In its final reading of the Pension Schemes Bill last night (November 16), the House of Commons voted down by a majority of 89 votes an amendment which would have required the government to write to members five years before they could access their pot, offering them a Pension Wise appointment.
The amendment was brought by chairman of the work and pensions committee, Stephen Timms, after a similar amendment was withdrawn in the previous reading.
Mr Timms argued that making people take a guidance appointment would equip them to avoid being scammed.
He said: “A significantly higher number of Pension Wise users than non-users say that they are very or fairly confident about avoiding pension scams, having had an interview with Pension Wise.
“The default ought to be that people are given an appointment.”
Conservative MP Nigel Mills, who sits on the work and pensions select committee, supported the amendment and pushed pensions minister Guy Opperman to set a higher take-up target for the guidance appointments.
He said: “I hope the minister will accept that we want to set a target that is much higher than 14 per cent. Whether it needs to be 50 per cent or some other figure is something that we could work on.”
Mr Mills also said the benefits of this measure should outweigh the costs that come with it.
He added: “The benefits of a retiring person not making a catastrophic mistake with their 40 years’ lifetime savings outweigh the relatively small cost per person of providing the guidance.
“I personally would prefer a default guidance appointment, with someone having to sign in blood if they really did not want this free, excellent quality guidance before they could access their money.
“If the government are not proposing that, I propose the compromise of setting a much higher target and if we cannot get there any other way, we will come back to this yet again.”
The government also voted down by a majority of 100 votes an amendment that would have required pension schemes in the UK to be carbon neutral by 2050 or sooner.
Labour MP Jonathan Reynolds said: “This is a historic step: the first time it has ever been included in UK pensions legislation, and we all should and do celebrate that fact.
“However, we know that, with the climate emergency getting even more serious, it is possible to go even further."
He added: “I reiterate that this is not about the government dictating to pension funds about when and who to invest their money in, and we are not seeking to compromise trustee independence.
“It is simply about putting a strategy in place that considers their role in meeting our climate objectives.”
However Mr Opperman argued Labour’s measures would lead to bad investment outcomes.
He said: “I am afraid the reality is that Labour’s proposals would direct investment, breach fiduciary duties and lead to divestment and negative outcomes.
“We want the transformation of the United Kingdom economy and the retrofitting of the country to happen in a partnership with business, legislators, pension schemes and citizens, but I am afraid the amendment would negatively affect that. It would be entirely the wrong way forward.”
The Bill completed its third reading last night, the last stage in the House of Commons, and will now go back to the House of Lords for their consideration of amendments, the last step needed before a Bill can receive Royal Assent and become law.
The Bill also includes long-awaited rules around pension dashboards, collective defined contribution schemes, and new powers for The Pensions Regulator.
It was reintroduced to the House of Lords at the beginning of this year (January 7) after the December general election delayed its debate in parliament.
It was then halted once again due to the government’s commitment to hurry through emergency health legislation to combat the effects of coronavirus.
amy.austin@ft.com
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