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Pensions Bill [HL]

My Lords, I rise to move my sub-amendment, to use European parlance, as corrected by the noble Baroness’s perceptive intervention, and to speak to my noble friend Lord Stoneham’s substantive amendment and around the parallel thoughts of the noble Baroness, Lady Hollis of Heigham, on this matter. My amendment is slightly different in character, but all these amendments are about essentially the same problem. I quote, with approval, the words of the Minister only this afternoon, which I jotted down for greater accuracy: "““It is very expensive to manage small pots””." That is exactly what the problem is about. There are a number of complexities in the consequences of this. It is expensive for employees and employers, or pension administrators. It is extremely expensive for the Inland Revenue and gives rise to lots of often misleading tax codes, which overlap and never seem to get synchronised and sorted out. It causes difficulties for taxpayer compliance and taxpayer understanding when these bits and pieces come in from sources that are probably long forgotten and do not add up to very much. On Second Reading I quoted examples. I will be a little more pointed than I was then. They were actually my wife’s two pots of about £20 per annum and about £30 per annum. Goodness knows what the administrative cost of carrying that burden is. I am pleased to see the Minister chuckling. As I recall the situation, my wife had already consolidated a number of pension entitlements and had one go at this. She had some entitlement under the teacher pension scheme but no actual pension and she had had that out. You cannot consolidate more than once. I may have got that wrong, such is the complexity of this. In other words, there was nothing that she could really do about them. The proposals, as I understand it from my noble friend and the noble Baroness, are basically that NEST should be an optional repository to handle them. I can understand that the Minister may be a little diffident about taking it all in while he is getting this extremely imaginative scheme under way, but there is at least the potential for a default mechanism to take this over. Were my energies not to have faded, I would have sub-amended my noble friend’s Amendment 34 to read ““may make regulations”” rather than ““must make regulations””, but let us not debate that at this hour. The idea would then be that NEST would be a place where these could be sorted out. An alternative approach would be to enable people to have a slightly more relaxed view about taking these in cash, which is what my sub-amendment in effect proposes. One always has a whiff that the Inland Revenue has a certain concern here. I am quite sure that some elaborate scheme could be devised of tax avoidance where people could have hundreds of miniature pots and somehow take it all out in cash with the full benefit of the accrued tax reliefs, ending up with a fortune. Perhaps this has never happened, but I am quite sure that the Inland Revenue would be there alert to make sure that it did not. I also feel, in relation to the suggestion made by the noble Baroness, Lady Hollis, and the thinking behind it, that it is not absolutely essential that this should be done by NEST. It could be that, if the rules were made more flexible, existing administrators could take this on. I am pleased to hear her acknowledging that. I do not wish to create an unnecessary controversy in the Committee, but I have a feeling that the words ““any willing provider”” might even be considered. If, for example, in a case such as that of my wife, where there was an entirely trivial and ridiculous entitlement that could have been bolted on to her existing private pension arrangements, somebody could say, ““This is the value of the scheme; will you take it over?””, and pay it possibly as an agent—I am not concerned with the legal basis of this—I think that we would be making some progress. I feel strongly about two things. The debate in this Committee has rightly focused on mini-jobs. We are now talking about mini-pensions, which are often, but not always—and it is not contingent on income or anything else—a by-product of mini-jobs, and good luck to people. They may in certain cases, though not in the case of the lady whom I mentioned, be quite central or disproportionately important to the income or the top-up of income of the individuals involved. We should be moving towards a system that is less complicated, more flexible and less obsessed with the possibility of theoretical minor difficulties with tax. We should somehow cut through the legal thickets and deliver something that is cheaper, easier to understand and worth having in the hands of the beneficiaries who have properly earned it.