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It is a great pleasure to join in the debate. May I say how nice it was to have two such constructive contributions from the SNP? My friend Ian Blackford and Kirsty Blackman spoke from the perspectives of considerable industry knowledge and the view of a younger generation, which were extremely valuable in tonight’s debate.
I rise to congratulate the Government on introducing a Bill with the simple and absolutely correct objectives of providing essential protections for people saving in master trusts and giving those people the same security as members of single-employer schemes. That is the key thing. Many people listening to this debate will wonder what on earth a master trust is. The simple way to explain it is that it is a multi-employer occupational pension scheme. The question that many people will be asking is: why do these things exist in the first place? The answer is of course that they have advantages of scale. That means that small employers do not have to create their own trust; they can join an existing master trust, which can reduce their costs, administration and overall hassle, and that is incredibly important for a small employer.
The downside, unfortunately, is that master trusts do not, as a mandatory requirement, have to pursue the best interests of the scheme members. They can take a purely commercial approach to generating profit. Their trustees do not have to pass the fit and proper persons test, the master trust does not have to be authorised, and there is a question mark over what would happen to the assets in the case of the master trust failing.
For all those reasons, the Select Committee, under the chairmanship of my distinguished colleague Frank Field, looked at this issue in some detail last year. In effect, it made three key recommendations: first, that a pensions Bill should establish minimum finance and governance standards; secondly, that there would be ongoing requirements for master trust schemes and for compliance; and thirdly, that there should be measures to protect member assets in the event of a master trust winding up.
The report, which was written last May, was accompanied by a letter from the Chairman of the Select Committee to the Chancellor at the time, asking him to make sure that there would be a pensions Bill in the Queen’s Speech. To be fair, the Government have delivered precisely that. In fact, the previous Pensions Minister said she wanted a pensions Bill to provide stronger regulation of master trusts, and the current Parliamentary Under-Secretary of State for Pensions is now taking that forward and delivering the promised Bill.
I felt that Debbie Abrahams was a little curmudgeonly to say that the Bill was long overdue. In fact, it is being delivered surprisingly fast. As other Members have pointed out, although there have been a couple of cases of small master trusts failing, they have been taken over very swiftly and easily, and as far as we are aware, nobody has lost any money so far. The Bill is therefore slightly ahead of the curve in dealing, we hope, with the problem ahead and providing the necessary framework and structures.
The industry has responded constructively to the changes. If we look at the three main bodies that have responded—the Association of British Insurers, the Pensions and Lifetime Savings Association and NOW: Pensions, which is the snappily named pensions provider of Danish origin—we can see that all three have made constructive comments. Some of the comments will need to be taken up in the Public Bill Committee, but they have broadly supported the ideas that the Bill is putting forward.
In essence, the Government have focused on three separate items. First, there are the master trusts, which will have to be authorised. Secondly, there are the people—the trustees—who will have to pass the fit and proper persons test. Thirdly, there are the assets, which will have to be ring-fenced and protected. Those are all good things, although they raise one major question to which I hope my hon. Friend the Under-Secretary will respond in his winding-up speech. They require the Pensions Regulator to do a lot of important work, and there is a question mark over whether that body has the right resources. He will no doubt be able to tell us more about his discussions with the regulator and what they have agreed on resources. Without the right resources, these important changes will clearly not be implemented effectively.
There we have it: it is a simple and important Bill that everyone should support. The tone of this debate has been constructive. There will, however, be details to go through at the next stage of the Bill’s progress. For example, the PLSA has raised questions about whether the requirement for the scheme funder to be an independent entity is too onerous. NOW: Pensions has noted that only four master trusts have actually passed the master trust assurance framework full audit, which is disappointing. The ABI has questioned whether master trusts attracting members not connected to an employer—in other words, those in what is known as the decumulation phase—should be regulated by the FCA. Those three issues can be considered at the Bill’s next stage.
In closing, I just want to say that the Bill is important, and I am grateful to the Government for bringing it forward. Some good issues have been raised, and I will support the Bill.