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An update from our Parlimentary Advisors
The House of Commons held a first sitting of the Pensions Scheme Bill:
Mark Garnier (Con, Wyre Forest) raised ethical concerns about how DB pension surpluses might be used by employers, questioning trustees’ role in overseeing this.
Dale Critchley (Aviva) argued trustees should focus on securing member benefits, though there was agreement that excessive surplus extraction, especially by short-term investors like private equity, risks misuse. Garnier also highlighted restrictions on annuity funds investing in equities, with suggestions that regulatory updates, not legislation, could address this.
On DC schemes, Charlotte Clarke (FCA) and Critchley welcomed the Value for Money framework but warned against rigid benchmarks that might stifle innovation and lead to herd behaviour. Critchley stressed the need for flexible, personalised decumulation options and noted behavioural insights are being used to boost engagement. Rebecca Smith (Con, South West Devon) and Critchley raised concerns that privacy and marketing rules limit providers’ ability to communicate effectively with members.
Sarah Edwards (Lab, Tamworth) asked about reform sequencing and capacity, with Clarke noting tight timelines and the need for contractual changes before VfM enforcement. There were concerns about industry capacity to manage changes. John Milne (LD, Horsham) and Peter Bedford (Con, Mid Leicestershire) called for balanced secondary legislation to protect innovation while ensuring member value. Steve Darling (LD, Horsham) and Alice Macdonald (Lab, Norwich North) highlighted Australia’s lessons on avoiding over-regulation and promoting long-term pension adequacy.
The House of Commons also held a second sitting of the Bill, focusing on the reliance on secondary legislation, engagement with pension scheme members, monitoring and evaluation plans, and the volume of amendments to the Bill.
Minister Torsten Bell acknowledged the heavy use of secondary legislation in the Bill, stressing its necessity due to the complexity and evolving nature of pension schemes. He emphasised ongoing consultations and the importance of clear timelines for regulations to provide industry certainty.
Concerns were raised about low online engagement from members, particularly those less financially secure. Bell highlighted the role of the pensions dashboard in improving engagement, noting the need for careful design to avoid impulsive decisions by savers.
Kirsty Blackman (SNP, Aberdeen North) questioned the strength of the Bill’s monitoring and evaluation plan, with Bell agreeing to review and update it. She also expressed concerns about the large number of amendments (273) being presented in a short timeframe, which Bell defended as necessary to avoid even more amendments later and to allow thorough scrutiny.
Luke Murphy (Lab, Basingstoke) asked about making surplus release indexation mandatory rather than merely encouraged. Bell responded that trustees should lead on this issue without legislative changes, maintaining the integrity of scheme rules.
The following written questions of interest have been answered:
Vikki Slade (LD, Mid Dorset and North Poole): To ask the Secretary of State for Housing, Communities and Local Government, whether she plans to consider the housing needs of older people in the development of her long-term housing strategy.
Matthew Pennycook (Lab, Greenwich and Woolwich): The government is committed to enhancing provision and choice for older people in the housing market and we will continue to consider this issue as we develop our long-term housing strategy.
