Viscount Younger of Leckie (Con)

My Lords, supported by my noble friend Lady Stedman-Scott, I am glad to be leading off in another group of amendments, largely designed to probe the Government and clarify their thinking, plans and rationale on the small pots regulations in the Bill. Indeed, I know that many industry bodies are watching our proceedings with interest and will be taking note of what the Minister says. This is after we had a series of meetings with those at the sharp end in the industry, as she will probably guess. I will speak briefly to the other amendments in this group before turning to my own. First, I speak to the amendment in the names of the noble Lord, Lord Vaux, who is not in his place, and the noble Lord, Lord Palmer. Ensuring that a qualifying dashboard service has been available for a period before small pots can be consolidated seems an entirely sensible and proportionate measure. If we are to move pension savings automatically, often without an active decision by the member, it is surely right that individuals should first have a practical opportunity to see and trace their pots in one place and to engage with them themselves. I also welcome Amendment 81 from the noble Baroness, Lady Bowles, which, as I understand it, would ensure that a pot is not treated as dormant where contributions have ceased for a legitimate and expected reason, such as a temporary break from employment with an intention to return. This strikes me as a pragmatic refinement that would better reflect real-world working patterns and help to ensure that consolidation targets genuine dormancy rather than planned inactivity. I have no doubt the Minister will explain that in more elegant terms than me. Amendment 88, in the name of my noble friend Lady Noakes, addresses the definitions set out in Clause 34, which itself gives the Secretary of State a broad power to alter the definition of a “small” pension pot, including increasing the threshold, with no upper limit set in the Bill. The amendment would retain flexibility but place a clear ceiling on how far that power could be used. I look forward to my noble friend’s remarks. I know that my noble friend will expand on that point, but I would be grateful if the Minister could also explain why an upper limit is not currently included and how the Government envisage safeguarding against this power being used to capture significantly larger costs in the future. That is an important question that I hope will be raised. I turn to my first amendment in this group, Amendment 79, which would replace the 12-month dormancy period in Clause 22 with an 18-month period. This is a probing amendment intended to test the rationale for the Government’s choice of a 12-month timeframe. The definition of “dormant” is critical, because once a pot meets that definition it may become eligible for automatic consolidation with no active decision by the member. Many savers engage with their pensions only intermittently, often on an annual basis, and employment patterns do not always follow neat or predictable cycles. Therefore, extending the period to 18 months would allow the Committee to explore whether a full year of inactivity is genuinely sufficient to infer disengagement, or whether it risks capturing individuals who are simply between roles or engaging on a longer cycle. I want to be clear that this amendment does not seek to undermine the policy of small pots consolidation, which, as the Minister knows, we broadly support. Rather, it is intended to probe how the Government have balanced administrative efficiency with member protection, and what evidence has informed the choice of a 12-month period rather than a longer one. I would therefore welcome the Minister’s explanation of how this timeframe was determined, and whether alternative periods were considered. Amendment 80 would leave out Clause 22(3)(b). This too is a probing amendment; it is intended to explore what the Government mean by the reference to “prescribed exceptions” in the definition of a dormant pension pot. As drafted, Clause 22(3)(b) assumes that a pot may be treated as dormant not only by reference to contribution inactivity but by whether a member has taken steps to confirm or alter how their pot is invested, subject to exceptions that are left entirely to regulations. Many savers remain in default investment arrangements by choice and engage with their pensions only intermittently, often in ways that are not easily captured by scheme records. Therefore, it is not clear what types of member action the Government intend should prevent a pot being treated as dormant, nor what kinds of behaviour might be carved out as exceptions. This amendment is intended to prove whether investment-related actions are an appropriate proxy for engagement, how prescribed exceptions will operate in practice and whether the approach adequately reflects real-world member behaviour. I would welcome the Minister’s clarification on how these exceptions are envisaged and why this test has been included in the definition of dormancy. Finally, my Amendment 82 concerns the level of parliamentary scrutiny applied to regulations made under Clause 22. As drafted, the Bill applies the affirmative procedure to only the first set of small pots regulations or regulations that meet certain specific triggers. Thereafter, changes to the consolidation regime may be made under the negative procedure. This amendment is probing and is not dissimilar to one raised previously in Committee. It is intended to test whether that approach provides sufficient ongoing parliamentary oversight. The regulations made under Clause 22 will govern when and how small dormant pension pots may be consolidated, often without an active decision by the member, and they therefore go to the heart of member protection and confidence in the system itself. The amendment would require all such regulations to be subject to the affirmative procedure, ensuring that Parliament has the opportunity to scrutinise and approve changes to this framework wherever they are made, not just at first use. I would be grateful if the Minister could explain why the Government consider the negative procedure appropriate for subsequent regulations in this area, and whether there are safeguards to prevent significant policy changes being made without fuller parliamentary scrutiny. I thank in advance the Minister for her comments and answers and all other noble Lords for their contributions on this group, which I feel concerns an important matter. I beg to move.