Hansard - United Kingdom Parliament

47 Pensions Bill [Lords]
20 JUNE 2011
Pensions Bill [Lords]
48
Mr Duncan Smith: I give way to the right hon.
Member for Croydon North.
Malcolm Wicks: I am encouraged by the Secretary of
State’s thoughtfulness on the matter, to which I hope we
will return in Committee. According to the Office for
National Statistics, almost one fifth, or 19%, of men in
routine occupations—manual workers, labourers and
van drivers—die before they receive their state pension.
As my right hon. Friend the Member for Birkenhead
(Mr Field) has implied, those people have probably
worked since they were 14, 15 or 16 years old—very
different from those of us who did not start in the
labour market until our early 20s. Some sensitivity
about when people who have worked for 49 or so years
can draw their pension is a matter well worth pursuing.
Mr Duncan Smith: As I said to the right hon. Member
for Birkenhead (Mr Field) and repeat to the right hon.
Member for Croydon North, I am always willing to
look and to think carefully about what proposals there
are—not for the purposes of this Bill, obviously, but in
the future. I know that he has written—
Mr Watts: Will the right hon. Gentleman give way?
Mr Duncan Smith: May I just finish my answer to the
right hon. Gentleman?
I am always happy to discuss the matter. There are
complications, and there may be some issues about
women, too, because contributions are an issue for
many women at the moment, so we cannot take these
things lightly. I recognise the work that the right hon.
Gentleman has done, however, and I am very happy to
discuss the issue beyond this Bill, as is the Minister of
State, Department for Work and Pensions, my hon.
Friend the Member for Thornbury and Yate (Steve
Webb). For the purposes of the Bill, however, the right
hon. Gentleman will forgive me if I stay to the point
that we are going to equalise the retirement ages for
men and women. The only question is, at what point?
Tom Blenkinsop (Middlesbrough South and East
Cleveland) (Lab) rose—
Mr Duncan Smith: I am going to make some progress,
but I give way to the hon. Member for St Helens North
(Mr Watts).
Mr Watts: The Secretary of State seems to indicate
that there is a potential practical problem. Is it not the
case that when someone nears retirement age the
Department looks at how many stamps they have paid
and how many contributions they have made, which
must mean that it keeps track of how long people have
been working? That would resolve the problem mentioned
by my right hon. Friend the Member for Croydon
North (Malcolm Wicks).
Mr Duncan Smith: As I understand it, the pre-1975
data are very patchy and messy. I do not want to get
sucked into this debate now, tempting as it is, and never
to get on to the rest of the Bill; I do not think the hon.
Gentleman’s colleagues would thank me for that. I
recognise the issue and I am happy to discuss it post the
Bill, but he will forgive me if I do not go down the road
that Labour Members want by adding that in all of a
sudden. I am not going to do that; we are going to stay
with what we have. I am happy to listen to their concerns
and to see whether we can make changes in future, but I
do not give any guarantees.
Tom Blenkinsop rose—
Mr Duncan Smith: To be fair, I want to make a bit of
progress, because a lot of people want to speak. If the
hon. Gentleman wants to raise something else about the
matter, I will give way to him later.
Pensions policy has not been updated accurately to
reflect all the increases that I spoke about. I remind the
House, however, that we are by no means alone in
having to deal with this issue; others are making decisions
about it. Ireland has already legislated for the pension
age to be raised to 66 by 2014, and the Netherlands and
Australia are increasing state pension age to 66 by 2020.
The United States is already in that position, and Iceland
and Norway are now at 67. Under existing legislation,
the timetable for the increase to 66 in the UK was not
due to be completed for another 15 years, yet the
timetable was based on assumptions that are now out of
date. The Pensions Act 2007 was based on ONS projections
of average life expectancy from 2004. Those projections
have subsequently increased by at least a year and a half
for men and for women, so the situation is moving
apace. That is why we are taking the necessary decision
to look again at the timetable for increasing the state
pension age. The Bill amends the current state pension
age timetable to equalise men’s and women’s state pension
ages at 65 in 2018 and then progressively to increase the
state pension age to 66 by 2020. This new timetable will
reduce pressures on public finances by about £30 billion
between 2016-17 and 2025-26.
The impact of the changes on women has been
debated enormously, focusing particularly on certain
cohorts. All but 12% of those affected will see their state
pension age increase by 18 months or less. I recognise
that some 1% of those impacted will have a state
pension age increase of two years, but it none the less
remains the case that those reaching state pension age in
2020 will spend the same amount of time in retirement
as expected when the 2007 Act timetable was being
drawn up. That is an important factor. There will be no
change to the amount of time that they will spend in
retirement—some 24 years, on average. In fact, the
women who are affected by the maximum increase will
still, on average, receive their state pension for two and a
half years longer than a man reaching state pension age
in the same year.
Fiona Mactaggart (Slough) (Lab): Which of the facts
that the Secretary of State has cited was he unaware of
12 and a half months ago, when in the coalition agreement
the Government signed up to not introducing these
changes before 2020?
Mr Duncan Smith: As a coalition, we are, and continue
to be, bound by the agreement. [Interruption.] The
hon. Lady can shout at me in a second, but let me try to
explain. There is a slight problem with that element of
the coalition agreement. It was done in that way at the
time, and that is fair enough, but we have since looked
at it carefully and taken legal advice. The agreement
talks about men’s pension age being accelerated to 66,
which would breach our legal commitment to equalisation
and then not to separating the ages again. There are
reasons for needing to revisit that, and we have done so
and made changes.