Pension Schemes Bill

Debate between Torsten Bell and Nia Griffith

Report stage
Wednesday 3rd December 2025 Commons Chamber

[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.

--- Later in debate ---

[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.

Oral Answers to Questions

Debate between Torsten Bell and Nia Griffith

Monday 27th October 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)]

I obviously recognise the challenges facing those without inflation protection, particularly after the cost of living pressures of recent years, and I think that recognition is shared by Members on both sides of the House. I met a cross-party group of MPs earlier this year to discuss exactly this issue. Reforms in the Pension Schemes Bill give trustees more flexibility to share surpluses in their DB pension schemes with employers, and to negotiate for members to benefit from any such sharing of surpluses. That could include discretionary increases to address the issue raised by my hon. Friend the Member for Llanelli (Dame Nia Griffith).

[Dame Nia Griffith]

As a result of the efforts of pensioner associations, we know that there have been unintended consequences of the Pensions Act 1995, which made it legal to stop payment of indexation to the pre-1997 pensioners of successful multinationals such as 3M and Hewlett Packard Enterprise, who, having been recruited with the promise of index-linked pensions, are now suffering hardship. Their pensions have already been frozen for at least 15 years, despite healthy funds and trustees’ pleas. What will the Minister do to stop this dishonourable practice, so that these companies deliver the financial security that they promised?

[Torsten Bell]

I absolutely recognise the issue that my hon. Friend has raised: any of us in that situation would want those pension increases to continue. She is aware of the legal background, but I should point out that scheme rules govern when inflation-linked increases can be paid. They are not changed retrospectively, but the Pensions Regulator has spelt out that trustees should consider those who are not receiving inflation-linked increases when making their decisions, and should also consider the history of making such awards—particularly in some of the examples that my hon. Friend has given. As I have said, I think that the provisions in the Pension Scheme Bill give trustees more power to argue for those increases.

Oral Answers to Questions

Debate between Torsten Bell and Nia Griffith

Wednesday 11th September 2024 Commons Chamber

[The Parliamentary Under-Secretary of State for Wales (Dame Nia Griffith)]

This Government’s No. 1 mission is to kick-start economic growth across the United Kingdom. Wales can be at the forefront of that mission, with renewable energy, advanced manufacturing, our vibrant creative sector, fintech and the life sciences each offering huge opportunities to create jobs and drive growth.

[Torsten Bell]

I thank the Minister for her answer and congratulate her on her appointment. Welsh universities are central to economic growth in many of our communities, but these are difficult times: Swansea University has already seen 200 voluntary redundancies, and many more are happening across Wales. Our universities are affected by decisions of the Welsh Government as well as those of the UK Government, so can the Minister update the House on how the two Governments will work together to nurture those crucial institutions?

[Dame Nia Griffith]

I welcome my hon. Friend to his place, and am very sorry to hear about the recent redundancies at Swansea University. Only last week, the Secretary of State and I met with Professor Paul Boyle, vice-chancellor of Swansea University and chair of Universities Wales, to discuss the challenges facing Welsh institutions and ways of supporting the higher education sector in Wales. We recognise that Welsh universities, including Swansea, have a huge contribution to make, both to our mission of growth in the economy and within their local regions. Colleagues at all levels in the UK and Welsh Governments are working closely together to safeguard those universities’ potential amid the difficult economic circumstances we have inherited.