The amendments cover at least three important, but distinct, areas: first, the uprating of the limit, secondly, the ability to transfer in or out of personal accounts and, thirdly, whether, in addition, there should be a lifetime limit. I disagree with much of what the hon. Member for Eastbourne has said about the second and third of those. However, on the first of those, the uprating of the annual limits, he makes a great deal of sense. Amendment No. 77 seeks an annual limit of £3,600 at 2005 prices that should then be uprated in line with the relevant index in the future. To have that in the Bill, just to be clear of the Minister’s intention, makes a great deal of sense. I will now turn to other issues where there are some grounds for disagreement.
The hon. Member for Eastbourne seeks to put in the Bill an absolute ban on transfers in and out of personal accounts. It is clear from what the Minister said elsewhere that that is a question that he seeks to review in 2017. That approach is probably a sensible one, but there are cases where, having had a period of stability in the initial phase of personal accounts—which I suspect is what the 2017 review is designed to achieve—there are circumstances in which to allow small transfers in and out would be appropriate.
We have talked previously about particular groups of people such as those with small pension pots or broken work records. Let us take as an example someone who has worked for two or three years in a relatively low income job, with a company pension scheme, who has perhaps built up a small pot which would be significantly lower than the trivial commutation limit. After a period out of work, they might come back into work and have a personal account again but have only the income and the time to build up a relatively small pot. It would clearly make sense, in due course, to allow those small pots to be combined, within appropriate limits, to allow the transfers in.
I accept what the hon. Member for Eastbourne says, and he is right that this point has been made strongly by PADA. He is right that Parliament should be conservative about adding unnecessary bells and whistles to the scheme, because the more bells and whistles that are added, the more complex it becomes and the harder it becomes to keep the charges at a low level. That would then have an impact on the benefits that members will receive. However, the critical word has to be “unnecessary”. There are some additional ways of contributing to personal accounts which I would not characterise as unnecessary bells and whistles, but which are potentially necessary to allow personal accounts to achieve their full objective. There is at least a genuine question to be asked about allowing the transfer in of other small pots so that there can be a combination which allows a decent degree of income to be realised in retirement. I hope that the Minister can say that the 2017 review will be a real review that will look at those issues in detail with a view to ensuring that the interests of members, particularly those I have described who might have a number of small pots, are met. That is why I strongly oppose amendment No. 29.
I turn now to the idea of having some additional lifetime contributions limit, which is embodied in amendment No. 103. It suggests that
“A member may make payments that are not contributions for the purposes of provision under subsection (1) up to a maximum of 2 per cent. of the standard lifetime allowance.”
Standard lifetime allowance, as the Committee will know, is currently £1.6 million. Two per cent. of this would be £32,000, approximately twice the current trivial commutation limit. We had an interesting debate about trivial commutation in which I proposed an amendment that the trivial commutation limit be increased. Amendment No. 103 would add a degree of flexibility to the system while not allowing excessive contributions to be brought in from outside. That would allow people in the target group—and this has to be of interest to the Committee—who are on low incomes and may only be able to make a relatively small contribution to their personal account, to make use of any windfall, legacy or inheritance they may have to build up what will be, in many cases, the only pension they have to ensure an adequate income in retirement.
While the hon. Member for Eastbourne is absolutely right that there would not be an employer contribution attached to any such transfer in, the obvious reason for such a transfer would be to allow growth to take place in that money so as to contribute to the overall retirement fund. That would allow them to reach a level at which they are able to benefit from an annuity or a regular income stream as opposed to a lump sum, which is all that they would be entitled to in a very small pot. I must confess that I was not in the Committee when the questions about advice were debated, though I have read with interest the record of those discussions. However, to say that the fact that such people will not be in a position to have advice is an argument against allowing a lifetime contribution limit, is not quite right. If we are to get the advice regime right—it is my understanding that that is what Otto Thoresen has been asked to look into, and it is certainly the basis on which my party’s proposals for the advice regime have been made—we must consider that there are a number of different aspects of life where better access to financial advice is needed by a range of people who will potentially be in the target audience for personal accounts. This is not just advice about personal accounts. Advice is needed about personal debt, for example.
Our suggestion—a national network of financial advice centres, perhaps operating through citizens advice bureaux—would clearly provide a vehicle where, if someone wished to ask a question about this sort of decision, they would be able to do so. People would be able to receive generic financial advice, not restricted to personal accounts, but dealing with a range of other circumstances. Such an approach would allow relevant questions on this sort of decision to be asked. So that is not a genuine objection to amendment No. 103.
I am very pleased to see that a number of stakeholders, who follow very closely the Committee’s deliberations, also support amendment No. 103. I note, for example, the EEF’s belief that individuals should be able to make the occasional lump-sum payment, in addition to the annual contribution, into a qualifying workplace limit such as personal accounts, provided this does not add disproportionately to the cost of administration, which must be kept as low as possible.
I am also pleased to note the support of Which?. It says that the Government should introduce a lump-sum contribution limit now to allow consumers to pay in lump sums such as inheritance, redundancy payments or bonuses, separate from an annual limit. That would help people to save for a comfortable retirement in line with their aspirations, and allow millions of people to achieve their aspirations, which are not currently being fulfilled. That is the Bill’s principal political objective. Likewise, the TUC has noted its support for amendment No. 103. I could go on, but I suspect I would try your patience, Mrs. Anderson, if I continued to list organisations in support of this point.
Our proposal is not a bell or a whistle; it is an essential feature to allow people on low incomes who are in the target group and may not be in a position to create, through their own endeavours and employer contributions, the size of pension pot that they wish, to make relatively modest additional payments into their personal account from time to time, with a clear lifetime limit set at a relatively low level. It would ensure that the personal accounts scheme can have the wider benefits desired by everyone on the Committee. That would be a sensible addition to the Bill, and, although I have not yet heard the Minister’s response, I would like to be permitted, if necessary, to press the matter to a Division at the end of the debate.