The Lord Bishop of Chester: My Lords, I warmly support both these approaches. Although they are contrasting—the noble Lord, Lord Lawson, emphasises transparency while the other approach offers appropriate consumer protection through some degree of regulation—I do not think that they are incompatible with each other.
In approaching this matter I follow what the noble Lord, Lord Bates, said in response to an earlier amendment: the overall aim is to engage people so that they save for their retirement. As I said earlier in the passage of the Bill, the lack of provision in retirement for future generations is a time bomb. The Bill, which in general I warmly support, attempts to address that.
The sheer complexity of this area is a problem, as we have discovered in this Committee. If we find this issue complex, how does a member of the public find it when they are making a decision about whether to put additional contributions into their scheme? The money-purchase schemes that are now predominant will work only if people add contributions of their own and do not just rely on the employer contribution. I think that we need transparency in this area—not only the details set out by the noble Lord, Lord Lawson, but an overall figure of costs bringing together all the different costs discovered by the Which? report. Transparency over overall costs is necessary or people will feel disengaged.
One of the problems in our society is disengagement with politics in general, partly caused by the sheer amount of legislation turned out by Parliament. No one really understands what is going on and so people disengage from it. With all the jargon in the investment industry, not least in relation to pensions—terms such as “bid/offer”, “revenue splits” and so on—the average person in the street simply would not know what is being referred to. We need an overall figure that helps people to understand how much of the money that they are investing is actually invested, and investment returns, in a way that is transparent and where the consumer is generally protected. A few years ago, stakeholder pensions were an attempt to achieve this, but I am not sure what happened to them. As far as I can see, these amendments are entirely consonant with the broad push of Schedule 17. I conclude my remarks.
Sitting suspended for a Division in the House.
The Lord Bishop of Chester: I am not used to being interrupted in my perorations, but I was coming to an end. Schedule 17 says that the Government,
“may impose duties on the trustees or managers of a relevant scheme”.
These amendments spell out what those duties might be, in the interests of transparency, with a view to try to encourage people to invest in these products with some certainty as to how much of their money is going to be invested. I hope that the Government will look sympathetically on the issues that have been raised.
Lord Bates: …I am also grateful for the intervention of the right reverend Prelate the Bishop of Chester, who encapsulated in a couple of sentences the fact that the Minister had compounded the complexity and the difficulty of the challenge facing those approaching retirement in such pension schemes, rather than giving them any comfort…
Lord Browne of Ladyton: …I am very grateful to the right reverend Prelate the Bishop of Chester for two things: first, for his identifying that the approach of the Labour Front Bench and that of the noble Lord, Lord Lawson, are much more compatible than others who have commented on this appear to believe. These amendments proceed by way of regulation but the regulation is to define what subsequently should be disclosed. I point out to those who have contributed to this debate that we, too, are about disclosure with this amendment. We have an ambition to cap the charges on the administration of pension funds but this is not the vehicle for that policy. This is about disclosure. It is about defining what ought to be disclosed in a very precise fashion through a process of consultation and regulation, and then about disclosure for all the same reasons that the noble Lords, Lord Lawson and Lord German, the right reverend Prelate, my noble friend Lady Donaghy and indeed the Minister all seem to consistently agree with.
The second reason I am grateful to the right reverend Prelate the Bishop of Chester is that he not only put his finger on the problem for the member, or potential member, of a pension scheme but explained more fully than I did—perhaps I should have done—why value for money is so important to our reforms. It is about confidence. If there is no confidence in the market, as the right reverend Prelate pointed out—and drew the Minister to agree—this whole package of reforms will fail. This will be half a reform, if there is no confidence in the private pensions industry. Our whole thrust is to address the issues that have been successively identified by reports and analysis of the issue in a form that is designed to reform the law and to provide the confidence that will be necessary for this whole reform—which we support—to go forward…
The Lord Bishop of Chester: My Lords, briefly, I listened to the Minister with great interest. I regard the amendment as important because, in a sense, the proof of the pudding is in the eating; it is when you are taking the benefits of the saving.
The Minister’s reply, it seems to me, says that in addition to all the complexities which the noble Lord, Lord Browne, set out, there is actually a whole load of other complexities about whether you should be having an annuity at all. My question is simply as follows. Until now, when we have often had final-salary schemes around, these decisions have been largely managed. However, we are increasingly moving into a position where most people will be on money-purchase schemes, and this will become normal; we will have to engage with these issues. Given the complexities which the Minister has so helpfully set out, is the Government’s view that the obligation to work this out is on the consumer—the person taking the pension—with some information provided somewhere, or is the obligation on the pension provider to provide information which covers all these options? Where does the responsibility primarily lie to advise the person at the point of retirement? I thought it was not quite clear enough as to where that lies in what the Minister said.
Lord Browne of Ladyton: …I am also grateful for the intervention of the right reverend Prelate the Bishop of Chester, who encapsulated in a couple of sentences the fact that the Minister had compounded the complexity and the difficulty of the challenge facing those approaching retirement in such pension schemes, rather than giving them any comfort…