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Pensions Bill

As I said earlier, we have always made it clear that the personal accounts scheme should complement and not replace existing pension provision, and the annual contribution limit and transfer bands are just two of the measures designed to achieve that. We have made our position on these measures clear in various publications and statements, and the contribution limit has been extensively debated here today and in the other place. As is said, our policy on the contribution limits has been widely discussed and there is broad consensus with our stakeholders about the £3,600 level for the annual contribution limit. As part of this consensus, it has been widely acknowledged that there is a need to review the policy at some point after implementation. That is why we are committed to having a review in 2017 of two of the features of the scheme: the contribution limit and the prohibition of transfers to and from the scheme. That has been agreed by the Secretary of State and announced in previous publications. The review will enable the Government to assess whether these measures have been successful in promoting market stability as intended without detriment to individuals within the scheme. Following the review, and if the review evidence clearly indicates that the contribution limit should be abolished, the Secretary of State may decide to remove the requirement to have a contribution limit in the personal accounts scheme. Clause 61 allows the Secretary of State to do just that. Of course, if the review evidence indicates that the limits should remain, the Secretary of State is not required to use this power and the limits can remain and be adjusted as necessary. Amendment No. 112C would remove the Secretary of State’s ability to remove the requirement for personal accounts to have a contribution limit. In other words, should the 2017 review find conclusively that a contribution limit was not necessary—for example, if it found that the limit was hampering saving and was not needed to maintain market stability—it would be difficult to remove the requirement to have a limit. Personal accounts would then be required to operate a limit until a suitable opportunity to amend primary legislation arose. I hope that the noble Baroness accepts my assurance that the Secretary of State will exercise this power only in such circumstances as I have described. I should add that Parliament will be able to debate fully the exercise of the power, which uses the affirmative procedure. I hope that that goes some way towards addressing the noble Baroness’s concerns and that she understands that the purpose of the power is to allow the Secretary of State to act on the findings of the 2017 review, should it be required. I hope that that is clear but I see that it may not be and that some questions may be coming my way.