The great strength of the Pension Wise approach is in providing appointments that deliver guidance to a very large number of people. The issue that the hon. Gentleman talks about will need to be managed in the context of a national service that already exists—one that is helping a significant number already and ought to be helping a lot more. The default should be that people get an appointment.
The chair of the Money and Pensions Service told the Work and Pensions Committee in March that 72% of people change their mind about what they are going to do as a result of talking to Pension Wise. He pointed out that
“that tells you that the vast majority of people, left to their own devices, will probably make a poor decision.”
However, the Government’s current policy will leave eight out of nine savers in exactly that position.
Last week, the Minister received a four-page letter from Age UK and other organisations that said:
“The DWP should rightfully be proud of Pension Wise, but usage is still worryingly low, and it is a great concern that the ‘Stronger Nudge’ trials report published by the Money and Pensions Service shows that only a marginal improvement in take-up is likely to result from this approach.”
We have to do much better; they are quite right. The letter goes on to argue that non-advised savers should be opted in automatically, as proposed in new clause 1. It also provides detailed rebuttals to the arguments that the Minister used against this new clause in Committee, which are on the record.
Of course, Age UK is quite right: the Department’s plans are currently inadequate. The letter goes on to point out that the Minister’s suggestion in Committee that the FCA’s introduction next year of its investment pathways might deal with the problem is not going to work either. We cannot sit back while Pension Wise continues to be an excellent service taken up by a very small minority. The Government and regulators need to end their indifference on this. Aspiring to 11% take-up is not enough. We need auto-enrolment into a service that enables better outcomes from pension savings.
One of the reasons for the importance of Pension Wise is that it equips people to avoid being scammed. The Pension Scams Industry Group estimates that 40,000 savers have been scammed out of their savings in the five years since pension freedoms were introduced. Some of them do not yet know about it. A significantly higher number of Pension Wise users than non-users say that they are very or fairly confident about avoiding pension scams, having had an interview with Pension Wise. The default ought to be that people are given an appointment. I hope that the Minister will accept the new clause, but if he does not I hope that the House will have a chance to vote on it.
Amendments 2, 3, 4 and 5 address the scam problem. They are probing amendments, because the Minister has helpfully explained that he intends to introduce regulations under powers in the Bill that have the same effect as the regulations that would be introduced if the amendments were added to the Bill.
I was in touch—the Minister has heard me say this before—with a nurse who works in a health centre in my constituency. Her husband drives a black cab. Some years ago, a financial adviser whom they knew well and who had given them good advice previously called to
tell them about an opportunity to realise their pension savings early with no real downside. They took up his offer, and the upshot is that all their savings have gone, and they face a massive tax bill of about £60,000 with no means to pay it. The financial adviser, I gather, is living on a yacht off Tenerife.
All of us can understand how devastating is the impact on hard-working families of being robbed of their life savings in that way. People who have worked hard, who have done the right thing and who are entitled to look forward to a secure retirement suddenly find that their hopes have been destroyed. The Transparency Task Force, one of the groups that urged the Select Committee to undertake its current inquiry on scams, reports cases of spouses who, sometimes for years, have not dared tell their partners what has happened, so awful are the consequences. People wake up every day in dread of the future, often ashamed and embarrassed to have fallen for such bare-faced lies. Scammers groom people and make themselves trusted family friends. They warn savers that schemes will advise them not to transfer their money, and they claim that that is because the schemes want to hang on to it for their own gain. If the saver becomes aware that the receiving scheme has fallen foul of regulators, they say that that was just because someone was late filling in some forms.
It seems absurd that, as the law stands, trustees are compelled to make a transfer if a member demands it, even if they know that the money is going to crooks. Even if the receiving scheme is on the warning list published by the Financial Conduct Authority of firms known to be suspect, the law requires trustees to go ahead with the transfer. If they are slow about it, they can be fined. The Select Committee has launched a three-part inquiry looking at scams. There have been lots of calls for the Committee to look at the issue, because there is widespread revulsion at the scandals that have occurred and fear of the damage to individuals and to the industry as a whole. There is a particular worry that pension freedoms, plus the financial pressures of the pandemic, could create what the Pensions Regulator has called a golden age for pension scams, as people are anxious to get hold of their money.