---

Pensions Bill

I want to use this debate as a hook with which to raise an issue that I am worried about. It has been raised by TPAS, whose 25th anniversary noble Lords have referred to, and I suspect that it may be a concern for many noble Lords. We may explore it more fully on Amendment No. 134ZB. It involves the issue of stranded pots and the capacity to transfer them in. I am batting beyond my technical range here; I hope that noble Lords will forgive me if I am mistaken, but I believe that what I am saying is accurate. Let us assume that an employee in her 50s joins a personal account in 2012 and, over the next five years, puts in the maximum, which comes, in today’s prices, to £18,000. I agree that that is unlikely but it is possible. That sum could not be trivially commuted; she would be forced to annuitise it. Let us suppose that that employee already has two small personal pots, each in personal pensions, of £2,000 each. If those two small pots were based on occupational pensions, with an employer contribution or whatever, the 2008 Budget would allow her, as I understand it, to trivially commute them in addition to her £18,000 coming in from her personal account. In other words, they can essentially be ignored. However, if her two small personal pensions are not occupational, but personal pensions, she cannot trivially commute them; she cannot annuitise them, because they are too small and, with the noble Baroness’s amendment, she cannot transfer them into her personal account. Those two £2,000 pots are completely lost; they are stranded in no-man’s land. She already has savings of £18,000 in her personal account. She has an additional £4,000. If those pots are in an occupational pension she can get at them, but if they are in a personal pension she cannot and they are totally lost. I understand that to be the case; if it is, frankly, something has to be done about it. We can discuss this again when we get to the amendment on trivial commutation, but I am giving warning now, because I think that it is one circumstance in which problems might arise. Another circumstance is pension sharing on divorce; you may end up with a sum where the existing pension fund does not want to retain the split but the fund has nowhere else much to go. There may be cases like that where those sums need to be able to come into personal accounts. Whether that is effected through the code of practice or guidance—it does not necessarily have to be done on the face of the Bill—or through regulations, there is a bundle of such issues almost hiding under the stones, which we will uncover as we go through the Bill. This is the issue that most grieves me. I raised it at the TPAS reception dinner last night. The chief executive of PADA and several financial advisers said that it is a real problem. I am persuaded that we should do something about it. That may not be today. My noble friend may not yet have sufficient answers; I recognise that this is primarily a matter for HMRC rather than DWP. However, I hope that noble Lords will agree with me that we cannot tolerate a situation in which modest savings are left stranded, not belonging to anybody, and just fall back to the general scheme members. Those modest savings will have been lost to somebody for whom every penny counts.