The Government announced last week that pension providers will have to implement new independent governance committees to oversee workplace pension schemes. This is part of the Government’s package of measures to ensure that workplace pension schemes are well run and deliver value for money.
I thank the Minister for that answer, and I congratulate him again on his brilliant announcement last week of a 0.7% cap, which is 50% of the cap that the Opposition imposed on stakeholder pensions. But the OFT report identified other governance issues with smaller pensions where trustees and fund managers come from the same organisations, and it suggested that these independent governance committees be set up quickly. Will he confirm that that will happen before auto-enrolment goes much further?
I am grateful to my hon. Friend for his support for our robust action on pension scheme charges. On governance, we recognise that there is potential for conflict of interest in some master trusts. Therefore, in last week’s Command Paper, which I am sure he will have studied, we proposed that master trusts should be subject to the same independence requirements as independent governance committees. We are now consulting on that proposal.
I commend progress on this as well as the amazing wider package of pension reforms for which my hon. Friend is responsible. On the balance that trustees will look at, may I urge him to bear in mind existing people in the system, not just pensioners themselves, because with Sheerness Steel people who were still working were almost wiped out in order to protect those who had retired?
My hon. Friend is quite right. As he knows, we have both the Pension Protection Fund and the financial assistance scheme to help those whose sponsoring employer has become insolvent. It is important that we make sure that sponsoring employers are in a robust position and that regulation is proportionate, which is why we are changing the remit of the Pensions Regulator so that it has regard, in its actions, to the sustainable growth of the sponsoring employer.
Last week, the Minister announced that the Government were adopting lock, stock and barrel Labour’s policy on the pension cap. That is welcome news for savers, but the Minister and the hon. Member for Warrington South (David Mowat) both know that governance is key to ensuring that savers get value for money all the way through the pensions system. Does the Minister therefore agree that allowing big insurance companies to appoint independent governance committees themselves is a little like allowing the home team to pick the referee in a football match?
The hon. Gentleman raises an important point about governance and independence. He should know that the proposed terms of reference for IGCs include requirements that providers go through open and transparent recruitment processes, and that members be appointed for fixed terms, with limited numbers of reappointments. The requirements are designed to avoid any possibility that IGC members have incentives not to challenge providers in order to remain in post.