Mark Garnier MP: speeches

269 published records · newest first.

Speeches

2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q That is interesting; I will go and have a think about that one. Both of you manage annuity funds. For the record, I have had a chance to meet representatives of your organisations and have had long discussions about this. One of the interesting points that has come out of conversations with many people and organisations in your position is that, while the thrust of the opportunity of this Bill is to bring together pensions and make them more efficient, and another is to be able to unlock opportunity to invest into the UK and into various opportunities, yet there are some rules that are not being addressed. As one of your colleagues mentioned to me, Dale, an annuity fund is not allowed to invest into equities, yet investing into something like a wind farm would be an ideal opportunity to get a predictable return. Do you think the Bill is missing out on some of these measures that could be updated? Dale Critchley: I do not think it necessarily needs any change incorporating into the Bill. It is a matter for the Prudential Regulation Authority to allow us to make the investments that back our annuities. We would be quite happy to take that up afterwards, but I think that could be achieved through a change to PRA rules rather than incorporation into the Bill.
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q Also, similarly on the equity point: with defined benefit pension schemes, as I mentioned a bit earlier, if you have a deficit, that then appears on the balance sheet. The behavioural outcome of that is that if you are a trustee or from the host company, you would want to avoid the risk—rather like with the BT pension fund, which I think is £7 billion in deficit, and which now restricts the ability of BT to raise money. The behavioural outcome is that you do not invest into something that has high volatility but long term growth, i.e. the equity market. The 1987 stock market crash was hideous at the time—I am probably the only one present who remembers that—but the long-term growth over the equity market proved that was just a mere blip. However, at that time a company would have had a deficit on its balance sheet. Should we change those rules about the deficits on the balance sheet in order to allow pension funds to invest into equity, which is really what we want to get out of this?
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q Ironically, I met some annuity providers who are enthusiastic to invest in equities, but they told me that they are being prevented from doing so. For example, an investment in the equity of a wind farm is a very good asset, because there are predictable returns from it, contracts for difference in the price, and all the rest of it, but they are not allowed to invest in that because they are not allowed to invest into equities. Do you think there are better ways the Government can achieve its aims—that mandation is a bad way of achieving it, but that there are other, better ways that are being missed out in the Bill? Rob Yuille: Yes, there are better ways. The specific point that you mentioned about prudential regulation rules are not for this Bill, but other measures that could be taken, essentially to make the UK an attractive place to invest, are the kind of things that the Government are trying to do. Along with the Mansion House accord, which we were delighted to take forward with Pensions UK and the City of London Corporation, we agree with the Government’s assessment that use of the reserve power should not be necessary and will not be necessary. Firms are already investing in the UK. The Pensions Policy Institute’s latest statistics show that 23% of DC assets are in the UK, and annuity providers say that it is around two thirds, so we are talking about hundreds of billions of pounds in the UK. There is the appetite to invest in the home market, because they know it best, in the kind of projects that the Government are trying to drive forward and provide policy certainty about. We share the concern about the precedent it sets and the potential impact on scheme members, and we would propose another guardrail. There is already provision for a review, were this power to be used, of the impact on scheme members, which is right, and the impact on the economy, which is also fair enough, but they should also look at the impact on the pensions market and the market for the assets that would be mandated, because there is a risk that it would bid up prices in those assets, and that it would create a bubble in them. There are guardrails, but more important, there are other measures, including things that the Government are already doing, that make this power unnecessary.
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q You just triggered another question. Charlotte, can I quickly ask you about the retail distribution review? The retail distribution review came into effect on 1 January 2013. One of the criticisms at the time was that moving from a commission-based model, where IFAs were paid by commission, to being paid by cash, reduced the number of people seeking financial advice from something in the region of more than 50% to something in the region of 9%. RDR, although a very well-intentioned change brought by the FCA, has had the unintended consequence of making it more difficult for people who need that advice to get it from an IFA. Have you guys had a think about that within the FCA? Charlotte Clark: It is not in this Bill, but there is a very large work programme going on at the moment around the advice guidance boundary review. As Patrick said, as pensions have changed—there have been big changes in the market over the last 10 years or so—more and more people have come to need support, particularly at the point of retirement, but also in thinking about how you build assets in pensions and more generally. All the targeted support work we are doing is about how you help people more to make these difficult decisions. This Bill is very much about, “How do you get the market right?” but at the same time, we want to make sure that savers have the right support to make the right decisions at the point of retirement or before.
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Or, indeed, when they first start to work. As somebody once said, compound interest is the eighth wonder of the world.
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q Thank you very much for coming to give evidence. It can be a little intimidating, even for us, to see so many Government Back Benchers sitting across the table. I will start with the most controversial point: the mandation of local government pension schemes when it comes to amalgamation and being forced to go into assets. There are two parts to my question. First, is it fundamentally right to entrust trustees with looking after the interests of the members of pension schemes and then, separately, to tell them how they should be investing that money? Secondly, are there any guardrails to protect pension fund members from being forced to invest in unwise investments? Zoe Alexander: We are concerned about the precedent set by the reserve power in the Bill. We realise that it might not be used, and we hope that that will be the case. We hope that the work the industry has done to create the Mansion House accord and get DC schemes on track to invest more in the UK will fulfil its promise. The presence of the power creates a series of risks, and certainly enacting it would create a series of risks for savers in terms of its impact on investments, on price and, ultimately, on the value that is accrued to savers in the market. We are looking for more guardrails on the power. We would like it to be constrained to apply specifically to the commitments in the Mansion House accord, and no more than that. We think that is appropriate, because the market and the Government have together set out what “good” looks like. If we agree on that, let us put that in the Bill and make it clear that that is the extent of the power. We would also like the sunset clause on the power to be brought forward from 2035 to 2032. That would give more than enough time for the industry to deliver on the commitments in the Mansion House accord, and for the Government to assess progress and whether the power is required. We feel that keeping it on the statute book until 2035 would introduce undue political risk.
2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source
More
Q I have one final question. The key point, from the point of view of your members and the local government pension scheme, is that the interest of the members should not be trumped by the interest of the wider economy—their interest comes first. Is that right? Zoe Alexander: That is right, but often those things are consistent, and our members would agree with that. Those things are not inconsistent. Rob Yuille: I agree.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q I must ask a question that is perhaps a self beat-up, if you like. There was a disastrous mini-Budget a few years ago under a different Prime Minister—of course, at the time, we got rid of our bad leaders. Did you stress test a scenario such as that? Michelle Osterma n n: Not here in the UK, but as you can tell by my accent, I am not a local. I worked in Canada for most of my career, at two of the largest Canadian “Maple Eight” pension plans, and those are things that we would assess quite regularly. In fact, the open DB schemes here in the UK function very similarly to those in Canada. I joined the PPF in large part because it is a mini-version of the Canadian model. It is exceptionally similar, to me. You will notice that during the liquidity crisis that occurred it was the liability-driven investment strategies, with the degree of leverage, that were most at risk, and it was interest rate-sensitive. Those open DB schemes that were using a more balanced degree of risk, including some equity risk, were unencumbered. It was Railpen, which I worked for when I was here previously. I was phoning back to my peers both there and at the universities superannuation scheme and PPF, and they all withstood that very well.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Chris, following on from the points about derisking and all the rest of it, we heard from Phoenix a little earlier about the value for money framework. Everybody seems to agree that the framework is a good thing because it is going to drive better performance and all the rest of it, with one exception, expressed by Phoenix: the consequences of an intermediate rating. It is one of those difficult things where you seek mediocrity rather than going for good performance. Do you think that is a valid criticism of that particular part of an otherwise welcome part of the Bill? Chris Curry: First, I agree that we have seen lots of positive response to the value for money framework. Looking across international examples—Australia, in particular—it seems as if it will be very welcome in trying to ensure that, as part of the consolidation and what is potentially coming with the next Pensions Commission, with more investment going into UK pensions, that investment is going into a place that is actually going to work on behalf of the members who are investing their money. That is really important in what we are doing. I would also echo some of the views we heard earlier that it is really important in moving away from just a cost-based analysis of pensions and into value, and in looking at the whole range of different factors that are going to determine whether you get a good outcome rather than just at how much the investment costs. There are challenges. What we have seen in particular, which Tim mentioned earlier and echoes what we have seen in Australia, is that where you have a very hard measure over a relatively short period of time, that will affect investment behaviour. Because there is such a penalty for falling behind over a short space of time, you do everything you can to avoid falling behind, and there is fairly conclusive evidence that that has led to herding of investments in Australia. That is not to say that a framework, or even an intermediate marker, necessarily has to lead to that; I think that depends on the parameters you set and whether you are looking at the returns over one year, three years or five years, and how that works. Ideally, recognising that pensions are a long-term investment, you would not want to be looking too much at what happens over a short period of time in investment markets; you would want to be looking over a much longer period and at how the underlying strategy is performing. That is always very difficult, and one of the challenges is trying to get the balance right between what you can measure objectively and what you can measure subjectively. Where you are looking at things like an intermediate report, you tend to be looking at something that is objective, and it is quite difficult to do that over a long period of time. There is always a balance to be struck as part of this, and it would be good to investigate that more as we get further through this process, to work out the best way of doing it in order to achieve the best outcome for members.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q I completely agree: I think it is absolutely right that the more money you have, the more negotiating power you have and the more you can diversify risk and all the rest of it. But part of what I am worried about is this: how is anybody going to prove to the regulator that they will have £25 billion of assets under management by 2035? Surely that is an incredibly difficult thing to prove. Patrick Heath-Lay: I do not want to be flippant in my response, but our scale already means that we are over that limit, so I have not really put too much thought into how they will do it. I believe that there is enough, within the business plans of entities that might be affected, to be able to make some reasonable assumptions as to what ongoing contributions will be coming through the door and how they will respond to some of the opportunities that may arise in this market over the next few years, from organisations that are choosing to move because of the extent of change that is coming. I emphasise that I still think that the package of measures and that scale test is the right thing to instil that movement, because I think savers will be better off, provided that it is harnessed in the right way. That is why I come back to this: value for money is the proof point, and we need to make sure that we centre on that as an industry. Being able to evaluate how these changes have created a more competitive market in key areas going forward is really quite important.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q There was an interesting intervention yesterday from the Reform party about local government pensions. I know that is not necessarily part of what we are talking about now, but they made the point that 50 basis points is way too much to charge for assets under management and that it should be 10 basis points instead. You raise exactly that point, which is that it is not about how much you are being charged, but about a combination of that and the performance and how much you are growing. I am 100% behind that particular point, because it makes a huge amount of sense, but one of the things that slightly bothers me is about the metric data. It looked at the quality of service provided to members, which is a nice thing to have—it is about whether you are looked after properly—but it is a marketing type of thing. Slightly more important are the investment performance and the cost, and also the asset classes that the scheme or arrangement invests in. Where I begin to get slightly confused is that it then switches to member satisfaction surveys. I am curious as to what the member is. You raised the very good point that the customer is the business, but that is not the same as the member. Who is being asked whether they are investing in the right assets? That is quite a technical question by the time you start looking all of this. Can you see that there are anomalies and Gordian knots within this? Tim Fassam: There is certainly a lot of detail to be worked through. That will include understanding the impact of all these factors. For example, investment return will be an incredibly important part of the value-for-money framework. It is very hard to do forward-looking investment return analysis, but if you do backward-looking, you cement the best of what we have today. The premise of the Bill is that we want to see a different investment pattern going forward. It will be very hard to, say, model a higher allocation to private markets in a forward-looking metric unless we have some creative thinking. Getting those investment metrics right is absolutely critical. Service does matter to customers in terms of how easy it is to deal with and how much support they are getting to make good investment decisions. That will have a significant impact. When you combine it with things like the potential for targeted support, that could make a very significant difference in terms of the outcomes that the consumers get. We always think of the end customer being the individual. We have a close and important working relationship with the employer, and they are often working with employee benefit consultants to choose their scheme, but the most important stakeholder in all of this is the end user. We want them to get the best possible result to help them prepare for retirement.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q One of the questions around that is what drives a removal. We heard from previous witnesses that if a host employer puts in more money than is necessary, it seems perfectly reasonable for them to get some of that back. In some cases, that money could be used for investment in plant and machinery to expand the employer, but at the other end of the scale it could be used for share buy-backs to enhance the share price of the employer. Do you think it matters what happens to the money that is being withdrawn from these pension schemes, or should that be up to the host company? Morten Nilsson: I see it pretty much as you described. The main duty of the sponsors and the trustees is to ensure that there is enough money in the scheme to pay the benefits that were promised to members. If there are excess funds, it is reasonable that they can be invested back into the economy. In May, we surveyed 100 finance directors who are responsible for schemes with over £500 million of assets: 93% of them said that they would want to access the surplus, 49% said they would reinvest it in their local business, in the UK, to create jobs and do other good things, 44% said they would consider sharing it with members, 42% said they would invest it in their global operations, 40% said they would pay it back to shareholders, and 33% would invest it in DC. That is quite a wide range of uses. I think some of it will be paid back to shareholders, which may be local or abroad, but I expect a lot of it would be invested back into the UK economy in one way or another.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
If I remember rightly, the Bill allows for the detail to come in afterwards, so we will have a bit of work to do when this is all over. Thank you very much.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Do they know that they can do that? Somebody who is changing jobs quite a lot would not necessarily be the sort of person who is making strategic decisions about their retirement. Ian Cornelius: I think that is right. It probably goes back to dashboards. They are key to helping to increase visibility. That will get people thinking about the choices they can make, how they want to manage their pension and how they can consolidate their pensions. That will drive that type of activity naturally. At NEST, we have always had one pot per member to make it as easy as possible for our members. Ultimately, it is about member choice.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q So if this clause is passed, we could potentially see a drop-off in the performance of pension funds? Helen Forrest Hall: I am not sure that we would draw a direct correlation, but the point is that it will start to influence investment decisions. Those may be good decisions, or not, and they may be decisions that trustees would have made anyway; the challenge is that the reserve power exists, a good trustee and their legal advisers will be taking account of that at the moment. Sophia Singleton: We believe that the threat—just the threat—of this power is the worst of all worlds, in a sense, because the lack of clarity about what trustees should do and take into account when investing for the long term makes it very difficult for them to carry out their fiduciary duties.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q So the key point is that every single investment must be done on a benefit analysis rather than a social good analysis? Councillor Phillips: If you do not do that, I do not know where you are going with your pension investment.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q A previous witness, Michelle Ostermann, made two really interesting related points. One is that, having derisked the UK pensions industry, there is not the appetite to make some of these investments. The second is that other countries are much better at leveraging their pensions industries in order to promote economic growth. Is that something you have looked at, William? William Wright: Certainly on the derisking side, while we are blessed to have the second or third largest pool of pensions assets in the world, the structure of our pensions system—the fact that so many DB schemes have closed or are running off—means that the overall risk appetite simply is not there. There is a danger in this debate of comparing the outcomes that we see in different types of pension fund systems around the world and thinking, “We like the look of that. Can we have a bit of that, please?” I am simplifying here, but we tend not to be too keen on looking at the inputs and the decisions, often taken 20, 30 or 40 years ago in different markets around the world, that have helped to lead to the development of those systems as they are today. The Canadian public sector defined-benefit model did not happen overnight. Michelle knows the history of it better than I do, but it goes well back into the 1980s. That is why so many of the aspects of the Bill should be welcomed. They look at the fundamental drivers of what will help to define pension fund outcomes for members and the structure of our system in 10, 20 or 30 years’ time. On how other systems think about pension systems in relation to growth and economic wellbeing in their domestic markets, one of the things that we found particularly striking is that when you compare DC pensions in the UK with DC systems in other countries, or public sector DB in the UK with public sector DB in other countries, there tends to be, for DC pensions in other countries, a higher domestic bias. There tends to be more investment, whichever way you look at it, in their domestic equity market than we see from UK DC pensions in the UK equity market. You also see, almost universally, higher levels of investment in private markets. So much of that comes back to scale. Scale is a threshold—it is not enough on its own—and then there is the sophistication, governance and skillset that needs to be built over many years on top of that.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Minister, thank you for coming to give evidence—we have a long few weeks together. I will start with the evidence we heard from the Deprived Pensioners Association and the Pensions Action Group. I was rather surprised to hear that a fund that had been put aside, worth £14 billion, has now been taken into the Government’s balance sheet, when in fact that money is there to pay for the exact issues that were raised by those two witnesses. However, we suddenly find that the money is being used to fill in a £50 billion black hole—discuss. Torsten Bell: No, obviously. The change that you are referring to is a 2019 change under the last Government. It was taken not by the last Government but by the Office for National Statistics, and it refers not just to the PPF but to funded public sector pension schemes. The same issues apply to the LGPS in the same way. It is a 2019 change made by the statistics body following international guidance on accounting. The changes you are talking about have affected public sector borrowing since then.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
And you war game it? Michelle Osterma n n: Yes. The biggest variable that we have a hard time predicting in those scenarios is the likelihood of this being used and the manner in which it is used, but we test deep into the tail. We try several scenarios that give us a high probability of it being abused or overused, and the opposite, and we have come out with pretty strong confidence. As it is defined today, we feel comfortable.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Yes, but there is a serious issue here, which is that you are now the Minister for Pensions and in a position to be able to do something about this. We can look back on the last 14 years and have that conversation—let us get that out of the way—but here is your opportunity to resolve this problem. Torsten Bell: In stark contrast to lots of my predecessors, I have to say, I have spent a lot of time meeting members of both the PPF and the FAS who have been affected by the issue of pre-1997 accruals. If I am honest, the issue has been a real one since then, but it is a significantly bigger one because of the recent phase of high inflation, which made the pace of inflation eating into the real value of those pensions significantly faster. As I said on Second Reading—this was raised then by a number of colleagues on the Committee—we are considering the issue, but it needs to be considered in the round because of the wider public finance implications. That applies to other issues in this space as well; you will have seen that in other pension schemes where the Government have a role.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Helen, can I pick up on your comment that you have to make long-term decisions? These reserve powers have a sunset clause that will apply in 2035. Presumably, if you are making an investment decision, you have to take that into account. An investment decision could be expected to pay out in 2040, and in making that decision you would have to take into account the possibility, remote though it may be, that your investment objectives may be forced to change between now and 2035. How will that affect the performance of a fund, even if the power is never used? Helen Forrest Hall: That is the problem with a reserve power. It does not have to be used to influence the decisions that trustees are making about their investment strategies, because they have to consider the instances—and there is not an awful lot of clarity in the Bill about what those instances would be—in which this power might be used. They might suddenly find their long-term, well-considered investment strategy outwith Government legislation. That is a dangerous place to be. Pension schemes, quite rightly, are doing their job when they are thinking about their members and their beneficiaries, and making long-term investment decisions. They have the capacity and the joy of being able to do so, but that means that they have to think about those kind of time horizons. That means that a reserve power with a sunset clause with that kind of short-term time horizon will start impacting decisions that people are making at the moment.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
But you would rather see the opportunities first? Sophia Singleton: Absolutely—we would love to see the opportunities first. Helen Forrest Hall: The other dynamic there is that international pension funds, for example, are often looking to invest in the UK for reasons different from the reasons UK pension funds might want to invest. For them, it is often a smaller part of their portfolio, and part of their own need to diversify where their assets are, in order to manage their own volatility risks. There has been a history of going after the same investments, and unfortunately that is the market and that is healthy competition. One of the challenges and one of the market distortions we see with things such as the reserve power is that you will have the same group of people fighting over what, for a short period of time, is inevitably going to be a short pipeline. That will have an impact on things such as the value for money that you are getting for those investments.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q Do you think there is a risk that mandation could come in on the LGPS by subtle, behavioural outcomes rather than necessarily through directive outcomes? Rachel Elwell: I can understand why the Government would want to have a backstop power to direct pools, because the LGPS is significant—it is one of the top 10 globally by size. It has an impact on council tax, and on the economy more generally. If you have a pool that is not delivering and all the other mechanisms available to their stakeholders have failed, I can understand why that power would exist. But it is important that we clear the scenarios in which it is envisaged that it might be used.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q On this derisking thing, a number of investment managers over the years have pointed out to me that the rules were brought in as a result of Maxwell absconding and taking a lot of money out of his pension fund. Deficits are now placed on to the balance sheet of the host company, which means that the inclination of those companies is to prefer those pension funds to be invested in less volatile assets, not equity markets, where you can have a stock market crash one day as a minor correction in a long-term growth market. Do you think that is the kind of thing that Michelle was referring to in talking about derisking, where legislation that was well-intentioned at the time has had perverse outcomes? William Wright: Yes. As a number of witnesses have mentioned today, because of the structure of the UK pension fund industry, there are many different perspectives, often not entirely aligned, shall we say, with each other. Every participant in the industry has responded perfectly rationally to the incentives in front of them and the regulation behind them in their investment behaviour and risk profile. International accounting standards, rather than just UK standards, have helped to drive that in the private sector. We have seen similar derisking in other corporate DB pension systems around the world. It has been an entirely rational response. It is really interesting to see which elements of which markets around the world seem to have found a more positive response. Canadian public sector DB, the closest comparison to LGPS in this country, is one example. Others are Australian DC or some of the Nordic models—the Swedish and Danish DC models.
2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source
More
Q For defined-benefit pension funds? Morten Nilsson: Yes.

Published records only — not a full account of an MP’s work. How we work →