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Pensions Dashboards (Prohibition of Indemnification) Bill

Volume 718: debated on Friday 15 July 2022

Second Reading

I beg to move, That the Bill be now read a Second time.

This is a simple yet important measure designed to safeguard the interests of pension savers, but before going into the detail about precisely what my Bill would achieve, it may be worth while to provide some context about what pensions dashboards are and the work that the Government are doing to make them a reality. Pensions dashboards are an electronic communications service that will revolutionise the way people interact with their pensions by allowing individuals to see their pensions information, including the state pension, in one place online—at the touch of their laptop, smartphone or tablet. Dashboards will help individuals be reunited with their lost or forgotten pensions, and support people in better planning for their retirement.

An important point to mention is that while users will be able to view their pensions, they will not be able to make transactions, so they would not be able to combine or move pension pots within the dashboard. That is because, in order to introduce dashboards as soon as possible, they will start with a basic level of information, but they will include more detail as our understanding of consumer needs develops. The Government believe that to develop a digital service that is safe, useful and relevant to consumers, future enhancements to dashboards’ functionality should not be decided before the initial offer has been tested with users and any behavioural effects are understood.

Delivering pensions dashboards was a manifesto commitment of this Government, but the idea of a pensions dashboard has received widespread support from Members across the House, and it is not hard to see why. With the success of automatic enrolment, millions more are saving for their retirement and may have multiple pension pots, with no easy way of keeping track of them. Dashboards will bring pensions into the 21st century, and make it as easy for people to review their pensions savings as it is to view their bank accounts on their phones.

The Government are keen to see dashboards available as soon as possible to help consumers plan for their retirement. However, it is important to get the design of the service right to ensure that it is accurate, secure and consumer-focused. Developing a comprehensive service that can cater for the potential 52 million UK adults who could use dashboards, involving data from thousands of pension schemes, is complex and should not be rushed. The Government have, however, made excellent progress to make pensions dashboards a reality. The Money and Pensions Service has established the pensions dashboards programme team to design and implement the digital infrastructure that will make pensions dashboards work. The programme is on track and continues to move forward at pace, with work ongoing on the build of the central digital architecture, and research and testing to feed into the design and development of the service.

Hon. Members may recall our voting at the beginning of this Parliament to pass what is now the Pension Schemes Act 2021, which provided the primary legislative framework to make pensions dashboards possible. The Department for Work and Pensions has since consulted on the draft Pensions Dashboards Regulations 2022, which will apply to relevant occupational pension schemes, and the Government have this week published their response to that consultation. The Financial Conduct Authority has also consulted on equivalent rules for personal and stakeholder pensions to ensure that the information provided on dashboards will be comprehensive.

There will be a dashboard service provided by the Money and Pensions Service, which will be available from the start . That is because the Government believe very strongly in the importance of a Government-backed, impartial dashboard, and are committed to having the MaPS dashboard available from the start. In addition, it will then be possible for others to enter the market and provide dashboards, which will be bound by requirements set out in regulations and regulated by the Financial Conduct Authority. That will provide scope for innovation, helping to engage a broad range of users and meet the varied needs of the millions of people with pensions savings. Importantly, individuals will see the same information regardless of which dashboard service they use, and robust rules will be in place to ensure consumers’ interests are at the forefront of all dashboards.

Ensuring that user data is properly secured on the dashboards will be a significant consideration. The Government have taken care to ensure that pensions dashboards and the technology behind them are designed to maximise data security. For example, individuals will always have control over who has access to their data and will be able to revoke access at any time. Only the Money and Pension Service and any qualifying pensions dashboard providers that meet the agreed standards and regulatory requirements will be able to connect to the dashboard infrastructure. The draft regulations will require occupational pension schemes to connect to a central digital architecture that is being developed by the pensions dashboard programme.

Once connected, schemes will be expected to respond to requests by members of the public to find and view their pensions information. To ensure these requirements are adhered to, the regulations will enable the Pensions Regulator to take enforcement action through penalty notices against trustees or managers who fail to comply. That could result in penalties for each breach of £5,000 for individuals or £50,000 if the person is a body corporate, including corporate trustees. This is where my Bill comes in.

Although pensions scheme members may be able to take civil action, nothing currently in legislation prohibits rogue trustees or managers from using a pension scheme’s assets to reimburse themselves to repay fines they incur for breaches of pensions dashboard legislation, which is backed by criminal sanction. This Bill makes changes to pensions legislation to increase protection for savers against the actions of such unscrupulous persons. In particular, it provides additional powers for criminal proceedings to be brought against trustees or managers of occupational pension schemes if they reimburse themselves from pension pots to pay penalties imposed for compliance breaches under the future pensions dashboard regulations. If a trustee or manager is found guilty of this offence, the provisions would allow for a maximum sentence of up to two years in prison or a fine or both.

I should make it clear to the House that this Bill does not impose any new costs or requirements on occupational pension schemes or their sponsoring employers. The intent is simply to deter rogue actors who have already received a financial penalty from the Pensions Regulator under the dashboards regulations from plundering savers’ pension pots to pay the penalty. It is also not something that anyone in the pensions industry should be unfamiliar with. The Bill amends existing legislation that provides for a similar prohibition in several other areas of pensions legislation, including automatic enrolment.

I am delighted that the Bill has the Government’s support, and I look forward to continuing to work with them to secure its passage. As I said at the start, this is an important measure that will safeguard the interests of pension savers from any would-be unscrupulous trustees. I hope we all agree that this Bill would provide worthwhile protection to all of our constituents with pension savings, and I hope that it will be supported on both sides of the House today.

I thank my hon. Friend the Member for Cheadle (Mary Robinson) for bringing forward the Bill, and for allowing me to participate in the debate.

On Third Reading of the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill, I stressed the importance of pensions and how they provide a sense of security that individuals can enjoy later in their lifetime. The hope is that a pension will allow us to have economic freedom in our old age. My understanding is that paying into a pension pot, which many see as a long-term savings plan, is becoming more frequent as the years go by. In addition, it seems as if changing jobs has become more frequent in recent times. Those two increases have resulted in an issue: it has become more common for individuals to get the end of their career and not be able to locate all their pension pots with the ease they would have before, and that they would like. Individuals may struggle to find that figure, because they will have moved jobs and therefore paid into lots of different pension pots over their lifetime. That is not to mention the hassle of having to remember which companies they have paid into and having to find their most recent pension statement.

Pensions dashboards will allow people to see online what they have in various pension pots, including their state pension. A dashboard is a great tool because it is convenient to have the relevant information in one place, and it will ensure that pension pots do not get lost. Some people will even be able to track how much money they will have in their pension and realise sooner rather than later the changes they will need to make. That will ensure that they will be able to achieve the desired outcome for their retirement.

Under the current provisions, there will be an issue when dashboards come into force, so we need to make the changes to avoid these brilliant tools being abused by trustees or managers of occupational pension schemes. An occupational pension scheme is set up by an employer to provide retirement benefits to its employees. There is currently nothing to prevent a trustee or manager of an occupational pension scheme from reimbursing themselves from members’ pension pots if they are issued with a financial penalty by the Pensions Regulator for a compliance breach. The Bill seeks to make that exact practice a criminal offence, and that is why I support it.

The bottom line is that we need to protect people’s retirement funds. The maximum penalty for a failure or contravention of the pensions dashboards regulations will be £5,000 for an individual or £50,000 for a body corporate, including corporate trustees. As I have said before, pensions are so important to planning for the future, and I want to make sure that the pensions of the constituents of Broxtowe are safe from the abuse of others. I congratulate my hon. Friend the Member for Cheadle on introducing the Bill.

I congratulate the hon. Member for Cheadle (Mary Robinson) on bringing forward the Bill. The Opposition agree with the principle that pension scheme trustees must be responsible for any failure to meet their legal requirements. The Pensions Regulator has recently warned that many trustees are at risk of failing to meet their legal pensions dashboard responsibilities, and research shows that the majority of trustees have yet to prepare.

Last month, the regulator said:

“Trustees will have legal duties they must be ready for. We will take a dim view of trustees who carelessly fail to prioritise their dashboard responsibilities.”

There is indeed a very real risk that fines could be issued. Without the provisions of the Bill, those fines could fall on scheme members. It should never be the case that mistakes, failures or a lack of action to meet legal requirements on the part of trustees should land with scheme members. People who pay into pensions their whole lives should not be left with less because of the action or inaction of fund managers and trustees. We therefore support this important Bill. In fact, we would have liked to see these provisions in the original pensions dashboard legislation; so although I wish the hon. Member for Cheadle every success with her Bill and commend her for her work, it would be helpful if the Minister told us whether the omission was deliberate on the part of the Government or simply an oversight.

Pensions policy is a long-term policy area. The legislation brought forward in this Parliament and the last Parliament will have implications for many years to come. The Bill is therefore a timely reminder of the need for ongoing work on the pensions dashboard and ongoing work to ensure that people are saving enough for retirement generally and, as the hon. Member for Broxtowe (Darren Henry) says, that they can track and monitor their pension savings and repair problems in their savings history if necessary. We have to ensure financial security for all those who are over state pension age.

I will raise one final point. The dashboard is an important attempt to make information more easily accessible to pension scheme members. We welcome it and think it a helpful way to ensure that people save for retirement, but the Government cannot rely on the programme as a solution for all their pension woes. As a country, we must go further to ensure that more people are saving enough for retirement. If we do not, we will potentially be storing up a future cost of living crisis that will last for decades.

It has been good to hear hon. Members speaking about pension schemes today. I hope that the Bill is a reminder of the importance of well-run, good pension schemes that give people financial security and the confidence to plan for their retirement.

What an honour it is to speak today. I thank my hon. Friend the Member for Cheadle (Mary Robinson) for having the foresight to move the Second Reading of her Bill and for her excellent contribution to the debate. I can confirm that the Government fully intend to support the Bill today.

As you will be aware, Madam Deputy Speaker, this is my seventh day in the job as Minister for pensions; I hope to be better than my predecessor. The bottom line is that it is an honour to do this job and try to address the genuine issue that the hon. Member for Westminster North (Ms Buck) raises, which is that we need to get this country saving more. With great respect, we are doing that. The state pension has almost doubled since 2010, thanks to the triple lock and the work of the coalition Government and the Conservative Government: it was worth less than £100 shortly before the 2010 election and is now worth up to £185-plus. As taxpayers, we are paying out well over £100 billion to our pensioners. We are providing huge amounts of support.

Automatic enrolment has been a massive success story under successive Governments. The simple truth is that automatic enrolment has meant constituents up and down the country saving in a way that never happened before. The proportion of young people saving with a workplace pension was less than 30% prior to 2012; it is now above 80%. For women with pension savings in a workplace context, the figure was less than 42%; it is now above 80% as well. These are transformational things. For example, in your constituency of Epping Forest, Madam Deputy Speaker, 13,000 people are now saving for a workplace pension. The Bill will genuinely help them to navigate things an awful lot better, so I am very pleased that my hon. Friend the Member for Cheadle has introduced it.

The pensions dashboard is incredibly important and my constituents will probably be asking what it means for them. I am also very conscious that we have a digital divide; I have been campaigning for online accessibility for probably 20 years. I would be interested to know, first, how we can ensure that we do not put people in a position where they cannot get the information, and secondly what the roll-out means for Watford.

It matters tremendously to Watford, and I will tell my hon. Friend why: in Watford, 45,000 constituents are benefiting from a workplace pension under automatic enrolment. That is a transformational thing that was genuinely not there barely 10 years ago.

We all support the pensions industry, but it has basically been existing in the 19th century. With the pensions dashboard, we have jumped over the entire 20th century and into the 21st by bringing things online. The pensions dashboard will take pensions—all 40,000 schemes up and down the country in the private and public sector and the state pension—and make them all accessible via iPads, mobile phones and computers. That is transformational.

I am old enough to have met my bank manager—a person whom I used to go and see and have a conversation with. That never happens any more, yet, with the banking and savings apps that many of us now have, the way we engage with our bank is transformational compared with days gone by. We hope that people will have a pensions app so that, as they take the bus or train to work, they can look at their bank account, their savings account and their pensions at the same time and move money between them.

This process started under the Pension Schemes Act 2021, which genuinely transformed the digital divide. The 20-year campaign of my hon. Friend the Member for Watford (Dean Russell), both outside and inside Parliament, is seeing the fruits of his labours. This will make our lives easier, putting it bluntly, because we will have accessible information on an ongoing basis. It will make things simpler by enabling us to make decisions as consumers in a way we never have before, and it will make things better by providing a greater understanding of how to control our money. Surely that is something for which we all strive.

The Government support this Bill, and it is an honour to be here on a day when the House has taken forward four Bills, including the Shark Fins Bill, the Employment (Allocation of Tips) Bill and the Neonatal Care (Leave and Pay) Bill, which is particularly relevant to my good self as I have suffered loss. I listened to those debates with great interest, and I totally support the Bills.

This Bill is of great importance as we seek to make pensions safer, better and greener. As the hon. Member for Cheadle indicated, with record numbers of people saving for retirement it is more important than ever that people understand their pensions information and prepare for financial security in later life. Dashboards will unquestionably make people do that.

The Department for Work and Pensions published a consultation on the draft pensions dashboard regulations earlier this year, and only yesterday we published the response to that consultation, setting out in detail that we are fully committed to driving forward pensions dashboards and making them happen at the earliest opportunity.

The Bill will increase protections for pension savers by prohibiting trustees and managers of occupational and personal pension schemes from being reimbursed out of scheme assets in respect of penalties imposed on them by any future dashboard regulations. The Bill will achieve this by amending section 256 of the Pensions Act 2004, under which, if a trustee or manager were to be reimbursed and knew or had reasonable grounds to believe that they had been so reimbursed, they would be guilty of a criminal offence unless they had taken all reasonable steps to prevent it. For those found guilty, the provisions allow for a maximum sentence of up to two years in prison or a fine, or both.

Additionally, were any amount to be paid out of a scheme’s assets in such a way, the Pensions Regulator would have the power to issue civil penalties to any trustee or manager who failed to take all reasonable steps to secure compliance. Section 256 of the 2004 Act already prohibits reimbursement of penalties issued under a number of other pieces of pensions legislation, including automatic enrolment. We therefore consider the proposed amendment to that Act to be a very logical and welcome change.

My hon. Friend the Member for Broxtowe (Darren Henry) is a fantastic champion for his constituency, for which I thank him. He has spoken repeatedly in this House of the importance of pensions to his constituents, and I can tell him that 29,000 of his constituents have been automatically enrolled into a workplace pension. This is of massive importance to his constituents.

My hon. Friend raised two points that I will briefly address. First, we are talking about a significant number of pensions, because the average person will have several pots as they continue to work. They might have a job at the age of 18, 21, 24 or 26 before moving to another job. The dashboard starts out as a tracing service, as we have discussed. We already have the Pension Tracing Service, which allows people to seek and identify any lost pensions, but the dashboard will take that so much further. Individuals will be able to access in a safe way all their pensions, make decisions on consolidation and consider their options and possible outcomes in a way that they never could before. This is proper, modern, Conservative, consumer-focused politics that is genuinely transformational for the British people. I am so pleased that my hon. Friend supports that. It is important for his constituents that we support them, not just with workplace pensions.

As I outlined earlier, the support through the state pension has doubled effectively over the past 12 years. The Government are also bringing forward other support, whether it is the specific cost of living support that landed in a million of our constituents’ accounts—£326, and there will be £324 later this year—or whether it is the extra £300 in winter fuel payments for all our pensioner constituents, or the £400 that will go to households that are registered as recipients of energy, along with the energy support grant that will land in October and November. All those packages will be there to support constituents as they cope with the difficulties that have been caused fundamentally by the war in Ukraine and the energy war that we are effectively engaged in with Putin.

I appreciate my hon. Friend sharing the updates on the pension and how it is helping my constituents. Whenever I speak to pensioners, they always mention the triple lock. Will he commit to the triple lock please?

I assure my hon. Friend that the triple lock will return this autumn, when legislation is brought back, as it has been every year, in the pensions uprating process. That is something that not just I but my right hon. Friends the Chancellor and the Secretary of State for Work and Pensions have said, and it remains Government policy. My hon. Friend raises support for pensioners. I pray in aid and urge all colleagues on both sides of the House to get behind spreading awareness of pension credit. Most pensioner support is automatically provided. In other words, once someone is registered, upratings and the inclusion of greater sums such as the £300 winter fuel payment and the £400 energy support grant happen automatically. The key thing with pension credit is that you have to apply. So the message is, “Please don’t be shy, please apply.”

I was lucky enough to spend some time with Mr Len Goodman, to whom I am deeply grateful for his contributions. Fortunately there was no dancing by me, but the video that has been seen by more than 1 million people makes the case for pension credit. It is worth on average £3,300 to all our constituents who are vulnerable and have not claimed. That is something of great importance. We know that up and down the country, in every single constituency, there are hundreds of pensioners who have failed to claim pension credit. I urge them to contact their local citizens advice bureau, Christians Against Poverty, or other assistance organisation such as Age UK or others, for help to claim. They can also go to gov.uk or dial freephone 0800 991234. It applies across all communities. Yesterday I visited Punjabi Radio; we particularly want to reach BME communities.

In respect of the Bill, the Government are committed to making pensions safer, better and greener. We genuinely believe that the Bill makes pensions better through the pensions dashboard. The safety element is assisted by this small, discrete but very important Bill. We also have the capability to make pensions greener. We are the first country to bring in TCFD—the taskforce on climate-related financial disclosures. We are driving forward environmental, social and governance standards. Only today we issued our response to the call for evidence on the social element of ESG. Again, it is a world first for a country to look at this particular reform. Without a shadow of a doubt, the Bill will improve our ability to provide a proper deterrent which will prevent rogue trustees or managers from exploiting the pension assets for which they are responsible. The Government will therefore support the Bill’s passage through Parliament, and I congratulate my hon. Friend the Member for Cheadle—who is a doughty campaigner for her constituents —on ensuring that pensions are safer for the future.

With the leave of the House, Madam Deputy Speaker, I thank all Members for their contributions and for being present for this important debate. Let me begin my thanking my hon. Friend the Member for Broxtowe (Darren Henry), who rightly described the pensions dashboards as brilliant, and acknowledged their potential to enable people to find the various pension pots that they may have acquired during their working lives. So many people who have lost or forgotten pensions and simply do not know where to go will be helped by this groundbreaking legislation.

I thank the shadow Minister, the hon. Member for Westminster North (Ms Buck) for her support: she was right to recognise the importance of good, well-run pension schemes. I thank the Minister for his support, and I thank the DWP officials for their assistance in preparing the Bill and for helping me to present it to the House today.

As we move forward with the pensions dashboard, I am glad that we can also put in place the provisions that we will need to protect hard-working people and their savings. The Bill is intended to safeguard people’s pension savings, and I hope it will be able to progress with the support of the whole House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).