Pensions Bill

That is an interesting, but superfluous, point. The amendment is also based on the presumption that being over 50 is, in itself, a good indicator of poor returns on private pension savings. This is simply not the case. Noble Lords will be aware of the analytical work programme we are doing with stakeholders on incentives to save. Our analysis shows that age is not, in itself, a good indicator of poor returns. So rather than second-guess now what people will want, we are undertaking research to find out. Not to do so could damage these reforms, and that is what concerns me about the amendment. In the first place, it could seriously distort the allocation of resources, diverting them towards the wrong provision. If the Government were under a legal obligation to enrol everyone for face-to-face advice unless they opted out, we would need to ensure that we could meet the potential demand. The fact that face-to-face services would be the default option would increase demand over and above that which we could expect if there were a level playing field for all channels. People may conclude that if the Government considered it necessary to offer face-to-face advice in this way, they had better use it. Demand would be unpredictable, varying in different locations at different times, yet people would need to be able to get to a face-to-face adviser at a place and time convenient to them before they made the decision on opt out. If the opt-out period is 30 days, that is a very substantial logistical issue. Providing for this service would be extremely expensive. It is estimated that just an hour’s advice for all people aged over 50 could cost up to £150 million, an ongoing cost as people move in and out of work. We would risk wasting money on advisers who were underemployed. At best, we would spend money on providing face-to-face advice to people who may have been better served by other means. That is not the best way to direct resources. I am also concerned that if an individual cannot make the time to take up this face-to-face advice before making their opt-out decision, they may conclude that they should err on the side of caution and opt out. No doubt some will promise themselves to look at it again when they have time, but we all know how that situation ends. There is a serious risk that the amendment undermines the simplicity we have been striving to achieve in the auto-enrolment process and threatens the success of the reforms. Of course we recognise that face-to-face support ought to be a component of what people can access. My noble friend Lady Hollis emphasised the limited knowledge that there is of financial matters but referred also to practicality and capacity. The noble Lord, Lord Kirkwood, said that information is not enough—it also needs to be interpreted. That is right, but in a sense that is the situation for people who have the opportunity to enter into a pension scheme. The fact that there will be personal accounts and auto-enrolment does not change that fundamental issue. Effectively, he argued that although the amendment is targeted on the over-50s, if the logic runs true, it should be made available to all, particularly those younger cohorts who have the greatest levels of debt. The costs and practicalities associated with that would be even greater. We have a shared concern to make sure that these reforms work and that they enable people to access pension savings when they have not been able to previously. We need to ensure that they are helped to make the proper decisions by providing information. We need to recognise that some people will need additional face-to-face support, but the proposition before us is not the way forward. Indeed, it could be a diversion of resources which could and should be used more generally to support these pension reforms.