Official Report: Minutes of Evidence

The Chairperson (Mr Gildernew): I welcome to our meeting Hayley Ward, who is policy lead in this area; Michelle Grills, who is also policy lead; and Tommy Boyle, who is deputy policy lead. Hayley, I invite you to go ahead and make a brief opening statement, and we will then come to questions from members. Thank you.

Ms Hayley Ward (Department for Communities): Thank you, Chair. Good morning, and thank you for the opportunity to attend the Committee today. We are pleased to have the opportunity to speak to you about the legislative consent motion (LCM) for the inclusion of Northern Ireland measures in the Westminster Pension Schemes Bill, which I will refer to as "the Bill".

The measures for inclusion relate to pension schemes regulated by the Financial Conduct Authority (FCA); contractual override; the validity of certain alterations to salary-related, contracted-out pension schemes, which was previously known as retrospective actuarial confirmation of benefit changes; alienation or forfeiture of occupational pension; terminal illness; and the pensions dashboard.

I will briefly run through the background to the legislative consent motion and then go through the legislative consent motion's provisions.

Although pensions are a devolved matter, in general, Northern Ireland's pension policy and legislation operate in line with corresponding pension provision in Great Britain, as provided for in section 87 of the Northern Ireland Act 1998. In effect, there is a single pensions system and regulatory regime across the United Kingdom. Indeed, many private pension schemes operating in Northern Ireland are UK-wide schemes.

A Westminster Pension Schemes Bill was announced in the King's Speech on 17 July 2024. The Department for Work and Pensions introduced the Bill in the House of Commons on 5 June 2025 with the intention of obtaining Royal Assent by spring 2026. The DWP timeline for the Bill presents several issues with progressing corresponding measures through an Executive Bill. Several measures are intended to become operational when the Westminster Bill receives Royal Assent, or shortly after. A parity Executive Bill would not normally be introduced in the Assembly until there is no further opportunity for amendments to be made to the corresponding Westminster Bill. That means that the Executive Bill cannot be passed to meet the same operational date as the Westminster Bill for those measures.

In view of the significant challenges with progressing a parity pension schemes Bill on all elements and the associated risk to citizens in Northern Ireland being treated less favourably than people in Great Britain, the Executive agreed, on 2 October, to seek the Assembly's agreement to a legislative consent motion to extend the Westminster Bill to Northern Ireland for the five measures to which I referred. A separate Executive Bill is proposed to address the remaining provisions in the Westminster Pensions Schemes Bill.

I will now give a brief overview of each provision to be included in the legislative consent motion. Clause 48 is:

The measure primarily concerns reserved financial matters. However, it is included in the legislative consent motion due to its connection to devolved pension policy. The provision will enable providers to transfer a member's contract to another provider or to vary contractual terms without the need for individual consent, where doing so meets the "best interests" test. That will give greater consolidation in the pension market and deliver improved outcomes for members. A range of safeguards and procedural requirements will apply before any override or transfer can take place, ensuring robust protection for members. The measure also underpins the effective operation of other provisions in the Bill, including the value-for-money framework and the consolidation of small pension pots. While HM Treasury retains responsibility for the Financial Services and Markets Act 2000 regulations, the legislation delegates authority to the Financial Conduct Authority to set out operational rules for contractual override, aligning with existing Financial Services and Markets Act safeguards. The measure amends the Financial Services and Markets Act 2000 with reference to the Pensions (No. 2) Act (Northern Ireland) 2008 and the Pension Schemes (Northern Ireland) Act 1993.

Clauses 104 to 107 concern:

This measure was not part of the original Bill. It arises from the Virgin Media v NTL Pension Trustees case. In June 2023, the High Court and, later, the Court of Appeal ruled that an amendment to the NTL Pension Trustees schemes was invalid because it lacked actuarial confirmation under section 37 of the Pension Schemes Act 1993, or section 33 in Northern Ireland. The case relates to a contracting-out regime that applied between 1997 and its abolition in 2016. The judgement could have significant implications for similar defined benefits schemes. The policy intention is to restore certainty around scheme liabilities and funding by allowing schemes to retrospectively obtain actuarial confirmation that benefit changes made during that period met the reference scheme test, even if written confirmation was not obtained at the time. That will involve securing a professional opinion from an actuary, supported by guidance from the Pensions Regulator and the Institute and Faculty of Actuaries. However, if an actuary cannot confirm that the test would have been met, the amendment will remain void, thus safeguarding members and ensuring that the legislation is not used to validate non-compliant changes. It does not amend any existing legislation. It sets out a new provision, though it refers to definitions in the Pension Schemes (Northern Ireland) Act 1993, the Pensions (Northern Ireland) Order 1995, the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996 and the Pensions (Northern Ireland) Order 2005.

Clause 108 is:

A recent High Court ruling confirmed that the Pensions Ombudsman does not have the status of competent court under section 91(6) of the Pensions Act 1995, reversing previous practice and creating challenges when it comes to enforcing decisions on pensions overpayments recovery. At the same time, the Pensions Ombudsman has faced rising demand, COVID-related disruption and a 2023 cyberattack, leading to significant case backlogs. In the past five years, 821 cases from Northern Ireland were referred to the Pensions Ombudsman. Of those, 291 were referred via schemes and 530 were from customer complaints. The policy intention is not to grant new powers but to restore the Pensions Ombudsman's original 1993 role by reaffirming its status as competent court. That change will remove the need for schemes to seek court enforcement, reducing costs and delays for courts, schemes and members and ensuring an efficient and accessible way to resolve pension disputes. The provision amends the Pensions (Northern Ireland) Order 1995.

Clause 109 is "Terminal illness". The Pension Protection Fund (PPF) and the financial assistance scheme (FAS) play a vital role in safeguarding members of defined benefit pension schemes when employers become insolvent or schemes cannot meet their liabilities. At present, members who are diagnosed with a terminal illness who have a life expectancy of six months or less can access their payments early. The measure seeks to extend the definition to 12 months, bringing it into line with similar provisions in relation to social security and tax legislation. By doing so, it ensures that terminally ill members can receive financial support sooner, at a time when it is most needed. The change will particularly benefit those whose prognosis is more than six months but less than a year, who would not qualify under the current rules. The Assembly previously approved that measure for inclusion in a Westminster Member's private Member's Bill through a legislative consent motion, but that Bill fell following the dissolution of Parliament for the 2024 general election. The provision amends the Pensions (Northern Ireland) Order 2005 and the Pensions (No. 2) Act (Northern Ireland) 2008.

Finally, clause 111 is "Pensions dashboards". The legislative consent motion covers only the amendment to the Financial Guidance and Claims Act 2018 to allow the Money and Pensions Service (MaPS) to include information relating to the Pension Protection Fund and financial assistance scheme on its dashboard, including data at individual level. At present, the Pension Protection Fund and financial assistance scheme are excluded from the dashboards, as they are classified as compensation schemes rather than traditional pension schemes. However, many individuals rely on those payments as part of their retirement income, and their inclusion on the dashboards would significantly enhance the effectiveness and completeness of the service for members of those schemes.

That was a brief overview of the proposed measures. We are happy to take questions.

The Chairperson (Mr Gildernew): Thank you, Hayley. That is very much appreciated. I note the fact that we have been joined in the Public Gallery by a large number of young people from Mount Lourdes Grammar School and St Michael's College in Enniskillen, which is my constituency. We are dealing with pensions, and I am mindful that the Committee has previously been involved in work on reducing the age at which young people can access pensions.

There was quite a lot in that, Hayley. Similarly to all LCMs, there is concern. First, we are determined and keen to see that people here receive parity of access to benefits and improvements in a timely fashion. There could, however, be specific issues here that create difficulties or that the LCM might not pick up on. I am conscious that there is a specific additional element here.

My first question goes back to a question that has come up previously around winter fuel payments. We have seen significant numbers of people who live on the other side of the border on the island of Ireland lose out on the winter fuel payment. Can you confirm that there will be no negative impact on people in relation to this LCM that has not been considered? Can you confirm that it does not discriminate against people who live on the other side of the border who have developed a pension here?

Ms Ward: All the legislative reforms resulting from the measures in the legislative consent motion and the wider Pension Schemes Bill relate only to UK-based and operated pension schemes, which are registered with HMRC and fall within the regulatory remit of the Pensions Regulator. Any individuals who are members of UK-based pension schemes will be subject to the benefits arising from the introduction of those measures, regardless of where they reside.

The reverse of that is that residents of Northern Ireland who, perhaps, have a Republic of Ireland-based pension will be unaffected, as those pension schemes are regulated by Irish law and not UK-based law. Therefore, people who might live in the South but have a UK-based pension scheme will receive all the benefits of the legislative consent motion.

The Chairperson (Mr Gildernew): Thank you. That is very helpful, Hayley. You referred to the court proceedings and changes around accessibility. There were positive messages around reducing costs and improving accessibility. Is there any diminution of rights attached to that? Do we need to be concerned about people's rights as a result of that change?

Ms Ward: For clarification, are you talking about the Pensions Ombudsman?

The Chairperson (Mr Gildernew): Yes. You said that there will be access to the ombudsman. Rather than having to go to court, there will be access that way.

Ms Ward: Do you mean cross-border access?

The Chairperson (Mr Gildernew): No, just in general. I do not mean cross-border but across the board.

Ms Ward: Implementing the Pensions Ombudsman to be the competent court will simplify things in overpayment cases and it will make decisions easier. We will not have a long-drawn-out process that would have to go through a court proceeding. I do not believe that there will be any diminution of rights. If anything, it will make things quicker, more efficient and better for members and schemes.

The Chairperson (Mr Gildernew): Finally, before I come to members, I want to ask about the timeline of the Executive Bill. You mentioned that the LCM will deal with Parliament, and there will be a need for a further Executive Bill. What timeline are we looking at for that Executive Bill to come forward?

Ms Ward: The Executive Bill would not normally be introduced until there are no further amendments to the Westminster Bill, which is usually after it goes through the House of Lords. It is looking for Royal Assent by spring 2026. We will seek to introduce a Bill shortly thereafter or around the same period.

Ms K Armstrong: You mentioned the timescale. The hope is that it will go through Westminster in spring 2026, but we might have a gap in processes between the two Bills being active. I know that the intention was that the pensions dashboard would be operational in autumn 2026. Given the fact that we know that it is coming, and we know that our legislation will come through, how much are the pensions networks speaking with you about preparing in Northern Ireland to match up with that? I suppose that they are aware of it because it is happening in Westminster anyway.

Ms Ward: We work very closely with officials in the Department for Work and Pensions, and we have already discussed that. The measures that are required to be operational in line with DWP are the measures that we are seeking legislative consent for. The fact that there will be a delay will not impact on pension schemes, or we hope that it will not impact on them, as long as we get our Executive Bill through by the end of the mandate.

The subordinate legislation following on from the Westminster Pension Schemes Bill will not be operational until 2027-28, so we should, hopefully, have the powers to replicate the powers and measures in the wider Bill in Northern Ireland at the same time as it is becomes operational in the Department for Work and Pensions.

Ms K Armstrong: That delay in implementation means that we will not have any gaps.

Ms Ward: That is our intention.

Ms K Armstrong: That is helpful. Thank you.

Mr McHugh: Tá fáilte romhaibh ar ais, a Hayley, agus d’fhoireann.

Hayley, do you have an opinion on why the British Government have introduced this legislation?

Ms Ward: We have brought the legislation to improve the pension system in the whole of the UK. It is for better reforms of the pension system to simplify it. There is a whole range of measures in the Bill that we have not properly assessed yet for Northern Ireland because we have not done the policy development for Northern Ireland at the moment. Therefore, I am not in a position to talk about the Bill as a whole. It is the measures here that we have assessed at this point.

Mr McHugh: If we did not consent to this, what would be the implications?

Ms Ward: I will take that step by step. On the terminal illness provision, we would not have the extension of six months for people who live in Northern Ireland of the PPF and the FAS. Not having the provisions on the Pensions Ombudsman would mean that we would have to rely on the court system for rectifying pension overpayments. On the Virgin Media case, without the legislation, any defined benefit pension schemes would be likely to result in challenge for any changes that had been made during the period where the reference scheme test actuarial confirmation had not been provided. Without the legislation applying here, people in Northern Ireland who fall under the financial assistance scheme and the PPF would not have their details on the pensions dashboard, unlike the rest of the UK. On contractual override, pension schemes in Northern Ireland would not have the ability to move members from one scheme to another. That would have knock-on effects to the value-for-money framework that is in the Bill and also to the consolidation of small pots. We would not have the ability to do any of those things. An awful lot will be beneficial to people in Northern Ireland.

Mr McHugh: It would be disadvantageous to a lot of people.

Ms Ward: It would be.

Mr Allen: Your briefing document, on human rights and equality, states that the provisions of the LCM are "largely beneficial". Is there anything in the LCM that the Department has identified that may not be beneficial, or do you feel that it is entirely beneficial?

Ms Ward: Yes, the provisions are largely beneficial in that they are advantageous. The wording in that document is to make it clear that each of the measures are not necessarily advantageous to somebody but are also not going to disadvantage them. The language in the document is to make clear that some of the measures are absolutely advantageous, but some people will not notice whether they are advantageous or not.

Mr Allen: So, you would probably change that "largely beneficial" to "entirely beneficial". There is nothing in the legislation that the Department sees as not being beneficial.

Ms Ward: We have assessed it, and we do not think that there are any disadvantages to anybody.

Mr Allen: It just stuck out that there may be a degree of ambiguity with the words "largely beneficial" and how I am interpreting that, rather than using the words "entirely beneficial".

Ms Ward: We will take that away and consider the wording.

Mr Tommy Boyle (Department for Communities): Andy, I think that that term is in there because some of the measures are quite technical and make changes that re-establish elements that should have been there in the past. They do not necessarily make a change that is either advantageous or not advantageous to individuals. The changes are more rectifiable rather than being changes that will impact a person from day to day. I think that the ambiguity of the term is to cover that.

Mr Allen: Given my interpretation of the language, I wanted to clarify that point. I appreciate your clarifying that. Thanks.

The Chairperson (Mr Gildernew): Apologies if this is covered in the briefing, but that prompts me to clarify this. When an LCM is being considered, do you have input at the very start of it to iron out potential unforeseen consequences, or is it a question of simply assessing, when it comes, what the impact of it might or might not be? Is there a co-produced position when an LCM is introduced?

Ms Ward: In normal processes, we work closely with the Department for Work and Pensions when new policies are being developed. We liaise with them to get the information that we require to assess it from a Northern Ireland perspective.

The Chairperson (Mr Gildernew): OK. Thank you. Do members have any other questions? OK.

Thank you, Hayley, and your team. I appreciate your bringing this further information to us. We will obviously come back in due course. I appreciate your input today. Thank you.