Government is to reduce the complexity in our pensions system, rather than just hoping that ever more advice will help savers to navigate it. That is exactly why the parts of the Bill on guided retirement and small pots are so important as we move forward.
I would just like to cover some of the commitments I made in Committee. [Interruption.] I know this is going to be electric for all Members. That is the kind of enthusiasm I hope to see from more Members across the House. I will make a quick update on pensions dashboards, which at least one Member will appreciate. User testing on pensions dashboards has begun. I know that will thrill everybody in this House. [Hon. Members: “Hear, hear.”] That is the attitude we need! [Laughter.] It will ramp up over the course of the next year, with greater volumes and more focus on consumer behaviour. We will be conducting a full evaluation of pensions dashboards over the coming years as the service goes live. That will include the impact of dashboards on engagement with pensions. I commit to update the House on that work in due course.
Following on from other issues raised in Committee, I am pleased to report that following the findings of the curriculum and assessment review, the Government will make financial education compulsory in primary schools in England.
One issue raised in Committee was the Department’s monitoring and evaluation plans for the policy programme set out in the Bill, not least the guided retirement measures. Those comments have been taken on board; an updated impact assessment this week lays out how we intend to approach monitoring impact.
I have endeavoured to do justice to the very wide range of different issues raised during the debate today. I hope hon. Members will support Government amendments that build on policies that will make a real difference to all our constituents in the decades to come.
Question put and agreed to.
New clause 30 accordingly read a Second time, and added to the Bill.
New Clause 31
Indexation of periodic compensation for pre-1997 service: Great Britain
“(1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is amended in accordance with subsections (2) and (3).
(2) In paragraph 28—
(a) for sub-paragraph (2) substitute—
“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—
(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);
(c) in any other case, the amount mentioned in sub-paragraph (2E).
(2A) This sub-paragraph applies where, immediately before the assessment date—
(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.
(2B) This sub-paragraph applies where—
(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and
(c) immediately before the assessment date the admissible rules of the scheme—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2D) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2E) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.
(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.
(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.
(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”
(b) in sub-paragraph (3)—
(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;
(ii) for both definitions of “underlying rate” substitute—
““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,
(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;
(c) in sub-paragraph (5)—
(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;
(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;
(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—
““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or
(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;
(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.
(3) In paragraph 29, for sub-paragraph (2) substitute—
“(2) The Board may also determine the percentage that is to be—
(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;
(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,
(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”
(4) Schedule 5 to the Pensions Act 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).
(5) In paragraph 17—
(a) for sub-paragraph (2) substitute—
“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—
(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);
(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);
(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).
(2A) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 7 to the Pensions Act 2004 (“the relevant Schedule 7 provisions”), and
(b) immediately before the assessment date—
(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.
(2B) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions,
(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,
(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and
(d) immediately before the assessment date the admissible rules of that scheme—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 7 provisions, and
(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.
(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 7 provisions.
(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.
(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”
(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;
(c) after sub-paragraph (3) insert—
“(3A) For the purposes of sub-paragraphs (2A) to (2C)—
(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”
(d) in sub-paragraph (4)—
(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;
(ii) for the definition of “the underlying rate” substitute—
““the general underlying rate” , as at an indexation date, is the aggregate of—
(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;
(e) omit sub-paragraphs (5) and (6);
(f) before sub-paragraph (7) insert—
“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Secretary of State.
(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 7 to the Pensions Act 2004 under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.
(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.
(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;
(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;
(h) in paragraph (9)—
(i) before the definition of “post-1997 service” insert—
““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act 1993 (see section 8(2) of that Act);”;
(ii) in the definition of “post-1997 service” for “has” substitute “, “pre-1997 service” and “GMP indexed service” have”;
(iii) after that definition insert—
““the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule);”.
(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—
(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;
(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;
(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)
This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to England and Wales and Scotland to be increased annually.
Brought up, read the First and Second time, and added to the Bill.
New Clause 32
Indexation of periodic compensation for pre-1997 service: Northern Ireland
“(1) Schedule 6 to the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (pension compensation provisions) is amended in accordance with subsections (2) and (3).
(2) In paragraph 28—
(a) for sub-paragraph (2) substitute—
“(2) Where a person is entitled to periodic compensation under any of those paragraphs, the person is entitled, on the indexation date, to an increase under this paragraph of—
(a) where sub-paragraph (2A) applies, the aggregate of the amount mentioned in sub-paragraph (2C) and the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the aggregate of the amount mentioned in sub-paragraph (2D) and the amount mentioned in sub-paragraph (2E);
(c) in any other case, the amount mentioned in sub-paragraph (2E).
(2A) This sub-paragraph applies where, immediately before the assessment date—
(a) the admissible rules of the scheme included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the compensation is payable.
(2B) This sub-paragraph applies where—
(a) the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the compensation is payable, and
(c) immediately before the assessment date the admissible rules of the scheme—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2D) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the notional pre-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2E) The amount mentioned in this sub-paragraph is—
(a) the appropriate percentage of the amount of the post-1997 underlying rate immediately before the indexation date, or
(b) where the person first became entitled to the periodic compensation during the period of 12 months ending immediately before that date, 1/12th of that amount for each full month for which the person was so entitled.
(2F) In any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub-paragraph (2A)(a), this paragraph has effect as if the scheme included such a requirement.
(2G) In any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of sub-paragraph (2F)) applied in relation to particular pre-1997 service, this paragraph has effect as if the requirement applied in relation to such service.
(2H) In any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, this paragraph has effect as if the scheme so provided.
(2I) In any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of sub-paragraph (2H)) was in relation to particular GMP indexed service, this paragraph has effect as if the accrual was in relation to such service.”
(b) in sub-paragraph (3)—
(i) in the opening words for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2E)”;
(ii) for both definitions of “underlying rate” substitute—
““notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“notional pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
(b) a prescribed percentage of so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“post-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to post-1997 service,
(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to post-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 3 or 22, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service, and
(b) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amount within paragraph (a) of this definition immediately before the indexation date;
“pre-1997 underlying rate” means, in the case of periodic compensation under paragraph 5, 8, 11 or 15, the aggregate of—
(a) so much of the amount mentioned in sub-paragraph (3)(a) of the paragraph in question as is attributable to pre-1997 service,
(b) so much of the amount mentioned in sub-paragraph (3)(aa) of the paragraph in question as is attributable to pre-1997 service, and
(c) so much of the amount within sub-paragraph (3)(b) of that paragraph as is referable to the amounts within paragraphs (a) and (b) of this definition immediately before the indexation date.”;
(c) in sub-paragraph (5)—
(i) in paragraph (a), for “sub-paragraph (2), each definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), each definition of “notional pre-1997 underlying rate”, “post-1997 underlying rate” and “pre-1997 underlying rate””;
(ii) in paragraph (c), for “sub-paragraph (2), the definition of “underlying rate”” substitute “sub-paragraphs (2C) to (2E), the definition of “notional pre-1997 underlying rate”, the definition of “post-1997 underlying rate” and the definition of “pre-1997 underlying rate””;
(d) in sub-paragraph (6), before the definition of “post-1997 service” insert—
““GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service which is within paragraph 36(4)(a) and occurs during the GMP indexation period, or
(b) pensionable service which is within paragraph 36(4)(b) and meets such requirements as may be prescribed;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);”;
(e) in sub-paragraph (7), for “and “pre-1997 service”” substitute “, “pre-1997 service” and “GMP indexed service””.
(3) In paragraph 29, for sub-paragraph (2) substitute—
“(2) The Board may also determine the percentage that is to be—
(a) the appropriate percentage for the purposes of sub-paragraphs (2C) and (2D) of paragraph 28;
(b) the appropriate percentage for the purposes of sub-paragraph (2E) of that paragraph,
(and where it does so, the definition of “appropriate percentage” in paragraph 28(3) does not apply in relation to the sub-paragraph in question).”
(4) Schedule 4 to the Pensions (No.2) Act (Northern Ireland) 2008 (pension compensation payable on discharge of pension compensation credit) is amended in accordance with subsections (5) and (6).
(5) In paragraph 17—
(a) for sub-paragraph (2) substitute—
“(2) Subject to sub-paragraph (3), the transferee is entitled, on each indexation date, to an increase of—
(a) where sub-paragraph (2A) applies, the amount mentioned in sub-paragraph (2E);
(b) where sub-paragraph (2B) applies, the amount mentioned in sub-paragraph (2F);
(c) where sub-paragraph (2C) applies, the amount mentioned in sub-paragraph (2G);
(d) where sub-paragraph (2D) applies, the amount mentioned in sub-paragraph (2H).
(2A) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with paragraph 3, 5, 8, 11, 15 or 22 of Schedule 6 to the 2005 Order (“the relevant Schedule 6 provisions”), and
(b) immediately before the assessment date —
(i) the admissible rules of the scheme in respect of which that compensation is payable included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(ii) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(iii) that requirement applied in relation to pre-1997 service in respect of which that compensation is payable.
(2B) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions,
(b) the scheme in respect of which that compensation is payable provided a guaranteed minimum pension that accrued during the GMP indexation period,
(c) that accrual was in relation to GMP indexed service in respect of which that compensation is payable, and
(d) immediately before the assessment date the admissible rules of that scheme—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(b)(i), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) This sub-paragraph applies where—
(a) the transferor's PPF compensation is payable in accordance with the relevant Schedule 6 provisions, and
(b) neither sub-paragraph (2A) nor sub-paragraph (2B) applies.
(2D) This sub-paragraph applies where the transferor's PPF compensation is payable otherwise than in accordance with the relevant Schedule 6 provisions.
(2E) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2F) The amount mentioned in this sub-paragraph is the aggregate of the appropriate percentage of the notional pre-1997 underlying rate and the appropriate percentage of the post-1997 underlying rate.
(2G) The amount mentioned in this sub-paragraph is the appropriate percentage of the post-1997 underlying rate.
(2H) The amount mentioned in this sub-paragraph is the appropriate percentage of the general underlying rate.”
(b) in sub-paragraph (3), for “(2)” substitute “(2E), (2F), (2G) or (2H) (as the case may be)”;
(c) after sub-paragraph (3) insert—
“(3A) For the purposes of sub-paragraphs (2A) to (2C)—
(a) in any case where it is unclear to the Board whether, immediately before the assessment date, the admissible rules of the scheme included a requirement of the kind mentioned in sub- paragraph (2A)(b)(i), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the Board whether, immediately before the assessment date, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(b)(i) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the Board whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the Board whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.”
(d) in sub-paragraph (4)—
(i) in the opening words, for “sub-paragraph (2)” substitute “sub-paragraphs (2) to (2H)”;
(ii) for the definition of “the underlying rate” substitute—
““the general underlying rate” , as at an indexation date, is the aggregate of—
(a) the general indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the notional pre-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the notional pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the post-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the post-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b);
“the pre-1997 underlying rate” , as at an indexation date, is the aggregate of—
(a) the pre-1997 indexed proportion of the aggregate of the initial annual rate of compensation and (in the case of compensation payable under paragraph 6), the revaluation amount,
(b) so much of any actuarial increase under paragraph 16A as relates to the amount in paragraph (a), and
(c) so much of any annual increase to which the transferee is entitled under this paragraph in respect of earlier indexation dates as relates to the amounts in paragraphs (a) and (b).”;
(e) omit sub-paragraphs (5) and (6);
(f) before sub-paragraph (7) insert—
“(6A) For the purposes of paragraph (a) of the definition of “the general underlying rate”, “the general indexed proportion” is such proportion as is determined in accordance with regulations made by the Department.
(6B) For the purposes of paragraph (a) of the definition of “the notional pre-1997 underlying rate”, “the notional pre-1997 indexed proportion” is such proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of Schedule 6 to the 2005 Order under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service as may be prescribed.
(6C) For the purposes of paragraph (a) of the definition of “the post-1997 underlying rate”, “the post-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to post-1997 service.
(6D) For the purposes of paragraph (a) of the definition of “the pre-1997 underlying rate”, “the pre-1997 indexed proportion” is the proportion of the amount mentioned in sub-paragraph (3)(a) of the paragraph of that Schedule under which the transferor’s PPF compensation is payable that is attributable to pre-1997 service.”;
(g) in sub-paragraph (7), for ““the underlying rate”” substitute ““the general underlying rate”, the definition of “the notional pre-1997 underlying rate”, the definition of “the post-1997 underlying rate” and the definition of “the pre-1997 underlying rate””;
(h) for sub-paragraph 9 substitute—
“(9) In this paragraph—
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“guaranteed minimum pension” has the same meaning as in the Pension Schemes Act (see section 4(2) of that Act);
“post-1997 service” , “pre-1997 service” and “GMP indexed service” have the same meaning as in paragraph 28 of Schedule 6 to the 2005 Order (annual increase in periodic compensation);
“the assessment date” , in relation to a pension scheme, has the same meaning as in that Schedule (see paragraph 2 of that Schedule).”
(6) In paragraph 20, in sub-paragraph (1)(b), for “for the purposes of paragraph 17(2)” substitute “—
(i) of the pre-1997 underlying rate and of the notional pre-1997 underlying rate for the purposes of sub-paragraphs (2E) and (2F) of paragraph 17;
(ii) of the post-1997 underlying rate for the purposes of sub-paragraphs (2E), (2F) and (2G) of that paragraph;
(iii) of the general underlying rate for the purposes of sub-paragraph (2H) of that paragraph.””—(Torsten Bell.)
This new clause makes provision for certain compensation paid by the Pension Protection Fund in respect of a person’s pre-1997 pensionable service under legislation extending to Northern Ireland to be increased annually.
Brought up, read the First and Second time, and added to the Bill.
New Clause 33
Financial Assistance Scheme: indexation of payments for pre-1997 service
“(1) The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) are amended as follows.
(2) In paragraph 7(1)(b) of Schedule 2 (determination of annual and initial payments), after “(b)(i)” insert “, (ia) and (ib)”.
(3) Paragraph 9 of that Schedule is amended in accordance with subsections (4) to (6).
(4) In sub-paragraph (2)—
(a) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—
“(ia) where sub-paragraph (2A) applies, the product of X multiplied by so much of the expected pension as is attributable to pre-1997 service;
(ib) where sub-paragraph (2B) applies, the product of X multiplied by the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;
(b) in paragraph (b) of the definition of “underlying rate”—
(i) omit the “and” at the end of sub-paragraph (i);
(ii) after that sub-paragraph insert—
“(ia) where sub-paragraph (2A) applies, so much of the expected pension as is, proportionally, attributable to pre-1997 service;
(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the expected pension as is, proportionally, attributable to pre-1997 service; and”;
(c) after the definition of “post-1997 service” insert—
““pre-1997 service” means—
(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or
(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;
“relevant percentage” means such percentage as may be determined by the Secretary of State;”.
(5) After sub-paragraph (2) insert—
“(2A) This sub-paragraph applies where, immediately before the qualifying pension scheme began to wind up—
(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.
(2B) This sub-paragraph applies where—
(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and
(c) immediately before the scheme began to wind up the scheme rules—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) For the purposes of sub-paragraphs (2A) and (2B)—
(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.
(2D) In sub-paragraphs (2B) and (2C)—
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or
(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period.”
(6) In sub-paragraph (3)—
(a) after “attributable to” insert “pre-1997 service or”;
(b) for “that amount” substitute “the amount in question”.
(7) In paragraph 7(1)(b) of Schedule 2A (determination of ill health and interim ill health payments), after “(b)(i)” insert “, (ia) and (ib)”.
(8) Paragraph 9 of that Schedule is amended in accordance with subsections (9) to (11).
(9) In sub-paragraph (2)—
(a) after the definition of “E” insert—
““EA” means so much of the expected pension as is attributable to pre-1997 service;
“EB” means the relevant percentage of so much of the expected pension as is attributable to pre-1997 service;”;
(b) after the definition of “post-1997 service” insert—
““pre-1997 service” means—
(a) pensionable service (whether actual or notional) which occurs before 6th April 1997; or
(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;
“relevant percentage” means such percentage as may be determined by the Secretary of State;”;
(c) in paragraph (a) of the definition of “underlying rate”, after sub-paragraph (i) insert—
“(ia) where sub-paragraph (2A) applies, the product of X multiplied by (C x EA);
(ib) where sub-paragraph (2B) applies, the product of X multiplied by (C x EB);”;
(d) in paragraph (b) of the definition of “underlying rate”—
(i) omit the “and” at the end of sub-paragraph (i);
(ii) after that sub-paragraph insert—
“(ia) where sub-paragraph (2A) applies, so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service;
(ib) where sub-paragraph (2B) applies, the relevant percentage of so much of the amount “A” for the purposes of paragraph 2 as is, proportionately, attributable to pre-1997 service; and”;
(10) After sub-paragraph (2) insert—
“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—
(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.
(2B) This sub-paragraph applies where—
(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and
(c) immediately before the scheme began to wind up the scheme rules—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme
(2C) For the purposes of sub-paragraphs (2A) and (2B)—
(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.
(2D) In sub-paragraphs (2A) to (2C)—
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or
(b) where the ill health payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;
“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”
(11) In sub-paragraph (3)—
(a) after “attributable to” insert “pre-1997 service or”;
(b) for “that amount” substitute “the amount in question”.
(12) In paragraph 6 of Schedule 3 (determination of certain annual payments)—
(a) in sub-paragraph (2)—
(i) in the definition of “underlying rate”, after paragraph (a) insert—
“(aa) where sub-paragraph (2A) applies, the product of X multiplied by—
(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—
(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or
(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and
(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;
(ab) where sub-paragraph (2B) applies, the product of X multiplied by—
(i) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—
(aa) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or
(bb) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and
(ii) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;
(iii) after the definition of “post-1997 service” insert—
““pre-1997 service” means—
(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or
(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;
“relevant percentage” means such percentage as may be determined by the Secretary of State;”;
(b) after sub-paragraph (2) insert—
“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—
(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the annual payment is payable.
(2B) This sub-paragraph applies where—
(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the annual payment is payable, and
(c) immediately before the scheme began to wind up the scheme rules—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) For the purposes of sub-paragraphs (2A) and (2B)—
(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.
(2D) In sub-paragraphs (2A) to (2C)—
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or
(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;
“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;
(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.
(13) In paragraph 6 of Schedule 5 (determination of certain ill health payments)—
(a) in sub-paragraph (2)—
(i) in the definition of “underlying rate”, after paragraph (a) insert—
“(aa) where sub-paragraph (2A) applies, the product of X multiplied by (C x VA);
(ab) where sub-paragraph (2B) applies, the product of X multiplied by (C x VB);”;
(ii) after the definition of “post-1997 service” insert—
““pre-1997 service” means—
(a) pensionable service (either actual or notional) which occurred before 6th April 1997; or
(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred before 6th April 1997;
“relevant percentage” means such percentage as may be determined by the Secretary of State;”;
(iii) after the definition of “V” insert—
““VA” means—
(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—
(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, so much of the revalued notional pension as is attributable to pre-1997 service; or
(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, so much of the sum of R-A as is attributable to pre-1997 service; and
(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;
“VB” means—
(a) where the beneficiary is a qualifying member or a survivor or surviving dependant of a qualifying member who died on or after the calculation date—
(i) where the qualifying member is not a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the revalued notional pension as is attributable to pre-1997 service; or
(ii) where the qualifying member is a qualifying member to whom regulation 17D applied, the relevant percentage of so much of the sum of R-A as is attributable to pre-1997 service; and
(b) where the beneficiary is a survivor or surviving dependant in respect of whom a survivor notional pension has been determined, the relevant percentage of so much of the survivor notional pension as is attributable to the qualifying member’s pre-1997 service;”;
(b) after sub-paragraph (2) insert—
“(2A) This sub-paragraph applies where immediately before the qualifying pension scheme began to wind up—
(a) the scheme rules included a requirement for all or any part of so much of the annual rate of a pension in payment under the scheme as is attributable to a person’s pre-1997 service to be increased annually,
(b) that requirement did not apply only in relation to a guaranteed minimum pension provided by the scheme, and
(c) that requirement applied in relation to pre-1997 service in respect of which the ill health payment is payable.
(2B) This sub-paragraph applies where—
(a) the qualifying pension scheme provided a guaranteed minimum pension that accrued during the GMP indexation period,
(b) that accrual was in relation to GMP indexed service in respect of which the ill health payment is payable, and
(c) immediately before the scheme began to wind up the scheme rules—
(i) did not include a requirement of the kind mentioned in sub-paragraph (2A)(a), or
(ii) included such a requirement only in relation to a guaranteed minimum pension provided by the scheme.
(2C) For the purposes of sub-paragraphs (2A) and (2B)—
(a) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, the scheme rules included a requirement of the kind mentioned in sub-paragraph (2A)(a), those sub-paragraphs have effect as if the scheme included such a requirement;
(b) in any case where it is unclear to the scheme manager whether, immediately before the scheme began to wind up, a requirement of the scheme of a kind mentioned in sub-paragraph (2A)(a) (including such a requirement included by virtue of paragraph (a)) applied in relation to particular pre-1997 service, those sub-paragraphs have effect as if the requirement applied in relation to such service;
(c) in any case where it is unclear to the scheme manager whether the scheme provided a guaranteed minimum pension that accrued during the GMP indexation period, those sub-paragraphs have effect as if the scheme so provided;
(d) in any case where it is unclear to the scheme manager whether the accrual of a guaranteed minimum pension provided by the scheme (including by virtue of paragraph (c)) was in relation to particular GMP indexed service, those sub-paragraphs have effect as if the accrual was in relation to such service.
(2D) In sub-paragraphs (2A) to (2C)—
“GMP indexation period” means the period beginning with 6 April 1988 and ending with 5 April 1997;
“GMP indexed service” means—
(a) pensionable service (whether actual or notional) which occurs during the GMP indexation period; or
(b) where the pension was payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred during the GMP indexation period;
“guaranteed minimum pension” has the meaning given in section 8(2) of the 1993 Act.”;
(c) in sub-paragraph (3), after “attributable to” insert “pre-1997 service and”.”—(Torsten Bell.)
This new clause makes provision for certain assistance paid under the Financial Assistance Scheme Regulations 2005 in respect of a person’s pre-1997 pensionable service to be increased annually.
Brought up, read the First and Second time, and added to the Bill.
New Clause 34
Exemption from public procurement rules
“(1) After paragraph 2 of Schedule 2 to the Procurement Act 2023 (general vertical arrangements exemption from public procurement rules) insert—
2A “(1) A contract between a local government pension scheme manager and an asset pool company providing for the company—
(a) to manage the funds and other assets for which the scheme manager is responsible,
(b) to make and manage investments on behalf of the scheme manager, and
(c) if the contract so provides, to carry out other investment management activities for or on behalf of the scheme manager,
if each of the conditions set out in sub-paragraph (2) is met.
(2) The conditions are—
(a) that more than 80% of the activities of the company are investment management activities carried out for or on behalf of local government pension scheme managers;
(b) that no person exercises a decisive influence on the activities of the company (either directly or indirectly) other than—
(i) the participating scheme managers in the company, acting in their capacity as local government pension scheme managers, and
(ii) where the only shareholder in the company is another company (see section 1(9)(a) of the Pension Schemes Act 2025), that other company;
(c) that the company does not carry out any activities that are contrary to the interests of—
(i) the participating scheme managers in the company, in their capacity as local government pension scheme managers, or
(ii) where the only shareholder in the company is another company, that other company.
(3) The contracts covered by this paragraph include a contract where the local government pension scheme manager concerned is already a participating scheme manager in the company (as well as one where the scheme manager concerned will become a participating scheme manager in the company as a result of entering into it).
(4) An appropriate authority may by regulations make provision about how a calculation as to the percentage of activities carried out by an asset pool company is to be made for the purposes of sub-paragraph (2)(a).
(5) For the purposes of sub-paragraph (2)(b), a person does not exercise a decisive influence on the activities of the asset pool company only by reason of—
(a) being a director, officer or manager of the company, acting in that capacity, or
(b) where the only shareholder in the company is another company, being a director, officer or manager of that other company.
(6) In this paragraph—
“asset pool company” has the meaning given by section 1(7)(a) of the Pension Schemes Act 2025;
“investment management activities” means activities involved in or connected with the management of funds or other assets for which a scheme manager is responsible (including making and managing investments on behalf of the scheme manager);
“local government pension scheme manager” means a person who is, by virtue of section 4(5) of the Public Service Pensions Act 2013, a scheme manager for a pension scheme for local government workers in England and Wales;
“participating scheme manager” , in relation to an asset pool company, means a local government pension scheme manager who participates in the company within the meaning of section 1(9)(b) of the Pension Schemes Act 2025.””—(Torsten Bell.)
This new clause amends the Procurement Act 2023 to create a new category of exempted contract covering certain investment management contracts between a local government scheme manager and the asset pool company. This is intended to replace Clause 4 in the current print of the Bill.
Brought up, read the First and Second time, and added to the Bill.
New Clause 35
Funding of the Board of the Pension Protection Fund
“(1) The Pensions Act 2004 is amended in accordance with subsections (2) to (5).
(2) Omit section 116 (power of Secretary of State to pay grants to Board of Pension Protection Fund).
(3) Omit section 117 (power of Secretary of State to impose administration levy on pension schemes).
(4) In section 173 (Pension Protection Fund), in subsection (3), before paragraph (a) insert—
“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Pension Protection Fund,”
(5) In section 188 (fraud compensation fund), in subsection (3), before paragraph (a) insert—
“(za) any sums required to meet expenditure of the Board that is attributable to the operation or administration of the Fraud Compensation Fund,”
(6) No amount is payable to the Secretary of State by virtue of section 117 of the Pensions Act 2004 (administration levy) in respect of the financial years beginning with 1 April 2023 and 1 April 2024.
(7) In the Pensions Act 2008, in Schedule 10 (interest on late payment of levies), omit paragraph 3 (which makes an amendment about interest for late payment of the administration levy that has not been brought into force).”—(Torsten Bell.)
This new clause (which is intended to be added after clause 112) enables administrative expenses of the Board of the Pension Protection Fund to be paid out of the Pension Protection Fund and the Fraud Compensation Fund, and removes the existing administration levy mechanism; it also clarifies that no administration levy is payable for 2023/24 or 2024/25.
Brought up, read the First and Second time, and added to the Bill.
New Clause 3
Terminal illness: means of demonstrating eligibility
“(1) The Secretary of State must by regulations make provision about how a person may demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme.
(2) In making regulations under this section, the Secretary of State must seek to minimise the administrative burden placed upon the person with a terminal illness.
(3) Regulations under this section must provide that, where the Department of Work and Pensions (“the Department”) holds a valid SR1 form in respect of a person seeking to demonstrate that they are terminally ill for purposes relating to compensation or assistance from the Pension Protection Fund or Financial Assistance Scheme, the Department must share that form with the Pension Protection Fund or the Financial Assistance Scheme.
(4) Regulations under this section must require the Pension Protection Fund and the Financial Assistance Scheme to make the appropriate payment or payments within a specified time of receipt of a valid application.”—(Manuela Perteghella.)
This new clause would require the Secretary of State to provide, by regulations, for the use of a valid SR1 form to make it easier for a person to demonstrate that they are terminally ill for purposes related to compensation from the PPF or FAS.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Torsten Bell
I beg to move, That the Bill be now read the Third time.
Pensions matter. They are the means by which we deliver on some of the biggest promises we have made to the public: that the prospect of a comfortable retirement, with the option of leisure—hon. Members may choose not to take it—in later life, is there for the many, not just the few. We need not only to encourage people to save, but to ensure that those savings work as hard as possible for them to deliver that comfortable retirement. That is ultimately what this occasionally technical Bill is all about. Better returns mean better retirements, and there are few things more important than that.
The Bill adds wind to the sails of some of the major changes already under way in our pension landscape. Most importantly, it pushes ahead with the shift towards larger, better-governed schemes, better able to access and deliver returns for savers and to invest in a wider range of assets. It introduces a new value for money framework, so that schemes are judged on performance and service, not just cost. It removes one of the big barriers to people engaging with their pensions by consolidating small, inactive pension pots. It delivers reforms to ensure people are building up a pension, not just a savings pot, with simple default pensions that do not require each of us to become a financial expert as we approach retirement.
For defined benefit schemes, the Bill strengthens the local government pension scheme, puts more trustees in the driving seat for managing scheme surpluses, and addresses the lack of pre-1997 indexation within the PPF and the FAS. Those are real improvements shaped by constructive debate and detailed scrutiny in this place and across the pension industry.
I again thank Members from all parts of the House for their contributions and I thank the Clerks for taking us through Committee. I also thank the Bill team—Jo, Amanda, Mike, James, Sagar, Saadia and Steve—and the many officials across DWP and the Treasury who have worked behind the scenes to support the Government in bringing forward this important legislation. I appreciate that it is not a short Bill. The PPF, the Financial Conduct Authority and the Pensions Regulator have also played important roles for which I am grateful. I commend all of them, and this Bill, to the House.
Budget Resolutions
Torsten Bell Excerpts(3 weeks, 4 days ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir Mel Stride
That is absolutely true.
Let us look at how we ended up at this sorry pass. In opposition, Labour assured the British electorate that they would not be putting up taxes left, right and centre, and when they got into power, what did they do within a few short months? They slapped taxes—£40 billion-worth—on the British people, £25 billion of that by way of national insurance increases on business alone. It is no surprise that that destroyed employment and growth.
They talked down the economy. They came up with this confected £22 billion black hole. What an irony it was—[Interruption.] There may be chuntering from those on the Front Bench, but what an irony it was that it was at the behest of the Government themselves that the Office for Budget Responsibility was invited to look into this claim and said that it would not legitimise that figure. The damage was done. The animal spirits in the economy were extinguished.
Of course, they did something else that socialists down the ages always do: they borrowed and borrowed and borrowed and spent and spent and spent until they ran out of other people’s money—
Sir Mel Stride
The Minister is having trouble containing himself, such is the punishment that he is receiving at the moment. They borrowed all this money, and what did that do? It stoked inflation, and with inflation higher, interest rates have been higher for longer.
Sir Mel Stride
The Minister says from a sedentary position that inflation is coming down. The International Monetary Fund says that inflation will be the highest in the G7 this year and next year.
We know that with high inflation, interest rates are higher for longer. That means businesses’ borrowing costs are higher. It means that consumer sentiment is dampened. It means that the servicing cost alone on the burgeoning debt that this Government are constantly adding to is currently £100 billion a year—twice what we spend on defence. In fact, if debt servicing were a Government Department, it would be the third largest in Whitehall—not spending money on better public services, as we are often told by the Labour party, but simply paying for the profligacy of the Labour party when it comes to borrowing.
The run-up to this Budget was a farce. We have seen weeks and weeks of uncertainty generated by the Treasury, which has leaked every possible combination of tax increases and then U-turned on some of them. It has flown so many kites that it has blotted out the sun, and a huge shadow has been cast across businesses, which have pressed pause on investment and hiring. The Parliamentary Secretary to the Treasury should speak to Andy Haldane, who concludes that what I am saying is absolutely right. It has also weighed down on consumer sentiment. All this hokey-cokey around what is in the Budget has done real damage to our economy on this Government’s watch.
Sir Mel Stride
My right hon. and gallant Friend is entirely right, as usual, and something else has also been going on. I have written to the OBR to ask Richard Hughes exactly what happened with the information that the Treasury appears to have leaked out about the forecasts during the run-up to the Budget. I say that in the knowledge that the OBR’s own guidance says that information exchanged with the Treasury during the build-up to a Budget is provided to Ministers in confidence. Why is it then that the Chancellor herself was on the airwaves before the Budget, opining on the apparent coming downgrade to productivity? I have written to the OBR to ask whether it feels that that was appropriate.
I have also written to the permanent secretary to the Treasury to ask if he is implementing an investigation into the leaks coming from the Treasury. Interestingly, he has written back to me simply to say that in the event that there are suspected leaks, of course there is an investigation. He has not quite answered my question as to whether there is an investigation being undertaken at the moment, but I will be following up with him on that matter.
What has happened in this Budget? The OBR forecasts tell a sorry story: unemployment is higher in every single year of the forecast than it was forecast to be back in the spring. Inflation is up—we have seen the latest figures from the Office for National Statistics. Labour is the party that talks about resolving poverty; it is a disgrace that food inflation in the last set of figures went up way above the headline rate, from 4.5% to 4.9%. That rise is being borne by some of the most vulnerable and some of the poorest in our society.
On growth, of course the Chancellor tells a good story. She says that the growth forecast is up compared with spring this year, but, as the Parliamentary Secretary to the Treasury will know, it is down compared with the autumn of last year, when the OBR said that growth would be 2% in this year; it is now forecast to be 1.5%. In in every subsequent year, growth is forecast to be lower than was forecast back at the time of the spring statement. That is the simple fact.
Sir Mel Stride
We will come on to why that is the case momentarily.
What has happened to borrowing? One might have thought that the Government would have learned the lesson that ever-increasing borrowing always leads to disaster, but no: there is £11 billion of additional borrowing on average in every year of the forecast. What has that done to living standards? Real household disposable income—the economists’ measure of economic wellbeing —is down in every year of the forecast compared to the forecast in the spring.
The OBR says—the Parliamentary Secretary to the Treasury will like this one—that real income growth across this forecast will be well below the average of the last decade. So this Government should not point a finger at the last one when it comes to living standards.
Dame Harriett Baldwin
I am talking about yesterday’s Budget. The Chancellor herself announced that she was freezing the thresholds for a further three years, and I dare say that the hon. Gentleman will be asked to vote for that in the Aye Lobby next week. I disagree with him, because the Chancellor has just announced that the thresholds will be frozen for an additional three years.
Another person who will pay more tax as a result of the Chancellor’s decisions is a single young person on minimum wage. I do not know whether hon. Members have seen the emigration statistics that were published today, which show that hundreds of thousands of our young people are fleeing this country. That is something that we should all be very concerned about.
A single mother who has just received a lump sum in a divorce settlement will pay more tax as a result of yesterday’s Budget. A sole trader or entrepreneur who runs a business and perhaps pays themselves in dividends will pay more tax as a result of yesterday’s Budget. A driver in my rural constituency who needs to drive to go to work will pay more tax because of yesterday’s Budget. We can see that the choices made by the Chancellor punish the employers, the farmers, the family businesses, the workers, the savers, the pensioners and the drivers—everyone who tries to do the right thing and tries not to be a burden on the state.
I will leave the House with one final point.
Dame Harriett Baldwin
I am looking forward to the Minister’s winding-up speech at the end of the debate, and I will not give way at the moment.
Given the skulduggery that the Treasury seems to have engaged in during the run-up to this Budget, the lingering impression will be that the spectre of further tax hikes looms. The floating of the income tax idea and all the other tax ideas, and all the taxes, will come back like a ghoul in Budgets to come.
The Parliamentary Secretary to the Treasury (Torsten Bell)
It is a pleasure to close today’s debate, and I thank all Members for their contributions, including my hon. Friends the Members for North Warwickshire and Bedworth (Rachel Taylor), for Exeter (Steve Race), for South East Cornwall (Anna Gelderd), for Gower (Tonia Antoniazzi), for Norwich North (Alice Macdonald), for Newcastle upon Tyne East and Wallsend (Mary Glindon), for Newcastle-under-Lyme (Adam Jogee), for Newcastle upon Tyne Central and West (Dame Chi Onwurah), for Dunfermline and Dollar (Graeme Downie), for North Northumberland (David Smith), for Glasgow North (Martin Rhodes), for Mid Cheshire (Andrew Cooper), for Glenrothes and Mid Fife (Richard Baker), for Earley and Woodley (Yuan Yang), for Congleton (Sarah Russell) and for Calder Valley (Josh Fenton-Glynn), who all made strong cases for this Budget.
I listened carefully as Opposition MP after Opposition MP talked down the British economy, as the hon. Member for Huntingdon (Ben Obese-Jecty) did, talking down British workers and talking down British entrepreneurs. I have been trying to remember what it reminded me of. I was racking my brains, but then it came to me: they are just reading out exactly the same script that they had at exactly this time last year. The shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), frothing with his usual excitement, claimed that Britain would spend 2025 in recession. He said:
“‘Could we be in recession?’ Yes we could.”
That was his forecast.
The actual figures are in, and the truth is that Britain in 2025 did not just avoid recession, but beat the forecast. The OBR has revised up growth this year from 1% to 1.5%. Let us look at wages. As my hon. Friend the Member for Erewash (Adam Thompson) said, wages are up in the forecast and, far more importantly, in people’s pay packets. Wages have gone up more in the first year of this Government than in the entire first decade of the last Conservative Government, and there is much more to do.
Changing Britain was always going to be hard, and we now know that the damage from the last decade of austerity and Brexit was worse than previously thought. That lies behind the productivity downgrade that the hon. Member for West Worcestershire (Dame Harriett Baldwin) rightly raised, but the question is how we respond to that news.
Sir John Hayes
I notice that the Minister is wearing a William Morris—or William Morris-esque—tie, and what Morris understood was the importance of craft and skills. The Government addressed apprenticeships in the Budget in a minor way, but does the Minister know that simultaneously the skills White Paper envisages downgrading apprenticeships by diluting the competencies they confer, thereby undermining their reputation with learners and employers?
Torsten Bell
What I know is that youth apprenticeships fell by 40% under the Conservative party. That is what failure looks like. I am coming on to some of those matters.
We do not want to grow this economy by simply borrowing more, as my hon. Friend the Member for Bolton West (Phil Brickell) rightly pointed out before he turned, at some length, to snails. There is nothing progressive about arguing that we should spend more than £1 in every £10 of taxpayers’ money on debt interest —money that would be better spent on schools and hospitals—so Liz Truss and the leader of the Greens should stay exactly where they belong and where they both started out: in the youth wing of the Liberal Democrats, far away from Government.
We in the Labour party will cut borrowing in every single year—more than in any other G7 country—and more than double the headroom against our fiscal rules. We are cutting borrowing and giving businesses the confidence to invest, and cutting inflation too. We are taking £150 off energy bills, freezing rail fares for the first time in 30 years—as my hon. Friend the Member for Burnley (Oliver Ryan) set out—and extending the fuel duty freeze. All this knocks 0.4% off inflation next year, helping interest rates—which have already been cut five times since the election—to keep on falling, helping businesses to expand and getting mortgages down.
What will not be coming down is public investment, which the OBR says boosts our economy. The pro-growth choice is not to return to the austerity of the past, as my hon. Friend the Member for Cannock Chase (Josh Newbury) set out. Austerity saw Tory Chancellors slash public investment, and repeatedly scrap and delay projects—the worst kind of short-term political fixes, with the worst kind of long-term economic consequences. This Budget presses ahead with an extra £120 billion of capital investment.
It is exactly because this Government are confident about Britain’s future that we are going to invest in it. Sizewell C is going ahead, and we are building the UK’s first small modular reactor at Wylfa—the biggest industrial investment in north Wales for a generation. We are also building the lower Thames crossing. Infrastructure is being built in every corner of Britain. The blockers and the pessimists, and the gloomsters and the doomsters, are being taken on, confronted and defeated. The Opposition parties have never seen a housing development or energy project that they did not want to block, but those days are done. Britain is getting back in the building business.
The Budget also contains necessary and fair choices on tax, which hon. Members have raised repeatedly. We have not hidden from that fact, nor am I hiding from the fact that we are asking everybody to contribute by further freezing tax thresholds towards the end of this Parliament. I hear the chuntering and the howls from the Conservatives, but where did this year’s frozen thresholds come from? Them. Who put in place next year’s freeze? Them. They announced threshold freezes, they defended threshold freezes, they voted for threshold freezes, and they cannot howl with outrage about them now. In case all of that is not clear enough to them, let me spell it out: of the revenue raised from frozen thresholds, over three quarters comes from the choices made on their watch. The difference between us and them is that we are not ducking the long-needed reforms that our tax system needs—reforms that mean we can keep the contribution from workers as low as possible.
We have already abolished non-dom status, raised capital gains tax and ended tax breaks for private schools. The Budget brings an end to the disgrace of someone in a terraced house in Blackpool paying more in council tax than someone in a £10 million mansion in Westminster—or what the shadow Chancellor called an ordinary family home. If he had had more time, I am sure he would have gone on to worry about people with an ordinary family deer park, duck pond and stables.
Torsten Bell
I will come to the hon. Lady in a second, because she and the hon. Member for St Albans (Daisy Cooper) told us that the Liberal Democrats wanted wealth taxes, while continuing their record run of opposing every single wealth tax put in front of them, and conveniently forgetting that the Liberal Democrats tried and failed to introduce just such a wealth tax in government —a level of convenient amnesia matched only by the hon. Member for Clacton (Nigel Farage) when reminiscing about his school days.
Sarah Olney
Because the Minister was maintaining his own running commentary throughout my speech, he probably missed me making the point that, although he keeps saying that this is equalising council tax between poorer areas and richer areas, he must admit that it in fact does nothing of the sort. When people owning £2 million houses in Putney pay their £2,500 levy on top of their council tax, they will still only be paying the same amount of council tax as people living in the lowest band of properties in my constituency. There are arguments to be had about the mansion tax, but can he stop saying that it equalises council tax rates in different parts of the country, because it does nothing of the sort?
Torsten Bell
I did not say anything of the sort. I said that we are not going to have a £10 million mansion in Westminster paying less tax than a terraced house in Blackpool, and that has been brought to an end by this Budget.
I have heard the worries of some Opposition Members about the surcharge, and I want to assure the House that less than 1% of properties will be affected, and even for the £10 million mansion I have mentioned, it will not exceed £7,500 a year. To put that in perspective, it is not even enough to bribe a Russian-sympathising, Putin-praising Reform politician—or a traitor, as we should always call them.
Other reforms in the Budget will ensure that everyone who drives on our roads helps to maintain them. It will address the fact that tenants pay higher taxes than their landlords and tackle some of the tax breaks that have exploded in recent years, disproportionately benefiting the wealthy. That is the fair thing to do, and it is the responsible thing to do.
I know that others want to take a different approach, and I heard representations from some to raise income tax. Who was particularly keen? The shadow Chancellor. He told eager listeners—[Interruption.] I think he should listen. He told eager listeners at the Conservative party conference that he would “go for income tax”. In fact, he was more enthusiastic than that, going on to label it the best “thing to do”. We have not taken his advice, and are instead delivering major reforms—reforms ducked by Tory Chancellor after Tory Chancellor.
We have heard a lot about welfare today, and I recognise why. It is because our welfare system is failing, and we are changing it. We are undoing the huge incentive to be labelled too sick to work that the Conservative party built into universal credit, and the OBR has confirmed that this will move tens of thousands more people into work. The shadow Chancellor claimed he had a plan to reform welfare, but he did not mention that it was quashed by the courts. What he actually did as Secretary of State for Work and Pensions was to oversee the subsidised leasing of luxury cars, with the ordinary taxpayer bearing the cost of tax breaks for Mercedes and BMWs on the Motability scheme. Well, those days are done. The scheme has itself removed luxury cars, and it has committed to half of its cars being built in Britain. We are reforming its tax breaks to save over £1 billion in the coming year.
Torsten Bell
I am afraid that I do not have time to give way.
The last Government cancelled face-to-face assessments for health benefits; this Government are bringing them back. The last Government also oversaw a scandal that has received far too little attention. They allowed people who came to Britain for just a few years—people who left, and never had any intention of returning—not only to buy a state pension, but to buy it on the cheap. The Conservative Government did not just waste money here at home; they wasted it across Canada, Australia and New Zealand, and we are bringing this overseas pension scandal to a close.
What this Government will never do is pretend that the Tory policy of making children poor does anything other than cost us all in the long run. Child poverty costs this country £40 billion a year. A child growing up in poverty is less likely to be in work as an adult, and they earn 25% less at age 30. We tackle child poverty not only because it is a moral imperative, as was laid out by my hon. Friends the Members for Rochdale (Paul Waugh) and for Camborne and Redruth (Perran Moon), but because it is an economic one. This Government will scrap the two-child limit, we will lift over half a million children out of poverty and we will deliver the biggest fall in child poverty of any Parliament on record.
Everyone can see what the Conservatives are trying to do. They cannot defend their record, and we all know why. They have nothing to say about Britain’s future, as the Leader of the Opposition made patently clear yesterday, and now they are salivating at the prospect of trying to hide their total lack of policy behind the cheap, divisive, lazy politics of talking about “Benefits Street”. Well, bring it on, because this Budget is for every street, with potholes being filled, neighbourhood police back on the streets and an NHS that is actually there when we need it. It is a Budget for every street in cutting borrowing because that helps not just mortgage payers, but employers; it is a Budget for every street in cutting energy bills because the cost of living crisis has seeped into everyone’s homes—rich and poor, north and south; and it is a Budget for every street because child poverty exists in every part of Britain, limiting life chances, wasting talents and undermining not just some childhoods, but all of them. With borrowing down, energy bills cut and public services rebuilt, this is a Budget for every street in Britain.
Ordered, That the debate be now adjourned.—(Gregor Poynton.)
Debate to be resumed on Monday 1 December.
Pension Investment in UK Equities
Torsten Bell Excerpts(3 weeks, 6 days ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
It is a pleasure to serve under your chairship, Mr Stringer. I will indeed leave several minutes for the winding-up speech. Like everyone else, I begin by congratulating the right hon. Member for Salisbury (John Glen) on securing this debate, particularly on the Budget eve; it is very kind of him to make my diary relaxed. It is a topic on which he has thought deeply and that we have discussed many times. As ever, I welcome his constructive and practical approach, which befits someone who confirmed to me earlier that he holds the title of longest-serving Economic Secretary to the Treasury. Luckily, he was not on performance-related pay, given the growth of the economy during that time.
Torsten Bell
He may not have been paid at all. His focus at the beginning of his remarks on growth and one of its key enablers, investment, was right. If we stepped back and forced ourselves to ask, “What is the one thing the British economy needs more of?”, it would be public and private investment. As several hon. Members have said, the UK has the second largest pension scheme in the world, worth £2 trillion. It is our largest source of domestic capital, underpinning not just the retirement we all—or at least most of us—look forward to, but the investment on which our future prosperity depends.
That is why this Government launched and concluded a review of pensions investment within a year of taking office. Those reforms are now being taken forward through the Pension Schemes Bill, as the hon. Member for South West Devon (Rebecca Smith) pointed out. First and foremost, the Bill includes measures to deliver bigger and better pension schemes in the DC market. It requires multi-employer defined contribution pension providers to hold at least £25 billion in assets by 2030 or to be on track to do so by 2035.
That requirement will drive scale and sophistication in workplace DC schemes so that they are better positioned to invest in a fuller range of asset classes, including specialist private markets such as venture capital, which we have not heard much about today but which are key. The biggest gap in UK capital markets is growth finance: the gap that holds back our science and tech start-ups, scale ups and pre-initial public offering companies. That does not take away from the challenges we are raising about public markets, but if we look at our capital markets as a whole, that is our biggest gap.
Pensions can be a key source of funding for those economically critical investments and sectors, which my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) set out, as he has done many times in the discussions on the Pension Schemes Bill. This is not just theoretical; it is actually starting to happen. Legal & General is investing in post-quantum cryptography and Nest is investing in energy generation. Last week, the Chancellor and I met with Aegon UK, NatWest Cushion and M&G, which have all confirmed that they will invest £200 million in the British Growth Partnership, a fund managed by the British Business Bank investing in cutting edge British businesses and building on British strengths in areas such as clean energy, advanced manufacturing and the medical technology that other Members have talked about in the past.
As we have heard, Members are well aware of the Mansion House accord, a voluntary commitment by 17 major DC funds to invest 10% of their main default funds in private assets by 2030, including 5% in UK private assets. That will boost investment across a range of asset classes, including growth market equities, which we have not touched on much today. That is welcome news driven by a focus on giving savers better returns and showing how pension funds can contribute directly to making Britain the best place to start up, scale up and ultimately list companies. I should emphasise that we should think about our capital markets as a ladder up which firms can climb. Our job is to make that climb easier, not just to focus on the ultimate destination.
Several Members raised the question of transparency. The Pension Schemes Bill includes a new framework under which DC funds will need to disclose their investments in more granular detail, including UK-overseas and asset class split. We will be able to see in more detail what individual schemes are doing. We are doing that so that we can measure their value for money. For the first time, we will be able to see where those funds are invested.
Finally, as Members know, the Bill includes a reserve power, which has been discussed today, to ensure that the change that the pension schemes themselves say is needed in the interest of members happens. I will repeat what I said on the “Making Money” podcast—it is very exciting that the hon. Member for South West Devon had time to tune in. I am confident that this power will not need to be used, given the progress the industry is already making. It is designed as a proportionate backstop to the commitments that the industry has already made, with strong safeguards to protect the interests of pension savers.
On mandation, I note—as gently as possible, given the excellent tone of this discussion—that I have spent much of the last six months hearing strong opposition to any mandation backstop while hearing, often from the very same people, language that does not directly contradict that, but gets close to calling for mandation, whether it is social housing, public equities or anything else. I just gently note that tension before as gently moving on to set out some of the wider steps that the Government are taking to support our capital markets, because they go far beyond pensions. It is important to note that although UK equity markets have faced some challenges in recent years, London’s markets remain some of the deepest and most liquid in the world. We want to build on those strong foundations and make the UK as attractive a destination as possible for companies to start, scale and stay. There is a danger here: we need to make sure we are having this discussion about the change we need to see, while also celebrating many of the real strengths that exist in London’s capital markets.
Richard Tice
Is the Minister aware that the quantity of listings on the London stock market has collapsed by about 80% in the last decade, and that the number of companies listed on AIM—the alternative investment market, which was the original growth market 40 years ago—has fallen to a 25-year low, so something fundamental is going wrong with our listed markets?
Torsten Bell
I am. I will just gently say that many people, when discussing the reasons for that, point to a policy of Brexit delivered without any ideas about how it should be delivered in a smaller, home market and without any plans for the future. I would probably pause on that before I started offering anyone views on anything at all.
My Treasury colleagues have already delivered an ambitious programme of reforms: modernising UK listing rules; establishing the private intermittent securities and capital exchange system—PISCES—to support private companies to scale and grow as a stepping-stone to public markets; and making it easier to raise capital and IPO in the UK with new prospectus rules from January of next year. To come directly and more fairly to the question that the hon. Member for Boston and Skegness (Richard Tice) raised, I think it is important to celebrate the fact that we have seen some of that translate into positive momentum recently. Hon. Members will know that the stock exchange has had a very strong year, outperforming most of the rest of the world. We saw listings from Fermi America and Shawbrook last month, and there are other exciting companies in the pipeline. I now regularly see my hon. and learned Friend the Economic Secretary to the Treasury in confetti-filled photographs from the stock exchange, and I look forward to seeing many more in the years to come. I encourage hon. Members to go and engage in similar activities.
Our capital markets are not just about celebration and ceremony; they are critical in connecting retail investors’ capital with businesses in the way that several hon. Members mentioned. Investing offers a powerful way for people to make their money work harder and share in growth. That is why the Government are bringing forward measures to get Britain investing again.
The right hon. Member for North West Hampshire (Kit Malthouse) raised a point, which I have heard him discuss before, about risk appetite and the incentives that people have. I would say that if we look at the evidence from the last 25 years, we see that it is not the strength of the incentive that is the issue. Many people holding cash ISAs would have made very significant returns if they had held that in equities instead. I will give an example. If someone, each year since the introduction of ISAs, had put £1,000 into an equity ISA rather than a cash ISA, they would be £50,000 better off. The issue is not purely about incentives, and I think focusing there would miss some of the wider changes we have been seeing, but I am always eager to hear about what more can be done.
What we are doing is working closely with the FCA and rolling out a scheme of targeted support ahead of ISA season next year. That will represent the biggest reform of the financial advice and guidance landscape—mentioned by the hon. Member for South West Devon—in more than a generation. It will revolutionise the support that consumers can receive to invest.
Kit Malthouse
I get the example that the Minister talks about, but I think he misunderstands or perhaps misappreciates how the retail investor thinks. They do not necessarily think, “If I put £1,000 in now, in 20 years’ time it will be worth this.” They think, “If I put £1,000 in now, what is my return going to be next year? What is my running return going to be?” And it will be a percentage return on the dividend. That is why we have a P/E—price-to-earnings—ratio for every share; that is what investors look at. If that is impaired because of taxation and the return is reduced, as it has been over the last few years, they will be less inclined to invest. That, fundamentally, is the pattern that we have seen. The Minister never says this, but in the end, people invest in listed stocks and shares, whether through their pension or otherwise, to make money. They are not doing it for the good of anybody else. They are doing it to make money, and if they are going to make less money, or the perception is that they will make less money, because of Government taxation, they will do less of it. Would he not agree?
Torsten Bell
I am not sure that I fully understood, so I am not going to commit to agreeing. Remember that the capital gains on shares in equity ISAs—investment ISAs—receive tax relief in their entirety, so the tax is not the problem in terms of people’s rates of return; the returns would have been very real indeed over, for example, that 25-year period. However, my basic argument is that we need better advice, and that our targeted changes will make it possible for financial firms to offer that.
We are also supporting an industry initiative to rebalance risk warnings to ensure that firms are offering consumers information about investing, not trying to scare them off with over-the-top warnings. Together, these measures will support savers in securing stronger returns over the long term because, as the right hon. Member for North West Hampshire just said, this is about making money for savers—whether in pension savings or elsewhere—putting money into people’s pockets and further strengthening our world-leading capital markets.
I will make one more substantive point and then conclude. This is not just about capital. In the end, the growth agenda, and needing the investment to make it happen, is about actual investment not just financial flows. Financial flows are an enabler of the investment that ultimately matters to the size of the capital stock, the quality of the infrastructure, the quality of the firms, and the amount of capital that workers have to work with. That is, in the end, what matters, and it means firms wanting to grow, which is why I focused slightly more in my remarks on the whole chain of firms’ access to capital.
This is also about being able to get out and actually get things built. I gently remind Members, when I hear them opposing anything getting built, anywhere, by anyone, at any time—I definitely hear the Lib Dem Front Bench opposing—[Interruption.] I am not talking about the hon. Member for Torbay (Steve Darling), but the Lib Dems have never seen a house that they wanted to be built. That is my lived experience of sitting in the Chamber day after day. We need to actually get things built, and as I said, I agree with the hon. Member for Carshalton and Wallington (Bobby Dean) on the pipeline of investment. That is ultimately what we need if we want growth to happen; it cannot just be about changing the flows of existing assets.
I once again thank the right hon. Member for Salisbury for securing today’s debate. A strong pensions industry and thriving capital markets are cornerstones of our capitalism, as I think everybody in this Chamber agrees. We are introducing significant reforms of both the capital markets and the pensions industry, and I am grateful to have had the chance to discuss them this afternoon.
Draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025
Torsten Bell Excerpts(4 weeks ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move,
That the Committee has considered the draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025.
That should encourage enthusiasm from everyone. The primary purpose of the draft regulations is to extend the legal framework for collective money purchase schemes, commonly known as collective defined contribution schemes, to allow multiple unconnected employers to participate. Until now, CDC schemes have been restricted to single employers or connected employers.
Significant progress has been made in getting more people saving, not least under the previous Conservative Government. We now have 23 million people saving into a workplace pension, but the job is not finished. Currently, pension contributions in defined contribution schemes are going into a savings pot, not a pension, leaving them exposed to the twin challenges of adequacy and risk. The Government believe that CDC schemes have an integral role in helping us address these challenges.
The statutory instrument puts in place a number of key measures to ensure that unconnected multiple employer CDC schemes deliver for members. Part 2 of the statutory instrument amends the Pension Schemes Act 2021—we will be hearing more about that—to allow for unconnected multiple employer schemes and to broaden the range of organisations that can set up a CDC scheme. To become authorised, a scheme needs to satisfy the Pensions Regulator that it meets the authorisation criteria, which are listed in section 9(3) of the 2021 Act. Part 2 of the statutory instrument amends that Act to create additional authorisation criteria specifically for unconnected multiple employer collective money purchase schemes.
We have identified persons who we consider will have an important role in such schemes, and we have brought these people within the scope of the fit and proper persons test, so that they are subject to appropriate scrutiny. It is imperative that our regulations clearly establish who is responsible for a scheme’s business strategy and financial sustainability, and that it is evidenced to the regulator at authorisation. Regulation 10 therefore amends the 2021 Act to require that an unconnected multiple employer CDC scheme has a single scheme proprietor that meets specific criteria and requirements. Regulation 10 also inserts a requirement for the scheme proprietor to prepare, maintain and submit a business plan to the regulator.
The new legislative framework will permit schemes that intend to operate on a commercial basis. To mitigate the risks of schemes overpromising to gain a commercial advantage or mis-selling, we are introducing a promotion or marketing authorisation criterion. The requirement is that no person has carried out promotion or marketing of a scheme that is unclear or misleading without rectification, and that the scheme has adequate systems and processes for ensuring that promotion or marketing is clear and not misleading.
We want trustees of these schemes to focus entirely on the interests of scheme members, and to have complete autonomy to do so. A trustee also acting as a person who promotes or markets the scheme, or as the chief financial officer for the scheme, detracts from this responsibility and creates a clear conflict of interest. Regulation 5 of the statutory instrument amends the 2021 Act to make a separation of these roles an authorisation criterion.
It is the Government’s intention that running an unconnected multiple employer CDC scheme as a closed scheme should always be an option open to trustees, where it is viable to do so and to the extent that it is permitted under wider pensions legislation. Regulation 5 therefore inserts a new authorisation criterion into the 2021 Act to ensure that trustees can choose this option, if appropriate. To deter speculators, part 2 also imposes a mandatory deadline of 24 months from authorisation, by which an authorised unconnected multiple-employer CDC scheme must start being operated—it cannot sit there in abeyance.
Part 3 of the statutory instrument supplements the meaning of “connected” in section 49(2)(a) of the 2021 Act—one of the better sections. This term is relevant for determining whether a collective money purchase scheme is a single and connected employer scheme or an unconnected multiple-employer scheme, and therefore which of the two legislatives frameworks applies to it. Part 4, including schedules 1 to 6, implements the new authorisation and supervisory regime for unconnected multiple employer collective money purchase schemes under part 1 of the 2021 Act. It includes regulations on the application for authorisation, scheme design, financial sustainability, the valuation and adjustment process essential to calculating benefits, and the supervisory regime, both at set up and on an ongoing basis. The new regime will continue to place strong emphasis on regulatory oversight. The Pensions Regulator is empowered to issue risk notices, approve and enforce continuity strategies and, ultimately, withdraw authorisation where schemes fail to meet the required standards.
Part 5 of the instrument contains amendments to the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022, introduced under the last Conservative Government, to ensure that certain aspects of the single or connected employer collective money purchase schemes regime are aligned with this new regime. Part 6 and schedule 7 make consequential amendments to other relevant primary and secondary legislation.
Unconnected multiple employer CDC schemes are a welcome addition to the UK pensions landscape, as are CDC schemes more generally, as they have come forward on the basis of cross-party consensus over the past few years. When well designed and well run, which this instrument will ensure, they can help boost retirement incomes and benefit the wider economy. I comment the instrument to the Committee.
Torsten Bell
I thank the hon. Members for Wyre Forest and for Horsham for their consensual approach and the clarity of their support for what is a development of CDC schemes that has had good cross-party support. Communications are very important. The truth is that they are important in all pension schemes—particularly within CDC schemes because they are new, and because there is some complexity sitting behind them. That is why we take this particularly seriously.
In response to the questions raised by the hon. Member for Horsham, the regulators will be looking at the overall approach to communication. They are not signing off the individual bits at the initial authorisation. As I said in my opening remarks, the authorisation is not a “one and done”. There will be ongoing monitoring of that. Specifically on communications, for multi employer CDC schemes, the marketing in general will be to employers, not to individuals. That may help allay some concerns about how that is communicated. But even within that, we will definitely want clarity, particularly to savers, about the honesty of what the offer is—this is not a DB scheme; it is not a certain guaranteed income. It is one that is aiming for a target amount, and there can be some fluctuation around that. It is important that we are honest and straight about that, and that those of us who support these schemes are also clear about what they are and are not offering.
The pension landscape does need to change—we all agree about that. Fundamentally, we need to move from having savings pots to delivering actual pensions. CDCs are one of the ways—there are others—in which we can make progress on that. I therefore commend this instrument to the Committee.
Question put and agreed to.
Fund Advance for Cash Paid in to Social Fund: Contingencies
Torsten Bell Excerpts(1 month, 1 week ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I would like to notify the House that the Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £1,610,000,000
The voted cash requirement for cash to be paid into the social fund exceeds that provided for in the main estimate 2025-26 due to changes to eligibility in the Social Fund Winter Fuel Payments Regulations 2025.
The Contingencies Fund advance is required to enable payments into the social fund to meet obligations until the supplementary estimate receives Royal Assent.
Parliamentary approval for additional resources of £1,610,000,000 will be sought in a supplementary estimate for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £1,610,000,000 will be met by repayable cash advances from the Contingencies Fund.
The advance will be repaid at the earliest opportunity following Royal Assent of the Supply and Appropriation (Anticipation and Adjustments) Act 2026.
[HCWS1047]
Annually Managed Expenditure Budgets Increase
Torsten Bell Excerpts(1 month, 1 week ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I would like to notify the House that the Department for Work and Pensions has obtained approval from His Majesty’s Treasury for an increase of £1,610,000,000 to non-voted AME—annually managed expenditure—budgets and the total AME budget control, to fund increases to the winter fuel payment in line with the Social Fund Winter Fuel Payment Regulations 2025.
[HCWS1048]