UK Parliament / Open data

Pension Schemes Bill [HL]

I am very grateful to the Minister for that very comprehensive answer. There are one or two observations that I would like to make about components of the answer. We seem to disagree about quite what the reach of Pension Wise is. The Minister quoted a composite figure of, I think, about 52% in Pension Wise and other advice. The figure that I had was, as I said earlier, about 15% using Pension Wise.

I was also interested in the comment about whether the current drawdown rate was sustainable. The Minister might recall that in the original discussions on the pension freedoms Bill, the foreseen sustainable drawdown rate was 3%. Now, it is running at 6% and 8% for pots under £50,000. Although I admit that I might be mistaken about this, I think that the FCA may in fact have said that 6% was not sustainable in the longer term either. Therefore, I think that there are warning signs about the rate of drawdown.

I had one other question about the nudge programme. I know that two schemes are being tested against each other, in an absolute sense as well, but when this programme was designed, did it incorporate a level of success at which a rollout would be justified? I would be interested to know if that were the case—I think it should be—and what the number was for these schemes. What would trigger a rollout nationally of these two small tests? I mentioned the FCA and the investment pathways initiative. Can the Minister write to me with more detail of what is happening with investment pathways; that sounded a very promising way of coming at the problem.

Finally, there is the question of timing. Timing is behind a lot of what I was saying. It is a long time since we started on the Financial Guidance and Claims Bill and debated all this thoroughly here and in the other place. We are still not in a position to do as much as we wanted about providing guidance or advice at drawdown. A very long time has elapsed, and I have demonstrated the harms being done to consumers in the meantime by ill-judged drawdowns or transfers. I continue to worry that these timetables will slip and the harms will continue. I am reassured by the Minister expecting a result from the nudges in summer—which I take to be ending in September—and then to move as quickly as we can to implement it, if it is a success. Perhaps he and I can have a conversation later; I would be interested to know what plan B is, because it is possible that neither of those nudge trials produces what is needed. Having said all that, I beg leave to withdraw the amendment.

About this proceeding contribution

Reference

802 cc251-2GC 

Session

2019-21

Chamber / Committee

House of Lords Grand Committee
Back to top