Pension Schemes Bill
Public Bill Committee, 21 October 2014.
Peter Bone (Conservative, Wellingborough)
Before we begin, I shall make a few housekeeping announcements. Please switch electronic devices to silent. For my benefit, tea and coffee are not allowed during sittings.
The Committee will first be asked to consider the programme motion on the amendment paper. Debate is limited to a maximum of half an hour. We will then consider a motion to permit the Committee to deliberate in private in advance of oral evidence sessions and a motion to report written evidence.
In view of the time available, I hope that we may take those matters formally. Assuming agreement, we will move into private session to agree questions. Witnesses and members of the public will then be invited back into the room and our oral evidence will begin—so, ladies and gentlemen, do not make yourselves too comfortable, because you will be thrown out in a minute or so.
Therese Coffey (Conservative, Suffolk Coastal)
I beg to move an amendment, for paragraph (3) to substitute—
“(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 8; Schedule 1; Clauses 9 to 12; Schedule 2; Clause 13; Schedule 3; Clauses 15 to 37; Schedule 4; Clauses 38 to 45; Clause 14; new Clauses; new Schedules; remaining proceedings on the Bill;”
I understand the amendment has been agreed with the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. It moves discussion of clause 14 towards the end of consideration of the Bill, after clauses 38 to 45, so that we discuss the defined-ambition elements together, rather than splitting them up.
Peter Bone (Conservative, Wellingborough)
The deadline—this is important for members of the Committee—for amendments to be considered at the two sittings of the Committee on Tuesday 28 October is the rise of the House on Thursday 23 October.
Examination of Witnesses
Peter Bone (Conservative, Wellingborough)
For the benefit of the Committee, it is now in order for Members to take their jackets off.
We will now hear oral evidence from Mark Boyle and Stephen Soper, the chair and the interim chief executive of the Pensions Regulator. Before calling the first Member, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has just agreed. For this panel, I am afraid we have only until 9.30 am. Will the witnesses introduce themselves for the record?
Stephen Hammond (Conservative, Wimbledon)
I should like to ask two questions. The first is about the complexity of what you are being asked to do, and whether you think that increased complexity means there are likely to be issues. If there is joint regulation by your organisation and the Financial Conduct Authority, how will you ensure that there are no problems with the regulation?
The second question, to be slightly more blunt, is that as someone who has worked in the financial services world and experienced regulation of businesses, I know that the reality is usually that people at the top of regulatory businesses and regulators are of high quality. The people on the operational side are usually of significantly lower quality. I want to understand how you will make sure the people who are doing the regulation, as opposed to yourselves, will be of significant or sufficient quality to achieve what is necessary.
Peter Bone (Conservative, Wellingborough)
Sorry to interrupt, but we have only limited time and perhaps answers could be as short as possible. If hon. Members want to butt in, they should do so.
Stephen Hammond (Conservative, Wimbledon)
May I ask a quick question? The thrust of my question—I understand the point for the Government—was about the two or three issues when you must make sure the gaps do not materialise.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Good morning. May I ask, in the first instance, for your opinion of what the advantages and disadvantages are of collective defined contribution as opposed to individual defined contribution?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Thank you for that answer; I shall come back to that issue with other witnesses. Perhaps you will be more able to reflect on this question. The Bill does not specify the form of collective defined contribution that is to emerge. Would you be prepared to reflect on the issues about different forms of collective defined contribution and what they might be?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I ask a final question? One of the issues about the different models of collective defined contribution, as far as I can see, surrounds the public’s willingness to pay for guarantees. The DWP did research that suggested that people were keen on guarantees, but when the Institute for Public Policy Research added to that research by asking, “Are you prepared to pay the cost of those guarantees?”, support plummeted. Have you a view—it may be a personal view, rather than a TPR view—on where that biting point lies between guarantees and the cost of those for savers?
Richard Graham (Conservative, Gloucester)
May I come in on the question of guarantees and outcomes for people buying these pensions? A question is raised by the insurance sector in particular about the way regulators allow them to invest in certain investment products. An example is infrastructure. I understand that if an insurer running a pension scheme wanted to invest in a series of solar panels for primary schools, with guaranteed returns, currently at inflation plus three, that would be quite difficult from a regulatory point of view. Do you think that regulations need to be altered to allow for more interesting types of investment that have quasi-Government guarantees?
Richard Graham (Conservative, Gloucester)
The experience in continental Europe of collective defined-contribution schemes is, as Stephen hinted, mixed. There is evidence that in Holland it is declining. Many of the benefits of collective defined-contribution schemes have been weighed in terms of the reduced costs and admin, but what about the outcomes? What evidence have you got on outcomes improving things for members of the scheme?
Richard Graham (Conservative, Gloucester)
It will give you more work to do, and you will basically have to deploy resources to study whatever comes up.
Peter Bone (Conservative, Wellingborough)
We will now move on to some questions from Dame Angela on a different part of the Bill.
Angela Watkinson (Conservative, Hornchurch and Upminster)
I wonder whether you have made an assessment of the likely take-up for shared-risk schemes and what impact you think that might have on the Pensions Regulator’s resources. Secondly, how will regulatory responsibility be shared between the Pensions Regulator and the FCA? Will one of those organisations take the lead?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
I wonder whether you would like to comment on clause 17, which proposes to remove the requirement for you to maintain a register of independent trustees. Currently, one of the positive things about trustees is that they have a fiduciary interest, and they are there to represent scheme members, who are their prime interest. Will removing that affect accountability and transparency and, most importantly, the confidence of scheme members who want to invest in such schemes?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
What about my broader point on transparency?
Stephen Hammond (Conservative, Wimbledon)
May I go back to Mr Boyle’s point a moment ago in answer to Mr Graham’s? You rightly said there will be a range of products. I think that that is inevitable because it will fill out with the market. There will necessarily be a range of investment strategies that will need to find how the product is structured. Over the weekend, I read a lot of the commentary from various people. Some of them suggest that you should play quite a close role in the supervision of investment strategies that trustees or scheme managers take up. Given there will be a range of products, that is surely an inappropriate role for you to take.
Stephen Hammond (Conservative, Wimbledon)
But philosophically does it not militate for light-touch regulation, given the range of products, as you described?
Richard Graham (Conservative, Gloucester)
On that question—realistic targets for outcomes of products in collective defined-contribution schemes especially—how would you as a regulator set about assessing whether those targets are appropriate?
Richard Graham (Conservative, Gloucester)
May I interrupt? Is that right? The thing about defined benefit is that you know exactly what you are going to get.
Richard Graham (Conservative, Gloucester)
Yes, the member does, but the scheme itself does not set a specific target. With defined contribution you simply know what the inputs are.
Richard Graham (Conservative, Gloucester)
But anything with a target is aspiring to achieve a result that depends on the investment strategy at the time and what markets are doing.
Richard Graham (Conservative, Gloucester)
How do you assess whether those are accurate? The endowment mortgage scheme, of course, was a spectacular example of many companies getting it wildly wrong.
Richard Graham (Conservative, Gloucester)
And then coming back for regulatory fines later.
Richard Graham (Conservative, Gloucester)
Do you think such schemes that have targets necessarily have an additional layer of risk attached to them from a regulator’s point of view in assessing whether that target is realistic?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Three quarters of respondents to the Government’s consultation on the Bill thought Government intervention would be necessary to achieve a scale such that guarantees could be offered by a scheme. We know that in other countries regulators have a role in promoting scale. Do you think that greater scale would be a benefit to UK pension savers?
Angela Watkinson (Conservative, Hornchurch and Upminster)
If a shared-risk scheme is exclusive to one very large employer, how is the level of viability for the success of the scheme arrived at? It will depend upon the number of employees who choose to contribute to that particular scheme. There must be a level below which there will not be viability.
Angela Watkinson (Conservative, Hornchurch and Upminster)
Do you envisage having some schemes that are exclusive to a large organisation and others that attract savers from a range of employers?
Kwasi Kwarteng (Conservative, Spelthorne)
In relation to oversight of the schemes, will you have any role in trying to work out which investment strategies are best—will you be providing that sort of support? Also, is return on investments something that you will be particularly focused on in terms of structure?
Kwasi Kwarteng (Conservative, Spelthorne)
May I just follow up on that? Clearly, there is a blurred line between governance, the actual quality of the investment managers and the strategy. You can get a situation in which there is no oversight of a scheme or a fund, and some very silly decisions can be made. If you are looking at trying to get pensions over a generation—40 years, perhaps—that could have devastating results. I am not sure that the level of comfort, in terms of oversight—
Peter Bone (Conservative, Wellingborough)
You will have to be very quick.
Peter Bone (Conservative, Wellingborough)
Order. Time has beaten us. That is the end of this session. I thank the witnesses for their attendance and the Members for their questions. We will now move on to the next panel of witnesses.
Peter Bone (Conservative, Wellingborough)
Good morning. We will now hear oral evidence from the Pension Protection Fund and the Financial Conduct Authority. For this session, we have until 10.15 am. Could the witnesses please introduce themselves for the record?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I ask first a question of the FCA? This is going to create significant challenges for regulators. What, in the FCA’s view, are the key structural and behavioural barriers preventing individuals from obtaining the best retirement income for themselves?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Is the FCA confident that it will be able to prevent savers from being overcharged with respect to draw-down products? I am asking specifically about the issues that CDC might create and, more widely, the Government’s pension reforms in relation to regulating that more expansive draw-down space.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I ask finally, for the moment, a broader question about the FCA? It strikes me that the FCA and its predecessor, the Financial Services Authority, were and are focused on banks and financial services. Certainly my sense is that, in the past at least, the FSA was much less focused on pensions than on those other important areas. Can we be confident that the FCA has sufficient capacity and expertise in pensions to do the job it has been asked to do? Going on to the wider job around collective risk sharing, if the FCA has a significant role in that—perhaps you have a view on that role—can we be confident that the FCA has the capacity and expertise to deliver in those areas?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
I am tempted to ask a further question, Chair, but I will not.
Stephen Hammond (Conservative, Wimbledon)
To follow on from the shadow Minister’s question, I think what you are describing is the organisational task for you and you have made the point about your current regulation of fund managers. You will be responsible for setting the standards and regulating the guidance guarantee. Can you give us a feel for your approach to what the key things are for you in setting those standards and your approach to regulation of that guidance?
Peter Bone (Conservative, Wellingborough)
At Committees, it is normal for the Minister to be grilled, but unusually, he has an opportunity at these Committees to grill witnesses.
Steve Webb (Liberal Democrat, Thornbury and Yate)
And to enjoy it to the full. Picking up on Stephen’s questions about guidance and advice, I want to ask our colleagues from the FCA about two scenarios. First, where someone accesses guidance, there is an argument, in terms of regulated financial advice, that there is all-singing, all-dancing, customised, regulated, tailored, expensive stuff, and there is nothing in the middle—there is no cheap and cheerful advice. Could you give us your thoughts on whether that is wrong, and whether there is something that looks a bit like that already, or whether you are trying to foster that? Is there advice for people who have perhaps got a taste, following guidance, who would not necessarily pay the full cost of a full-blown advice session? Is there something in the middle?
Steve Webb (Liberal Democrat, Thornbury and Yate)
On that point, before I come to the second question, do you think the regulatory framework needs to change at all to foster more of that something-in-the-middle type of advice, or do you think the rules are all there and we just need a market to develop?
Steve Webb (Liberal Democrat, Thornbury and Yate)
The alternative scenario is someone does not access the guidance at all. So take-up will not be 100%; there will be a set of people who do not access it because they know what they are doing, but there will be some people, for whatever reason, who do not take it up. What thoughts have you had on safeguards? My provider does their bit, tells me that guidance is available, I do not take it up, and I then make a retirement choice. Do you think there is a need for any second defence—that I have to sign something that says, “I am married, and I realise my widow will get nothing.” Do you think you need any safeguards?
Andrew Love (Labour, Edmonton)
You have a definitive role in terms of regulated advice. There seems to be a much more nebulous area of a guidance guarantee. What is the FCA’s role in ensuring the quality of the guidance guarantee?
Andrew Love (Labour, Edmonton)
The biggest concern is take-up. Your thematic review of the annuities market was not a positive expression of consumer concerns. I wonder what role you think the FCA has in terms of ensuring high take-up for the guidance guarantee.
Andrew Love (Labour, Edmonton)
Correct me if I am wrong, but the optimists suggest 20% to 30% take-up; the pessimists think it will be less than 10%. Would you disagree with that? How do we ensure that we get to the top end rather than the bottom end, for those who take up the guidance guarantee?
Andrew Love (Labour, Edmonton)
In the annuities market, the number of people taking up the option of looking across the market at the best annuity is very low. Based on your experience, would you say the optimists are being far too optimistic?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
My question follows the Minister’s earlier one. What you said about the circumstances in which you would provide additional advice or guarantees seemed a little vague. Using the Minister’s example—if we had nothing to suggest that someone had signed away their rights and decided to go against it, based on advice—can you be more specific about those circumstances? How many people would have to go through that for you to be concerned?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
If, after a year, 50% of the people have signed away their rights and then die, leaving their widows without any pensions, is that the stage at which you would think there was an issue? I am trying to pin down the circumstances in which you would want to take further action.
Debbie Abrahams (Labour, Oldham East and Saddleworth)
In relation to the FCA responsibility for setting standards and guidance, would that include the requirement to advise on comparable administration costs and charges?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
Including admin costs and charges?
Richard Graham (Conservative, Gloucester)
May we move now to the Pension Protection Fund? Alan, can you first confirm that the PPF will take on the liabilities of, effectively, any guaranteed element of shared-risk schemes, including collective DC? Have you the right resources to be able to assess the risks, and therefore the levies, of the guaranteed elements of shared-risk schemes that will come up? Overall, is it your assessment that this will increase the potential liabilities of the PPF or that the new shared-risk schemes will mostly be sourced by people exiting from currently open DB schemes, in which case your total liabilities will reduce?
Richard Graham (Conservative, Gloucester)
Would it not in fact reduce your overall potential liabilities and therefore give you the opportunity to reduce levies to existing DB clients?
Richard Graham (Conservative, Gloucester)
So it depends really on the size of the guarantee and what percentage of the total pension promise that involves?
Richard Graham (Conservative, Gloucester)
And the PPF? In terms of resources, how are you equipped to tackle all that?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
The PPF has been, in any fair observer’s opinion, a success in providing an insurance policy for scheme members in schemes that could possibly go under. PPF has been a success in that respect.
Alan, can you reflect on how you believe this potential move to risk-sharing pensions will impact upon the PPF’s role? Do you hope that in the long term it might reduce the pressures on the PPF to pay significant numbers of pensions?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I move on to ask the questions that I was encouraged to ask by hearing the FCA representative’s previous answers? David mentioned that the FCA has sight throughout the pensions chain. What are the transaction costs? In particular, we know that in the 2014 Pensions Bill, the 2000 Act was amended so that the FCA now has the ability to set general rules around the disclosure of transaction costs. Where are you in that process? Are you able to say at this stage what those roles will be and when they will be enforced?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Thank you. On a related point, you mentioned the independent governance committees—I know that your consultation has just closed on those. In the FCA’s opinion, are there any potential conflicts of interest in the independent governance committees?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
As envisaged, if, despite those forms of discussion, negotiation and mediation, it remains the case that the IGC and the insurer continue to disagree, will the IGC be able to continue to impose its view in the public interest?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Just to observe finally, the notion of governance goes into some tension there, because it does not seem from the FCA’s answer that the governance committee is able to govern in a very critical sense.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
To be fair, it sounds like an advisory committee rather than a governance committee.
Angela Watkinson (Conservative, Hornchurch and Upminster)
May I go back to the previous questions on the PPF? On shared risk schemes, is it possible that in some cases only part of the scheme could fall under the ambit of the PPF? If that was the case, how easy would it be for savers and trustees to understand?
Steve Webb (Liberal Democrat, Thornbury and Yate)
May I go back to the FCA and the issue of product regulation? Quite why I am doing this, I am not sure, but I am playing devil’s advocate. Next April we may get new products—flexible drawdowny-type things; we do not know what they will look like yet. The FCA does not pre-approve products, so someone could try to sell a slight flaky drawdown product, things could go wrong and then you would clear up the mess. What pre-emptive things can you do to stop people being sold unsuitable, bad value for money products and so on? What are your product regulation powers and how far can you use them in advance of things going wrong?
Steve Webb (Liberal Democrat, Thornbury and Yate)
Obviously, you cannot reveal the details of your conversations with providers but, based on those conversations in general, do you think we are going to see substantial product innovation on day one or will that evolve?
Peter Bone (Conservative, Wellingborough)
If there are no further questions from Members, I thank the witnesses for their evidence and we will move on to the next panel. Thank you very much. We will suspend the Committee.
Peter Bone (Conservative, Wellingborough)
We shall now hear evidence from the Pensions Advisory Service and the Money Advice Service. We have until 11am for this session. I welcome the witnesses. Will you please introduce themselves for the record?
Peter Bone (Conservative, Wellingborough)
Thank you. I call the shadow Minister first.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
If guidance is a single event, as it appears to be in the Government’s plans, how will that guidance assist an individual seeking the necessary way, perhaps 20 years later, to switch from a draw-down product to an annuity?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Thank you. If you will allow, Chair, I would like to put a follow-up question to both organisations. We know that the annuities market, as things stood and stand until the changes, to an extent failed because individuals did not exercise the open market option and shop around. Why do we think that this offer of a form of open-market guidance will be more successful?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Finally, is there a danger that if the pension providers’ call to action is not strong enough, a substantial number of people will be rolled over in an inertia-based system into a product that looks a lot like an existing annuity?
Angela Watkinson (Conservative, Hornchurch and Upminster)
When you give advice about how to make best use of pension savings, does it include the comparative advisability of whether a person should continue to pay existing debt—mortgages, credit cards or other loans—or whether they should use capital from their pension pot to pay it off, and what impact that will have on their benefit entitlements in the future? I have a separate question about other forms of financial advice. I have a lot of constituents who had fairly modest incomes throughout their working lives, so have fairly modest pensions, but are classically asset rich, cash poor because their homes have increased in value beyond their wildest dreams, so they may be looking for schemes that will protect their children from inheritance tax. Some consider equity release schemes on the value of their properties. Does the package of advice you give to people include that sort of advice?
Kwasi Kwarteng (Conservative, Spelthorne)
With regard to the guidance guarantee, if people do not initially take it up, how will you reach out? What sort of methods will you use to reach out to those people who have not taken up the initial guidance?
Kwasi Kwarteng (Conservative, Spelthorne)
So you do not see reaching out to people who have not taken up the initial guidance as part of your role?
Kwasi Kwarteng (Conservative, Spelthorne)
So it is part of your role, but it is also someone else’s role?
Kwasi Kwarteng (Conservative, Spelthorne)
But in terms of your bit—your responsibility—how will you engage with people? What sort of methods will you use? Will you ring them up? How are you going to do that?
Stephen Hammond (Conservative, Wimbledon)
Twice during answers, I heard you say that setting the standards is clearly the responsibility of the FCA, and the Committee questioned the FCA about its philosophical approach. You are obviously responsible for delivering the guidance. Can we just be clear about what conversations you have had with the FCA about what you think should be in the guidance guarantee?
Stephen Hammond (Conservative, Wimbledon)
When was that written submission made? Has there been any subsequent conversation between you and the FCA about the content of that submission?
Stephen Hammond (Conservative, Wimbledon)
Given the potentially truncated time period, and given that you do have a role to play under business as usual, what are you doing to inform people who are giving guidance about what will be in the Bill and about their responsibilities prior to the guidance guarantee coming into place?
Stephen Hammond (Conservative, Wimbledon)
You have spoken several times about business as usual, which is giving guidance. Clearly, that guidance will now have to extend to the limits or the entire remit of the Bill. I wonder what you are doing, in front of the guidance guarantee, to ensure that people who give guidance recognise that they will have to make sure they have the skills to take account of what is in the Bill.
Stephen Hammond (Conservative, Wimbledon)
Thank you. I would like to ask one last question. In your submission to the FCA about the guidance guarantee, did you suggest that the guidance that was given out in future should also talk about non-pension options?
Richard Graham (Conservative, Gloucester)
Perhaps I may turn to the business of April 2015. I do not think that the phrase “business as usual” will apply in April 2015; it will be business as never before. There will be a combination of new pension flexibilities coming in, the Taxation of Pensions Bill coming out, and lots of providers referring individuals to you. What preparations have both your organisations made for what could be a perfect storm? It will be like a combination of passports in the summer and immigration at the Olympics, all heading your way. Are we going to see website crashes, telephone overloads, everybody arriving at once and—goodness knows—even politicians and the media in April 2015 possibly being keen to deploy the word “shambles”? What sort of discussions have you had among yourselves with the Department for Work and Pensions and others to ensure that it will not be possible for that word to be applied with accuracy?
Richard Graham (Conservative, Gloucester)
May I recommend that you look really closely at stress testing every conceivable scenario? I think it is going to be much greater in those first few weeks than just beefing up the number of people on the telephones.
What sort of interface is there between your two organisations? What is to prevent somebody from ringing, first, the Money Advice Service and getting one lot of guidance and then, secondly, calling the Pensions Advisory Service and getting different advice, and then publicising the fact that they are getting different advice? How are you going to check whether people have received one lot of advice, two or possibly three, with one from a citizens advice bureau? What sort of interface is there?
Richard Graham (Conservative, Gloucester)
But when they ring in can you click on your computer and see that Mr Peter Smith, or whoever he or she is, has already had guidance from another place?
Richard Graham (Conservative, Gloucester)
Given what is coming down the line very fast and that we are in late October, do you think it would be helpful to have those discussions on whether there will be joint access to CRM?
Steve Webb (Liberal Democrat, Thornbury and Yate)
May we move on to the question of defaults? We have thought very hard about what happens when people make no active choices when they are accumulating their pension pot. I would be interested in your reflections on people who reach 55 or an age when they might reasonably think about doing something with their pension. Are you content that the situation is satisfactory as things stand if they do nothing, or do you think we need more protections in place for people who just do not act, who just leave their cash somewhere, so perhaps it is not being invested in a very useful way for them because their provider thinks they might take it out at any minute? Do we need to do any more on defaults at that point?
Steve Webb (Liberal Democrat, Thornbury and Yate)
What might a default look like?
Steve Webb (Liberal Democrat, Thornbury and Yate)
Briefly, if I may. Some people say that there are not enough people out there to provide guidance. Can you, perhaps particularly Michelle, give the Committee a feel for your view on capacity on the provision side? Are there enough people out there who can do the job?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
May I follow up the Minister’s questions? What overall volume of people do you think you will be dealing with who will need advice? I appreciate that you say you have recruited 16 people. However, there are other schemes where there is a lack of capacity, but it was said that there was enough.
Debbie Abrahams (Labour, Oldham East and Saddleworth)
May I ask 25% of what?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
May I ask another question? It is more general and related not just to the guidance guarantee. There is going to be additional risk for individual pension savers. In terms of all the measures available—guidance guarantee being one of them and your responsibility around that—do you all think that there are sufficient safeguards within the system? What else needs to happen in terms of regulation and the implications for the regulators and the industry as well?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
I appreciate that we have a regulatory framework and so on, but what about the industry itself and how it is behaving ethically?
Angela Watkinson (Conservative, Hornchurch and Upminster)
We have heard about the fairly wide-scale recruitment of pension advisers to meet the anticipated demand. Could we hear a little bit about any training that is being given to ensure that there is consistency in the quality of advice that is given?
Andrew Love (Labour, Edmonton)
May I come back to the issue of communication between the provider and the pensioner to signpost them to advice? What would be the minimum that you would require a provider to do to ensure that that is brought to people’s attention? I think, Ms Cracknell, you mentioned that an individual should not be allowed to take their pension pot from a provider until the provider is satisfied that they have taken guidance. Could you elaborate on how we would achieve that?
Andrew Love (Labour, Edmonton)
But what does that mean in concrete terms?
Andrew Love (Labour, Edmonton)
What success are you having in convincing those who have the power to do these things that this is the correct way forward?
Andrew Love (Labour, Edmonton)
You mentioned earlier that you estimate that 25% will take up the guidance. Has any work has been done on what type of guidance that 25% will take up? Will it be telephone guidance, face-to-face or internet-based? Has the Money Advice Service done any work on what type of guidance people are likely to take up?
Andrew Love (Labour, Edmonton)
Was the 25% you talked about the number you expect to take telephone guidance?
Andrew Love (Labour, Edmonton)
It is 25% overall. What is your estimate of the number that will come to you for telephone guidance?
Andrew Love (Labour, Edmonton)
Do you have any estimate of how long an average telephone conversation to provide guidance would be, how long an average interview would be and whether these will be single interviews or collective discussions? Do we have any elaboration of the detail of how guidance will be delivered?
Andrew Love (Labour, Edmonton)
Depending on how the proportions work out, the number doing telephone and individual interviews—because I expect that an interview would be even longer than a telephone conversation—we are talking about a significant additional resource. Has any work been done on how much the guidance guarantee will actually cost the industry?
Peter Bone (Conservative, Wellingborough)
Three Members have indicated that they want to speak and we are running a little short of time, so we must move on to hear from the shadow Minister.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
I will be brief. I want to make an observation: so many of the answers that both organisations are giving understandably default back to the Treasury making a decision about things. It is therefore difficult for the Committee to get a sense of a number of factors, because the ghost in the machine, the elephant in the room, or whatever metaphor one wishes to use, is the Treasury.
Michelle, you suggested that you thought that 100,000 of the 400,000 savers coming up towards retirement would use the guidance guarantee—your estimate was a quarter. What does that suggest about the likelihood of good decisions being made by the other 300,000?
Angela Watkinson (Conservative, Hornchurch and Upminster)
Briefly, where an individual has received advice but is unable to make a decision and needs time to think about it, can they come back for further advice? Is there any limit to how much advice one person can access?
Angela Watkinson (Conservative, Hornchurch and Upminster)
So to a range of sources of further information.
Michael McCann (Labour, East Kilbride, Strathaven and Lesmahagow)
Ms Cracknell, in answer to a previous question, you explained that the pension advisers you are looking to hire will need 10 years’ experience, and that there will be a two-month training programme. How many people do you expect to have to hire and what salary scale do you expect to have to pay to entice people into the job?
Michael McCann (Labour, East Kilbride, Strathaven and Lesmahagow)
How many people would that be?
Michael McCann (Labour, East Kilbride, Strathaven and Lesmahagow)
Can I ask you to extrapolate, perhaps based on the 25% proportion that you gave? What would that mean in terms of bodies?
Peter Bone (Conservative, Wellingborough)
Order. I am very sorry, but you are not going to get an answer. I am afraid that that brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank the witnesses for their evidence.
Linda Riordan (Labour, Halifax)
Will the witnesses please introduce themselves for the record?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I ask our witnesses first to give the views of the organisations that they represent on the advantages and/or disadvantages of moving to collective defined-contribution pensions?
Linda Riordan (Labour, Halifax)
I think that would be very welcome.
Debbie Abrahams (Labour, Oldham East and Saddleworth)
I wonder, Ms Salt, if you could expand on the model that would reduce intergenerational inequality.
Richard Graham (Conservative, Gloucester)
I have a quick question for each member of the panel, starting with David. You said that outcome is 30% to 40% better for collective DC than for normal DC. How do you know what the outcomes from my DC are? You can mull that over.
Stefan, if the Dutch experience has not been entirely satisfactory, where has the experience been better and what can we learn from that?
Derek, you talked about the cliff edge of annuities. That cliff edge, surely, has gone?
Hilary, you mentioned the advantage of a longer period of higher-interest investments. I do not see why that should be the case. As an individual, I can decide exactly what my investment is going to.
David, it is 50 shades of grey. I see the argument for why a defined-benefit scheme would want to change into a collective DC, but surely that is just a watering down of what already exists, rather than a strengthening of what does not yet exist?
Richard Graham (Conservative, Gloucester)
That is entirely hypothetical. Those are not actual outcomes.
Richard Graham (Conservative, Gloucester)
I think that invalidates the data completely.
Richard Graham (Conservative, Gloucester)
That is cost; we are talking about outcomes. Let us move on.
Richard Graham (Conservative, Gloucester)
Thank you very much. Stefan?
Steve Webb (Liberal Democrat, Thornbury and Yate)
One of the criticisms is that nobody is interested: “DB is going; everybody just goes to individual DC. This is all an awful lot of time and effort for nothing at all.” I will start with David and David, but any of the other colleagues can come in. What is your sense of employer appetite? Is this all just a theoretical nicety that nobody is interested in?
Nigel Mills (Conservative, Amber Valley)
We have had our market tainted by the Equitable Life scandal and other things, where what people think of as a promise ends up not being one. People are then stuck in a pot, their money has gone and they have no way out. How do you regulate something like this so that you have a meaningful promise without being a binding one, with people thinking they can rely on them but perhaps they cannot? It looks like a minefield of confusion, doesn’t it?
Nigel Mills (Conservative, Amber Valley)
That sounds absolutely right, but it is easier to reduce a forecast for someone aged 40 than it is to reduce a pension in payment to someone aged 80, is not it? The logical outcome of what you just said is that if the stock market takes a dive, or if actuarial assumptions go one way, you have to start reducing pensions in payment. Is that an attractive prospect?
Nigel Mills (Conservative, Amber Valley)
How do you stop people leaving a scheme? Say that I have been in a collective scheme and I get to 60 and have a massive heart attack and decide that I am now not going to live to see 70, so I will get out of this collective scheme quite quickly and start spending the cash. Do not you have a real risk that you lose all the people with a short life expectancy and just keep the healthy ones?
Nigel Mills (Conservative, Amber Valley)
It seems like, for collective to work, you have to have some winners and some losers; otherwise, presumably you have no winners or losers, in which case you are back to where you started. Does it seem that the only way that you get winners is if you have ignorant losers who choose not to leave at the time they ought to leave, for example? Are we not in danger of mis-selling to a load of people in that situation?
Angela Watkinson (Conservative, Hornchurch and Upminster)
Given the increasing complexity of the spectrum of pensions, would it be better to have a single regulator rather than sharing that responsibility between the FCA and the Pensions Regulator? If you do think that, how should that one regulator be structured? Who would like to answer?
Angela Watkinson (Conservative, Hornchurch and Upminster)
But we have to know where the buck stops.
Angela Watkinson (Conservative, Hornchurch and Upminster)
Would you envisage that as a merging of the two existing regulators into one body, or one of the regulators becoming the only regulator?
Richard Graham (Conservative, Gloucester)
May I just play devil’s advocate, and offer you an explanation of what is going on, which I would love your comments on? I am not saying that I necessarily believe this to be the case, but what we are really looking at here is a compromise, which is trying to avoid a collective leap of the remaining DB schemes straight into money purchase. Within that messy compromise, the large remaining DB schemes will probably be able to function well as stand-alone collective DC, because they have the volume and bulk to buy in the expertise to make it work, but culturally, it is not hugely in the British DNA to shape our pensions structure in the way that they have been shaped in Holland, Denmark and, to some extent, in public schemes in Sweden. Actually, there is not any proof that the outcomes are any better, although there could certainly be proof that the costs should be considerably lower. In terms of the changing landscape of the annuities system, there really is not any particular reason to believe that longevity issues will be a major attraction of CDC. That is a sort of general sceptic’s approach. How would you all try to tackle that?
Richard Graham (Conservative, Gloucester)
Are enough employers going to be able to fund the great difference between the current DC outcome for someone putting in x% of their income, and this outcome where they will have a significant amount of income guaranteed? Someone is going to have to pay for that.
Richard Graham (Conservative, Gloucester)
So we are talking about legacy DB schemes, although you said that we should not be thinking about that.
Richard Graham (Conservative, Gloucester)
But it will not affect the schemes that are already DC or any new company setting up a new scheme, will it?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I ask the members of the panel a couple of questions briefly? The issue at hand is the comparison between individual defined contribution and collective defined contribution. The first question I want to ask is: what is the single greatest weakness of individual defined contribution that you believe or do not believe collective defined contribution can overcome? For example, from Stefan’s answer it seemed to me that the biggest advantage is changing the way we talk about retirement. For other members of the panel, it would be useful to have that on the record.
The second question is related. There are different models of collective defined contribution. Which model do you favour?
Linda Riordan (Labour, Halifax)
I have one more question from a Member but we must finish at 3pm, so please keep your answers brief.
Debbie Abrahams (Labour, Oldham East and Saddleworth)
Briefly, my question is about CDC scheme governance. Are you confident that there are trustees of sufficient quality and capacity to do this work?
Linda Riordan (Labour, Halifax)
I am afraid that brings us to the end of the time allotted for the Committee to ask questions of these witnesses. On behalf of the Committee, thank you for your evidence.
Linda Riordan (Labour, Halifax)
We will now hear oral evidence from Martin Lowes, who is a consultant with Aon Hewitt; Sue Lewis, who is chair of the Financial Services Consumers Panel; and Jim Bligh, head of public services at the Confederation of British Industry. For this panel we have only until 4 pm.
Richard Graham (Conservative, Gloucester)
First, may I declare two interests? One is that although I neither look nor feel like a pensioner, I am actually in receipt of a modest pension. Secondly, I am chair of the all-party group on pensions, which is sponsored by the Association of Chartered Actuaries—the ACA.
Linda Riordan (Labour, Halifax)
Will the witnesses please introduce themselves for the record?
Linda Riordan (Labour, Halifax)
Thank you.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
May I begin by asking you this, Sue, in your role in simplifying financial products: how do you think we are all getting on collectively on simplifying pensions?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
To elaborate on that point, and to put this question to all three of you, are there lessons to be learnt from auto-enrolment? Sue is saying that it is pretty straightforward, and of course auto-enrolment was developed as a way to ensure that people were not discouraged from pension saving because of complexity and a lack of information. Should lessons be being learnt for the “turning your pension into an income” phase?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Is there anything you want to add?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
What would be the issues at hand there?
Angela Watkinson (Conservative, Hornchurch and Upminster)
With the introduction of shared-risk schemes to the already wide selection of types of pension scheme, how will employers, large organisations—presumably they will not be running more than one type of pension scheme in one organisation—choose which is the most beneficial type of pension scheme for their employees? They may already have a defined-benefits scheme going on. Will they have to consult the work force and ask them to choose which sort of scheme they want, or will they have individual employees transferring from one scheme to another?
Richard Graham (Conservative, Gloucester)
May I put a question to each of you? To take you up on that last point, Jim, what has happened to the sense of responsibility of British employers? There was a time when everyone recognised that you had to look after people who worked for you not just while they were working for you, but afterwards. It has been suggested by an earlier speaker that there will be employers out there who will want to try to ensure that their employees, after retirement, have an income to live off and that will be one of the attractions of the new risk-sharing arrangements. Are you implying that this will simply be a quick fix for the remaining DB providers among your scheme members, or do you see anyone having a longer-term interest in their employees’ interests?
Richard Graham (Conservative, Gloucester)
So they are prepared to go for the risk-sharing schemes rather than the straight DC, are they?
Richard Graham (Conservative, Gloucester)
We are not really talking about DB, because we are assuming that plenty of them will convert, but what about other members who do not have a DB scheme, because the vast majority of your members do not?
Richard Graham (Conservative, Gloucester)
Are you anticipating a strong take-up of interest?
Richard Graham (Conservative, Gloucester)
Okay, Jim, that is fine. We have got the general picture.
If I may, I have a quick question for Sue. I was a bit nervous when Martin was talking about creating another default; it seems that that is what large consultants like doing. They like to have control, so they say, “Let’s create default schemes where everything can be run by a few people at the top.” However, you made the point—absolutely rightly—that that will not necessarily be the right solution for many people. Also, presumably there is a risk later on of mis-selling, if everybody is shepherded into some form of default. Would you like to comment on that?
Richard Graham (Conservative, Gloucester)
Yes. Martin, surely the answer to your point about the default option being the way to avoid a large spending spree is that the default position in today’s world—after the new changes—is just to let your DC pension carry on. You have got your investments there; they roll on. Why does there have to be a great big spending spree?
Richard Graham (Conservative, Gloucester)
So you do not see the default position being the usual thing of not doing anything and just letting it run on?
Stephen Hammond (Conservative, Wimbledon)
May we look a little at what is going to underpin these schemes, in terms of the benefit outcome, which is obviously not just a contribution rate, but the products? I have several basic questions. I think there is probably a pretty obvious answer to the first one, which is, with the collective benefit schemes, will not new products develop in some areas to underpin those schemes? Presumably, a lot of the products might just be a larger extension of the individual DC schemes, or money purchase schemes as they are now. In some of the reading, it has been suggested that collective benefit schemes require closer supervision of investment strategies. I am not clear why that should necessarily be, because presumably you want the investment strategy to produce the most benefit within agreed risk criteria.
The final point is, how will you—particularly you, Martin—advise your clients if there is closer supervision about, first, what that supervision might do to outcomes and, secondly, the capability of the Pensions Regulator to undertake that role?
Stephen Hammond (Conservative, Wimbledon)
I take that point, but, first, is there anything in the current arrangements—perhaps in the guarantee of guidance—that will give that extra transparency, and if not, how should that be written into the protective process? Secondly, it presupposes, therefore, that if it is a collective scheme, it will be about the quality of the trustees as well, so that the employee has confidence.
Nigel Mills (Conservative, Amber Valley)
Mr Lowes, may we return to default schemes? There is some intrigue in the new landscape about how you have a default scheme, not just at the time you come to start decumulating but when you are accumulating. If you take the hypothesis that at the moment you have risky investments till you are 10 years from retirement, then you de-risk, so that when you get to your retirement age your pot is not destroyed by a stock market crash at the last minute, that assumes that you are going to buy an annuity at that day of retirement. If, as I think, most people will keep at least some of their pot and spend some of it, you do not really want that de-risking 10 years out. How do you design a default scheme at all in such circumstances?
Nigel Mills (Conservative, Amber Valley)
What do you think people will do?
Nigel Mills (Conservative, Amber Valley)
Is that what you would do as your default? You would not just default people into an annuity or something?
Nigel Mills (Conservative, Amber Valley)
I suppose the whole idea is that more choice will lead to more products, or more options. How do we get more confidence that the industry will be responsible in the way it sells these things and communicates? Is that a hope that will never come to fulfilment, or is there more that we, in the legislation, or the regulator could do to make sure that selling is done properly?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
Can you hazard a guess as to the type of employer—I appreciate that not all CDC schemes will be employer based—in terms of size and industry that may be more inclined to promote or want to take up a CDC type of scheme?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
Does anyone else want to comment on that?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
Does that have implications for the inequalities we discussed with the previous panel, such as intergenerational inequality? Would there be implications from having different sectors and different sizes of employers in terms of less beneficial pension schemes?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
May I ask a few questions about the guidance guarantee and your views on that? Some of you have already mentioned your concerns about how it might operate. What are the pros and cons?
Debbie Abrahams (Labour, Oldham East and Saddleworth)
May I take you back to what you said about the FCA’s standards being too principles-based? How would you improve on that?
Steve Webb (Liberal Democrat, Thornbury and Yate)
A question for Sue, if I may, about defaults, and then one for Jim about risk sharing. On defaults, say I am a member of an individual DC scheme. I reach the pension age that I flag to them many years ago, potentially, and I do nothing—I get the pack and put it in the “too difficult” pile. Will providers think that at any point the consumer could just take the cash—have it on demand, not invest it at all but just take the cash? Is there a consumer detriment for not having a default of investment? How do you view that issue?
Steve Webb (Liberal Democrat, Thornbury and Yate)
That is a shame.
Steve Webb (Liberal Democrat, Thornbury and Yate)
Okay. Before I come to Jim, Martin do you want to add anything?
Steve Webb (Liberal Democrat, Thornbury and Yate)
Jim, I have a question on employer attitudes. In our conversations, we conflate CDC with risk-sharing defined ambition, and they are separate types of scheme in the Bill. If employers are worried about volatility of cost, which of course they are, would they be more attracted to the defined-ambition bits where, for example, a third party ensures the volatility—paying a set, predictable premium—and the risk is borne by the insurance provider, which ensures that the pension is paid at a certain level? Would that be a more attractive model?
Steve Webb (Liberal Democrat, Thornbury and Yate)
I think that you heard the witness who was sitting in the seat you are in. I asked if there is any appetite among employers. You are sort of saying they are not very interested and they do not trust politicians. The previous witnesses said that they are talking to potential clients now who are interested; they hear the trade unions are interested. There is a dissonance between the two perspectives.
Angela Watkinson (Conservative, Hornchurch and Upminster)
May I ask you the same question that I asked a previous panel? You might have a slightly different perspective. Should there be a single regulator or the existing two? Would you prefer to see a single regulator and, if so, do you envisage the Pensions Regulator absorbing the role of the FCA or vice versa? Should the two merge to form one organisation, or do you envisage a completely different structure?
Angela Watkinson (Conservative, Hornchurch and Upminster)
Jim, do you have a view about this?
Angela Watkinson (Conservative, Hornchurch and Upminster)
That is very helpful. Thank you.
Stephen Hammond (Conservative, Wimbledon)
Mr Bligh, I want to go back to this point about transparency. In your response to Nigel Mills’s question, you said that more transparency would be required. Can you define what you mean by more transparency over and above what is given to either a DC member or a DC trustee at the moment?
Stephen Hammond (Conservative, Wimbledon)
Well, I think you were implying that if you were in the collective scheme, you would need more transparency than under the current DC arrangements. Unless I misunderstood, that is what you replied to Nigel’s question. I am keen to understand what you mean by more transparency than the current arrangements that are already in place if I am in a DC scheme.
Stephen Hammond (Conservative, Wimbledon)
Is your point that as a member of a DC scheme, I get certain information from my provider, and what you are suggesting is that that information needs to go to the trustees, who do not see that information in a DC scheme at the moment?
Stephen Hammond (Conservative, Wimbledon)
At the moment, if you are in a DC scheme, for instance, most DC people make a choice between a range of products that they go into. They get transparency twice a year about what that product is and the opportunity to switch once a year, usually. I am asking what extra transparency you think is needed for the member of a collective DC scheme or the trustees.
Stephen Hammond (Conservative, Wimbledon)
But there will be a package of investments. It may not specify this investment or that investment, but it is the same principle.
Stephen Hammond (Conservative, Wimbledon)
So potentially, if you are a member of a collective DC scheme, you will get less information because it will be about the principle underneath, which will be “We will maximise risk” or “We will minimise risk”, or whatever, with the criteria.
Stephen Hammond (Conservative, Wimbledon)
How do I get more information than now? At the moment I get what the DC scheme produce is doing in terms of performance and underneath that I get what it is involved in, be that bonds or equities, and I can make a choice. I am not sure what extra information I would get as a member as opposed to as a trustee.
Stephen Hammond (Conservative, Wimbledon)
I take that point, but I suspect that the average member of a scheme would find that more confusing than understanding whether a particular unit trust or investment had gone up or down over that year. Potentially that will make it even more difficult for a member of a scheme. I take your point that a trustee will understand that, but it seems to me that the member of a scheme will get less information of a reasonable quality than they do at the moment.
Stephen Hammond (Conservative, Wimbledon)
All right.
Richard Graham (Conservative, Gloucester)
The short answer to that is that the individual may get more information, but he or she has significantly less choice. That is the crucial thing. That may be fine, but, when there are problems if investment decisions turn out not to have worked, no doubt that will come back to Sue’s panel.
Can we go back to guidance? Sue, you mentioned consistency. How easy will it be to get consistency from three very different organisations with different cultures? Secondly, in terms of them being given a bit of a runaround, how easy will it be for a member of the public to ring all three of them and get three different bits of advice? How important is it that they have some form of customer relationship management system that means that, when Joe Bloggs rings up, that organisation can tap in to him and see that he has already had the guidance, or whatever?
Richard Graham (Conservative, Gloucester)
There are three parts to it really: first, consistency in three different organisations.
Richard Graham (Conservative, Gloucester)
Everything is recorded here. The second part was about how an individual customer could ring around three organisations and get three different answers and no one would know that he had spoken to one of the others.
Richard Graham (Conservative, Gloucester)
What about the CRM element of it, where things can be typed while the person is there on the telephone, so that everything is shared between the three of them and everyone knows what has been said to whom?
Richard Graham (Conservative, Gloucester)
How concerned are you that arrangements will not be adequate?
Nigel Mills (Conservative, Amber Valley)
I am intrigued by the guidance guarantee, Sue. You appear to be assuming that it will be pretty close to individual advice, whereas I would be on the cynical wing, who think that it will be a pretty uninspiring conversation saying roughly, “Think about what you’re doing. Work out what you want. Shop around. Pay off your debts, and make sure you are thinking about your spouse,” rather than one that goes, “You’ve got these six pension pots, a house and some savings. Perhaps you should do A, B, C, D and E.” I just struggle to see how you can get into a statement of facts, without wandering into advice, which then leaves you with all the legal exposure if you get it slightly wrong, in an half-hour call. Do you really think that can be done?
Nigel Mills (Conservative, Amber Valley)
To move towards the more useful end, ideally you want the guidance provider to have sight of certain facts before they get to the conversation; otherwise you are flicking through 25 pieces of paper. You are putting in a very different thing from picking up the phone and saying, “Hello, I have been told to ring up for some guidance. What shall I do?” You are sending in the statement of affairs and that starts to get very expensive, and very risky, doesn’t it?
Nigel Mills (Conservative, Amber Valley)
You start to picture a 111-style flowchart here, going down different channels.
Nigel Mills (Conservative, Amber Valley)
That brings me back to the question that I asked earlier about whether we need to regulate or legislate for an industry backstop to the guidance to an extent? Do we need to say to a regulated provider that you cannot sell a product until you have checked that somebody has had the guidance, and that they have understood it? Is there a way of creating a back-stop that we could enforce?
Nigel Mills (Conservative, Amber Valley)
It needs to be a recorded conversation, doesn’t it? Can you confirm that you have access—
Nigel Mills (Conservative, Amber Valley)
No, I was thinking more that the person selling the product would say, “I now need to record your answer to this question: ‘Have you had the guidance, or did you waive it?’” It would be that kind of tick box.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
To take up that conversation. Sue, you mentioned that in the glance you had had at the guidance, you had seen that it would not involve looking at wider assets, just the pension savings. What are the implications of that for the kind of guidance conversation that Nigel referred to?
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
That is your reading of this.
Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)
Jim, what is and what should be the role of employers in the process of turning a pension pot into a retirement income? Auto-enrolment was predicated on the notion of rebuilding a workplace pension system. It strikes me that in the reforms the Government are taking forward on the income side of things, there is not a role for employers. Is that a fair assessment?
Linda Riordan (Labour, Halifax)
If there are no further questions from Members, I thank the witnesses for their evidence and ask the Government Whip to move that further consideration of the Bill be now adjourned.