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Private Sector Pension Funds

Volume 789: debated on Thursday 8 March 2018

Question for Short Debate

Asked by

To ask Her Majesty’s Government what is their assessment of the condition of private sector pension funds.

My Lords, I apologise for my sore throat, which I assure your Lordships will improve with the lubrication of my speech. I declare a historical interest in the subject as the chairman for 20 years—it seemed to go in a flash and has just concluded—of the UK pension fund of a company called Thales, a very large, state-owned French defence and electronics group that is very active in this country.

I am very grateful to my noble friend Lady Stedman-Scott for stepping in at the last minute for my noble friend Lady Buscombe, who is unavoidably detained. I pay tribute to the contributions of my noble friend Lady Buscombe, particularly over this past year, which has been very busy for her. I hope she will be back at work very quickly. I also thank those noble Lords who are taking the trouble to listen to and participate in this debate, particularly my noble friend Lady Altmann, who probably knows more about pension funds than all of us put together. I understand from her that she intends not only to speak but to maintain her very impressive contribution to your Lordships’ Chamber in the future.

The timing of this debate is fortunate because the Third Reading of the Financial Guidance and Claims Bill—its final stage—is planned for consideration in the Commons on 12 March. This debate is very relevant, perhaps not only to informing what will happen in the other place but, in particular, because it has prompted a number of noble Lords to consider the issue.

My starting point is the Green Paper of February 2017, Security and Sustainability in Defined Benefit Pension Schemes. It seems like yesterday that it was published but it is getting on for just over a year. That has triggered a much wider debate on the whole pensions industry, which has been largely well informed and very timely. About £1.5 trillion is held in defined benefit schemes and the average pension provided is £7,000 per annum. There are about 6,000 defined benefit schemes, with, I estimate, well over 11 million members. As a result of very low interest rates for a great number of years, the liabilities of these schemes have been driven up because of the low rate of return on investments. Inevitably, for defined benefit schemes, the obligations increase automatically. Therefore, there have to be substantial deficit contributions. In January 2017, the aggregate deficit of DB schemes was, I believe, of the order of £200 billion—a staggering sum.

The Pension Protection Fund is there as a modest backstop for default but, as noble Lords can see, it has a very daunting task in protecting those schemes. PricewaterhouseCoopers—I declare an interest as a former partner— have warned recently that the deficit could rise significantly. I understand that the government White Paper is due shortly—this year—to give the Pensions Regulator more power to take over DB schemes at risk. This is a most urgent matter. We await the White Paper and hope that it will steady matters. We hope that the Government can give us, in due course, a better indication of timing, if that is possible and appropriate. We await the White Paper.

I turn to defined contribution schemes—that is, where the pension depends on what is invested by the company sponsors and, of course, the enrolled employees. Royal Mail closed its defined benefits scheme to new members in 2008. Apparently, the Communication Workers Union saw that the old scheme was unsustainable. I understand that Royal Mail awaits secondary legislation to introduce a collective defined contribution scheme where independent trustees decide investment policy. I look forward to a White Paper examining such a proposal, the exact role of the Pensions Regulator and the nature of the closure of future accruals.

Turning to other issues briefly—I do not expect an answer on these from the Minister today—the use of the consumer price index, rather than the retail price index, has been discussed in the industry for better protection for pensioners and pensions. That debate continues, and I hope there will be some conclusions on it. Secondly, I turn to cold calling, which came out of pension freedoms—people’s freedom to release their pension pots. The trustees should shoulder more responsibility in dealing with this. It is one thing to provide the freedom; it is another for sensible decisions to be taken.

Automatic enrolment is excellent. It began in 2012 at 2%—shared equally between the employer and the employee—for defined benefit pension schemes and for employees earning more than £10,000 a year. By 2019, I understand that this will have gone up to 8%: 4% each for the employer and the employee. I welcome this very much.

Another issue is the possible merger of the regulators. The Department for Work and Pensions sponsors the Pensions Regulator, and the Financial Conduct Authority, under the Treasury, controls financial advisers. I wonder whether it would be sensible at some stage—it is not urgent—for those two organisations to be merged together.

Finally, still more regulation is to be enacted. The Financial Guidance and Claims Bill, as your Lordships will know, is in the Commons. I believe that Report and Third Reading will be on 12 March, in just a few days’ time. That will create the pensions financial guidance and advisory body, which combines—as your Lordships will know—the Money Advice Service and the Pensions Advisory Service. I hope it will be open for business soon—certainly this year. If possible, some indication of timing in the Minister’s response would be extremely helpful.

Finally, my future wishes—I think I am allowed those in the remaining minute—include a pensions dashboard so that people can look online at an individual’s pension position and an effective ban on cold calling. I mean effective; I know some members of my own constituency have suffered from cold calling, so I have first-hand experience, although I no longer represent that constituency. Finally, I wish for extra powers for the Pensions Regulator. I look forward very much to my fellow Peers participating in the debate and to the Minister winding up.

My Lords, I congratulate my noble friend Lord Freeman on securing this debate on an issue that noble Lords probably know I am rather passionate about. I also welcome my noble friend Lady Stedman-Scott—it is a pleasure to see her here—and I send my best wishes to my noble friend Lady Buscombe, who is equally doing an excellent job for us.

Pensions in the UK have a specific characteristic. Our system has always been structured as one that offers an exceptionally low state pension. The recent OECD figures showed that the UK state pension, even with the new state pension, was the lowest for average earners in a developed world, with a replacement rate of just 29%. Within our country the system has relied on private pensions to top up what is a rather low state pension. In the EU, by contract, most countries have a much more generous state pension and have relied less on private pensions. So private pensions are crucial to the financial well-being of the UK population in retirement. Indeed, we have had a very successful defined benefits system and we now have the success of auto-enrolment.

Today, I will spend a few minutes, given that it is International Women’s Day, talking about pensions for women. Women have been—and in many ways still are—second-class citizens. There have been a number of studies and there are a number of ways one can express the disadvantages that women face in pensions. For example, Zurich Insurance looked at four years, from 2013 to 2016, and found that men were estimated to receive an annual average pension contribution from their employer of some £3,500 a year, compared with £2,500 a year for women. That suggested that women, on average over their lifetime, would have £47,000 less in employer contributions than an equivalent male. Prudential has published figures that show that, on average, 21% of women are saving nothing for their retirement, compared with just 9% of men. The Centre for Policy Studies looked at women aged 60 to 65, whose pension pots were less than half those of men. So there clearly is an issue.

Women are losing out for many reasons. Obviously there is the gender pay gap. We have made significant progress but typically women earn less than men. They also tend to work in industries with lower employer contributions than men’s, such as the health sector, social work and education, compared with more men in financial services, for example. This is also compounded by career breaks. So women have a triple whammy: smaller salaries, lower contributions and fewer years of working.

The Government are embarking on auto-enrolment to try to ensure that pension coverage is spread much more widely, and this has so far been a tremendous success. However, there are issues that still affect women. Auto-enrolment does not cover the lowest earners, who tend to be women. Even low-earners who are covered unfortunately are losing out in an issue that I feel needs far more attention across the country.

I hope that your Lordships might join us in highlighting this issue and that my noble friend the Minister might look into it on behalf of so many women—and indeed men—who currently earn less than £11,500 and are entitled to basic rate tax relief on their pension contributions of the equivalent to the 25% government bonus, but are being denied it without their knowledge, often because their employer has chosen a scheme that even the employer does not realise has this impact on them. If their pension operates what is called the relief at source administration system, these workers will get the 25% to which they are entitled, but if the pension provider chosen by their employer is administered under a net pay system, they cannot get that money. They have to pay their own pension tax relief. The taxpayer does not pay it, so they are forced to pay 25% more for their pension than they should.

This scandal has been going on for a long time and sadly the Government have failed to address it. I have tabled numerous Written Parliamentary Questions asking what the Government plan to do about it, but I have received no answer. I have asked who would be responsible for the losses that these women are facing, but I have received no answer. It seems that they are falling through the cracks.

At the moment, the answer that I typically receive is that it is not a lot of money, but we are about to quadruple contributions under auto-enrolment by next March, and the amount of money that these women, and low earners in general, are losing will keep rising as the number of people potentially affected keeps rising. The failure to take this issue seriously means an ongoing risk of undermining the success of auto-enrolment if there is a scandal about these people being denied the money and there being nobody to take responsibility for it. I urge the Minister at least to speak to the Treasury and ask whether a system could be put in place whereby at least the scheme could claim the tax relief on behalf of these people. It knows who they are because it knows their earnings.

Having said that, if we can sort out the problems, we want to focus on making auto-enrolment an even greater success than it currently is. I congratulate the Government on the pension freedoms that have been introduced and the new arrangements for pensions that have the potential to make the system even better than it currently is. I urge my noble friend to ensure that we get default guidance embedded in the system so that the Financial Guidance and Claims Bill will automatically direct people to get the free guidance guarantee which the Government rightly have set up specifically for them. I hope that we will get proper measures that will effectively, as my noble friend Lord Freeman said, ban cold-calling and the use of leads obtained from cold-calling. That is critical so that the companies that might try to use those leads face the risk of being put out of business.

Then, of course, I eagerly await, as, no doubt, do all of us in the Room, the White Paper that we are expecting by the summer, I believe—perhaps my noble friend could update us on progress—on the sustainability of defined benefit pension schemes. I hope that we will look seriously at increasing the regulator’s powers, consolidating pension schemes and merging them so that we can cut costs, and perhaps giving trustees more responsibility for assessing the strength of their employer covenant in a professional manner, perhaps bringing in outside expertise to assess the company. Such outside expertise could have warned trustees and the regulator about the problems looming at Carillion. A number of hedge fund analysts spotted them just by looking at the report and accounts, but they were not apparently something of which the trustees were aware.

My wish for the future is that we help the pensions industry live up to its responsibility to promote pensions and to explain to the public why pensions are so brilliant. It is free money. We want the pensions industry to stop continually calling for the Government to bring it more customers and for the Government to make those customers pay it more money. The pensions industry is getting enormous amounts of taxpayers’ money from the tax relief. It needs to start serving its customers, making the product attractive, explaining why somebody wants to buy a pension and making them more user-friendly by getting rid of the jargon. One of my pet hates is the jargon that says that every pension scheme must have something that people who do not want to choose their investments should use. What do they call that? A default fund. What is the last thing that most people would want to do with their money? Default. Yet that is what everybody is supposed to have. Why not call it “experts’ choice”, or “specially designed for you”? Get people engaged with pensions: have apps; gamification; and user-friendly and popular investment options that are environmentally and socially responsible. Those are all opportunities that we can take.

I congratulate my noble friend on the debate. I look forward to listening to the other noble Lords who will be speaking and to my noble friend’s response.

My Lords, with the leave of the Committee I will speak in the gap about two specific issues related to private sector pensions, both of which are fairly current and have raised their heads in the last few days. The first relates of course to the GKN/Melrose acquisition battle. I call it a battle because it looks, sounds and feels like one. The issue of those who work for, or have retired from, GKN is a live one. Just two days ago the chair of the Business, Energy and Industrial Strategy Committee in the other place wrote to the chief executive at Melrose Industries following the committee’s meeting with them, in which she set out a requirement to inform the committee of Melrose’s plans for applying for clearance from the regulator prior to acquiring the company. That was a result of the company itself having come under scrutiny from the Pensions Regulator, which asked whether it would apply for the voluntary clearance that is all that happens under the current powers of the regulator. The question that arises—given that this is about a principle, not just that specific matter—is, when will the Government be bringing forward the promises they made in their manifesto? To quote the Financial Times, the,

“party pledged to boost the Pension Regulator’s powers so it could veto deals which could harm pension scheme members”.

That is the question that arises in principle about mergers and acquisitions for the future.

The second point is very much about mergers and acquisitions in the Brexit context. Your Lordships may know that the European Union Committee produced a report last month, Brexit: Competition and State Aid. I am a member of the internal market sub-committee. In evidence we heard about the importance of European Commission Regulation 1/2003—that means that it was the first regulation undertaken in 2003—in which the UK is able to co-operate with competition authorities, other member states and the Commission when mergers and acquisitions are being contemplated. The regulation allows co-operation on detecting anticompetitive conduct; sharing confidential information; facilitating cross-border access to evidence; avoiding dual notification of mergers; alignment of national leniency programmes; and mutual recognition of enforcement remedies and court rulings. The committee was further told in evidence that,

“without these information flows, ‘the quality of UK enforcement would very likely deteriorate’, and that information-gathering and monitoring activities would place a significant additional burden on … sector regulators”.

As we know, many acquisitions and mergers do not wholly relate just to companies inside the UK, but also within the European Union. The issue is whether the Government are minded—and how they are minded—to put the free flow of information for regulators very much on the agenda in the negotiations that are taking place, so that whenever there is a potential threat to pension scheme members there is protection and information available in the way that it is now.

My Lords, I start by thanking the noble Lord, Lord Freeman, for facilitating this debate about the condition of private sector pension funds. It is good to see the noble Baroness, Lady Stedman-Scott, in her place; I detect that she is getting some enthusiasm for this role. It is surprising that this important and topical issue has not attracted more engagement; perhaps these are early signs of fatigue induced by Brexit.

In preparing for this debate, it has been assumed that the focus would be largely on the health of DB schemes, notwithstanding that the world of pensions is moving inexorably from DB to DC. Indeed, in evidence to a recent Work and Pensions Select Committee, one of the witnesses, a pensions lawyer, bemoaned the fact that young people coming through her business are likely to be experts in advising when a scheme is to be wound up, closed down or closed to future accrual, but claimed that no one of her generation knows how to set one up. That is possibly an exaggeration but it is perhaps a sign of the times. However, we should not write such schemes off, and I shall come to that in a moment. Before I do, I shall just range over the broader pensions canvas to illustrate its complexity and what is changing beneath our feet; the noble Baroness, Lady Altmann, has been involved in much of this.

Many recent pension policy changes, for both state and private pensions, have their origins in the recommendations of the Pensions Commission. These include: increasing the state pension age; simplification and restriction of pensions tax and tax relief; the new state pension; and, of course, auto-enrolment, the latter coming with mandatory employer and employee contributions; and the basic state pension coming with the triple lock. Along the way are further reforms to public sector pensions.

More recently, we have seen the demise of the default retirement age; abolition of the obligation to annuitise; the introduction of so-called pensions freedoms; and, notwithstanding the launch of Pension Wise, the rise in pension scams—but, thankfully, not a secondary annuity market, or not yet. We are on the cusp of a further exercise to embed the recommendations of the 2017 auto-enrolment review as we enter the era of increased employer and employee contributions and, along the way, the pensions dashboard. I very much join and have common cause with the noble Baroness, Lady Altmann, on the tax issues that she raises. It has been an anomaly outstanding for far too long and should be fixed.

Many of these changes have fuelled the rise of DC schemes. So, among all these changes, how have private sector DB schemes fared, and what is their future? We have the benefit of the recent Green Paper, referred to by several noble Lords, and insights into the Government’s thinking. There are around 11 million members of DB schemes, more than 50% down on the position 10 years ago. Most schemes are only small; only 4% have more than 10,000 members and these hold over 60% of the assets and around 70% of the members. Around £1.5 trillion is held under management.

From the 2017 Purple Book we learn that the proportion of schemes open to new members has fallen slightly in 2017 to 12%, although the decline since 2012 is slowing. The proportion of schemes closed to both new members and future accrual rose by some 4% in the period to 35%, while 21% of members were in open schemes and 55% in schemes that are closed to new members but open to new accrual. The number of active members has been declining over the past decade, and the total membership comprises 47% who are deferred, 40% who are pensioners and 12% who are active. Although continuing to be volatile on a full buyout basis, the aggregate deficit of such schemes fell to £736 billion and funding levels improved to 68%. However, as the noble Lord, Lord Freeman, mentioned, PWC Skyval, which sounds a bit like a Bond movie—I guess I must also declare an interest as a former partner of what was then just PW—points out the limitations of using the buyout basis for much, and prefers a gilts-plus method, which it says is widely used by actuaries. On this basis, it says that aggregate deficits rose by £40 billion to £450 billion at the end of November.

So although there is a clear direction of travel, the sector continues to provide secure retirement income to millions of people. We suggest that this is not the time to write off private sector DB schemes, notwithstanding that, as the Purple Book records, many members of DB schemes are choosing to transfer out for a variety of reasons, including a hitherto buoyant stock market. We should recognise that the switch to DC schemes is likely to accelerate under the 2015 pension freedoms and as schemes continue to de-risk, not only by closing to new accrual but by diversifying investments—moving away from equities towards bonds.

The Green Paper asserts that DWP modelling considers that scheme deficits are likely to shrink for the majority of schemes if promised levels of employer contribution are sustained. Smaller deficits have led to shortened recovery periods; the mean recovery period length is seven and a half years, although the spread is from 12.5 years to those schemes in surplus. We should not overlook that some 1,000 schemes are in surplus.

Some have suggested, particularly given the antics we have seem from some high-profile individuals and their corporate manoeuvring—the noble Lord, Lord German, touched on this—that there is a fundamental problem with the regulatory and legislative framework for DB schemes. The Green Paper concludes that, while not optimal, there are no major structural problems with the framework. It asserts that available evidence does not appear to support the view that DB schemes are generally unaffordable for employers. In this regard, we note the manifesto commitment of the Conservative Party to introduce punitive fines alongside a TPR contribution notice, and to make certain corporate transactions subject to mandatory clearance. That would help the noble Lord, Lord German. I am not sure whether that should be done by the regulator. We would support this approach, but perhaps the Minister will confirm that this is still the Government’s position. Could she put some flesh on the bones of the type of transactions the Government have in mind? Indeed, when will we see the White Paper that will spell this out? I think we were promised it in the spring, although I think spring has sprung.

My noble friend Lady Drake, when giving evidence to a recent Work and Pensions Select Committee, suggested improvements to the regime that included strengthening the duty and requirements on the sponsoring employer to consult and inform trustees, which is important where there is a sponsoring employer who does not want to engage. She further suggested a tougher regime on recovery plans, as well as the need for the regulator to be more proactive and focused on the use of information, albeit recognising that this has resource implications. How do the Government respond to these suggestions and are they satisfied with the level of resources available to the regulator?

The issue of corporate dividends has of course featured in recent cases and the potential conflicts between properly funding the pension scheme and supporting the share price of an enterprise on which executive bonuses may well be based. How do the Government consider the regime can be improved to prevent the deliberate enrichment of shareholders at the expense of the pension scheme? We were told recently by the Minister’s colleague that the regulator does not have the power to stop businesses paying bonuses to executives or dividends to shareholders. Could the Minister say what the alternative mechanisms are that can be used to substitute for the lack of such powers?

We should acknowledge the important role of the Pension Protection Fund in helping to sustain confidence in DB schemes. Given that its payments are met from levies on other DB schemes, it is doubly important that others are not allowed to escape their obligations by dumping schemes into the PPF. This is notwithstanding that the PPF has developed a robust business model that has enabled it to take on major schemes as well as a stream of smaller ones. We are told that 43 schemes entered PPF assessment last year—a declining number—with 130,000 members in receipt of compensation. This has been a major success and important in helping to sustain the DB sector.

In considering whether the existing regulatory arrangement is appropriate, it should be borne in mind that it is a scheme-by-scheme approach and its effectiveness depends on the strength of the employer covenant in each case. As has been said, there are a number of large schemes but also many smaller schemes, often covering older, industrialised, sometimes family-owned, businesses. Smaller schemes may struggle to obtain benefits of scale for their investment strategy and, in terms of governance, to readily attract independent and member-nominated trustees. The possibility of consolidating smaller schemes has been raised, although one can see that this would bring considerable challenges. How might this be helped?

Private DB schemes continue to make a significant contribution to the UK savings market and to help alleviate poverty in retirement. But there is a growing move away from them towards DC arrangements, particularly from the success of auto-enrolment. This changing environment requires alternative approaches to regulation but does not negate the need to strengthen the DB regime. We look forward to the White Paper and follow-up legislation in due course. As others have noted, the Financial Guidance and Claims Bill now wending its way through the Commons should provide some key and necessary safeguards to help members of DC schemes, or of DB schemes switching to the DC market, build better protections. It is right that we proceed on both fronts.

My Lords, I thank my noble friend Lord Freeman for tabling this Question for Short Debate on the assessment of the condition of private sector pension funds. I also thank the noble Lord, Lord McKenzie, for his comment about my enthusiasm for this subject. I got enthusiastic when I started to take interest in my own pension scheme, so I must declare an interest in that I have a pension. I will also give your Lordships’ best wishes to my noble friend Lady Buscombe.

The nature of retirement has changed dramatically over the past decade. People are living longer and working more flexibly. It is important that government encourages and supports people to save for their retirement, to provide security later in life. As a result of recent reforms, millions of people look forward to a more secure retirement. We are continuing to improve the pension foundation for all pensioners, through a fair and sustainable state pension system. To achieve greater security, choice and dignity, we have introduced the new state pension. We continue to provide benefits such as winter fuel payments and have given those not eligible for the new state pension the opportunity to increase their state pension through a top-up.

We have already taken a number of important steps to strengthen the private pensions landscape: more than 9 million people are now automatically enrolled into an occupational pension scheme, and we have given people aged over 55 greater choice in how to access their private pension pots, which noble Lords have referred to. The new single financial guidance body will provide savers with more information and guidance on their retirement options.

We all know what a great success automatic enrolment has been in reversing the long-term decline in pension saving, and 2018 is a particularly important year, with the beginning of work to take forward and build support for the proposals we set out in our review of automatic enrolment, Maintaining the Momentum, published in December last year. This work highlighted some remarkable progress since 2012 in workplace pensions coverage. The workplace pension participation rate for women is now equal to that of men among eligible employees in the private sector, with around three-quarters of men and women participating in workplace pensions. Total annual contributions into workplace pensions were at a 10-year high of £87 billion in 2016. Automatic enrolment is normalising pension saving.

We will keep this movement going with two planned increases in contribution levels for automatic enrolment, in April this year and April 2019, at which point people who have been automatically enrolled will be saving 8% of their qualifying earnings. As a result, by 2019-20 we expect that an additional £20 billion will go into workplace pensions annually.

The increased number of people saving through automatic enrolment has led to a considerable expansion in the master trust market, from around 200,000 in 2010 to around 9.2 million by January 2018, with the majority of employers choosing to use a master trust pension scheme rather than setting up their own pension scheme. We will ensure that members of master trust schemes are provided with similar protections for their savings to members of other pension schemes through the authorisation and supervision regime set out in the Pension Schemes Act 2017.

Defined benefit pension schemes provide an important source of income in the retirement plans of millions of people. In the private sector alone, nearly 10.5 million members rely on such schemes with around £1.5 trillion of assets under management. They help to fuel the UK economy through investment in UK government bonds, corporate bonds and equities. News of increased deficits combined with a number of recent high-profile cases have led some commentators to declare that there is a fundamental problem with the funding and regulation of these schemes. While it is true that the defined benefit pensions landscape is evolving, as these schemes continue to close and be replaced by other forms of provision, it is not the case that fundamental change to the underlying legislation and regulation is needed. There are indeed new challenges for trustees and employers, but the Government are committed to improving the powers of the Pensions Regulator so that the defined benefit system continues to work in the best interests of those involved; that is, for members and pensioners, for today’s workforce, and for employers.

The noble Lord, Lord McKenzie, asked about the private sector defined benefit scheme and its future. The Government’s position on defined benefit pensions is clear: where employers can, they must continue to meet their responsibilities. The noble Lord, Lord German, asked whether the Government would meet their commitment to boost the Pensions Regulator’s powers. The Government’s manifesto further signalled our commitment to protect private pensions and indicated a number of areas in which they will bring forward, or will consider bringing forward new powers for the Pensions Regulator. In our upcoming defined benefit pension schemes White Paper, to be delivered in the spring—I know that the noble Lord, Lord McKenzie, said that spring has sprung; I am a little behind him on that, but we live in hope—we will explore the Government’s manifesto commitment to take action to prevent and punish those whose deliberate actions put pension schemes at risk. The White Paper will also set out the steps being taken to deliver new measures and build on existing measures to strengthen the regulator’s anti-avoidance framework and information-gathering powers.

There is a well-established legislative framework that provides protection for members. The Pension Protection Fund was set up by the Government to pay compensation to members of defined benefit schemes where the sponsoring employer is insolvent and the scheme’s funding level is not sufficient to secure pensions at least equal to the level of compensation that the Pension Protection Fund would pay. It is also important to note that the Government are acting in a joined-up way to ensure that all parts of the business, legal and governance framework are considered.

I shall now answer some of the questions that noble Lords have raised, and within the timeframe I have, I shall do my best to go through them. The noble Lord, Lord Freeman, talked about the Green Paper. I should say that the Green Paper has considered the powers of the Pensions Regulator and has encouraged a debate on striking the right balance between the needs and aspirations of sponsoring employers and members. As I have said, the Pension Protection Fund operates in the wider economy to ensure that no one in any group is unfairly disadvantaged. I think I have covered the publication of the White Paper. However, I have to say that the pensions dashboard mentioned by the noble Lord, Lord Freeman, sounds like a good idea. I should be most grateful if the noble Lord could write to help me understand it.

My noble friends Lady Altmann and Lord Freeman both talked about a cold call ban. We are committed to introducing a pensions cold calling ban as swiftly as possible. We tabled an amendment to the Financial Guidance and Claims Bill to enable us to make regulations to implement the ban. If we have not made these regulations by June, we will publish a statement explaining why and outline a timetable for delivering it.

My noble friend Lord Freeman mentioned CPI and RPI. In the Green Paper we discuss schemes that still use RPI and will set out our position in the White Paper.

My noble friend asked about Royal Mail and the CDC scheme. Royal Mail will close its defined benefit pension scheme and open a defined contribution scheme from 1 April this year. It is working hard with the Communication Workers Union to develop a collective defined contribution scheme, which both parties believe will better meet their needs. This is expected to replace the defined contribution scheme when and if the Government make the necessary changes to the legislation. We expect details of Royal Mail’s proposals imminently. Ahead of that, it is too early to say exactly how the Government will respond. It is also not possible to be more specific about the timetable.

My noble friend also asked about the timing for the introduction of the single financial guidance body. After Royal Assent, we will need time to get the body up to speed, so it will not be before the autumn of this year.

I thank my noble friend Lady Altmann for her contribution to this debate. In the Chamber the other day I mentioned that around the House there are giants on certain subjects. That met with an interesting response but I consider her a giant in the pensions field. I am pleased to have her here today and I hope to learn much from her. I shall be very happy to meet her along with officials, who I am sure will set up that meeting.

On the issue relating to women that my noble friend raised, automatic enrolment was designed specifically to help groups who historically have been less likely to save, such as women and low earners. The workplace pension participation rate of women is now equal to that of men among eligible employees, with, as I said, 73% of women now participating. In the words of, I think, the good man General William Booth, “That and better will do”.

My noble friend Lady Altmann asked what independent trustees can bring to the role. A professional independent trustee can help to ensure that the scheme is run professionally and avoids some of the governance and financial risks inherent in a less experienced and less professional approach. My noble friend spoke about the promotion of pensions and “free money”, which we do not hear about too often. The Government agree that pensions are a fantastic product, which is why noble Lords will have seen posters and TV commercials promoting automatic enrolment.

My noble friend also asked what the Government are doing about default guidance. The Government tabled further amendments on this on Monday. These will be debated in the Commons next Monday, when the Financial Guidance and Claims Bill reaches its Report stage.

The final point that I will make in the time allowed is about GKN and Melrose, raised by the noble Lord, Lord German. It would not be appropriate for Ministers to comment on individual cases. They are a matter for the independent regulator, and therefore we cannot discuss the specifics of this case. The regulator operates a statutory clearance procedure to provide greater certainty for those who are considering transactions involving companies with defined benefit schemes. If clearance is not applied for and granted, the regulator may exercise its powers up to six years after a transaction has taken place if it considers that the transaction was aimed at avoiding a debt for the pension scheme.

I have tried to answer as many of your Lordships’ questions as possible. If, on reading Hansard and talking to the officials, I find that I have missed any, I will ensure that all noble Lords are written to. I end by thanking everybody for their preparation for and contributions to this debate on a most important subject.

Sitting suspended.