Pension Schemes Bill [Lords] — House of Commons, 2020-10-07
Topic: Labor
Harriett Mary Morison Baldwin (Conservative, Centre-right): I welcome the Bill, which is a milestone in the country’s journey to a safer, better and greener financial future, in which more people are saving for their old age. I echo the warm words spoken by the Secretary of State about the work of the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman)—the Pensions Minister—who has a true passion for improving the future not only of his constituents in Hexham but of all our constituents This has been an incredibly well-informed debate and I hesitate to add anything, but I do want to bring my perspective, as someone who used to work on the dark side as a pension fund manager, and to make the obvious point that there are three main things that ensure that people have a good pension in old age. The first is starting as young as possible. I was interested to hear Members arguing about starting as early as 18. I certainly think that the Government should seriously consider such a provision, if people meet the earnings criterion. The second thing that makes people’s pensions better over the long term is tax breaks and employer contributions. The earlier that people can pay in the maximum before tax that they are allowed to and get the employer matching that amount, the better off they are going to be in retirement The third thing that makes people better off through their pension is lower charges. This subject has not yet come up during this debate, but it is incredibly important to put on the record. The charges in this incredibly competitive industry, in which the UK leads the world, can vary dramatically. I hope that the powers in the Bill will enable our constituents to see much more clearly on their pensions dashboard what they are being charged and for what. As someone who used to work in the industry on the receiving end of the charges, there is no question but that the compounding effect can have a meaningful impact on the final outcome of people’s pensions Will the Minister comment in his closing statement on the charges that the National Employment Savings Trust levies on our constituents? NEST is the body that was set up because, through auto-enrolment, there will be some very small and uneconomic pots that the industry will not want to take on. I recall from my time on the Select Committee on Work and Pensions that NEST itself charges really quite vicious amounts to people who are putting their money into a NEST scheme. I seem to recall that it was something like 1.8% up front and then an ongoing annual charge of 0.3%, which sounds low, but is not actually that competitive these days. Despite that, I understand that NEST has not been able to make enough money to repay the loan that the taxpayer gave to establish it. I would be interested in an update and in the Minister’s thoughts on how we can ensure that people who are using NEST do not end up paying particularly onerous charges Let me turn to climate change risk. The Treasury Committee, on which I serve, is currently doing an inquiry into green finance, and it is clear that the UK has a huge opportunity to make the most of our leadership—not only on climate generally, but also as a financial centre—to be the go-to place for green finance, green investment and green bond insurance. I heartily endorse the call of my hon. Friend the Member for Grantham and Stamford (Gareth Davies) for the UK to show the way not just by being the place where other countries come to issue green bonds, but by being the country that issues green bonds itself to invest in greening our economy I want to highlight something that we heard clearly in evidence this week. The former Governor of the Bank of England, Mark Carney, has repeated that the cost of climate risk is not being priced into our stock market. There is quite a significant risk that investments in some large companies that form a large part of the index in this country—we should bear in mind how much investment goes into indexed funds—are held as assets that could end up being trapped in value.