Torsten Bell MP: speeches

Speeches

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Q So when you are thinking about segmenting, your main segmentation is size of pot and other pensions. Dale Critchley: It is the ability to take risk.

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Q Could you explain a bit about what NEST has done in order to do that? Christopher Brooks: NEST has essentially negotiated with the private finance industry, and is not paying the “two and 20” classic fee structure, so it is not paying the performance fees. It has incorporated it all into its existing charges. If the intention is to drive greater investment in private finance, that is the way to go about it. If that scale is replicated across the industry—across the 15 to 20, or however many, schemes remaining at the end of the consolidation process, which I fully support—then hopefully you would be in a position to replicate those types of outcomes for members across the board, in their DC savings. Jack Jones: I would say something very similar. As a package, on the DC side, it is scale that potentially has the greatest power. It is probably important to look at the factors that would make sure that the scale results in the changes you want. It is interesting to look at NEST; it has scale, but it also has a business model and governance structure that incentivise it to go and build up its experience in investing in those markets, and to have an understanding of what its fiduciary duty is, which very clearly includes looking at the widest range of assets possible and investing in them. So I think it is scale, as long as you have everything else in place there to make sure that schemes are using that scale in ways that benefit members.

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  The question to the witness is to expand a bit more on that point. In reality, this provides a “comply or explain” power. In terms of the point Charlotte was just making there, it is absolutely right about the ability of the trustees to say, “This is not in the interest of our members.” It might be worth talking a bit about how when we move forward the consultation will allow us to set out how that would work in practice. Charlotte Clark : It is an area that we would need to work through in terms of the road map. At the moment, our focus is very much on getting the value for money framework right. How the mandation would work and the process around it—as the Minister says, first, we would consult on it. We would have to have a look to see what information was given and how we would monitor it in the period from now to 2030 or 2035. We would have to work through all of those aspects of the process. We would do that in conjunction with the industry, making sure that what we were asking for was information that it could readily provide and that we felt confident that we could make a good assessment around. Patrick Coyne : Our engagement with the marketplace so far already shows that many are considering investment strategies that have significant proportions of diversified investments, so the market is already responding based on some of the Mansion House accord commitments.

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Your metric for that is just other income sources plus size of pot? Dale Critchley: It is those main two at the moment. We are also working with a guy called Shlomo Benartzi, who is a behavioural science expert, to look at the whole concept of defaults in retirement. It is one thing defaulting people into taking £120 a month from their salary; it is a very different thing to say, “I am now going to take the biggest amount of money you have ever seen in your life and use that to purchase an income.” That is what we want to test, because if the default is strong and if inertia works, we will get people moving away from the poor solutions they are choosing at the moment, but if people still think, “Well, I do not like the look of that,” they will go on to make the same poor decisions they are making now, and we will not achieve the policy aim. So we think we need to deliver what is right for customers and members, but also what is attractive to them—so looking at their wants as well as their needs.

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Q It is not right to say that mandation is at the centre of this Bill. There is one backstop power and there are a lot of clauses that we are going to spend a lot of the next few months—

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Q As we have just heard, there is some cross-party agreement that the main purpose of the changes is ensuring that we drive up the returns to members—particularly financial returns, but also more generally. What do you think will make the most difference, from the perspective of the returns, particularly to DC savers? Balance between VFM; scale metrics; decumulation changes; small pots—all of these are about driving up returns for members. What are you most excited about? Christopher Brooks: I think they all work together, so I would say it is a combination of them, but scale seems to be one of the main drivers. I am thinking about NEST in particular, which has been leading the way in terms of investing in private assets. It is able to negotiate a good deal, because of its scale. If you can drive that with similar outcomes across the marketplace, it will be really beneficial to members.

• 2 Sept 2025 · Pension Schemes Bill (First sitting) · Hansard source

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  Q I want to move to DC pensions, not just DB, given what you do. One of the larger changes in this Bill for your providing to savers is on the default pension benefit solutions. Would you give us an update on your internal thinking about how you plan to operationalise those requirements, if this Bill receives Parliament’s support? Dale Critchley: Obviously, this is dependent on regulations, but DWP people have been very open in conversations. That has been really welcome, and we have a good picture of where we are headed. We launched a “flex first, fix later” solution called guided retirement. We are now looking at flexing that guided retirement solution to offer different flavours to fit the different cohorts and the amount of risk people can take in terms of fluctuations in their income, dependent upon guaranteed income from elsewhere, or the level of their fund. At one end, you might have a cohort of people who almost need a guarantee. We could go down the route of an annuity, but we are reluctant to do that, because we think that an immediate annuity purchase might put people off. We need to ease people into the idea of an annuity purchase, and that is where we are going. For those people who want more of a guarantee, it might be lower-risk investments and in a drawdown phase for a shorter amount of time. For people who can take more risk, it may be higher-risk investments in the drawdown phase and in drawdown for longer, with an annuity purchase later. That is where our thinking is at the moment.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q Thank you both for joining us today. I want to ask you to reflect on the internal consistency of some of what you have said. Implicit in what you are saying is that pension schemes should have been investing in a wider range of private assets over the course of the past 10 years, and that that is what they should want to be doing in future—so in some ways we have not been living up to our fiduciary duties in the past, and we are now making changes to do that. Given that that is your logic, the question is why that has not happened. If you go and ask actual pension providers why that has not happened, they will tell you they have a collective action problem and an industry focused exclusively on cost and not on returns, and that they struggle to deliver against that. If you have a collective action problem, you need to ask how we resolve that. You then get to the fact that the Mansion House accord is entirely industry led, with numbers set by them—it is not about distortion to the market; you might want to reflect on that, given the comments you have just made. You also spoke about a lack of clarity, but the Mansion House accord provides clarity about the objectives: everyone can see them and they are set by the industry. When it comes to savers’ interests, you know that the Bill includes a carve-out for trustees to say, “This isn’t in my members’ interests, so we won’t be doing it.” Reflect a bit on the consistency of the argument you have made about the real progress you want to see on investment in a wider range of assets—because it is in savers’ interests and should have happened in the past but did not—and the changes in the Bill. I would gently suggest you might want to think about the consistency of that. Sophia Singleton: We are not a mature industry—the defined contribution industry—and in the past we have not invested in these assets because there have been operational barriers, including the focus on cost.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  That is not the view of the whole industry, which points to the collective action problem of an exclusive focus on cost, as much as it is a barrier— Sophia Singleton: The value for money framework in the Bill is extremely helpful—

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  And that compares to the Mansion House benchmarks of 10% and 5%. Ian Cornelius: The Mansion House commitment is 10% into private markets, with half of that into the UK, so we are already well ahead.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q Are you already doing that because you think that that is what is in savers’ interests? Ian Cornelius: Absolutely. It is providing attractive returns, it diversifies risk and it also invests in the UK.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q It is lovely to see you again, Rachel. Thanks for making the time today. A few people have asked questions about the LGPS through the lens of member engagement. There are obviously some implications with the move into greater pooling for that. Given that you are running that and seeing it up close, it would be good to hear your reflections on how that currently operates, as you have seen it over the last few years. Rachel Elwell: Again, for all of us working in the LGPS, that sense of purpose is really important. I know my partner funds do a huge amount to make sure they are engaging directly with members, running events, as well as the importance of member representation on the pensions committees and on the pension boards, whether that is through union representation, pensioner representation or other scheme member representation. We also have two fantastic scheme member representatives on our joint committee, which is the body that comes together across all of the partner funds to oversee and engage with what we are doing on their behalf. They are really bringing that voice into our considerations as a board and the wider organisation—the wider partnership.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  It is. Sophia Singleton: —and we have said that we need to move the focus from cost to value, and we are seeing that very much come through in the culture within the industry, to be focusing on value. I have given evidence about funds recruiting investment teams to invest in these assets, because they are not simple to invest in for DC schemes. If you look at the experience in Australia through the covid pandemic, there were some real challenges that those schemes had to face relating to stale pricing, intergenerational fairness and cross-subsidies. They are not simple assets for DC schemes to invest in. The market is moving, going, and will get there. What we are saying is the mandation power is not needed to achieve that, because we are, with your help, getting to the right place.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q This morning we heard from Legal and General and from Aviva on how they are planning to operationalise the requirements in the Bill on default drawdown products. I thought it would be good to give you the opportunity to answer the same question: how are you thinking about that within your organisation? Ian Cornelius: It is one of the elements of the Bill that we very much welcome. I think guided retirement solutions are overdue. Certainly, our members have been opted into a retirement savings scheme, and they end up with a pot of money rather than an income. I think their expectation is an income. In fact, in the research we have done with our members, they say that the most important things for them are to have a sustainable income, confidence that it will not run out and an element of flexibility, because their circumstances can change very quickly in retirement. I think the guided retirement solution moves us in that direction. At NEST, we have been working on this for some time, as we recognise that it is a core issue for our members. We therefore want to introduce a guided retirement solution—it is very much a work in progress—that delivers that sustainable income, but also gives them a guarantee that it will not run out. That will be some sort of deferred annuity, purchased probably when they are 75, to kick in when they are 85. We are actively working on that and will be looking to introduce it in 2027, aligning with the expectation in the Bill. Patrick Heath-Lay: It is very similar from our perspective. We should not underestimate how much onus the shift from final salary to DC has put on individual savers, in terms of the decision that they have to make, in a very complex world that they really do not understand. Even if you surface a lot of information, your constituents will still struggle to navigate those decision points. We also should not underestimate the onus they have taken on, in terms of the risk of their own fund, when you think about the productive finance agenda and other things here. I think it is absolutely the right move. It is a good development for us to bring about guided retirement journeys in a way that is either “Do it for me” or “Do it with me” for policyholders. Similarly, we are thinking about drawdown and how we can facilitate or help people to understand the implications of the actions they may take with accessing their funds, and then, when they get to later life, some sort of deferred annuity as an approach. The really important aspect is the guidance and how we can help, but have certain obligations on ourselves, as providers, to make sure that we are accountable for the help that we are giving as we go through the process.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q Given that you think that it is in savers’ interests to be well above the Mansion House targets, why have some people not got to those targets? Are they failing in their fiduciary duties? Why have they not got there yet? Ian Cornelius: It is hard to speak for others, but scale is an important factor, as we have talked about. You need scale and sophistication to access these investment opportunities. NEST has that scale and is building that sophistication. It often involves quite innovative solutions and partnering. Partners want to partner with someone who has got scale and assets coming in at pace, and we have those things. There are some unique circumstances that have made it attractive for us. I will let Patrick speak for People’s, but it is on that journey as well. Patrick Heath-Lay: Yes, we are, although we are much nearer the start of that journey. Again, it comes back to the scale point. Why is £25 billion or £30 billion about the right amount? Because it is about the right part that you can economically start investing in those items. To answer your question, and to pick up a more general point, it is incredibly important that we work collaboratively on the issue, because, as an industry, there is not much point in us all sailing our own little boats around trying to find the right harbour to invest. There is a degree of collaboration that the industry, together with Government, can do to open up the opportunities where that investment needs to go and how it can be executed in the most efficient manner. The biggest risk with investing in private markets is that they are expensive. If the vehicles that are being used on a commercial basis are not sharing the economics of that investment well enough with savers, it will certainly not be an investment that we are interested in pursuing. The other point is that putting down the foundations for this to be a pipeline of repeatable investment activity is critical. Because of its scale, NEST has got ahead of where we are today, but that is the phase we are in at People’s at the moment. There is over £1 billion a year from our scheme alone that will be invested in those markets on an ongoing basis. Given the scale that we are both experiencing, in terms of how we are scaling up, that will be an ever-increasing number, so it is important that we have reliable and very cost-effective routes by which we can deploy that capital. Ian Cornelius: Going back to your original question, I think that the industry is moving in the right direction. The Mansion House accord had 17 signatories and we are seeing the right moves.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  I was encouraging you to say that; you got there. Helen Forrest Hall: Apologies; we are very, very supportive of the vast majority. This is basically the one substantive issue from our perspective. As Sophia has said, the value for money and consolidation elements in particular are incredibly helpful in removing some of the barriers that have existed, including for trustees. They technically have the ability to operate within their fiduciary duty, but sometimes the legislation and the structure of the industry get in their way. Things such as value for money and scale will really help with that. This Bill is incredibly enabling in the vast majority of its provisions. There are just a small number—mandation being one of them—where we have a bit of concern.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q We all have work to do; it is never all over. Chris, this question is mainly for you, as I am conscious that you have done lots of work over an extended period on the dashboard. Obviously, there are elements of the Bill that relate to that—mainly relating to the PPF—but not many. However, is there anything you want to tell the Committee about the lessons from it for when we come to the small pots work, which obviously is a central part of the Bill? Chris Curry: I listened with interest to some of the earlier witnesses talk about dashboards, and there certainly are some lessons that we can learn from the pensions dashboards programme, as it has been evolving over the past few years, for small pots in particular. There are two issues that I would pull out. The first is on the technology front. I think someone suggested that the next five years or so could be quite a tight timetable to build a technological solution and get it in place. You have to be very careful—you cannot underestimate just how much complexity there is and how long it takes to do these things—but I would say that the work that we have done on pensions dashboards is giving us a bit of a head start. That is not to say that we necessarily need to build on or use parts of the system that we have already built, but it has helped us understand a lot about, for example, how you can find pensions—the way you can use integrated service providers rather than having to go direct to all the schemes, and use a syndicated model to find where people might have their pensions. It has helped the industry get a long way down the path to where it needs to be, as well. One of the big challenges for pensions dashboards is the quality of data. Enabling individuals to find their pensions means data quality: it needs not only to exist and be there; it needs to be accurate and it needs to be up to date. When you are thinking about an automatic consolidator or default consolidator for small pots, that is even more important. You are not just transferring information, but transferring money, so it is really important that the data is high quality. The work that is being done on pensions dashboards will get people in the industry a long way to having part of that in place as well. There are definitely lessons that can be learned from how we progressed on the pensions dashboards programme. It has got us much closer to where we would be if we had had a completely blank page to start from, but there is still a reasonable amount of work to do, because it is working in a slightly different way.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q You have both been involved in the discussions with the industry on the wider move to private asset investments. As you talked about earlier, you are further along the journey than most. You know the numbers in the Mansion House accord. In lots of cases, I know you are planning to be significantly above those de minimis levels. Tell us a bit—for the industry as a whole, not just for your individual schemes—about how we should think about those numbers, as de minimis or as targets, or where people are going to be in 20 years’ time. In the end, that is what we are always thinking about; we are not thinking about the next five years. Ian Cornelius: It is difficult to speak for the industry, but I can speak for NEST. At NEST, we are very committed to investing in private markets: 18% of our assets are invested in private markets, and 20% of our assets are invested in the UK.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q The reserve power is about automatic enrolment contributions; it has no impact on the LGPS. It is the same for surplus: the changes do not apply to the LGPS. Could you confirm that I am correct in saying that? Councillor Phillips: Right.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q Since we have gone to mandation and surplus, I encourage you to clarify that the reserve power and the surplus measures in the Bill do not affect the LGPS in any way. Those are not within the remit of the Bill. Councillor Phillips: My understanding is that it is a back foot.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q Again, I would look at the actual history of what happened. The industry committed to private assets under the previous Government, and it is failing to deliver on that because of collective action challenges. You have to face up to this at the level of the sector as a whole; I am afraid you are giving answers that are very happy with the status quo, the way you are describing it. I would reflect that it is definitely a failure of fiduciary duty over the last 10 years not to have made more progress. Helen Forrest Hall: Just to give my own perspective, there are a number of structural issues with the development of the sector. Defined benefit has been in run-off, which has driven a particular type of investment strategy. DC has not been at scale, and a number of us in the sector have been calling for consolidation for a long time. I think it goes without saying that we are having this conversation in the context of being very supportive of the vast majority of provisions in this Bill.

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  indicated dissent. Councillor Phillips: It is not a back foot?

• 2 Sept 2025 · Pension Schemes Bill (Second sitting) · Hansard source

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  Q The other thing to touch on is that all the pools are moving towards FCA authorisation. What is your experience of that? Obviously, you are further ahead than most. Rachel Elwell: This is before I was employed to bring it to life. This is a decision our partner funds made really early, because they recognised the real benefits that can come from being FCA regulated. This is really important. We will hopefully be managing over £100 billion on behalf of the LGPS, and a good proportion of that is managed directly within my team. We are managing that for, hopefully, 18 different customers—effectively, investors and our owners. We need to have those disciplines in place, and we need to make sure that we are following those regulations. We do not need another regulatory set. There are already some very good, strong regulations that exist, so we, as a partnership and as a company, think that is the right thing to do.

• 1 Sept 2025 · Topical Questions · Hansard source

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  I thank the hon. Member for his question. We discussed this issue at some length in the statement before the recess. He knows that the priority for the Labour party has been to raise the state pension by committing to the triple lock throughout this Parliament at a cost of £31 billion a year. For the new state pension, that will mean an increase of £1,900 a year by the end of this Parliament. On winter fuel payments specifically—and I thought this was the Conservative party’s position—most people think that we should not be paying hundreds of pounds to the very richest pensioners. We have listened to concerns and raised the threshold, but it is important to maintain that principle. If the Conservatives’ position is now that they want a return to universal winter fuel payments, they need to have a word with the Leader of the Opposition, who has not supported universal winter fuel payments or, indeed, a universal state pension.

• 1 Sept 2025 · Topical Questions · Hansard source

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  I thank my hon. Friend for his crucial question. That is exactly why we have revived the landmark pensions commission. We have to confront the reality that we are on track for tomorrow’s pensioners to be poorer than today’s. Auto-enrolment has been a huge success, with 88% of eligible employees now saving, but 45% of working-age adults, including 3 million self-employed and one in four low earners, are currently saving nothing. The commission will ensure that we build a pension system that is strong, fair and sustainable.