'Essential protections' pledge as automatic enrolment boosts workplace pensions
Steps being taken by the Government will provide "essential protections" for people saving for their retirement as automatic enrolment into workplace pensions continues to roll out, according to a minister.
Outlining the safeguards contained in the Pension Schemes Bill, Conservative frontbencher Lord Freud said the market had grown quickly and there was a need to ensure it "evolves in the right way".
A large part of the proposed legislation is focused on the regulation of so-called master trusts, which are pensions providers that manage a centralised workplace pension fund for several companies at the same time.
These bodies have sprung up in response to auto-enrolment, where firms are required to provide a pension scheme for their employees.
Setting up an individual scheme can be costly, especially for small firms, leading companies to turn to master trust providers that deal with the setting up and running of a scheme on behalf of the businesses.
More than six million people have been placed into a workplace pension under auto-enrolment and eventually the drive will mean around 10 million are newly saving into a pension or saving more.
The new Bill promises to provide better protections for members of master trust pension schemes, including millions of automatically enrolled savers.
Opening the debate at the Bill's second reading, pensions minister Lord Freud told peers: "Automatic enrolment means that more people are saving into a private pension.
"The new freedoms mean they have more choice about what they do with their savings than ever before.
"We need to ensure that the legislative framework is appropriate in the light of these developments.
"The measures in this Bill will help to protect savers and maintain their confidence in pension savings."
He added: "We are introducing this Bill now because it will from the day it becomes law protect consumers, preventing providers from winding up an existing master trust while raising charges to cover the cost of doing so."
The minister went on: "This Bill is an important legislative step in ensuring we provide essential protections for people saving in master trust pension schemes and maintaining confidence in pensions savings.
"The market has grown quickly and it's important that we now respond to ensure this part of the pension market evolves in the right way.
"We are committed to ensuring members are protected equally whatever type of scheme they are in and the measures proposed in this Bill will provide that protection."
For the Liberal Democrats, Lord Stoneham of Droxford warned the country was "hugely under-saving" in pensions and retirement.
He added that ministers should not underestimate the damage being done to pension funds by low interest rates.
Tory former pensions minister Baroness Altmann welcomed the Bill, saying improved retirement provision across the population was vital in an ageing society.
Lady Altmann said she was "taken aback" as minister to discover that proper protections for people's trust-based defined contribution pension savings had not been put in place before auto-enrolment began.
Labour former TUC secretary Lord Monks said there was much to support in this "modest" Bill but warned it was "only scratching the surface" of pensions problems.
The Bill received its second reading and now goes forward to committee stage.