Torsten Bell MP: speeches

Speeches

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  Chapter 3 sets out the criteria for approving superfund transfers. The clause protects the integrity of the superfund regime that we are aiming to put in place through the Bill by making it clear that the penalty for committing an unauthorised superfund transfer may be a fine, imprisonment for up to two years, or both. I commend the clause to the Committee. Question put and agreed to. Clause 57 accordingly ordered to stand part of the Bill. Clause 58 Approval of superfund transfers

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  I thank all hon. Members for the consensus around these amendments. We will return to the question of indexation shortly with some of the new clauses. I also want to correct the record. In the exciting debate on the Pensions Ombudsman, I mentioned 1931 but meant 1991. It is not quite as old as I suggested, so I am glad that is now noted. Question put and agreed to. Clause 93 accordingly ordered to stand part of the Bill. Clauses 94 to 96 ordered to stand part of the Bill. Clause 97 Amendments of Pensions Act 2004 Question proposed, That the clause stand part of the Bill.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  These new clauses deliver proposals that are contained in the final report of the pension investment review by adding a new chapter in part 2 of the Bill. Clause 38 set out the requirements for master trusts and group personal pensions to demonstrate that they have sufficient scale, and this new chapter merely supports that delivery. There are too many default arrangements without scale in some schemes, and this fragmentation does not benefit savers. To prevent further fragmentation, new clause 15 allows for regulations to be made to restrict the creation of new non-scale default arrangements. This is not a ban on new default arrangements; there will be circumstances where they will be in savers’ interests. However, any new non-scale default arrangements will need to obtain regulatory approval before they can accept any moneys into them. We must also deal with the existing fragmentation, and new clause 17 requires a review to be established jointly by the DWP and the Treasury on non-scale default arrangements. This review will look at the scale of the issue and why action has not been taken to consolidate these non-scale default arrangements where it would benefit savers for that to take place. We anticipate that the review will commence in 2029, once the value for money and contractual overrides are in place. They will provide the tools needed for providers to take action before the review commences. Those tools will help to reduce fragmentation. The FCA and the Pensions Regulator will be required to provide information and assistance to the review. Once the review has been completed, it will be required to publish its findings, and these will inform further steps to support consolidation.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  The first reassurance I can give is that this part of the Bill requires only one regulatory framework, because it all sits within the Pensions Regulator and within the defined benefit part of the landscape, as I am aware the hon. Member for Aberdeen North knows. On the hon. Member’s wider point, which is relevant to many parts of the Bill, I absolutely agree and will offer a two-part reassurance—we will also come to a new clause later that directly gets at this issue. I entirely agree that having two regulatory regimes is no excuse for having different consumer experiences across the two halves of the regime. To address that, I have made sure that the Bill supports the same outcomes, and have stress tested that considerably, but also made it clear that, as a Government policy agenda, our goal is that that should be the case, full stop, including in some areas where it has not been historically. That is absolutely what we need to keep working towards. We should all have that in our heads. When it comes to the regulations, it is also our clear intention that the FCA and TPR should be working very closely together, as we discussed with the value for money regulations, for example. Question put and agreed to. Clause 58, as amended, accordingly ordered to stand part of the Bill. Clause 59 Special provision for certain schemes coming out of assessment period Question proposed, That the clause stand part of the Bill.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  This group of clauses introduces requirements for superfunds that concern funding and investment. Clause 63 places a duty on the responsible body of a superfund to protect members’ benefits by having robust policies and procedures in place to monitor the financial thresholds. Clause 64 defines those financial thresholds, which are key components of the regulatory regime and follow the example of the Solvency II supervisory ladder of interventions, tailored to the unique characteristics of superfunds. That means that there is a series of clear and known consequences, both positive and negative, that could happen in superfunds as a direct response to changes to their funding levels. The financial thresholds are designed to protect the security of members’ benefits. When certain thresholds are breached, there are mandatory actions that must be taken to protect members. Government amendment 222 is minor and technical, and seeks to provide certainty and clarity to the operators and administrators of superfunds that they can use the buffer funds both to invest the buffer in the hopes of generating growth, and to pay expenses, fees and—importantly, for the Treasury half of my job—any taxes that are owed. Clause 65 requires that arrangements must be made to transfer capital buffer assets to the scheme’s trustees in specific circumstances. That is the important protection, because it is the capital buffer that provides the equivalent of the employer covenant protection that we see in traditional defined-benefit schemes. The release of the buffer to the trustees as part of an approved response plan—which we will come to in clause 81—is fundamental to the protection of members’ benefits. Clause 66 ensures that the capital buffer cannot be released to anyone other than the scheme’s trustees, except where the liabilities of the scheme have been satisfied, or where the release is a permitted profit extraction. It is important that permitted profit extraction takes place only when the security of the scheme has been materially improved, above the superfund’s initial capital adequacy requirements, which are obviously significant. Clause 67 requires the responsible body of the superfund to have an investment strategy for the capital buffer, prepared in accordance with any requirements specified in regulations made by the Secretary of State. Clause 68 requires the responsible body of the superfund to appoint an appropriately qualified, independent person to verify the valuations of the capital buffer at least once a year. Question put and agreed to. Clause 63 accordingly ordered to stand part of the Bill. Clause 64 ordered to stand part of the Bill. Clause 65 Capital buffer: compulsory release to trustees Amendment made: 222, in clause 65, page 73, line 2, leave out “for market value consideration” and insert “— “(a) in the ordinary course of the investment of the capital buffer, or (b) in payment of fees, expenses, taxes or other charges incurred (in each case) in connection with the management or administration of the capital buffer”. —(Torsten Bell.) This amendment clarifies the circumstances in which the capital buffer is regarded as “released” for the purposes of Part 3. Clause 65, as amended, ordered to stand part of the Bill. Clauses 66 to 68 ordered to stand part of the Bill. Clause 69 Key functions Question proposed , That the clause stand part of the Bill.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  Just to clarify, there is significant support from the industry for clause 59 in general terms. This is in part because of the successful rescue of the Debenhams pension scheme out of the Pension Protection Fund assessment—it had not entered the PPF; had it done so, there would have been a significant cut in members’ benefits—by the currently sole operating superfund, Clara Pensions. PPF assessment following employer insolvency is designed to ensure that member benefits are protected. Some schemes that come out of PPF assessment are too well funded to stay in the PPF, because they could achieve better member outcomes than might be offered by the PPF. The clause amends the onboarding conditions in these instances, to allow trustees of a scheme in PPF assessment to seek to secure their liabilities with a superfund at less than full benefits, but more than would otherwise have been secured through a buy-out that was available, given the level of their assets at that point. Based on the evidence from the PPF’s purple book, we anticipate that, on average, five in 10 so-called PPF-plus schemes could benefit each year. [ Official Report, 27 October 2025; Vol. 774, c. 1WC.] (Correction) Trustees can continue to buy out the level of benefits that the scheme can afford with an insurer, but this clause provides them with the option of entering a superfund, where they consider doing so to be in the interest of members. Clause 60 specifies that an application must be made in the manner and form specified by the Pensions Regulator. The approval process enables the regulator to protect schemes and their members during the application process, and aligns with the regulator’s systems and processes and its experience with other authorisation and supervisory regimes. I commend clauses 59 and 60 to the Committee. Question put and agreed to. Clause 59 accordingly ordered to stand part of the Bill. Clause 60 ordered to stand part of the Bill. Clause 61 Governance and structure

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  Amendment 215 simply clarifies the policy intent behind the clause. It reflects the reality that pension schemes’ funding is fluid and difficult to predict. Amendment 216 makes the clause clearer and ensures consistency with amendment 215. Amendment 217 introduces a power to enable the Government to consult industry and the regulator on an appropriate timeframe in which to assess whether the technical provision threshold has been met. Amendment 218 is consequential to amendment 217. Amendment 219 allows the Secretary of State to make special provisions to modify or disapply the onboarding conditions, which we have just been discussing, in subsection (2) in the instance of a merger, division or restructuring of superfund sections. Amendments 220 and 221 set out parliamentary procedures for the powers introduced by amendments 217 and 219 respectively. I hope that hon. Members feel able to accept these amendments. Amendment 215 agreed to. Amendments made: 216, in clause 58, page 68, line 3, leave out “there is a very high likelihood” and insert “it is reasonable to expect”. This amendment adjusts the onboarding condition in relation to the technical provisions threshold for consistency with the change made by Amendment 215. Amendment 217, in clause 58, page 68, line 5, leave out from “period” to end of line and insert “specified in regulations made by the Secretary of State;”. This amendment allows for regulations to set the period by reference to which the onboarding condition relating to the technical provisions threshold is assessed. Amendment 218, in clause 58, page 68, line 22, leave out paragraph (b). This amendment is consequential on Amendment 217. Amendment 219, in clause 58, page 68, line 32, at end insert— “(5A) The Secretary of State may by regulations modify subsection (2) in its application to a superfund transfer of a kind described in section 53(3) (merger of sections etc).” This amendment allows for regulations to make special provision about how the onboarding conditions apply (or do not apply) in relation to a superfund transfer within clause 53(3) (under which a restructuring of sections within a superfund can itself be treated as a superfund transfer). Amendment 220, in clause 58, page 68, line 42, at end insert— “(7A) Regulations under subsection (2)(d) are subject to the negative procedure.” This amendment provides for negative parliamentary procedure to apply to regulations made by virtue of subsection (2)(d) as amended by Amendment 217. Amendment 221, in clause 58, page 68, line 43, at end insert— “(8A) Regulations under subsection (5A) are subject to the negative procedure.”— (Torsten Bell.) This amendment provides for negative parliamentary procedure to apply to regulations made by virtue of the provision inserted by Amendment 219.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  I thank the hon. Members for Torbay and for Horsham for the amendment. It is sensible to discuss one of the key questions in the design of superfunds policy. My main reassurance is that this exact option, or options in this space, were part of the extensive consultation on superfunds. That is important to understand. They were in the consultation, and a wide range of views were expressed in the responses, many of them pointing to the clear practical difficulties of providing the legislative test to assess whether a scheme could afford an insurance buy-out in future, as opposed to its exact position at the time of the assessment. For reasons I will come on to, that does not mean that it is not important to look ahead to whether a scheme is likely to be able to buy out in the future, but we have taken the view, following the consultation, that that should not be the test on the face of the Bill. That is because, when it comes to projections looking ahead, both the cost of an insurance buy-out and the scheme funding levels can fluctuate significantly. Forecasts ask for more judgment to be exercised compared with an assessment of what the buy-out market is offering at the time it is carried out. It is about the current funding levels. Clause 58 already states that schemes can transfer a superfund only when they are currently unable to secure members’ benefits with an insurer. I will offer two elements of reassurance to the hon. Member for Horsham. First, we need to be clear about the role of the legislation, which is as I just set out, and the role of the trustees, who are the ones who would approve a transfer to a superfund. Trustees will absolutely be looking ahead and thinking about the kinds of issue that the hon. Member highlighted. Do they wish to see a superfund transfer or a buy-out transfer in future? Is it plausible that they would get one? They will be relying on the guidance of the TPR and the clear intent in the legislation, which is that superfunds will provide an additional option, not replace the core approach of most defined-benefit schemes’ goal, which is an insurance buy-out. I therefore do not support putting the proposed test on the face of the Bill. Also, as the hon. Member for Aberdeen North pointed out, there are issues with the drafting of the amendment, which requires trustees in legislation to do what they will, in practice, be doing anyway. The second point of reassurance I can offer is that the Bill sets out a power to substitute another condition to replace this condition, if needed. We will consult the industry to assess what, if any, further requirements might be added to satisfy members before the regime comes into effect. I hope that on that basis, the hon. Member will be happy to withdraw his amendment.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  We turn now to chapter 5, which is concerned with “events of concern”—events that require closer regulatory scrutiny. These are events such as breaches of financial thresholds, an unauthorised extraction of capital or a material risk of insolvency. An “event of concern” will result in a “period of concern”, which will end once it has been resolved by the regulator or the superfund winds up. Clause 78 sets out the list of circumstances in relation to a superfund that give rise to an event of concern. Subsection (4) provides an affirmative power to adjust the period and circumstances of financial thresholds not being met. This is because different risks may emerge as the market evolves and further events of concern may be needed. Clause 79 requires a relevant person to notify the Pensions Regulator when an event of concern occurs or is likely to occur. Members may find it helpful to note that this provision replicates existing measures for defined-contribution master trusts. Clause 80 requires the superfund or the trustees to produce a response plan to address the event of concern. The response plan must be approved by the Pensions Regulator. If it is not satisfied that the response plan is sufficient, it can request a new plan. Clause 81 specifies the required content of any response plan. Government amendment 223 is technical. It ties the direction-making powers of the regulator explicitly to the requirements placed upon a given member of the superfund group or trustee of the superfund scheme in clause 80. Clause 80(1) requires the submission of a response plan to an event of concern, while clause 80(3)(b) requires the revision of any response plan if the regulator is not satisfied. Government amendment 224 clarifies the limits of the regulator’s powers to direct superfunds to take corrective action during the event of concern. Clause 82 lists the specific powers that will be granted to the Pensions Regulator during periods of concern to ensure the timely and effective resolution of any event of concern. A member of the superfund group must comply with a direction given to them by the regulator. Clause 83 grants the regulator the power to make a direction to pause only if it is satisfied that doing so is necessary to protect the interests of superfund members. Members should note that this direction-making power is standard and reflects those in the regulator’s master trust and CDC authorisation regimes. Clause 84 allows the regulator to issue a fixed penalty notice to a person if it considers they have failed to comply with some of these requirements. The penalty must not exceed £100,000. Clause 85 allows the regulator to issue an escalating penalty notice for failure to comply with a requirement, if it has already issued the person a fixed penalty notice under clause 84 in respect of that failure. The penalty is to be determined according to regulations and must not exceed £20,000 per day. Clause 86 enables the regulator to withdraw authorisation from a superfund if it considers that the superfund has failed to comply with its ongoing requirements. Superfund pension schemes are defined-benefit occupational pension schemes and will be subject to the employer debt provisions under section 75 of the Pensions Act 1995. Superfunds will include a statutory employer. If that employer becomes insolvent or the scheme enters wind-up, a debt will be triggered from the employer in the normal way under section 75 if the scheme cannot secure member benefits through an insurer buy-out. That is an additional protection that matches how that is carried out in traditional defined-benefit schemes. Clause 87 enables employer debt to be paid, or partly paid, by funds released from the capital buffer rather than directly by the statutory employer itself. Question put and agreed to. Clause 78 accordingly ordered to stand part of the Bill. Clause s 79 to 81 ordered to stand part of the Bill. Clause 82 Regulator’s direction-making powers during period of concern Amendments made: 223, in clause 82, page 84, line 9, leave out “if no response plan has been approved” and insert “if a person has failed to comply with section 80(1) or (3)(b) (requirement to propose response plan or revised response plan)”. This amendment limits the direction-making power in clause 82(1)(c) so that it can only be exercised where a person has failed to produce a response plan or a revised response plan as required by clause 80. Amendment 224, in clause 82, page 84, line 16, at end insert— “(1A) A direction under subsection (1)(c) may not require the provision of financial support to the superfund scheme.”— (Torsten Bell.) This amendment provides that the direction-making power in clause 82(1)(c) cannot be used to require a person to provide financial support to the superfund scheme. Clause 82, as amended, ordered to stand part of the Bill. Clauses 83 to 87 ordered to stand part of the Bill. Clause 88 Power to extend superfunds legislation to similar structures Question proposed, That the clause stand part of the Bill.

• 11 Sept 2025 · Pension Schemes Bill (Seventh sitting) · Hansard source

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  Clause 97 introduces the schedule of amendments that are being made to the Pensions Act 2004. These amendments extend the regulatory functions of the Pensions Regulator to include superfunds and other matters in the Bill. Amendments 229 to 239 ensure that a similar effect is achieved in relation to the guided retirement, value for money, scale and asset allocation provisions, and the small pot measures. I particularly draw Members’ attention to paragraph 16 of the schedule, which amends section 127 of the Pensions Act 2004 to extend the duty of the board of the pension protection scheme to superfund schemes. It is important that members of superfunds receive the same protection as members of other occupational schemes. Paragraph 18 of the schedule amends section 224 of the Pensions Act 2004 to require that superfunds’ actuarial reports, produced in years between triennial valuations of scheme assets and liabilities, must be sent to the Pensions Regulator. This is an additional requirement for superfunds, which will allow for greater oversight by the regulator of their funding positions. Question put and agreed to. Clause 97 accordingly ordered to stand part of the Bill . Amendments made: 229, in schedule, page 100, line 16, leave out “Part 2 or 3 of” and insert— “Chapter 1, 2, 3A or 5 of Part 2 of, or any provision of Part 3 of,”. This amendment confines the application of section 13 to specific Chapters of Part 2. The reference to Chapter 3A is to the Chapter referred to in the explanatory statement to NC15. Amendment 230, in schedule, page 100, line 27, at end insert— “(1A) Before paragraph (da) insert— ‘(dza) sections 28A to 28F of the Pensions Act 2008 (scale and asset allocation);’” This amendment ensures that the powers of the Pensions Regulator to inspect premises conferred by section 73 of the Pensions Act 2004 are exercisable in relation to the Regulator’s functions under the new scale and asset allocation measure inserted in the Pensions Act 2008 by Chapter 3 of Part 2 of the Bill. Amendment 231, in schedule, page 100, line 31, leave out “(value for money)”. This amendment is consequential on Amendment 232. Amendment 232, in schedule, page 100, line 31, leave out “Chapter 1” and insert “Chapters 1, 2, 3A and 5”. This amendment ensures that the powers of the Pensions Regulator to inspect premises conferred by section 73 of the Pensions Act 2004 are exercisable in relation to Chapters 2, 3A and 5 of Part 2 of the Bill. The reference to Chapter 3A is to the Chapter referred to in the explanatory statement to NC15. Amendment 233, in schedule, page 100, line 32, leave out “(superfunds)”. This amendment is consequential on Amendment 232. Amendment 234, in schedule, page 101, line 16, leave out “any” and insert “or by virtue of any”. This amendment, which relates to Amendment 235, ensures that functions under regulations made under the provisions mentioned in section 80(1)(c) are also captured by that provision. Amendment 235, in schedule, page 101, leave out line 22 and insert— “‘Chapter 1, 2, 3A or 5 of Part 2 of, or any provision of Part 3 of, the Pension Schemes Act 2025’”. This amendment extends the offence in section 80 of the Pensions Act 2004 to false or misleading information provided in connection with the Pensions Regulator’s functions under or by virtue of Chapters 1, 2, 3A or 5 of Part 2 of the Bill. Chapter 3 of Part 2 is already covered, as it amends existing legislation already mentioned in section 80(1)(c). The reference to Chapter 3A is to the Chapter referred to in the explanatory statement to NC15. Amendment 236, in schedule, page 101, line 25, leave out “any” and insert “or by virtue of any”. This amendment, which relates to Amendment 237, ensures that functions under regulations made under the provisions mentioned in section 80A(2)(c) are also captured by that provision. Amendment 237, in schedule, page 101, leave out line 31 and insert— “‘Chapter 1, 2, 3A or 5 of Part 2 of, or any provision of Part 3 of, the Pension Schemes Act 2025’” — (Torsten Bell.) This amendment extends the civil penalty provisions in section 8A of the Pensions Act 2008 to false or misleading information provided in connection with the Pensions Regulator’s functions under or by virtue of Chapters 1, 2, 3A or 5 of Part 2 of the Bill. Chapter 3 of Part 2 is already covered, as it amends existing legislation already mentioned in section 80A(2)(c). Amendment 238, in schedule, page 102, line 10, after “legislation” insert— “— (a) after paragraph (d) insert— ‘(ea) Part 1 of the Pensions Act 2008 in relation to the scale requirement in section 28B or the asset allocation requirement in section 28C,’;” This amendment ensures that the scale and asset allocation provisions in Chapter 3 of Part 2 can be the subject of a Regulator code of practice under section 90 of the Pensions Act 2004. Amendment 239, in schedule, page 102, line 12, leave out “Part 2 or 3 of” and insert— “Chapter 1, 2, 3A or 5 of Part 2 of, or any provision of Part 3 of,”.— (Torsten Bell .) This amendment confines the references in section 90(6) of the Pensions Act 2004 to specific Chapters of Part 2. Schedule, as amended, agreed to. New Clause 11 Sharing of database where FCA makes corresponding rules “(1) This section applies if the Financial Conduct Authority makes rules, in relation to persons regulated by it, that correspond to value for money regulations. (2) The Secretary of State may by regulations make provision for the purpose of enabling or facilitating the use of the database mentioned in section 11(2)(d) for the publication or sharing of information— (a) that relates to persons to whom the rules made by the Financial Conduct Authority apply, and (b) that corresponds to metric data, including provision conferring functions on a person appointed as mentioned in section 11(2)(d). (3) Regulations under subsection (2) are subject to the negative procedure.”— (Torsten Bell.) This new clause, intended to be inserted after clause 17, allows for the same value-for-money database to be used for FCA-regulated schemes as for schemes regulated by the Pensions Regulator. Brought up, read the First and Second time, and added to the Bill. New Clause 12 Interpretation of Chapter ‘(1) In this Chapter— “the appropriate authority” , in relation to the making of regulations, means— (a) where the only pension schemes to which the regulations apply are FCA-regulated pension schemes, the Treasury; (b) where the only pension schemes to which the regulations apply are not FCA-regulated pension schemes, the Secretary of State; (c) in any other case, the Treasury and the Secretary of State acting jointly; “the appropriate regulator” , in relation to a pension scheme, means— (a) in relation to an FCA-regulated pension scheme, the FCA; (b) in relation to any other pension scheme, the Pensions Regulator; “approved main scale default arrangement” , in relation to a pension scheme, means a main scale default arrangement in respect of which the pension scheme is approved under section 28A or 28B of the Pensions Act 2008; “consolidating” a non-scale default arrangement into an approved main scale default arrangement means ensuring that any assets held subject to the non-scale default arrangement are instead held subject to the approved main scale default arrangement; “the FCA” means the Financial Conduct Authority; “FCA-regulated” , in relation to a pension scheme, has the meaning given in subsection (2); “main scale default arrangement” , in relation to a pension scheme, has the same meaning as in section 28A and 28B of the Pensions Act 2008; “money purchase benefits” has the same meaning as in the Pension Schemes Act 1993 (see section 181 of that Act); “non-scale default arrangement” , in relation to a pension scheme, means an arrangement— (a) which is not an approved main scale default arrangement, and (b) subject to which assets of the scheme must under the rules of the scheme be held, or may under those rules be held, if the member of the scheme to whom the assets relate does not make a choice as to the arrangement subject to which the assets are to be held; “operate” , in relation to a default arrangement, has the meaning given in subsection (3); “pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993; “the provider” of a pension scheme means— (a) in relation to an FCA-regulated pension scheme, the person mentioned in subsection (2)(b); (b) in any other case, the trustees or managers; “the trustees or managers” , in relation to a pension scheme, means— (a) in the case of a scheme established under a trust, the trustees of the scheme, and (b) in any other case, the persons responsible for the management of the scheme. (2) A pension scheme is “FCA-regulated” if the operation of the scheme— (a) is carried on in such a way as to be a regulated activity for the purposes of the Financial Services and Markets Act 2000, and (b) is carried on in the United Kingdom by a person who is in relation to that activity an authorised person under section 19 of that Act. (3) The provider of a pension scheme “operates” a non-scale default arrangement or main scale default arrangement if any assets held for the purposes of the scheme are held subject to the non-scale default arrangement or main scale default arrangement.’— (Torsten Bell.) This new clause makes provision about the interpretation of the new Chapter referred to in the explanatory statement to NC15. Brought up, and read the First time.

• 9 Sept 2025 · Pension Schemes Bill (Sixth sitting) · Hansard source

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  I beg to move amendment 92, in clause 38, page 41, line 8, leave out “of the totality”. This amendment is consequential on Amendment 94.

• 9 Sept 2025 · Pension Schemes Bill (Sixth sitting) · Hansard source

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  I thank my hon. Friend. She is right that it is important that we think through how to line up the value for money work with the question we are now turning to on contractual overrides. I will come back to distinguish between the data that comes through the value for money process and the actual formal assessments themselves, which is what is referred to in the amendment. We agree that the value for money data is vital for ensuring consumer protections, and it is why the implementation of the contractual override mechanism is already being timed so that it is in conjunction with the value for money framework. The very keen can read that in the road map we set out in June, which gets into exactly those questions. To go into a bit more detail—and I appreciate that my hon. Friend already knows this—the data for the value for money assessment will be available ahead of the formal assessments, and it is on that basis that people will be able to go ahead with some forms of contract override—for example, when they are moving members within parts of the individual providers, so they would have all the information that they require. My hon. Friend raised a specific question about when people are being transferred between schemes. Should that always wait for the full value for money assessments? I will give her another commitment that I will take that away and consider it. There may be some circumstances in which that information is available, and we do not wish to unduly constrain providers, but it is a reasonable point for us to be discussing. As I say, she is right to raise the point about the interaction between the value for money data, including its visibility to other people, and the contractual override. If she is happy to withdraw the amendment, I will consider whether we can provide further clarity on the point on Report.

• 9 Sept 2025 · Pension Schemes Bill (Sixth sitting) · Hansard source

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  Clause 44 relates to the provision of information to members about the solution or solutions that they offer them. We discussed the clause earlier with the hon. Member for Aberdeen North. The clause requires schemes to communicate and describe the default pension benefit solutions available and the circumstances for those for whom it would be suitable. Powers are taken to make further provisions in secondary legislation. The key policy behind the clause is to ensure that scheme members are well informed about their pension options. The Bill requires all communications issued by schemes to be in clear and plain language, which will help members to make better decisions regarding their retirement income. The clause allows trustees or managers to request relevant information from their members to determine what an appropriate default solution would be for their membership. Pension schemes will also have the ability, and potentially be required, to gather information from their members to ensure that where a scheme has multiple default pension benefit solutions, the member receives communications about the one deemed most appropriate for them. For example, what wider pension provision people have is important when they think about what is the right solution for them. Amendment 177, 179 to 181, 183, 186, 187, 190 and 192 to 195 ensure that clause 44 operates in relation to qualifying pension benefit solutions, as well as default pension benefit solutions. That change will mean that the same communication requirements will apply irrespective of whether a scheme member is being transferred to another pension scheme to receive a pension benefit solution or staying with the same scheme. Amendments 178, 182, 184, 185, 188, 189 and 191 provide minor language changes to improve consistency across the Bill. Clause 44 is essential for promoting informed decision making among scheme members. Amendment 177 agreed to. Amendments made: 178, in clause 44, page 58, line 3, leave out “the member” and insert “each eligible member of the scheme”. This amendment corrects a minor verbal error. Amendment 179, in clause 44, page 58, line 5, leave out “member’s default”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 180, in clause 44, page 58, line 8, leave out “default”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 181, in clause 44, page 58, line 9, leave out from beginning to “the trustees” in line 10 and insert “Where more than one pension benefit solution is available to the eligible members of a relevant scheme,”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 182, in clause 44, page 58, line 10, leave out “the member” and insert “, each eligible member of the scheme”. This amendment corrects a minor verbal error. Amendment 183, in clause 44, page 58, line 12, after “solution” insert “or qualifying pension benefit solution”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 184, in clause 44, page 58, line 14, leave out “option” and insert “solution”. This amendment makes a clarificatory change to the tag used in clause 44(2). Amendment 185, in clause 44, page 58, line 17, leave out “the default pension benefit solution” and insert “the specified solution”. This amendment is consequential on Amendment 184. Amendment 186, in clause 44, page 58, line 18, leave out “member’s default”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 187, in clause 44, page 58, line 27, leave out from “of” to “is” in line 29 and insert “a default pension benefit solution or qualifying pension benefit solution and an explanation that such a solution”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 188, in clause 44, page 58, line 29, leave out “an” and insert “a regular”. This amendment makes the language of clause 44(4)(b) consistent with clause 42(3)(b). Amendment 189, in clause 44, page 58, line 31, leave out “eligible members” and insert “each eligible member”. This amendment makes a minor clarificatory change. Amendment 190, in clause 44, page 58, line 32, leave out “the default pension benefit solutions offered by the scheme” and insert “the pension benefit solutions available to the eligible members”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 191, in clause 44, page 58, line 34, leave out paragraph (b). This amendment is consequential on Amendment 190. Amendment 192, in clause 44, page 58, line 38, leave out from “describing” to end of line 40 and insert “a particular pension benefit solution that the trustees or managers consider to be suitable for the eligible member in question;”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 193, in clause 44, page 59, line 2, leave out “default”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 194, in clause 44, page 59, line 10, leave out “default” and insert “, or in the case of transferable members identifying,”. This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Amendment 195, in clause 44, page 59, line 11, leave out “default”. —(Torsten Bell.) This amendment ensures that clause 44 operates in relation to qualifying pension benefit solutions as well as default pension benefit solutions. Clause 44, as amended, ordered to stand part of the Bill. Clause 45 Information etc in connection with selection of benefit solution

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  I will start with the Government amendments and then turn to new clause 32. The amendments relate to proposed new section 28C and specify more detail about the role of the regulator in over- seeing the granting and withdrawal of approvals under this section, including a penalty-making power where a provider does not comply with the relevant requirements, and a clarification to ensure that subsection (14) on the interaction of these provisions with scheme documentation operates as intended. New clause 32 would require the Secretary of State to conduct an impact assessment—and I appreciate, as I am sure the Opposition will come to shortly, that it is an impact assessment for a particular purpose—before implementing any regulatory or policy change for defined-benefit schemes’ asset allocation. First, let me reassure the hon. Member for Wyre Forest that the Government have no plans to make such changes to defined-benefit schemes’ asset allocation. I reiterate that the reserved powers contained in the clause only relate to defined-contribution workplace schemes. There are no plans to change defined-benefit asset allocations through the Bill. Therefore, the new clause is not considered necessary, and I encourage the hon. Member not to press it. I am sure he will want to make some wider points about the changes in asset allocation within defined-benefit schemes, and their impact on the wider economy.

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  The amendment is absolutely right that trustees should consider a wide range of options when they are developing their default pension benefit solutions. As I have just remarked to the hon. Member for Aberdeen North, I suspect that that will be a big focus for trustees and scheme managers in the years ahead. Clause 42 does make provision for trustees or managers to consider the needs and interests of scheme members. I would emphasise that as the priority, as opposed to considering every option already on the market, because we are looking for them to develop the right solutions. In most but not all cases, that will be in-house; we will come back to some of the cases where they will not be doing that. We do not want to make it sound like an off-the-shelf situation in lots of cases, although I appreciate that doing their job will require them to look across the market. I have a slight worry about setting a hard 10% of membership expressing an objection as a way of vetoing an approach. First, in many cases, there will not be a single default solution for members within a scheme; there will be a number of them for different cohorts within that scheme, not least based on the size of pots or their wider situation. We do not want a subset of a scheme to be able to vote down the solutions for everybody within the scheme, which is what the amendment would allow. The amendment would also allow those who are a very long way from retirement to shape the outcomes for those who are about to come to retirement. My most important point, however, is that individuals have an absolute right to opt out. Although we talk in terms of default, just as we talk about automatic enrolment, the purpose is that this is a softer default than automatic enrolment. That is partly because we are expecting multiple defaults, not a single one where everyone is required to save at least a certain amount, but also because people will be able to opt out and have a range of different defaults. I hope that I have provided reassurance that the Bill already includes important safeguards, and that trustees and scheme managers will already need to consider the issues that the Liberal Democrat amendment rightly puts on the table.

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  The purpose of the clause is to help improve pension engagement so that individuals can make better decisions themselves if they want to do so. As I said earlier, this is about softer defaults than we have in the case of automatic enrolment. The clause grants a power to make regulations requiring schemes to offer and provide information to assist members in the selection of their pension benefit solutions. The clause also includes a regulation-making power that could require schemes to monitor rates of decumulation —that is the drawdown of the pension pot used by members—and issue warnings if they believe that that should be changed. That could be used to help prevent individuals from inadvertently running out of money in later life, or it could even be used to recommend increasing withdrawals. Again, we have talked a lot about Australia. I do not know whether we are feeling patriotic at the moment, but one of the lessons from Australia is that in many cases one of the dangers is insufficient drawdown, and people under-consuming in later life. In either case, this approach could potentially help to prevent people from living in poverty during retirement, either because they are not spending enough or because they are drawing down too much early on. The Government’s broader objective is that individuals need not make any decisions about how their savings are invested or how they should take their pension benefits, except to confirm that they want to start receiving payment. That is a big change from the status quo, which is very complicated at the point someone approaches retirement. However, I want to emphasise that individuals will retain their pension freedoms and are able to opt out of any default, should they wish to do so. This provision allows for members to receive information to enable engaged and engageable members to make informed decisions. The clause includes a power to require that the information provided is based on members’ individual circumstances, where those are known to the scheme. The intention is that relevant general information will be provided to individuals. The policy behind this clause is to help bridge knowledge gaps and enhance members’ understanding of their options. I turn to the associated amendments. Amendments 196 and 201 provide clarity that information may be sent directly to scheme members or made available to them, for example via websites. Amendments 198 and 199 clarify that schemes may be required to provide information to their members on any of the options available to them under pension freedoms, not just those available under the default scheme. Amendment 202 clarifies that schemes may tailor the information provided to scheme members using information already held by the scheme. Amendment 197 requires that information provided to scheme members under clause 45 must be “in clear and plain language”. Finally, amendment 200 removes some unnecessary wording. The amendments are all technical in nature. They are not intended to change, but to enhance the deliverability of the policy. Amendment 196 agreed to. Amendments made: 197, in clause 45, page 59, line 28, after “information” insert “expressed in clear and plain language”. This amendment requires that information required by regulations under clause 45 be in clear and plain language, mirroring the requirement in clause 44(6). Amendment 198, in clause 45, page 59, line 30, leave out “default”. This amendment, together with Amendment 199, ensures that clause 45 operates in respect of pension benefit solutions other than default pension benefit solutions. Amendment 199, in clause 45, page 59, line 31, leave out “default”. See the explanatory statement for Amendment 198. Amendment 200, in clause 45, page 59, line 32, leave out “(for example as regards the rate of income withdrawal)”. This amendment removes the suggestion that members would decide the rate of income withdrawal, since that would be determined by the scheme. Amendment 201, in clause 45, page 59, line 33, leave out “given” and insert “provided or made available to a member”. This amendment is consequential on Amendment 196. Amendment 202, in clause 45, page 59, line 35, leave out “obtained under powers conferred by section 44”.— (Torsten Bell.) This amendment removes the reference to clause 44 from clause 45(2), so that information given by virtue of clause 45(1) may be based on information that the trustees or managers hold otherwise than by virtue of clause 44. Clause 45, as amended, ordered to stand part of the Bill. Clause 46 Pension benefits strategy

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  I beg to move amendment 209, in clause 46, page 60, line 36, leave out subsection (4). This amendment leaves out a penalty provision that government amendments to Clause 47 would make redundant.

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  In cases where trustees or managers of a relevant scheme have determined that it is not reasonably practical to provide a solution themselves, or that better member outcomes could be achieved if another scheme delivered a solution, they can arrange for the transfers to be made. That is what clause 43 permits. Whether a member is receiving a default solution in-house or being transferred to another scheme to receive that solution, the policy intent is that the member experience should be broadly similar—there should not be a difference in their experience of it. Amendment 164 seeks to ensure that there is parity in the requirement placed on schemes. In particular, the amendment requires schemes to ensure that a scheme receiving transferable members is able to provide a pension benefit solution that meets the needs and interests of the scheme’s membership. Amendment 174 aims to ensure that no scheme will be left in a position where it is unable to comply with the wider guided retirement provisions due to factors outside their control. There is a requirement on schemes to provide guided retirement under the Bill, but if there are factors outside their control that make that difficult, we want to have a backstop that is provided by introducing a power to designate schemes of last resort, which could be used to facilitate transfers from any relevant pension scheme for the purpose of providing a qualifying pension benefit solution. Hon. Members will think of the similar approach that NEST provided in auto-enrolment world—although we are not intending to need it in this case—where employers would always have a scheme they could go to, given that there was a requirement on them to enrol employees. Amendments 161, 162 and 174 merely provide helpful clarifications or otherwise ensure that clause 43 operates in line with the policy intent. Amendment 176 applies the negative parliamentary procedure to regulations relating to highly technical aspects of the policy. These amendments, taken together, provide for small targeted changes to clause 43, and I encourage hon. Members to support them. Amendment 161 agreed to. Amendments made: 162, in clause 43, page 57, line 7, at beginning insert “at such times or in such circumstances as may be prescribed,”. This amendment allows for regulations to specify when transfer arrangements need to be entered into. Amendment 163, in clause 43, page 57, line 8, leave out “facilitating relevant transfers” and insert “effecting a relevant transfer to that scheme”. This amendment clarifies that schemes will be required to arrange with receiving schemes to carry out relevant transfers (not just to facilitate them). Amendment 165, in clause 43, page 57, line 9, leave out “steps required by the regulations” and insert “prescribed steps”. This amendment corrects a verbal inconsistency. Amendment 164, in clause 43, page 57, line 9, at end insert— “(5A) In carrying out the step in subsection (5)(a), the trustees or managers of the principal scheme must have regard to the matters mentioned in section 42(4) (and for that purpose references in those paragraphs to “the scheme” are to the principal scheme). (5B) Section 42(5) applies for the purposes of subsection (5A) as it applies for the purposes of section 42(4). (5C) The trustees or managers of the principal scheme must, at least in such circumstances or at such times or intervals as may be prescribed, review the suitability of any qualifying pension benefit solution in respect of which they have identified a qualifying scheme as mentioned in subsection (5)(a).”— (Torsten Bell.) This amendment ensures that schemes are subject to similar duties in respect of their “transferable members” to the duties to which they are subject in respect of other eligible members.

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  I beg to move amendment 112, in clause 38, page 44, line 20, at end insert— “(za) the scheme in question does not yet have any members,” This amendment ensures that relief under section 28E is only available to schemes that are not yet operational.

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  Point noted. Amendment 127 agreed to. Amendments made: 128, in clause 38, page 45, line 31, at end insert— “28H Penalties (1) Regulations may make provision about the imposition by the Regulatory Authority of a penalty on the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme where the scheme— (a) fails to meet the condition in section 20(1A) by virtue of not being approved under section 28A or 28C, and (b) accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder. (2) Regulations may make provision about the imposition by the Regulatory Authority of a penalty on the provider of a group personal pension scheme where the scheme— (a) fails to meet the condition in section 26(7A) or (7B), and (b) accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder. (3) The regulations must provide— (a) that a penalty must not exceed £100,000 in relation to each employer from which contributions are accepted as mentioned in subsection (1)(b) or (2)(b), and (b) that there is a right of appeal against the imposition of the penalty.” This amendment allows regulations to make provision for the imposition of penalties where a relevant Master Trust or a group personal pension scheme accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder. Amendment 126, in clause 38, page 45, line 31, at end insert— “28I Enforcement by the Financial Conduct Authority (1) The Treasury may make regulations to enable the Financial Conduct Authority to take action (in addition to any action it may otherwise take under the Financial Services and Markets Act 2000) for monitoring and enforcing compliance of any FCA-regulated person with any provision of or under this Chapter. (2) The regulations may apply, or make provision corresponding to— (a) provision made by or under this Part in relation to the Regulator, or (b) any provision of the Financial Services and Markets Act 2000, with or without modification. (3) In this section, ‘FCA-regulated person’ means an authorised person (within the meaning of the Financial Services and Markets Act 2000).” This amendment allows monitoring and enforcement functions to be conferred on the FCA in relation to the compliance of FCA-regulated persons with provisions of or under Chapter 1 of the Pensions Act 2008, including the new provisions on scale and asset allocation. Amendment 129, in clause 38, page 46, line 9, leave out subsection (14) and insert— “(14) In section 99 (interpretation of Part)— (a) the existing words become subsection (1); (b) in that subsection, at the appropriate places insert— ‘“group personal pension scheme” means a personal pension scheme which is available, or intended to be available, to employees of the same employer or of employers within a group, but does not include— (a) a stakeholder pension scheme (as defined in section 1 of the Welfare Reform and Pensions Act 1999), or (b) any pension scheme that requires all its members to make a choice as to how their contributions are invested;’; ‘“Regulatory Authority” has the meaning given by regulations under subsection (2);’; ‘“relevant Master Trust” has the meaning given by section 20(4);’; (c) after that subsection insert— ‘(2) The Secretary of State may by regulations define “Regulatory Authority” for the purposes of this Part.’” This amendment consolidates certain interpretative provisions. It also amends the definition of “group personal pension scheme” so that only schemes where all members select their investment approach are excluded. Amendment 130, in clause 38, page 46, line 19, leave out “26(7A), 28E” and insert— “26(7A), (7B), (7C) or (7E),”. This amendment, together with Amendment 132, ensures that regulations relating to the new scale and asset requirements are subject to affirmative parliamentary procedure. Amendment 131, in clause 38, page 46, line 20, at end insert— “(15A) The following provisions of the Pensions Act 2008 (which relate to transition pathway relief) are repealed at the end of the period of 5 years beginning with the day on which they come into force— (a) paragraph (c) of Condition 1 in section 20(1A); (b) section 26(7C)(b); (c) section 28D; (d) the word ‘28D’ in section 143(5)(a).” This amendment provides for transition pathway relief to cease to be available 5 years after the commencement of the scale requirement. Amendment 132, in clause 38, page 46, line 20, leave out “28C,” and insert— “28C (other than subsection (10)(d))), 28D, 28E, 28F, 28H, 28I,”. See the explanatory statement for Amendment 130. Amendment 133, in clause 38, page 46, line 21, leave out subsection (16) and insert— “(16) If this section is repealed under section 101(5A) (repeal where asset allocation requirement uncommenced) in respect of the insertion of the provisions mentioned in that subsection, the Secretary of State may by regulations amend this section in consequence of that repeal. (17) Regulations under subsection (16) are subject to the negative procedure.”— (Torsten Bell.) This amendment is related to Amendment 228. It allows for regulations to be made tidying up the various references to the asset allocation requirement in clause 38 in the event that the power to commence that requirement is never exercised. Question put, That the clause, as amended, stand part of the Bill.

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  As the hon. Member has asked so kindly, I assure him that I will write to him and to my hon. Friend the Member for Tamworth ahead of Report.

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  I beg to move amendment 147, in clause 42, page 55, line 9, leave out “eligible members” and insert “each eligible member”. This amendment clarifies that trustees or managers are required to make a default pension benefit solution available to every eligible member of the scheme.

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  I will not speak for long. The hon. Member is absolutely right to say that defined-benefit schemes have been material buyers of gilts over a long period. The market is perhaps deeper and more robust than what some of his remarks might imply. There is a range of participants in our gilt markets. However, I take the point that pension schemes are one of them. Contributions such as those from the Office for Budget Responsibility are valuable in that debate, and I reassure him on two fronts. First, I know that he did not mean it quite like this, but the deficit is not growing this year; in fact, it is falling by around 1% of GDP, marking us out from some other countries. Secondly, he is absolutely right to say that the DMO should and does engage with market participants across a wide range of matters. However, on that basis, and on the basis that the Bill does not envisage changes in DB schemes’ asset allocations, I ask him to withdraw the new clause. Amendment 98 agreed to.

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  I completely recognise that. Let me say a few words about how we have tried to balance those tests. We want to see the industry get to scale, and we want clarity about what the end point is, but we want to provide a pragmatic approach to how we get there. Balancing that is what drove us to the five-year approach, which is different from some of the earlier discussions in the pensions investment review about an earlier, harder deadline of 2030. Within the Bill there is flexibility for regulators where people are just approaching the deadline or in other situations, to avoid difficult situations where people’s authorisation is put into question at short notice. That is important, but so is providing the clarity that they will be required to get to scale. It cannot be a never, never. It needs to be a pathway to a destination; it cannot just be a hope. I think that we have taken a pragmatic, balanced approach, but I appreciate that others will have their views. There will be those in the industry who will worry that they may not be on track to meet those scale requirements, but that is in the nature of the beast of our saying that the industry needs to change. I appreciate that that will mean some change for some organisations. We have tried to be flexible and to take a pragmatic approach. Amendment 108 agreed to. Amendments made: 109, in clause 38, page 43, line 28, at end insert— “, and (b) has a credible plan in place for meeting the scale requirement within the meaning of section 28B(2).” This amendment makes it a condition of approval for transition pathway relief that a group person pension scheme has a credible plan in place for meeting the scale requirement. Amendment 110, in clause 38, page 43, line 33, leave out “authorisation” and insert “approval”. This amendment is to ensure that new section 28D of the Pensions Act 2008 refers correctly to an approval under new section 28A or 28B of that Act. Amendment 111, in clause 38, page 44, line 15, after “20(1A)” insert “or section 26(7C)(c)”.— (Torsten Bell.) This amendment corrects an omission so that new section 28E of the Pensions Act 2008 works effectively for group personal pension schemes.