Baroness Noakes (Con)

My Lords, my Amendments 177, 179 and 180 in this group are all probing amendments. Amendment 177 would delete Clause 49(3)(b). Subsection (3) defines “default pension benefit solution”, and paragraph (b) says that it must be “designed to provide a regular income” in an individual’s retirement. I wish to probe whether it is right to force all prospective pensioners into a lifetime income solution. There is a problem with “one size fits all”. If a pensioner is going to continue working on a full-time or part-time basis, as many do, they may not need to draw income for at least part of their retirement. But paragraph (b) seems to be a straitjacket requiring an income for all their retirement years, even if the pensioner does not need it. In addition, smaller pots do not lend themselves to lifetime income solutions because they can produce insignificant amounts of income and are also costly to administer. The Bill does not provide for a de minimis exemption. Furthermore, a prospective pensioner who has significant accumulated debt pre retirement may well benefit more from clearing those debts with a capital sum than having income throughout retirement. I see that Clause 49(6) regulations can make provision about the term “designed to provide a regular income”, but that, using normal language, does not appear to be capable of encompassing the payment of lump sums without a lifetime income component within the use of such a power. Amendments 179 and 180 concern Clause 50, which deals with the people called “transferable members”, who are basically those for whom their pension scheme determines that they do not fit with its scheme for pension default benefit purposes—I paraphrase, but that is the gist of it. The pension scheme determines that these are the members they cannot design a default pension for. Subsections (14) and (15) allow regulations to require certain pension schemes to accept transferable members, while subsection (16) allows regulations to prohibit or limit the charging of fees in respect of transfers. Hence pension scheme A can determine that some of its members are too difficult to devise default retirement solutions for, and then the Government can tell pension scheme B that it must take them and might not even get paid for it. This sounds like quite an extraordinary set of powers, which is why my Amendments 179 and 180 would delete subsections (14) to (16). I would be interested to hear the Minister explain why the Government need such draconian powers and what limits will be placed on them.