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Pensions Bill [HL]

My Lords, this amendment relates to deferred charges, and it deals with the part of the benchmarking of quality of schemes into which jobholders will be automatically enrolled. As we have discussed on many occasions, a major segment of the workforce for whom auto-enrolment is aimed are likely to be frequent movers between jobs or, indeed, those holding multiple jobs during the year. One practice that is current in some personal pension schemes is increasing charges when people change jobs. An example of that might be where the current employee who is an active member of a pension scheme is actively contributing to a pension scheme, paying perhaps about 0.5 per cent in management charges. However, a former employee—that is, a deferred member of a scheme—is charged 1.5 per cent, which is much more than NEST will charge. Interestingly, the pension companies operating in this manner describe this as an ““active member discount””, but the consumer association Which? describes it, more appropriately, as a ““deferred member charge””. These charges clearly penalise people who regularly switch employers, and it is particularly appropriate for many of the employees for whom auto-enrolment is targeted. Therefore, the concern here is that there should be a set of guidance, instructions or regulations to ensure that, in assessing the quality of schemes which may be alternatives to NEST, these issues are benchmarked appropriately. Alongside this, there are concerns relating to the FSA proposals to allow employers to negotiate a consultancy charge with their advisers and then deduct those charges from the employee’s pension pot. The general purpose and thrust of the amendment is to guard against excessive charges and to ensure that the Government benchmark the sort of quality that they want in schemes which are to operate alongside NEST in the open market. I beg to move.