Baroness Kramer (LD)

My Lords, I will be exceedingly brief. I may participate on an occasional basis on this Bill, despite the fact that it is very important. However, we have many people with exceptional expertise in the Room, for which I am extraordinarily grateful. I have Amendment 167 in a later group on its own, which has relevance to one of the issues raised by my noble friend Lady Bowles in Amendment 46A, in which she introduces the concept that value-for-money regulations must take account of certain factors. Proposed new paragraph (c) particularly interests me, on “the characteristics of the members of the scheme”. In all the discussions that I have heard in the Mansion House compact and in the Bill, very little attention is paid to the characteristics of the members of the schemes, because they differ widely. I am particularly concerned that people on low salaries, whose primary savings for pensions and then investment is through auto-enrolment and default funds, have a very different risk profile from those of many people who otherwise engage in pension savings. This is a group for whom the downside has far more serious consequences than for other groups. Many of us can afford to take a chance with parts of our pensions: if we lose some money, we are still going to be in relative comfort. That is essentially not true for this group. The upside benefit of taking risk and doing well from that risk is nice, but the consequences of taking risk and losing because of that risk are far more serious. I want to draw the Committee’s attention to that issue. As I said, I will pick it up again in Amendment 167, because to me it has been overlooked. It is key that, when we devise pension arrangements, we recognise the very different risk profiles of members, so that what they are required to do—auto-enrolment and default schemes are in effect a requirement—matches their risk profile. I hope that we will begin to start to shift some of our thinking. There are amendments, in this group and in others, that could help very much with that issue.