Clause 1 - Conversion of guaranteed minimum pensions

Part of Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill – in a Public Bill Committee am 9:25 am ar 2 Chwefror 2022.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Matt Rodda Matt Rodda Shadow Minister (Work and Pensions) (Pensions) 9:25, 2 Chwefror 2022

It is a pleasure to serve under your chairmanship, Mr Efford. I thank the hon. Member for Rutherglen and Hamilton West for her work on this important Bill. As has been said, the Bill has potential repercussions for millions of people’s pensions. We support the measures to simplify a complicated system and make it much fairer.

I will use my time today to ask a series of questions, which I hope the Minister will address. In particular, I want to ask him about communication, consultation, the requirement to notify HMRC and the wider imbalances between men’s and women’s pensions.

On communication, I have a fundamental question. How have the changes been communicated to those affected? Obviously, we are dealing with a large number of people, going back to the cohort who have been saving for their pensions from 1978. I am afraid that the Government do not have a good track record of communicating changes to the state pension. According to many commentators, previous changes to the pension age were poorly communicated, and more recently the Government have been criticised for their work on sorting out the state pension underpayment crisis. I realise that the Minister is trying to address that. The public deserve reassurance on those issues.

I also point out that the Parliamentary and Health Service Ombudsman has concluded that in the past the DWP has not been open in explaining changes to GMP. Experts have said that using GMP conversion, in some circumstances,

“can trigger disproportionate and unintuitive pensions tax issues.”

In my view, schemes and individuals affected must have clear information to avoid costly errors. I hope the Committee agrees with that and I look forward to the Minister elaborating on these issues later. Obviously, we welcome the Bill but while it is generally positive, sadly some people may be in line to lose out compared with previous expectations. They may need time to plan and adjust.

Further, the Bill must commit to full and timely consultation with experts in the industry and others before the Government introduce the regulations the hon. Member for Rutherglen and Hamilton West spoke about. That consultation must look both at the conditions that must be met in terms of survivors benefits, which she rightly highlighted as a very important point, and at details about who must consent to conversion, which relates to the point about some of the company schemes where the establishment is no longer in existence. What instrument will be used to introduce these regulations? It is important that parliamentarians can adequately scrutinise the changes.

My next question is about removing the requirement to notify HMRC. On what basis is it right to remove this requirement? Are there enough checks and balances in place if the requirement is removed? I hope the Minister will clarify this and assure Members that enough due diligence has been done.

Moving on to wider gender equality issues, obviously there are significant inequalities between men and women in the current pensions systems. GMP equalisation is one way in which imbalances between men’s and women’s pensions need to be addressed, but I urge the Government to seek assurances that all other aspects of gender inequality and pensions are examined at the same time. We know that the pensions gender gap is around double the pay gap, which is pretty significant, and that small changes at early stages can have very large repercussions. Whenever we take decisions on pensions in this place, we must be aware of the wider repercussions, precisely because they could be difficult to remedy and could be with us for a very long time, as we have discovered when considering this Bill.

As I said, we support the Bill. We believe it is important to tidy up pensions legislation and make it easier for schemes to convert GMP rights into ordinary scheme benefits, but I hope the Minister will be able to provide the assurances I have asked for today, and that parliamentarians will be given proper time and resources to scrutinise any secondary legislation that may be introduced later.