Can I answer the noble Baroness’s question when I come to the specifics that have been asked? If I get to the end and have not answered, I have no doubt that she will let me know.
We will turn to dashboards later in Committee. However, it is important to highlight here that the Government want to ensure that information on dashboard services can be easily comprehensible to consumers. For this reason, dashboards should start with simple information. We remain interested in finding out whether dashboards can support an increase in engagement on issues, including the investment decisions made by schemes.
Moreover, new paragraph (c)(i), which would be inserted by Amendment 52, would not only duplicate the intent of the Government’s new clauses but would also duplicate existing duties that the Government have already placed on trustees. Amendment 67A would have a corresponding effect on workplace personal pension schemes, for which the FCA has also legislated to take account of such factors. Both these sets of requirements are mandatory, unlike the voluntary UK stewardship code referenced in this amendment.
Amendment 67B would enable the dashboard to include information on how schemes take into account members’ interests. Notwithstanding earlier arguments for keeping the dashboard simple at first, occupational schemes already have duties to report on the extent to which they take account of members’ views in investment decisions.
The final new section in the Government’s amendment, new Section 41C, confers powers on the Secretary of State to lay regulations ensuring that managers and trustees of occupational pension schemes comply with requirements in regulations laid under powers delegated by new Sections 41A and 41B. In particular, regulations may allow the Pensions Regulator to issue compliance notices, third party compliance notices and penalty notices. The provisions in new Section 41C are consistent with similar compliance provisions relating to pension schemes in paragraph 3 of Schedule 18 to the Pensions Act 2014.
New Section 41C and indeed 41A are subject to the affirmative procedure at first use only. The first regulations made in exercise of the powers in these sections will confer enforcement powers on the regulator and place new requirements on trustees or managers. The Government therefore consider that they should be subject to a higher level of scrutiny. However, the Government expect any subsequent use of the powers to be for the purpose of periodically amending these requirements to ensure that they reflect developments. We therefore believe that the negative procedure beyond first use is appropriate. The consultation requirements in Section 120 of the Pensions Act 1995, into which these new sections are proposed to be inserted, would also apply.
Delegated powers to set out these requirements in secondary legislation are essential to ensure that the requirements can take account of developing operational and financial best practice and are proportionate to the scheme in question. It also ensures that they reflect the rapidly developing understanding of the effects of climate change and its interaction with the financial system. Furthermore, the urgency of action required to address the climate emergency demands a swift policy response now and in the future.
All the Government’s new clauses also make provision for Northern Ireland that is equivalent to the provision that would be made by the Government’s amendments. This would ensure that, in accordance with the long-standing principle of parity, the single system of pensions across the UK is maintained. As such, the arguments made in relation to the proposed amendments to the Pensions Act 1995 apply equally to the amendments proposed to the Pensions (Northern Ireland) Order 1995, inserting a new paragraph into Schedule 11.
The government amendments and their associated powers are as urgent as they are important. Climate change is a major risk to the nation’s pension savings. It is appropriate and responsible for the Government to require those who have a duty to deliver members’ retirement income to safeguard investments against climate risk and publish information on how they have done so.
I come to some of the specific questions raised—