Making pensions transparent

As the Pensions Scheme Bill enters the House of Lords next week, Green peer Natalie Bennett discusses some of the proposed amendments to the Bill that aim to make pensions more transparent, including providing information on how well pension schemes align with the Paris Climate Agreement.

Natalie Bennett in parliamentary office.
Natalie Bennett in parliamentary office.

Hollin Jones

Natalie Bennett

Next week, the House of Lords will be debating the Pensions Schemes Bill in what’s called “Committee Stage”, when we’ll be operating most obviously in our classic “house of review” role, going through line-by-line to scrutinise and try to improve the Bill. 

As a new peer, I’ve seen the highly controversial and sadly eventually unamended Withdrawal Agreement Bill go through this stage, but this is the first time I’ve engaged in a Bill like this, which has broad support from across political parties and social actors, but can of course be improved.

Should the government be prepared to listen, and take on board expert views, we might even get changes to the Bill, seeing Westminster operate almost like far more constructive policymaking seen as normal in proportional election systems in the rest of Europe. We can but hope.

The Bill introduces a new, somewhat more secure, form of private pension (“collective defined contribution” schemes in the jargon), and boosts the powers of the Pension Regulator over company schemes – something I know would please many former journalistic colleagues who suffered the depredations of Robert Maxwell.

There’s also a highly practical “pensions dashboard”, that will enable individuals to see all of their pensions in one place on one website. As someone who has on their to-do list to chase up a former scheme since, when I moved house, they said they “couldn’t put the change of address in place then and could I ring back in a few months’ time”, several years ago, that sounds good to me. 

I’m working with the campaign group Share Action specifically on this part of the bill, to make the dashboard more useful and the activities and operations of pension funds more transparent – crucial when you consider that UK pension assets total $2.9 trillion (102 per cent of UK GDP) and that the government’s own research shows that 68 per cent of UK savers are concerned about the environmental and social impact of their pension funds.

The first amendment, being led by other peers and to which I’m merely lending my support, aims to ensure that the dashboard indicates how well pension schemes align with the UN Paris Climate Agreement. The need to do that, and the levels of public concern, make this a really clear necessity on the dashboard.

The next amendment goes somewhat further. We all know that greenhouse gas emissions are just one of the ways in which the human race is pressing up against the limits of this fragile planet, while also treating far too many workers and communities disgracefully, without respect for their human rights. 

So this amendment calls for the dashboard to record what are known as “environmental, governance and social factors” considered in the choice of investments, plus what’s known as the Statement of Investment Principles (SIP). Funds have to report these annually anyway, but inclusion in the dashboard will make this evidence easily accessible, rather than workers having to hunt around for it.

The amendments create a requirement for funds to show how they’ve consulted members’ views on the principles, and record how they’ve done that on the dashboard. As the Law Society recently said, trustees “may not impose their own ethical views on their beneficiaries” – but if they’re to be properly representative, they have to find out what their members think.

Another amendment is also not just for the dashboard, but rather for ensuring that funds report to the Pensions Regulator on the diversity of their governance. Numerous studies have found that diverse groups are more effective in decision-making, but a 2016 survey found that on average funds had 83 per cent male trustees, with more than a quarter of boards being all male.

There currently isn’t a requirement to report this – the amendments call for it to be required, and added to the dashboard.

Well done if you’ve read this far! This is not super-exciting, politically fun stuff, but it is the day-to-day business of government that having a Green in the room, or rather on the floor of the House, can have an impact on.

It is a demonstration of the two-track approach that practical politics demands. I’ll continue to campaign for a universal basic income and citizens’ pension that would ensure no pensioner lives in poverty, for a complete transformation away from the insecurity and poverty that our current system delivers for millions.

But at the same time, I’ll try to make whatever incremental improvements can be delivered now to make the system slightly less bad. After all, it is our money in these schemes and we should be in control of where it goes.