Written statements

Government Ministers and a small number of other Members of the two Houses can make a written statement to one or both Houses.

Written statements are published below shortly after receipt in Parliament. They also reproduced in the next edition of the Daily Report and of Hansard in the relevant House.

Written statements made before 17 November 2014 were published only in Hansard:

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Department for Work and Pensions
Made on: 04 July 2019
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Walker v Innospec Supreme Court Judgment and Response to the Survivor Benefits Review

I would like to make the following statement on behalf of myself and my right honourable friend, the Chief Secretary to the Treasury.

Supreme Court judgment in Walker v Innospec and others

The case concerned a challenge in the Supreme Court to paragraph 18 of Schedule 9 to the Equality Act 2010, which allows defined benefit occupational pension schemes to restrict access to survivors' benefits for survivors of a civil partnership or same sex marriage to benefits based on accruals from Dec 2005 onwards. The Secretary of State was joined as an interested party. The challenge was made under EU Directive 2000/78/EC (Directive establishing a General Framework for Equal Treatment in Employment and Occupation).

The judgment was issued on 12 July, with Mr Walker winning his appeal. The Supreme Court decided that the exception in Schedule 9 should be dis-applied and that Mr Walker’s husband is entitled on Mr Walker’s death to a spouse’s pension for the whole of Mr Walker’s service, provided they remain married (Mr Walker had accrued a pension from 1980 until 2003).

The Government respects the decision of the Supreme Court. It is now clear that same sex civil partners or spouses are entitled to survivor benefits in the same way as opposite sex spouses.

Impact of the judgment on public service pension schemes

Following the court ruling, the Government has decided that in public service schemes, surviving male same-sex and female same-sex spouses and civil partners of public service pension scheme members will, in the majority of cases, receive benefits equivalent to those received by widows of opposite sex marriages. The exception to this may be in specific schemes where, in the past, improvements in female members’ survivor benefits have led to increased contributions. Departments will consult on and take forward changes as soon as possible. Schemes will notify their members of changes and any actions they need to take.

All same-sex survivors of a public service pension scheme member will benefit from this change. How much they benefit by will be determined by a combination of factors, including when the deceased was employed, their pensionable earnings, the length of any pensionable service and the specific benefits of the scheme to which the deceased belonged.

Impact of the judgment on private pension schemes

Whilst the Government is responsible for public service pension schemes, private sector schemes are individually responsible for ensuring that they are compliant with the judgment.

It is therefore not for the Government to direct private sector schemes in this instance, and any action taken by the Government in respect of public service pension schemes should not be interpreted as the minimum requirement for private pension schemes in considering how they respond to this judgement. These schemes will need to take their own advice to ensure that they are legally compliant with the judgment going forward.

The Government’s response to the Review of Survivor Benefits in Occupational Pension Schemes

During passage of the Marriage (Same Sex Couples) Act 2013 the Government committed to undertake a review of differences in survivor benefits in occupational pension schemes. A duty to conduct this review was duly enacted in section 16 the Act.

The review was conducted jointly by the Department for Work and Pensions (DWP) and HM Treasury (HMT), which are the Departments with policy responsibility for private and public service pension schemes respectively, and was published on 26 June 2014.

The review considered the differences in survivor benefits in occupational pension schemes between different categories of member and the costs and other effects of eliminating those differences by the equalisation of survivor benefits. The review investigated the differences between:

  • same sex survivor benefits and opposite sex survivor benefits provided to widows;
  • same sex survivor benefits and opposite sex survivor benefits provided to widowers; and
  • opposite sex survivor benefits provided to widows and opposite sex survivor benefits provided to widowers.

The review considered the extent to which same sex survivor benefits are provided in reliance on paragraph 18 of Schedule 9 to the Equality Act 2010 and the extent to which same sex survivor benefits and opposite sex survivor benefits are calculated by reference to different periods of pensionable service.

The review further considered survivor benefits provided to same sex civil partners and those provided to same sex married couples. The law treats same sex civil partners equally to same sex married couples for the purposes of survivor benefits in pension schemes because these relationships provide comparable rights and responsibilities. There is no significant difference between them. As such, any differences in the benefits provided to survivors of same sex civil partners when compared to same sex spouses would be difficult to justify. The review therefore gave no further consideration to differences between these two groups.

The Review demonstrated that there are a variety of differences in treatment in survivor benefits in occupational schemes in respect of rights built up in the past. These differences reflect the change in social attitudes over the last 60 years and the subsequent introduction of new forms of legal relationships. As new groups have been brought into survivor benefit provision, changes have generally been applied prospectively to benefits built up from the point of that change.

The Government supports equal treatment of survivors of all legal relationships, and Parliament provided that survivor benefits must be built up equally for all of these groups on accruals from 5th December 2005 (when the Civil Partnership Act 2005 came into force).

The Walker judgment has clearly changed the legal position relating to survivor benefits in respect of same sex unions, and the Government has acted; public service pension schemes will now implement changes to provide that survivors of registered same sex civil partnerships or same-sex marriage will be provided with benefits that replicate those provided to widows of opposite sex marriages, with the exception of specific schemes where survivor benefits depend on making the correct contributions. As was made clear earlier in this statement, private pension schemes must take advice and act accordingly in complying with the judgment.

Following careful consideration of the Review’s findings, the Government has concluded that, aside from those changes brought about by the Supreme Court judgment, it will not make any further retrospective changes to the existing provisions in respect of occupational pension schemes to equalise survivor benefits. While this means that the differences in survivor benefits for accruals in past periods will remain for some, these will work their way out of the system in time.

This statement has also been made in the House of Lords: HLWS1650
WS
Department for Work and Pensions
Made on: 22 January 2019
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Contingent Liability Notification

Today I will lay before Parliament a Departmental Minute describing a contingent liability of £329 million associated with the National Employment Savings Trust (NEST) Corporation.

Confidence in the long-term stability of the pension system is a prerequisite for effective participation and achieving secure incomes in retirement, which are at the core of Government policy in this area. For this reason, there is a distinct body of legislation about private pensions and a number of public bodies play important roles, including the NEST.

NEST was established by Government to support the policy of all employers being obliged to automatically enrol their eligible staff into a workplace pension scheme. NEST ensures that all employers have access to a low cost, high quality pension scheme.

The Pension Schemes Act 2017 introduced the definition of a 'Master Trust' and the introduction of a robust new authorisation and supervision regime to ensure that Master Trusts being used for automatic enrolment are safe for the nearly 10 million people now saving in these schemes.

To be able to operate in the pensions market as a Master Trust, schemes, of which NEST is one, are required to meet five authorisation criteria prescribed in the Pension Schemes Act 2017.

One of the criteria is that the scheme must be financially sustainable and that in the event of a triggering event, an event that would put the scheme at risk of needing to wind up, the scheme must hold sufficient financial reserves to cover its gradual closure without putting these additional costs onto the scheme members.

As NEST is currently funded through a Government loan and, therefore, holds no financial reserves, The Pensions Regulator, who oversee the authorisation process, has suggested a “Letter of Comfort” from Government could provide a solution, which for Government accounting purposes is described as a contingent liability.

The Letter confirms that, in the remote possibility of a triggering event occurring, Government would fund NEST through to closure and meet any one off associated closure costs. This gives a remote contingent liability of £329 million. The expected loss as calculated by the Department is £16.45m. (based on the liability multiplied by risk).

DWP as sponsoring Department will manage the governance and risk associated with the contingent liability.

This statement has also been made in the House of Lords: HLWS1229
WS
Department for Work and Pensions
Made on: 14 January 2019
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Pensions Update

The Government’s reforms to the welfare system are designed to support those who need it and help people into work. We have reduced pensioner poverty to close to historically low levels and the triple lock on the State Pension has helped lift the incomes of millions of pensioners. Since 2010, we have increased the annual level of the basic State Pension by £1,450. In 2018/19 we will spend £121.5 billion on benefits for pensioners and by 2023/24 this rises to £143.5 billion.

In 2012, Parliament voted to modernise the welfare system to ensure that couples, where one person is of working age and the other person is over state pension age, access support, where it is needed, through the working age benefit regime. This replaces the previous system whereby the household could access either Pension Credit and pension age Housing Benefit, or working-age benefits.

Pension Credit is designed to provide long-term support for pensioner households who are no longer economically active. It is not designed to support working age claimants. This change will ensure that the same work incentives apply to the younger partner as apply to other people of the same age, and taxpayer support is directed where it is needed most.

I set out to Parliament last year that this change would be implemented once Universal Credit was available nationally for new claims. Today I can confirm that this change will be introduced from 15th May 2019. The change is being brought into effect in Great Britain through a Commencement Order[1] under the Welfare Reform Act 2012. There will be an equivalent Order to introduce the change for Northern Ireland.

Couples with one partner under State Pension age who are already in receipt of Pension Credit or pension-age Housing Benefit at the point of change will be unaffected while they remain entitled to either benefit.

In February 2017, Government published an employer-led Strategy “Fuller Working Lives: A Partnership Approach”, which sets out the importance of Fuller Working Lives for employers and individuals. It also sets out action Government is taking to support older workers to remain in the labour market.

[1] The Welfare Reform Act 2012 (Commencement No. 31 and Savings and Transitional Provisions and Commencement No. 21 and 23 and Transitional and Transitory Provisions (Amendment)) Order 2019

This statement has also been made in the House of Lords: HLWS1216
WS
Department for Work and Pensions
Made on: 18 December 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Pensions and Long-Term Savings Trials for the Self-Employed

Automatic enrolment has transformed pension saving amongst today’s workers. Almost 10 million workers have been automatically enrolled into a workplace pension by their employer, and only 9% of those enrolled chose to opt-out. And, this success is continuing with automatic enrolment continuing to be delivered and implemented successfully by employers, and increasing individual pension participation and savings levels as highlighted in the 2018 Automatic Enrolment Evaluation Report published today.

As part of the 2017 Review of Automatic Enrolment the Government committed to scope, develop and test targeted interventions aimed at establishing what works to increase retirement saving among the self-employed.

I am pleased to announce that following the Government’s Good Work Plan published yesterday the Government is publishing the Enabling retirement savings for the self-employed: pensions and long term savings trials’ report. This report sets out our delivery plan for delivering research and trialling activity as a step towards implementing the Government’s manifesto commitment to increase retirement saving by the self-employed. This will provide an evidence-base for future policy development, using insights from the success of automatic enrolment.

Our plan focuses on testing behaviourally inspired messages and tech tools, which may prompt self-employed individuals to save through a range of approaches in relation to both joining a pension scheme, and facilitating and making regular saving into pensions or other savings vehicles. The preparatory work has already started and trialling activity will go forward into 2019. It will focus on three areas: marketing interventions aimed at people who are saving or have previously saved to encourage them to continue or recommence their saving behaviour; marketing interventions using trusted third parties to promote the value of saving and provide an easy connection to an appropriate savings vehicle; and behavioural prompts, such as messages delivered through payment mechanisms and/or banking interfaces, to seek to engage self-employed people to think about starting a regular saving habit.

The Department for Work and Pensions will be working with a range of delivery organisations and service providers for the self-employed to commence a programme of research and trialling activity, following preparatory work already done. The report published today is also a call to action to organisations in sectors including payment services; accounting services; self-employed workspaces and growing fintech firms, to work with Government to co-design and test interventions.

The report complements our agenda to empower and improve the consumer experience, in particular through the Pensions Dashboard and the Single Financial Guidance Body.

The Government’s long term ambition is for future generations to have confidence in retirement saving – no matter what type of employment or self-employment they experience during their working lives – so that they can prepare for greater security in later life.

I will place a copy of the report in the House library and a copy is attached. These papers will be available later today on www.gov.uk website.

Self Employed Savings Trials (PDF Document, 1.05 MB)
This statement has also been made in the House of Lords: HLWS1166
WS
Department for Work and Pensions
Made on: 17 December 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Social Security

The Department for Work and Pensions is launching the Single Financial Guidance Body, established under s1 of the Financial Guidance and Claims Act 2018 in January 2019. The new body will deliver money guidance, pensions guidance and debt advice to the public. However, the launch date is in advance of the Department for Work and Pensions Supplementary Estimate 2018-19. This will give the confirming authority of the Supply and Appropriation Act to this expenditure. This will not be published until February, and not authorised until mid-March. In order to continue to provide these services to the public, DWP has therefore requested a contingencies fund advance.

Parliamentary approval for resources of £35,000,000 for this new service has been sought in the Supplementary Estimate for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £35,000,000 will be met by repayable cash advances from the Contingencies Fund. This sum is equivalent and no different from existing resources.

Once Royal Assent to the Supply and Appropriation Bill is achieved, the advance will be repaid.

This statement has also been made in the House of Lords: HLWS1159
WS
Department for Work and Pensions
Made on: 04 December 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Automatic Enrolment Annual Earnings Trigger and Qualifying Earnings Band Review

Automatic enrolment into a workplace pension has been a great success to date with over 9.9 million people having been automatically enrolled and all employers now having to comply with their Automatic Enrolment duties following the completion of the staged rollout of the duties in March this year. More than 1.4 million employers have met their duties and overall annual pension saving for eligible employees has increased by £11.7 billion since 2012. The second phased increase in the minimum contribution rates to 8 per cent will happen in April 2019.

The main focus of this year’s annual review of the automatic enrolment thresholds is to ensure the stability of the policy during the contribution increase next April. We also want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions whilst also ensuring affordability for employers and government. The review has concluded that the earnings trigger will remain at £10,000 and both the lower and upper earnings limits will continue to be aligned to the National Insurance contribution thresholds.

I intend to lay an Order before Parliament in the New Year which will include the following, for 2019/20:

  • £50,000 for the upper limit of the qualifying earnings band.
  • £6,136 for the lower limit of the qualifying earnings band.
  • The Automatic Enrolment earnings trigger will be maintained at £10,000.

I will place a copy of the analysis supporting the proposed revised thresholds in the

House library and a copy is attached. These papers will be available later today on www.gov.uk website.

This statement has also been made in the House of Lords: HLWS1106
WS
Department for Work and Pensions
Made on: 03 December 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Pensions Dashboards Feasibility Report and Consultation

Pensions dashboards will give consumers information about their pensions savings from multiple sources through an online service. Consumers will be empowered by the presentation of information, helping them to engage with their pensions savings. It will support informed decisions and prepare the consumer for the transition between working age and retirement.

Conscious of the complexity of this project, my department has undertaken an extensive study of the elements required of pensions dashboards. The government believes that dashboards will deliver for savers, and today we have published the feasibility report so starting the process of consultation.

It is my firm belief that industry is best placed to finance and deliver this project and to create a technical dashboard infrastructure. This will advance a range of dashboard options.

The Government has listened to views that suggest compulsion is needed to maximise pension scheme participation in a reasonable timeframe. We propose to act to deliver this legislation, when parliamentary time allows, and following the creation of a robust delivery model with the appropriate governance. It is not our proposal to compel all schemes to provide data – we have outlined limited exemptions. We will work with the regulators and industry to help ensure responsibilities to protect consumers are upheld, whilst ensuring the safeguarding of consumer data.

We have met with the Chair and the Chief Executive of the Single Financial Guidance Body. We believe that this body is ideally suited to oversee the industry delivery group. It will bring together industry representatives, FinTech and consumer organisations to ensure successful implementation. We propose that a non-commercial dashboard, hosted by the Single Financial Guidance Body, will offer an impartial service to those for whom there is not a commercial offering.

It is a continued priority of this government, with the support of the pensions, financial services and consumer community, to restructure the UK’s pension savings culture against the backdrop of a new generation of savers. Dashboards will build upon the successful introduction of Automatic Enrolment, which has led to almost 10 million people either newly saving or saving more towards their retirement.

We are confident that the ‘Working together for the consumer’ document, published today, demonstrates the government’s and the department’s strong and sincere belief that pension dashboards have great potential to transform the pensions landscape for the consumer’s benefit. We look forward to receiving your feedback and proposals as to how government can best facilitate an industry-led delivery of this online service.

For ease of reference, I shall deposit a copy of the feasibility report and a related fact sheet in both libraries of the Houses of Parliament.

This statement has also been made in the House of Lords: HLWS1102
WS
Department for Work and Pensions
Made on: 06 November 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Delivering Collective Defined Contribution Pension Schemes

Today the Government is publishing the consultation paper on Collective Defined Contribution Schemes. This sets out our vision for this new form of occupational pension scheme. We will be seeking stakeholder views on how we can best implement such schemes. CDC schemes will offer a new option for employers looking to help their employees save for retirement. A copy of this document will be placed in the library.

The UK has a world-class occupational pension system – but there are always opportunities for further innovation where this can benefit savers and businesses alike. The Work and Pensions Select Committee recently published a report calling for the adoption of CDC schemes in the UK; the Government welcomed this report and is grateful to the Committee for their support and advice. It is important to be clear that CDC schemes are not a panacea, and that members could see their pension incomes fluctuate. However, as the Work and Pensions Select Committee so clearly recognised, a robustly designed and appropriately regulated CDC regime can offer positive outcomes for both employers and pension savers. The Royal Mail and the Communication Workers’ Union are already working closely together to establish a CDC scheme, which the Government sees as an encouraging sign of the consensus in this area.

Saving for retirement is an extremely important part of people’s financial planning, representing their hopes for the future. Throughout the last decade, the Government has therefore worked closely with the pensions, financial services and consumer community to strengthen the UK’s pension savings culture. Together we have transformed the pensions landscape, delivering social change on an unprecedented scale. The establishment of CDC pension schemes is a key strand of this work.

This statement has also been made in the House of Lords: HLWS1046
WS
Department for Work and Pensions
Made on: 04 September 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion.)
Commons

Pensions Update

Throughout the last decade, government has worked closely with the pensions, financial services and consumer community to rebuild the UK’s pension savings culture.

Through automatic enrolment, 10 million people will be newly saving or saving more into a workplace pension scheme, with an estimated £20 billion extra pension saving by 2019/20.

The pension freedoms have given people much greater choice about when and how they use their pension savings.

The Government has a significant programme of work ahead to increase confidence in workplace pensions, by improving:

  • The provision of information to, and financial capability of, individuals, in order that they can make informed and more confident financial decisions.
  • The way pensions are run, making them more secure; improving transparency; and responding more quickly when things go wrong.

Improving the provision of information to, and financial capability of, individuals

The pensions dashboard will offer people the opportunity to access their pension information in a clear and simple form – bringing together an individual’s savings in a single place online.

The work that the Department for Work and Pensions has done in assessing feasibility for a pensions dashboard has made it clear that we should not underestimate the size or complexity of the challenge. An industry-led dashboard, facilitated by government, will harness the best of industry innovation. We will continue to engage with industry on this model and Government will protect pension savers and personal information by legislating where necessary. This will build on the Government’s ‘Check your State Pension’ online service for the State Pension. We will shortly report on the findings from the Feasibility Study.

To improve financial capability and understanding we have taken through Parliament the Financial Guidance and Claims Act 2018, which gives us the power to introduce the Single Financial Guidance Body. This will bring together the services currently delivered by the Money Advice Service, the Pensions Advisory Service and Pension Wise. The creation of the SFGB is a genuine opportunity to improve provision of free and impartial government sponsored money and pensions guidance and debt advice so that people - especially those who are struggling, can make informed choices about their finances.

The appointments of the Chair and Chief Executive of the new organisation have recently been announced, and we expect to establish the body as a legal entity in October when the Chair and Chief Executive take up their roles. It will then launch in January when it takes on its delivery functions of money and pension guidance, and debt advice.

Improving security and transparency

We have legislated to introduce a new Master Trust accreditation regime from 1 October 2018 for multi-employer pension providers wishing to continue to operate in the automatic enrolment market.

We will strengthen the powers of the Pensions Regulator to ensure that peoples’ pensions are protected. The Department recently consulted on proposals to improve the Regulator’s powers so that they can be more proactive, punish wrongdoing and get involved earlier when employers make changes which could affect their pension schemes. We’re currently considering the responses, and hope to publish our conclusions towards the end of this year. We’re also investigating how to facilitate consolidation of DB schemes, including looking at the establishment of ‘superfunds’, and intend to publish a consultation on this in the autumn.

Finally, collective forms of pension saving offer interesting new possibilities, and the Department is currently working through proposals for the first Collective Defined Contribution schemes in the UK. We intend to launch a formal consultation in the autumn.

This is an ambitious programme of work, which has the potential to further transform the pensions landscape and benefit consumers.

This statement has also been made in the House of Lords: HLWS905
WS
Department for Work and Pensions
Made on: 26 June 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Private Pensions

Further to the Protecting Defined Benefit Pension Schemes White Paper published in March this year, the Government is today announcing the publication of a consultation to gather views on enhancing TPR’s powers. Proposals include higher fines and criminal offences for wilful and/or reckless behaviour that puts pension schemes at risk, as well as new powers to enable the Regulator to intervene. The package aims to balance protection for pensions while not imposing unnecessary regulations on business.

We are seeking views on our proposals before we move to implement them at https://getinvolved.dwp.gov.uk . The consultation will be online from today and will run until 21 August 2018.

This statement has also been made in the House of Lords: HLWS769
WS
Department for Work and Pensions
Made on: 24 April 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Financial Guidance and Claims Bill

Later today I will place in the Library of the House the Department's analysis on the application of Standing Order 83L in respect of the further Government amendments tabled for Commons Report stage for the Financial Guidance and Claims Bill.

This statement has also been made in the House of Lords: HLWS618
WS
Department for Work and Pensions
Made on: 12 March 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Financial Guidance and Claims Bill

I am today placing in the Library of the House the Department's analysis on the application of Standing Order 83L in respect of the Government amendments tabled for Commons Report stage for the Financial Guidance and Claims Bill.

This statement has also been made in the House of Lords: HLWS512
WS
Department for Work and Pensions
Made on: 07 February 2018
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Financial Guidance and Claims Bill (Contingencies Fund Advance)

The Financial Guidance and Claims Bill currently before Parliament provides for an arms-length non-departmental public body, known as the Single Finance Guidance Body, to take on the functions currently delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise.

Our intention, subject to Parliamentary approval, is to launch the new body in autumn 2018. In order to avoid delay in the launch, expenditure is required in advance of the Bill receiving Royal Assent to cover the costs associated with the commencement of the recruitment of the Chair and Chief Executive of the body, including the staffing costs of the DWP Public Appointments Team, any media advertising, and miscellaneous administration costs. Advertising for the posts will be clear that the roles are dependent on the successful passage of the Bill through Parliament.

Parliamentary approval for resources of £ 30,000 for this new service will be sought in a Supplementary Estimate for the Department of Work and Pensions. Pending that approval, urgent expenditure estimated at £ 30,000 will be met by repayable cash advance from the Contingencies Fund.

This statement has also been made in the House of Lords: HLWS443
WS
Department for Work and Pensions
Made on: 16 November 2017
Made by: Guy Opperman (Parliamentary Under Secretary of State for Pensions & Financial Inclusion)
Commons

Pensions

The Government has now completed the examination of the cap that applies to member-borne charges in default investment funds within defined contribution (DC) pension schemes used for automatic enrolment (AE).

After seeking a range of industry and consumer views and considering the findings of the recent Pension Charges Survey, which captures data from providers covering 14.4 million scheme members, we do not feel that now is the right time to change the level or scope of the cap.

The cap is working broadly as intended, helping to drive down member-borne costs, whilst allowing flexibility to allow asset diversity or tailored services for members and employers. It appears some small schemes are less able to take advantage of the most competitive market rates, and we have launched proposals to simplify the scheme consolidation process. This will allow smaller schemes who cannot secure value for money in the long term to exit the market and secure a better deal for their members elsewhere.

There continues to be a lack of transparency on transaction costs, which is hindering trustees and Independent Governance Committees’ (IGC) attempts to monitor and evaluate whether these represent value. We believe that it is vital to get disclosure right before deciding on whether a cap on transaction costs is appropriate. Recently announced DWP legislative proposals will ensure trustees have sight of these costs and can give that information to members. The FCA is developing similar rules for providers.

The Government remains committed to ensuring AE members are protected from unreasonable and unfair charges, and recognises that there is on-going concern amongst consumers.

We will actively monitor the situation, by reviewing the information which trustees of DC schemes will be required to publish from April 2018, and which providers will publish in due course, to monitor whether the downward trend in charges is continuing.

That will also inform our next review. In 2020 we intend to examine the level and scope of the charge cap, as well as permitted charging structures, to see whether a change is needed to protect members. This will also allow us to evaluate the effects of the next stage of AE and the new master trust and transaction costs regimes.

Whilst we are not pre-judging the decision, we expect there to be a much clearer case for change in 2020.

This statement has also been made in the House of Lords: HLWS248
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