Clause 62
Pensions Bill
4:00 pm
Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)
It is a pleasure to see you in the Chair, Mrs. Anderson.
I should like to continue our discussion on the Personal Accounts Delivery Authority. Clause 61 concentrates on its functions and clause 62 deals with the broad principles under which it should operate. The group of amendments has two aims. Through some of the amendments, we seek to clarify and set out important principles in the Bill. In others, we seek to specify the area in which PADA should operate. It is clear from our debate on clause 61 that we believe that some aspects of the Bill set PADA’s remit too wide, so it is important to set down the clear principles and priorities.
Amendment No. 160 would add to the principles under which PADA should operate. It should have an overriding duty to act in the best interests of members and future members of the scheme. It has a clear job to do and a set time period in which to do it. It should be clear right from the start that its prime purpose is to act in the best interests of members and future members. There is a great danger, given the different relationships among the Pensions Regulator, the Secretary of State and occupational pensions, that PADA could lose focus. Our amendment would prevent that.
Amendment No. 161 also addresses the purpose of PADA and what it should seek to do. Everyone accepts that it will not be appropriate for every eligible person to sign up to a personal pensions scheme. It is vitally important that only those for whom personal accounts are appropriate are signed up. We do not want PADA to go out and try to sign up all and sundry. We know that there is a huge pool of people who currently do not have an occupational pension scheme, and they might well be the target market. Once we have established that, we have to start looking at who is appropriately eligible to be signed up.
It might be a case of simply saying that anyone who earns within a certain range would be appropriate, but this comes down to the debate that I am sure we will have once the Thoresen report is published about what is the appropriate generic advice and information that is provided, and even, as the hon. Member for Eastbourne said this morning, whether the guidance is appropriate. We need to be sure that there is a target market, and we should aim it at the appropriate employees.
Amendment No. 162 would ensure that qualifying schemes—those that PADA will have responsibility for setting up—would fit within clause 50. The use of broad language and talk about qualifying schemes is part of the unfocused thinking that pervades certain aspects of the Bill. We are talking about personal accounts and schemes for people who do not have occupational pension schemes, and we need to define tightly what those qualifying schemes should be. The best way to do that is to use clause 50, which sets out clear parameters for the scheme, if it is to come within the criteria. PADA has a very short life and an awful lot to do, and we believe that some of its remit is too wide. It needs to concentrate on its core objective, and if that is to set up PAs, the Bill should say so.
Amendment No. 106 would insert who the target market is into the set of principles by which PADA operates. That is important. We want to send out clear messages that it is not meant to compete with or replace occupational pension schemes, and that it is for people on low incomes and those who are not saving enough for retirement. This goes back to a discussion on an earlier amendment.
The Equality and Human Rights Commission gives clear figures in its briefing on who should be in the target market. It says that women are under-represented among employees earning more than £33,000, and over-represented among employees earning less than £5,000. Some 43 per cent. of female employees earn between £5,000 and £15,000, and disabled employees are also over-represented in that earning group. Those people are in the target market that we want PADA to concentrate on. This is about ensuring that PADA provides appropriate advice and guidance and that those people are signed up. If there is too much of a blunderbuss approach, the authority will lose some of its effectiveness. Taken with the Minister’s earlier assurance that there will be a review of how people on benefits or low incomes will be affected by various changes, we believe that amending the principles to set out how the measures should operate will send a clear message to people who might sign up to the scheme, and to PADA and the wider market, that this is what PAs are about.
With amendment No. 108, we are saying that PADA should act in the best interests of prospective members. We have talked about the importance of existing members and people who might sign up in the period leading up to PADA completing its work.
Amendment No. 109 also concerns a principle, so we are not talking about an operational matter. We are not prescribing how PADA should deliver its functions, but saying what its principles are. The first principle I stated was that it should protect the interests of prospective employees and scheme members. The second is that it should deliver a simple system of PAs. We want to ensure that we protect the interests of those signing up, and we want PADA to ensure that its products are for those who are most eligible and, predominantly, on low incomes and in certain sectors. Furthermore, the system provided to them must be simple to operate and understand.
We believe that our amendments would strengthen this clause by setting out some very clear principles to which PADA should adhere during the time span. I believe that they are neither unreasonable nor unworkable, nor that we would be saddling PADA with something that it could not deliver. We are trying to ensure that everybody is very clear about what personal accounts are for, who they are for, and how they will be delivered.