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Pensions Bill

I am sure that it is the case that there will be individuals who need very specific advice, as I am sure that it is the case that there will be individuals for whom savings by pension arrangements are not appropriate. The challenge is to see the extent to which they can be identified. One problem with the amendment before us is that it assumes a broad category of people who are, en masse, in need of a certain service. I do not believe that the evidence supports that, which is why we are proceeding with the work programme, which I shall come to in a moment. The distinction between information and advice is an important one. As noble Lords will be aware, there is no legal requirement for individuals to receive one-to-one advice before they are automatically enrolled into an occupational pension scheme now. That is the current position. So giving those reaching age 50, or any jobholders, a new legal entitlement to one-to-one advice could give them a misleading impression that automatic enrolment is a risky and complex process. That could cause unnecessary worry and lead to opt-out by the very people who stand to gain from the employer contribution. Our reforms aim to overcome the inertia experienced by those who do not want to make what they consider complex decisions about saving. So we should avoid this at all costs. Of course, some individuals may have further questions and wish to seek guidance. That is the case for any financial decision. There are already free-of-charge, publicly funded services for pensions and debt guidance, locally and nationally—again, for example, through the Pensions Advisory Service, the CAB and the National Debtline. These services will continue to be part of the landscape in 2012, should people wish to seek guidance about whether a personal account, or indeed any pension, is right for them, and for those considering, say, paying off large, high-interest debts first. We are particularly pleased that Thoresen’s proposed money guidance service will build on such existing provision. Thoresen has stated, and we agree with him, that auto-enrolment and personal accounts do not create a new need for a different kind of information and guidance for any groups. I do not agree that there is a need to supplement all this with additional one-to-one guidance services, potentially at great cost to the taxpayer. We simply run the risk of establishing new guidance services that will be used only by a minority of individuals. Therefore, rather than inserting inappropriate requirements into primary legislation, the Government will work with a range of other organisations that already provide information on retirement planning, to ensure people’s information needs are identified and met. I pick up on a couple of specific points. There were issues around Thoresen’s proposals. I believe that the proposals are an intelligent response to the need that he was asked to address; that is, the gap in general financial capability. However, it would be wrong for us to rely on the Thoresen pathfinders to deliver the information that people will need when they are auto-enrolled. The service is deliberately non-specific. It will aim to answer a wide range of basic financial inquiries, but will then pass people on to specialist organisations, such as the Pensions Advisory Service, for more complex queries. Given that we already know that a large number of people will need information to help them at the point of auto-enrolment, it would make no sense for us to wait until they contact a general financial inquiry service. We can and should anticipate most of the questions they will have and make sure that that information is available upfront. Many bodies are already providing this kind of information. We want to use their expertise to plan the provision of this information and to deliver it. We expect the final offer to be provided through a wide range of organisations and a variety of channels, including interactive bodies. The noble Lord, Lord Oakeshott, asked about the number of pensioners projected to be on benefits in the future. We should be very cautious about equating somebody who is destined to arrive on an income-related benefit as somebody who cannot benefit from saving though a pension arrangement. That is simply not the case. It may be the case for those who would have 100 per cent withdrawal for extra income. The majority of people heading for means-tested benefits would not be in that position. Of course, the pension reforms that we introduced last year, and which we are building on in this Bill, will restrict the impact of means-tested benefits in the future. But, as we discussed at Second Reading, if you want to eliminate means-tested benefits in total, you would have to more than double the state pension. I think the statistic is that if you double the state pension in 2012, by 2050, 25 per cent of pensioners will still be on at least one income-related benefit. So it is an environment in which we operate. To equate the two is, I believe, fundamentally wrong.