Labour will table an amendment to the Pensions Bill which would require all auto-enrolment qualifying schemes to either direct savers to an independent annuity brokerage service or offer such brokerage services themselves.
Labour shadow pensions minister Gregg McClymont has previously called on the Government to introduce the new rule in response to concerns savers could lose up to a fifth of their pension income because “the market simply isn’t working”.
The MP for Cumbernauld, Kilsyth and Kirkintilloch East has now drafted an amendment to the Pensions Bill which, if passed, would impose a new duty on all auto-enrolment pension schemes to provide a shopping around service to their members.
The amendment says: “Any qualifying money purchase scheme must direct its savers to an independent annuity brokerage service or offer such brokerage services itself.
“Pension schemes shall ensure that any brokerage service selected or provided meets best practice in terms of providing members with an assisted path through the annuity process, ensuring access to most annuity providers, and minimising costs.
“The standards meeting best practice on decumulation shall be defined by The Pensions Regulator after public consultation, reviewed every three years, and updated, if required, subsequent to such reviews.”
Hargreaves Lansdown has previously called on the Government to “hard-wire” minimum shopping around standards into auto-enrolment pension rules.
Separately, Labour is also planning to test the Government’s commitment to auto-enrolment for small firms by proposing an amendment to clause 34 of the Pensions Bill which would mean it cannot be used to exempt certain types of business from the reforms.
This follows concern that the clause, which was designed to allow policymakers to exempt certain workers from auto-enrolment, could also be used to exclude small companies from the new workplace pension rules.