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Pensions Bill

Clause 70 goes to the very heart of our ambitions for these reforms. It captures in legislation those matters which have shaped the development of our policy, and which must guide the authority as it moves forward with implementation. I know that we all support the goal of more people saving for retirement, more people contributing more for longer and, ultimately, higher incomes in retirement. Equally, we know that to achieve these aims we need to address that combination of individual inertia and poor commercial viability which has resulted in large numbers of moderate to low earners not saving enough for their retirement. Amendment No. 113F would alter the principle at Clause 70(2)(d) to require the personal accounts scheme established under Clause 58 to be aimed at a target group. The Bill is drafted to provide the legislative framework to deliver a scheme focused on the target group of moderate to low earners who do not have access to good quality workplace pension provision. However, the Committee will appreciate the difficulty of achieving a precise legislative definition of a target group that will stand the test of time. Instead, our approach is to achieve the same goal by setting the scheme a clear focus through the unique features of the contribution cap and prohibition on transfers, and the requirement on the authority to design a scheme within the framework of the principles. The authority fully understands this. When Tim Jones gave evidence to the committee of the other place, he made clear the authority’s role, saying: "““It is our job to address that target market””." Amendments Nos. 113A, 113B, 113D and 113E seek to broaden the scope of the principles requiring the authority to have regard to all existing schemes. I make clear that the personal accounts scheme is not being introduced to replace good quality pensions. Instead, it will be an additional pension scheme focused on the target group of moderate to low earners, which will sit alongside other schemes in the pensions market. That is a core ambition of our reforms. The amendments would broaden the scope of the principles beyond the pension provision that is defined as ““qualifying”” in Clauses 15 to 25. They would mean that, in designing personal accounts, the authority would be required to have regard to all existing schemes. That could include schemes that do not meet the minimum standards that we consider important in providing for a reasonable income in retirement. That cannot be right, and that is why it is appropriate to specify qualifying schemes in the principles. I share the noble Lord’s wish that the private pensions industry, which works well for many millions, should be allowed to flourish. We want to preserve good quality existing workplace pension provision, much of which offers greater member benefits than the minimum standard prescribed by the reforms. Amendment No. 113HA seeks to include a new principle for the authority about the overarching ambitions of the reforms. Our ambitions for the reforms are clear; more individuals saving and more pension contributions. However, that should not be expressed as a distinct legislative principle for the authority, as Amendment No. 113HA seeks; rather it is part of the rationale behind the Bill and the pension reform programme. As such, it is for the DWP to monitor the likely impact and evaluate the extent to which our objectives for the reforms have been met. Already, we have an extensive programme of research and data collection to inform this. We are tracking employers’ and individuals’ attitudes and responses to the reforms, we are continuing to develop our evaluation strategy in consultation with external stakeholders and we expect a full evaluation to be undertaken after the reforms have bedded in. Much of the research and evaluation will be publicly available, and will provide opportunities to examine the impact of the reforms on pension saving and the wider pensions market. Amendment No. 113M would insert a new clause requiring the authority to include in its annual report a report on how it has complied or otherwise with the principles set out in Clause 70. During the debate on the principles in the other place, my honourable friend, the Member for Warwick and Leamington, explained that the authority’s annual report will provide detail on the delivery and performance of its business, which will include information on how the principles have been considered during the year. Therefore, we do not think that this needs to be enshrined in legislation. I can also confirm that the authority’s forthcoming annual report for the 2007-08 financial year states that future annual reports will include such information. In closing, we take very seriously our responsibility in ensuring that the reforms achieve our aims. I believe that the measures in the Bill, including the principles as they are drafted, provide both the framework for delivery and a framework against which success will be assessed. I hope that I have been able to reassure the noble Lord that we share the ambitions behind the amendments, but that there is no need to amend the existing drafting of the Bill to achieve those aims. Accordingly, I hope that the noble Lord, Lord Skelmersdale, will feel able to withdraw his amendment.