Contribution
My Lords, I will speak to various of my amendments in this group. We have moved on now to value for money. Of course, I fully support the Government’s aim of moving from talking about cost as the only arbiter of whether a scheme is good, and low cost being the measure of good, to looking at a much wider area of benefits for members in terms of value for money.
The particular amendments that I tabled, which I also tabled in Committee, focus on language in particular. I am grateful to the noble Baroness, Lady Bowles, for her support for Amendments 24 and 25. These amendments are trying to outline more clearly what criteria a scheme that is good value for money should be able to fulfil, so that it is much clearer what “value for money” means beyond whether it is low cost, and indeed beyond the aims of just saying whether a scheme has been performing well.
Ultimately, when we are discussing the value of a pension scheme with members, one thing that has in the past not typically factored into the thinking of the industry is the idea that the scheme might encourage members to understand pensions and give them a better idea of what the pension fund does and the benefits it can bring to them. So often in the past, there has been a reliance on member inertia, where they do not have to do anything and the pension is done for them.
The aim of the various requirements I suggest in Amendment 24 is to make the accuracy of contributions important. At the moment, schemes are generally riddled with data errors. I know that the Pensions Regulator has been looking at this recently, but part of the assessment of a good scheme should be whether its administration is capable and competent in managing scheme assets and recording the contributions correctly. I therefore suggest assessment criteria that includes reliability of the valuation data and efficiency of administration. Those are other areas that I hope will form part of the value-for-money judgments, and I hope that a requirement that regulations must include them will be included in the Bill.
I have also included what I call
“jargon-light communications in plain English”.
So often when you get a pension statement, or when anyone talks about pensions, it is in jargon that makes no sense to ordinary human beings. It is pension speak, which everyone in the pensions industry automatically understands, but, unfortunately, when the member gets their information about pensions it is usually something that they ignore, throw away or put in a file for later, rather than looking at what it means.
That leads on to my next point, which is the
“availability of education or guidance for all members”.
Members of the scheme would then have a provider that tries to help them understand what is happening to their pension fund.
Along with that, of course, would be specific “support for vulnerable members”. To some extent, vulnerable members are better taken care of, but I argue that, when we are looking at value for money—I stress that the Government are right to suggest that we need to look at value for money—there are important areas that should be in the regulations. I am trying to highlight them here.
The remainder of the amendments look at the language that will be used to assess value for money, apart from Amendment 32,which I will come back to. The other amendments deal with the Government’s assessment of whether a scheme is good value—which in the Bill is called “fully delivering”, though I am not sure that that is the kind of language that an ordinary person would relate to when thinking a scheme is good value. I am suggesting that rather than “fully delivering”, why not use “good value”? By the same token, when a scheme is judged to be “not delivering”, could we not say that it is “poor value”? That is what the ordinary person would immediately relate to when they look at what a value-for-money assessment says.
I appreciate that the Government and the consultations around this have looked at different red, amber and green ratings—RAG ratings—such as light green, dark green and so on, but I am trying to signal that there are ways in which we could talk about pensions that would resonate much better with the ordinary person. I hope that the Government might consider that.
The pensions industry, of course, loves its jargon and is very wedded to it, but I am not sure that it helps encourage people to want to put more money in pensions, for example—an aim which I believe the Government want. It would be more achievable if pension providers spoke to ordinary people in language that they understand—and their members are ordinary people, such as workers and so on.