Pension Schemes Bill — Committee (1st Day)

Part of the debate – in the House of Lords at 5:30 pm on 7th January 2015.

Alert me about debates like this

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Lord in Waiting (HM Household) (Whip) 5:30 pm, 7th January 2015

I thank noble Lords who have participated in the debate on these amendments. The amendments in this group all relate to governance, and the Government recognise and agree that governance is key to effective choice in the pensions arrangements that are being brought forward. The amendments relate to governance in relation to various types of pension schemes in some way, shape or form, and, as I say, the Government recognise and agree that this is important. However, we believe that the new measures that we are delivering under the Bill, under the

Pensions Act 2014 and under the Financial Services and Markets Act, as well as the proposed draft Financial Conduct Authority rules, seek to address the concerns raised in the most appropriate way.

Under powers in the Pensions Act 2014, this Government are introducing a new approach to governance standards for all workplace occupational pension schemes. These will come into force from April 2015. The Government’s commitment to improving the governance of workplace pension schemes was demonstrated in the Pensions Act 2014 and in the subsequent publication Better Workplace Pensions: Putting Savers’ Interests First, which was launched on 17 October last year. This confirmed the Government’s plans to introduce governance standards in all workplace money purchase occupational pension schemes from April this year.

The Financial Conduct Authority has also completed a consultation on draft rules for independent governance committees for workplace personal pension schemes, to ensure oversight of these schemes in members’ interests from April this year. These proposals are built on an earlier agreement between the Association of British Insurers and the Office of Fair Trading to establish independent governance committees, and go further by introducing these on a mandatory footing.

The October command paper also included a consultation on draft regulations to place minimum governance standards on occupational pension schemes which are money purchase or have money purchase elements to them. This consultation ended on 14 November 2014, and the Government are currently considering the responses. Subject to parliamentary approval and any changes as a result of the consultation, the governance measures in these regulations will commence from April this year. This is in response to the Office of Fair Trading which, after completing its market study in the summer of 2013, proposed minimum governance standards for workplace pension schemes.

I want to make it clear that the Government believe that the right way is to build on the current landscape. It is critical that legislation acts to support the market to flourish and also to ensure appropriate protection for members. However, the amendment—as we read it—could mean a radical and expensive reformulation of the ownership of funds which are not currently held under trust.