Content of implementation strategy

Part of Pension Schemes Bill [Lords] – in a Public Bill Committee at 11:30 am on 9 February 2017.

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Photo of Richard Harrington Richard Harrington The Parliamentary Under-Secretary of State for Work and Pensions 11:30, 9 February 2017

—but we support the sentiments behind it. As with many things in the Bill, both sides want the same thing; the question is how things are achieved. The explanatory note to the amendment says that it

“requires members to be informed about caps on charges”,

which I understand, but the Government argue that that would duplicate provision elsewhere, so it is unnecessary.

I have said before that the Government agree with the principle that members should be able to see the costs and charges that affect their pension pot. Since April 2015, regulations have required trustees to report information about costs and charges in a chair’s statement, which must be shared with members, so that provision is there. Those regulations impose a charge cap where a scheme is used for automatic enrolment and contributions are invested in a default arrangement, as defined in the charges and governance regulations. To be clear, the cap is an annual one of 0.75%, or an equivalent combination charge, of the value of the member’s rights. That applies to master trusts in exactly the same way as it applies to other pension schemes.

The Government recognise that more needs to be done to increase transparency. We will be making regulations requiring charges and transaction costs for money purchase benefits in occupational pension schemes to be given to members and to be published. We have to get it right, and we are consulting. The hon. Member for Stockton North said that he thinks it is just another consultation, but it will happen this calendar year.

The purpose of the implementation strategy is for the Pensions Regulator to have scrutiny as part of the approval process.