Big pieces of legislation that radically alter how pensions operate don’t happen very often. In fact, the last major change was the Pension Schemes Act 2017, which brought in master trust regulation. The Pension Schemes Bill is about to make its way through the House of Commons, following its progression through the House of Lords with some surprising defeats for the Government. More on that shortly…
The Pension Schemes Bill
The Bill lays the groundwork for the creation of the pension dashboards as an online portal that will allow people to see details of all their pension entitlements in one place. The portal is intended to support a public, non-commercial dashboard run by the Money and Pensions Service (MaPS) and commercial dashboards run by individual pension providers.
Many people have more than one pension pot. The DWP estimates that people will have an average of 11 jobs in their lifetime with possibly a pension pot for each. People will ask, “what have I got and where is it?” and dashboards will give them that window on their savings. As Baroness Jeannie Drake commented, “Technology should be harnessed for the public good, empowering and informing citizens. The dashboard has that potential by reuniting the consumer with all their savings pots, including smaller ones that they may have lost track of.”
Our policy ‘asks’
Since the Bill was re-introduced in January (following the pause for the general election), we’ve been setting out what we’d like to see with members of the Commons and Lords and in behind-the-scenes meetings with civil servants. These policy ‘asks’, as we call them, fell into two categories:
- The provision of a public (non-commercial) dashboard run by MaPS first, gaining consumer trust, before commercial dashboards are introduced; and
- Reassurance that commercial dashboards can’t be used as a sales channel, without protecting consumers from mis-selling and other risks so often associated with pensions.
The Government suffers two defeats
Although the Bill had wide cross-party support, a number of peers (members of the House of Lords) shared our concerns about consumer protection. The Government introduced a clause requiring MaPS to provide a public pensions dashboard service, which was welcomed by all parties, but two surprising defeats lay ahead for them.
Firstly, the Government was defeated on an amendment tabled by Baroness Jeannie Drake that ensures that commercial dashboards cannot enter the market until the MaPS dashboard has been up and running for at least one year. As Baroness Altmann commented, “This will allow consumers to become used to the concept of dashboards, find their way around their pensions and have some guidance as to their possible options for the future. With the rise in numbers of people who may be tempted to cash in their pensions, or buy other financial products that might not be right for them, it is more important than ever to ensure their pension funds are better safeguarded.”
The Government was also defeated on an amendment that ensures any private commercially-run dashboards should not be allowed to carry out transactions without Parliament approving new regulations setting out how this should work. Peers on all sides of the House were concerned that a privately-run dashboard that was ‘transactional’ could pave the way for transfers that may not be in people’s best interests, or enable the selling of inappropriate financial products.
The Bill will be introduced into the Commons on 7 October. We’ll be watching closely to see whether the Government chooses to retain this newly-won consumer protection or whether it uses its large majority to overturn it. We’ll keep you posted.
You can explore our briefing papers and consultation responses in the policy section of our media centre.
Samantha Wilding is a former Health Policy and Public Affairs Lead for B&CE.