Clause 68
Pensions Bill
9:30 am
James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)
Good morning to you, Sir Nicholas. It is a pleasure to be serving under your chairmanship again. May I express my thanks to the hon. Member for South-West Bedfordshire and my sympathy for the Minister for Pensions Reform, who is obviously unable to be with us today for sad reasons? May I also welcome the hon. Member for Rochford and Southend, East? It is nice to know that our Committee’s deliberations are attracting new members because of the reputation that our proceedings are earning.
I turn now to the amendment that the hon. Member for South-West Bedfordshire has moved. I understand why he is raising the issue, but I think that there is a danger that he is over-anticipating—and potentially inflating—the problem that he sees. I will explain why a moment. I fear also that, by seeking to head off the problem that he anticipates, he is possibly inadvertently suggesting something that would be harmful to the existing rules for stakeholder pensions. By potentially inflating the scale of the problem, he could be causing a problem somewhere else. Let me go into that in more detail and try to explain why I have that view and why I hope that he will not press the amendment to a Division.
As the hon. Gentleman said, the amendment would remove two important conditions that define a stakeholder scheme: flexibility and portability. It would mean that stakeholder pension scheme members would no longer be able to pay money into their pension when it suited them, subject to the £20 minimum contribution limit provided for in existing regulations. That possibility is important because it enables people who have irregular or intermittent employment patterns to save when they are able to do so. The amendment would also remove people’s entitlement to transfer other pension rights into their stakeholder scheme, thus consolidating small pension savings that they might have elsewhere.
Both the flexibility to make payments and the ability to transfer pension funds would instead fall to the discretion of the pension provider, who could therefore make substantial changes to the current position. That would affect all those people who had bought the products on the understanding that their stakeholder pensions would continue to provide a flexible and portable pension vehicle. That would be a significant number of people, given that 3.9 million stakeholder contracts have been taken out since April 2001 and there are just under 2 million active members. The potential knock-on effect to existing holders of stakeholder pensions would therefore not be insignificant.