Torsten Bell MP: speeches 2025

Speeches

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

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  Let me just finish the point about the financial crisis, then I will come to the hon. Member’s question. The lesson from the financial crisis was that banks were too big, and the lesson that we all agree about is that pension schemes are too small. That is the distinction—that is why we are doing this Bill now and why the previous Conservative Government introduced different changes after the financial crisis. We are in a very different situation. That said, we need to prepare for the future and, when there are bigger pension schemes, we want a world where new entrants can come into them. I hear what has been said. I want to reassure the hon. Gentleman that we want to see new entrants offering innovative products. I take the point about services, which we will come back to when we come to amendment 113, but that needs to be a pathway, not a permanent carve-out that risks undermining the scale requirements. Question put, That the amendment be made.

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

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  I thank the hon. Member for Torbay for tabling the amendment. The Government share his commitment to ensuring that the pot limit remains appropriate. As we have just heard, it is a matter of consensus, and it is good to debate how we best do that. The Government’s view is that the amendment is not necessary at this stage. Clause 32 already enables the Government to undertake a review at any time. That is a deliberately flexible approach that allows us to respond to developments in the market—not least reflecting on the question from the hon. Member for Aberdeen North about inflation—but also to any other material changes, and it empowers the Government to act when needed. The amendment risks creating unintended consequences with a rigid cycle of Government reviews, which might mean that reviews do not happen when there is a good reason for looking at the matter, and that the Secretary of State is forced to carry them out when there is no rationale for doing so. We favour a more flexible approach. I take seriously the request for clarity that there will be regular reviews, and I can give that clarity. That is the intention. A wider question has been raised about the success of the policy and its monitoring, which is separate from the level of the threshold. Changes to the threshold might be one response to success metrics, but others might be about the operation of the consolidation process more generally. I commit to actively monitoring those—not least what is happening to people’s pots as they are moved, how people are responding to that and levels of awareness. That is exactly what we need to be doing, irrespective of what happens on the scale of the threshold over time. There is cross-party consensus on the objective here. We have taken a slightly different view on the flexibility of that review and how often it happens, but I give all hon. Members a commitment that that will happen.

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

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  I beg to move amendment 53, in clause 38, page 35, leave out lines 35 and 36. This amendment is consequential on Amendment 129.

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

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  This group amends sections 20 and 26 of the Pensions Act 2008, which deal with the quality requirements that a master trust and a group personal pension scheme must satisfy. The amendments will improve the operability of the new sections. In particular they will allow, via regulations, relevant master trusts and GPP schemes that have previously received transition pathway relief—the relief that allows schemes that do not reach the £25 billion threshold in 2030, but are on course to do so soon—afterwards to be treated as if they had scale approval on a temporary basis once the pathway ends. The amendments will also allow the Pensions Regulator to determine that a relevant master trust may be treated as meeting condition 2 of new section 20(1A) of the 2008 Act without a direct application from the master trust concerned. The effect of that is to allow the regulator to delay the impact of not meeting the scale or asset allocation requirements and to enable steps to be taken to protect members and support employers. A similar requirement for GPPs will be inserted into section 26. Government amendments 130 and 132 amend the provision in the 2008 Act that deals with the parliamentary scrutiny process relevant to regulations made under the Act. These amendments make sure that all significant powers to make regulations as part of the scale and asset allocation measures are subject to the affirmative procedure. Amendment 47 agreed to. Amendments made: 48, in clause 38, page 35, line 16, leave out from “determine” to “Master Trust is” in line 17 and insert “that a relevant” This amendment means the Regulatory Authority can determine that a relevant Master Trust is to be treated as meeting Condition 1 of subsection (1A) without an application from the Trust. Amendment 49, in clause 38, page 35, line 18, after “1” insert “or Condition 2” This amendment means that regulations can allow the Regulatory Authority to determine that a relevant Master Trust is to be treated for a period as meeting Condition 2 (the asset allocation requirement) as well as Condition 1 (the scale requirement). Amendment 50, in clause 38, page 35, line 20, leave out from “Authority” to end of line 21 This amendment removes some unnecessary wording for consistency with the corresponding amendments to section 26 of the 2008 Act. Amendment 51, in clause 38, page 35, line 28, at end insert— “(c) make provision about the Regulatory Authority requiring the trustees or managers of a relevant Master Trust to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement under section 28A or the conditions for approval under section 28C.” This paragraph allows regulations to give the Regulatory Authority a power to require the trustees or managers of a relevant Master Trust to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement. Amendment 52, in clause 38, page 35, line 32, leave out “28A(1)” and insert “28A(12)” . — (Torsten Bell.) This amendment updates a cross-reference.

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

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  I am glad we are all thoroughly confused. Three broad approaches have been set out to this small pots problem. The first is the one that the Bill takes forward, which is the multiple default consolidation solution—the automatic sweeping up of small pots into consolidated schemes to make everyone’s lives easier. Members would have one large scheme, or several larger schemes, but no really small schemes that they had to consolidate themselves. They could then choose to consolidate those larger schemes as they wished; there is a debate to be had about the size of the threshold in future. That is an automated approach. One thing that is really important, about the point on average returns made by the hon. Member for Wyre Forest earlier, is that this is not about average. A scheme can only be a consolidator if it offers good value, so a pot cannot be swept into one that does not. There has been much debate about other approaches over the years, and I have tried to distinguish between two of them. They aim to provide more of what has been debated here, which is slightly more ownership of one pot by the individual. However, “pot follows member” is, in practice, still maintaining the relationship between an employer and a single provider. It is not the individual but the employer who chooses the scheme. That is the approach we are rejecting today. There is then a longer-term discussion about whether there are attractions to a lifetime provider. That is the case in some of the countries that have been mentioned—the “stapled to your lapel” model—where it is the individual who chooses their provider; obviously to some degree individuals can opt out now if their employer is happy. That is not on the table here. It needs to be considered, but it is a much more fundamental change to the relationship between the employers and the pension schemes.

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

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  I offer reassurance, as we will shortly come to the end of the amendments for substantive debate. This group of amendments deals with the main scale default arrangement, along with the scale test and penalties. The MSDA is the pool of investments against which scale will be assessed. As I mentioned, the definition of that is obviously central to the effective enforcement of the scale requirements. Key among these amendments are Government amendments 72 and 91, which set out some of the details of the MSDA for master trusts and group personal pensions, including that it can be used for the purposes of one or more pension schemes, and that the assets held within it are those of members who have not chosen how they are invested. Regulations will be made that cover other matters, including the meaning of “common investment strategy”. The details we set out in these amendments reflect the invaluable input we received from pension providers and regulatory bodies. The remaining amendments in the group relating to the MSDA largely clarify how it fits into the wider approval requirements in the new sections 28A and 28B. Moving on to scale, Government amendments 69 and 85 clarify the circumstances in which assets held by connected master trusts and group personal pension schemes, or where the same provider runs a GPP and master trust, can count towards the scale test. This is to ensure that, where appropriate, assets managed under a common investment strategy where there is a family connection between the master trust and GPP scheme, and where they are used for the same purpose, can be added together to achieve the £25 billion requirement. Government amendment 71 ensures that the provisions governing penalties are consistent between the TPR and the FCA. Government amendment 90 ensures that regulations can provide for appeals to the tribunal in respect of penalties under regulations under new section 28C(9)(c). Amendment 63 agreed to.

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

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  I just point out that many of the measures in the Bill will support exactly that kind of investment in social housing, including those on scale and the local government pension scheme. On that basis, I think these amendments are unnecessary. Ordered, That the debate be now adjourned.— (Taiwo Owatemi.)

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

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  It’s very exciting!

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

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  I beg to move amendment 44, in clause 38, page 34, line 27, leave out “‘other than an authorised Master Trust scheme’” and insert “‘that is not a relevant Master Trust and’”. This amendment clarifies a verbal ambiguity in the amendment of section 20(1) of the Pensions Act 2008.

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

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  The Committee is being very patient so I shall speak briefly to this group. This group is centred around amendment 129, which sets out the interpretation of a number of terms used throughout the clause and consolidates them in new subsection (14). Key among these is the interpretation of “group personal pension scheme”, which is amended after discussion with the Financial Conduct Authority to ensure that only schemes where all members select their investment approach are excluded from the application of clause 38, to ensure that the vast majority of workplace schemes are covered by the clause. The remaining amendments in this group are consequential to amendment 129. Amendment 53 agreed to. Amendments made: 54, in clause 38, page 36, leave out line 12 and insert— “(a) has previously been approved under section 28D (transition pathway relief) and is to be treated in accordance with regulations as if it had approval under section 28B,” This amendment allows for group personal pension schemes that have previously received transition pathway relief to be treated as if they had scale approval. Amendment 55, in clause 38, page 36, line 15, leave out “(7C)(a)” and insert “(7A) or (7B)” This amendment ensures that new subsection (7D) applies both to exemptions from the scale requirement and to exemptions from the asset allocation requirement. Amendment 56, in clause 38, page 36, line 20, leave out “authorise” and insert “permit” This amendment ensures consistency with the equivalent language used for Master Trusts. Amendment 57, in clause 38, page 36, line 20, leave out “, on an application by the scheme concerned,” This amendment means the Regulatory Authority can determine that a group personal pension scheme is to be treated as meeting the scale or asset allocation requirement without an application from the scheme. Amendment 58, in clause 38, page 36, line 22, leave out “and sixth conditions” and insert “or sixth condition” This amendment allows for a determination by the Regulatory Authority under subsection (7E) to be made in relation to one or other of the scale and asset allocation requirements (rather than only in relation to both). Amendment 59, in clause 38, page 36, line 31, at end insert— “(c) make provision about the Regulatory Authority requiring the provider of a group personal pension scheme to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement under section 28B or the conditions for approval under section 28C.” This paragraph allows regulations to give the Regulatory Authority a power to require the provider of a group personal pension scheme to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement. Amendment 60, in clause 38, page 36, line 35, leave out “28A(1)” and insert “28B(12)” This amendment updates a cross-reference. Amendment 61, in clause 38, page 36, leave out lines 36 and 37 This amendment is consequential on Amendment 129. Amendment 62, in clause 38, page 37, line 4, at end insert— “(c) in paragraph (c), at the end insert “, except so far as those requirements relate to Condition 1 or 2 in section 20(1A)”” . — (Torsten Bell.) This amendment ensures that the requirements mentioned in section 28(3)(c) of the Pensions Act 2008, so far as they relate to the new scale and asset requirements, are not a “relevant quality requirement” for the purposes of that section.

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

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  Clause 30 seeks to ensure that the rules and conditions set by the regulations are, in practice, followed. These regulations can allow the Pensions Regulator to issue three types of notices: a compliance notice, requiring a person to take specific steps to comply; a third-party compliance notice, directing someone to ensure another party’s compliance; and a penalty notice, imposing a financial penalty for non-compliance or a breach of the regulations. If a scheme fails to comply with the regulations or with a notice issued under them, the Pensions Regulator can impose a financial penalty capped at £10,000 for individuals and £100,000 in other cases. The clause also enables regulations to provide for appeals to the first-tier or upper tribunal, ensuring procedural fairness and accountability. All those are standard approaches to pensions legislation. Clause 31 gives the Treasury the power to make regulations to enable the FCA to monitor and enforce compliance with the small pots consolidation framework for contract-based schemes. It ensures that the FCA can act decisively to protect consumers and uphold the integrity of the system. Clauses 30 and 31 ensure consistent standards across the pensions market as we look to enforce these measures. Any regulations made under clause 31 must go through the affirmative procedure, ensuring parliamentary oversight. Amendments 41 and 42 seek to clarify the definition of the term “FCA regulated” when referring to an authorised person in the context of the legislation. The amendments seek to provide greater clarity by ensuring harmony and removing any ambiguity between clause 30(1) and clauses 31 and 34. They ensure that the Pensions Regulator is not inadvertently prevented from regulating a trustee of a pension scheme solely because that trustee is also regulated by the Financial Conduct Authority in a separate capacity. The amendments are purely technical clarifications, and I ask the Committee to support them. I commend the clauses to the Committee.

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

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  I beg to move amendment 47, in clause 38, page 35, line 1, at end insert— “(ba) has previously been approved under section 28D (transition pathway relief) and is to be treated in accordance with regulations as if it had approval under section 28A,”. This amendment allows for relevant Master Trusts that have previously received transition pathway relief to be treated as if they had scale approval.

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

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  It is a pleasure to serve under you today, Ms McVey. We recommence our consideration of the small pots part of the Bill. I thank all Members for their engagement during the sittings last week. Clause 27 is fundamental. It allows regulations to be made to create an authorisation and supervisory framework for pension schemes to become authorised consolidators. This framework will allow master trusts to apply to the Pensions Regulator to become authorised, on the basis that they meet certain conditions and standards, including the value for money test we discussed at length last Thursday. The clause also ensures ongoing oversight. If a scheme no longer meets the standards, regulations can enable the Pensions Regulator to step in to require the trustees to take prescribed steps and, ultimately, to withdraw authorisation if necessary. That ensures better outcomes, not just fewer pension pots. The clause represents a vital safeguard in the small pots framework. Clause 28 provides a definition of a “consolidator scheme” and “consolidator arrangement”. A “consolidator scheme” can either be an authorised master trust or a Financial Conduct Authority-regulated pension scheme that appears on a designated list published by the FCA. A “consolidator arrangement” refers to a specific part of the scheme that is intended to receive small pots. This reflects the structure of pension providers that operate in the UK. Some pension providers offer multiple arrangements within their scheme whereas others may have a single arrangement or offering. The clause caters for both scenarios to ensure that regulators can focus on the particular arrangements that will require authorisation. To simplify: in practice, all schemes will be authorised by specific arrangement, but there will be some occasions where schemes may only have a single arrangement so the whole scheme will be authorised. By having at least one authorised arrangement, schemes or providers will be authorised consolidators.

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

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  I beg to move amendment 63, in clause 38, page 37, line 11, after “requirement” insert “by reference to the main scale default arrangement” This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28A.

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

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  I thank the hon. Member for that comment. The nature of every piece of legislation means that a future Government can take a different decision. Thanks for the reminder of the nature of British politics—that is how it operates. I am slightly more relaxed than she is, because there will be significant pressure from the industry, and from everybody, to keep this under review. That is not a matter of controversy. It is conceivable that there may be a Government who are steadfastly against ever again looking at the small pots threshold, but having lived through the last 15 years, I would put that low down the list of uncertainties in British politics. However, I take the intention behind the hon. Lady’s point, and I promise never to assume that Labour will win every election from now until eternity.

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

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  I thank hon. Members for their reflections. I agree with the sentiment of what everybody has put forward, including the hon. Member for Mid Leicestershire—apart from his worryingly weak patriotism.

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

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  I beg to move amendment 36, in clause 29, page 27, leave out lines 14 and 15. This amendment clarifies that small pots regulations may confer rights of appeal more broadly than just in relation to the refusal of an application for authorisation.

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

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  Clause 29 will make the small pot consolidation framework work in practice, through allowing the small pots regulations to cover a range of operational, administrative, data protection and consumer protection matters. It enables the Pensions Regulator to charge a fee for authorisation and gives applicants the right to appeal if their application is refused. Regulations will be able to require trustees and scheme managers to maintain and improve records, and they will protect members from high transfer fees. The clause enables the delegation of functions and powers to the Pensions Regulator, the FCA and the small pots data platform operator. It ensures that data protection and privacy obligations are respected, while allowing necessary data processing to support the scheme’s efficient operation. The clause will allow the Government to amend existing legislation to support the small pots consolidation framework. Examples of uses of the power include giving the Pensions Ombudsman new powers to investigate member complaints, and ensuring that the small pots data platform is properly funded through the general levy. Pensions law is complex and technical, and needs to evolve with time, so the Government need the flexibility to respond to those changes and regulators’ operational experience without having to table a new Bill every time. The Bill clearly sets out the multiple default consolidator framework. With targeted amendments, the clause will allow us to fine-tune the framework over time, ensuring operational effectiveness. Any use of so-called Henry VIII powers will be subject to the affirmative procedure. The clause is essential for the practicality, reliability and integrity of the small pots consolidation framework to ensure it is fit for purpose now and for the future. The Government amendments to the clause are purely technical drafting improvements. Amendment 36 clarifies that appeal rights for schemes are not limited solely to decisions regarding an application for authorisation, so one could appeal on other grounds. Amendment 37 provides further clarity on the liability framework that will be established to ensure that members are protected. It makes it clear that the small pots data platform operator or the trustees or managers of a relevant pension scheme can be made responsible for paying compensation to an individual who has suffered a loss as a result of a breach of the small pots regulations. Amendments 38 to 40 take account of the Data (Use and Access) Act 2025, which was passed by Parliament subsequent to the introduction of this Bill. The amendments do not alter the policy, and I ask the Committee to support them.

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

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  I beg to move amendment 70, in clause 38, page 37, leave out lines 39 and 40 and insert— “(b) what it means for assets of a pension scheme to be managed under a "common investment strategy" (including in particular provision defining that expression by reference to whether or how far the assets relating to each member of the scheme are allocated in the same proportion to the same investments).” This amendment provides more detail as to how the power to define “ common investment strategy” may be used.

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

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  I will be brief. The link between the definition of a main scale default arrangement and the common investment strategy is key to ensuring that the scale requirements apply to the correct elements of a pension scheme. Amendments 70 and 84 provide more detail on how the power to define a common investment strategy may be used to provide further information on the Government’s meaning when referring to that term. Amendment 97 removes the “common investment strategy” element from the definition of default funds to avoid confusion with how that term is used in the main scale default arrangement approval in new sections 28A and 28B. I commend the amendments to the Committee. Amendment 70 agreed to. Amendments made: 71 in clause 38, page 38, leave out lines 32 to 38 and insert— “(d) permitting the Authority to impose, on a person who fails to comply with a requirement under paragraph (c), a penalty determined in accordance with the regulations that does not exceed £100,000;”. This amendment ensures that the penalties language used in section 28A is consistent with that used in new section 28B. Amendment 72, in clause 38, page 39, leave out lines 1 to 4 and insert— “(12) In this section ‘main scale default arrangement’ means an arrangement— (a) that is used for the purposes of one or more pension schemes, and (b) subject to which assets of any one of those schemes 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.” This amendment defines “main scale default arrangement” for the purposes of new section 28A. Amendment 73, in clause 38, page 39, line 7, leave out “relevant”. This amendment removes an unnecessary tag. Amendment 74, in clause 38, page 39, line 10, after “requirement” insert— “by reference to the main scale default arrangement”. This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28B. Amendment 75, in clause 38, page 39, line 12, after “requirement” insert— “by reference to a main scale default arrangement”. This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28B. Amendment 76, in clause 38, page 39, line 16, leave out “subsection (6)” and insert “subsections (5) and (6)”. This amendment adds a further cross reference to new section 28B(4). Amendment 77, in clause 38, page 39, line 17, leave out “held in funds”. This amendment removes some unnecessary wording for the sake of consistency. Amendment 78, in clause 38, page 39, line 18, at end insert— “(ia) are held subject to the main scale default arrangement, and”. This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28B. Amendment 79, in clause 38, page 39, line 20, leave out “held in funds”. This amendment removes some unnecessary wording for the sake of consistency. Amendment 80, in clause 38, page 39, line 24, at end insert— “(ia) are held subject to the main scale default arrangement, and”. This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28B. Amendment 81, in clause 38, page 39, line 27, leave out “held in funds”. This amendment removes some unnecessary wording for the sake of consistency. Amendment 82, in clause 38, page 39, line 27, leave out— “one (and only one) relevant” and insert “a qualifying relevant”. This amendment corrects a reference to a relevant Master Trust in new section 28B(4)(c) to take account of new section 28B(8). Amendment 83, in clause 38, page 39, line 30, at end insert— “(ia) are held subject to the main scale default arrangement, and”. This amendment clarifies how the concept of a main scale default arrangement fits into the approval framework under section 28B. Amendment 84, in clause 38, page 39, leave out lines 38 and 39 and insert— “(b) what it means for assets of a pension scheme to be managed under a ‘common investment strategy’ (including in particular provision defining that expression by reference to whether or how far the assets relating to each member of the scheme are allocated in the same proportion to the same investments).” This amendment provides more detail as to how the power to define “common investment strategy” may be used. Amendment 85, in clause 38, page 40, line 3, leave out from “(4)” to end of line 6 and insert— “(a) a group personal pension scheme is ‘qualifying’ in relation to the GPP if the provider of the GPP is also the provider of the group personal pension scheme; (b) a relevant Master Trust is ‘qualifying’ in relation to the GPP if the provider of the GPP is also the scheme funder or the scheme strategist in relation to the relevant Master Trust (within the meaning of Part 1 of the Pension Schemes Act 2017).” This amendment clarifies the circumstances in which assets held by connected Master Trusts and group personal pension schemes can be counted for the purposes of the application of the scale test to a group personal pension scheme. Amendment 86, in clause 38, page 40, line 19, leave out “relevant Master Trust or”. This amendment removes an unnecessary reference to a relevant Master Trust. Amendment 87, in clause 38, page 40, line 25, leave out— “managers of the GPP that their” and insert— “provider of the GPP that its”. This amendment replaces a reference to the “managers” of a GPP with “provider” (reflecting normal usage in relation to personal pension schemes). Amendment 88, in clause 38, page 40, line 27, leave out “the managers” and insert “the provider”. This amendment replaces a reference to the “managers” of a GPP with “provider” (reflecting normal usage in relation to personal pension schemes). Amendment 89, in clause 38, page 40, line 35, leave out— “considered by the Authority to have failed” and insert “who fails”. This amendment ensures consistency with the new language in section 28A. Amendment 90, in clause 38, page 40, line 38, at end insert— “(e) providing for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty.” This amendment ensures that regulations can make provision for appeals to the Tribunal in respect of penalties under regulations under new section 28C(9)(c). Amendment 91, in clause 38, page 40, line 42, leave out from beginning to end of line 3 on page 41 and insert— “(12) In this section ‘main scale default arrangement’ means an arrangement— (a) that is used for the purposes of one or more pension schemes, and (b) subject to which assets of any one of those schemes 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.” — (Torsten Bell.) This amendment defines “main scale default arrangement” for the purposes of new section 28B.

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

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  We now come to the sections of the Bill that bring in the pensions investment review measures, particularly those on setting minimum scale levels required by schemes. Before I briefly describe these amendments, I remind the Committee of the purpose of clause 38, which we will probably be discussing for a substantial period. The clause will insert new scale requirements, which we do intend to use, and asset allocation conditions, which we do not, into the Pensions Act 2008. Specifically, it inserts them into section 20, which deals with the quality requirements in UK money purchase schemes for master trusts, and section 26, which provides equivalent requirements for group personal pension schemes.

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

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  I thank the hon. Member for Wyre Forest for tabling these amendments. We all recognise the importance of innovation in the pension landscape, but I respectfully oppose the inclusion of the amendments in the Bill. One point that is at risk of being lost from the discussion so far is the central insight that is the motivation for this clause, which is that scale really is important. Scale really does matter. It has the potential to unlock a wide range of benefits, from better governance to lower costs, to access to a wider range of assets. All of those are integral to improving member outcomes, and if we provide many carve-outs, every scheme will say it is a specialist provider that should not be covered because its members value its inherent difference from every other, and we risk undermining the premise that I think has cross-party agreement, which is that we need to move to a regime of bigger schemes. One of our aims in this Bill, which is relevant to the asset allocation discussion we just had, is to provide clarity that the change will happen, people will not duck and dive around for years attempting to litigate what is and is not a specialist provider and so on. Innovation is really important, as is competition in the market, but we need to do this in a way that does not undermine the purpose of the scale requirements, which I think is a matter of cross-party consensus. Having said that, while innovation in the market is important, the Government’s view is that it is not an alternative to achieving scale. That is why we have provided for a new market entrants pathway. There, the innovation grants a temporary exemption from scale requirements, not a permanent exemption as the amendments would enable. That is because scale is very important indeed. Applicants to the pathway will be able to enter the market if they can demonstrate they have strong potential to grow to scale, and if they have some kind of innovative design. That is not a permanent exemption from scale requirements, and there should be cross-party consensus on avoiding that. To provide reassurance on some of the points that have been raised, I emphasise that the scale requirements apply only to providers’ default offers. Providers of specialist offers and the rest, and self-invested personal pensions, are all able to continue to offer those specialist services, but the main offer in the workplace market does need to meet scale requirements. I hope with that explanation, hon. Members will not press the amendments.

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

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  Let me first respond to the thrust of the comments from the Opposition; I will then come directly to that question. I am conscious that, having sat through Second Reading, most hon. Members have heard my views, and the Government’s views, on this, but let us set out the facts. It is the industry itself that set out the case for change. That is what the Mansion House accord does: it says that a different set of asset allocations is the right way to go in the longer term. I support the industry’s judgment. The previous Conservative Pensions Minister has welcomed its judgment. I think it is the view of every senior Conservative ex-Minister sitting on the Opposition Back Benches that that change needs to come. [ Interruption. ] I am not speaking for the Opposition Front Bench; the hon. Member for Wyre Forest has just spoken eloquently for himself. I am speaking for former Conservative Ministers, including former Chancellors. If anything, they accuse me of being too timid—I am not sure what the characterisation of their current Front Bench would be in that regard. That is the status of the debate on this. Why is there consensus? Leaving aside some of the points that have been raised, it is because this is in savers’ best interests. That is the motivation and the goal. It is also wrong to set out the conflict in terms as broad as the hon. Member for Wyre Forest has just used, because there is a clear savers’ interest test within the Bill that enables trustees or scheme managers to say that proceeding in a certain way would not be in the interests of their savers, and the asset allocation requirements would not bite. Turning directly to the question about unreasonable Ministers—I have heard rumours of such things. They can exist, and there are protections against them: there are the usual judicial review protections, but in the Bill there are specific requirements to provide a report justifying any use of the reserve power and how it would play out. There are significant limits on the assets—it is broad asset classes—that can be set out in an asset allocation and there are limits to which assets can be covered. There is the savers’ interest test, and importantly, there is a sunset clause for exactly the reason that we cannot predict what 2040 looks like today. I recognise that hon. Members will not support that part of the clause, but I hope they recognise that the goal is the same, which is that a change in investment behaviour is in savers’ interests. That is what the industry is telling us. As I said last Tuesday, the danger of a collective action problem—the problem that saw commitments made by the industry and the previous Conservative Government not delivered—is partly what this reserve power helps to overcome. I have absolutely heard the points made about the volume of amendments. They are on the record, as will be all the points made during this process. To answer the question directly, the reason there are so many is that we had lots of useful feedback from industry over the summer, and I wanted to provide more clarity through the clause and make sure that we had the best version of it. We did not want to leave it until Report, so people have had a chance to see it as we go through Committee. I absolutely recognise the points made, and the specific point about the drafting choice of a large number of amendments versus an additional clause. I am sure the drafters will have heard that comment. Amendment 44 agreed to. Amendments made: 45, in clause 38, page 34, line 32, leave out “Conditions 1 and” and insert “Condition 1 and Condition”. This amendment makes a minor verbal change to facilitate differential commencement of the scale and asset allocation conditions. Amendment 46, in clause 38, page 34, line 37, leave out “of that scheme”.— (Torsten Bell.) This amendment reflects the fact that a main scale default arrangement may be used by multiple schemes.

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

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  I am reassured that our agreement that scale is the desirable outcome is clear. It is great to have that on the record. I also put on the record that there is agreement about the value of innovation and about new entrants. I think that the only distinction is between a new entrant that then grows and a new entrant that does not. Our approach is to allow new entrants, but they need to be ones with a plausible sense that they can get to scale. Inherent to most of the innovation in the market—for example, in collective defined-contribution schemes—is that they would have to operate at scale to be effective. I think that the banking analogy is actually quite apt.

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

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  I shall speak briefly because I am conscious that we need to adjourn shortly for Treasury orals, which I know everybody will be joining us for. I will not rehearse the arguments I have already set out against the purpose of amendments 248 and 249, other than to note that I do not agree with the characterisation by the hon. Member for Mid Leicestershire. Amendment 275 seeks to prevent the Government from designating securities in UK water companies as qualifying assets for the purpose of the asset allocation requirement. I recognise the points that the hon. Member for Wyre Forest made, and I am not surprised to hear that Reform has not thought through its policies in this regard. The Government have set out the safeguards we have put in place around the use of this power. We do not think we should single out a particular sector in primary legislation, so I ask Members not to press their amendments. I thank the hon. Member for Horsham for introducing new clause 4. The investment he references is exactly the kind that we think would raise financial returns and improve quality of life at retirement. That is the purpose of these changes. He rightly raises the bringing together of the demand side—that is, the Mansion House accord and the change in investment behaviours—with the supply side. That is exactly what the Government are doing via planning permissions and everything else, to ensure that the pipeline of projects is there, including via the British Growth Partnership work, which is intermediating all of that. On that basis, we think that the new clause is unnecessary, but I completely agree with much that it contains.