Hansard - United Kingdom Parliament

91 Pensions Bill [Lords]
20 JUNE 2011
Pensions Bill [Lords]
92
[Teresa Pearce]
will do so only if they know that they have that right.
Will the Minister assure the House that the regulations
will require employers to explain that to jobholders
from day one of their employment?
It is disappointing that NEST will not be allowed to
deal with small transfers in and out, and sweep up small
pensions from casual employment. Many people are
employed dozens of times over their lives, many doing
short-term jobs in, say, call centres. The reality is that
we have a much more transient labour market. Provisions
for transitions in and out of NEST should be included
in the Bill, even if they cannot be implemented immediately.
I very much look forward to the Minister’s response on
those two issues.
7.35 pm
Julian Sturdy (York Outer) (Con): It is a privilege to
have the opportunity to contribute to such an important
debate, and to follow some extremely thoughtful speeches
from all parts of the House. Ensuring that Britain has a
fair and financially sustainable pensions system must
rank as one of the most important priorities on the
coalition’s ever growing “to do” list. After all, not only
does this Bill shed light on a pensions system that is
currently broken and unsustainable; it also touches on
key issues of individual responsibility, a new savings
culture and easing the administrative burdens on small
businesses. All those factors make this Bill a significant
piece of legislation. However, it is impossible to reflect
fairly on the initiatives in the Bill without taking note of
the current state of our pensions system.
Unfortunately, Britain’s pensions system is dangerously
creaking, with real doubts about its financial sustainability.
The challenges that it faces are frankly enormous. Official
projections of average life expectancy were once again
revised upwards in 2009, indicating that men and women
are expected to live an extra one and a half years longer
than was thought at the time of the Pensions Act 2007.
Although we must welcome increasing life expectancy
rates, their impact on our pensions system cannot be
ignored—a point already covered by a number of Members,
including my hon. Friend the Member for Ipswich (Ben
Gummer), who did so very eloquently. The impact will
be huge.
Meanwhile, it is a sad reality that too few people have
been saving enough for their retirement in recent years.
Indeed, according to the Office for National Statistics,
fewer than 9 million people in Britain now participate in
an occupational scheme, with around 7 million people
not saving enough for their retirement. Combined with
increasing life expectancy, our poor savings culture is a
potent time bomb beneath the surface of our pensions
system. In addition, the Pensions Commission recently
described the UK pensions system as one of the most
complex in the world. A 2009 survey by the Department
for Work and Pensions highlighted the fact that 71% of
people did not understand the workings of modern-day
pensions. To my mind that is a worrying statistic.
With increasing life expectancy, a poor savings culture
and a complicated system, our pensions systems is not
fit for the 21st century. The status quo will no longer
suffice. We cannot pass this ticking time bomb to the
next generation. Change is absolutely necessary. This
Bill paves the way for such timely reform. As in other
policy areas, such as health, higher education and welfare,
the Government are absolutely right to tackle pensions
with a long-term focus on ensuring sustainability. As in
other areas of Government, the coalition cannot be
accused of currying favour ahead of the next general
election. By tackling big, sensitive issues head-on, we
will restore confidence and fairness in such vital areas.
The Government are therefore right to commit to increasing
the state pension age in the Bill. As I have said, we are
experiencing significant increases in life expectancy.
I had hoped that that part of the Bill would be
welcomed across the House—it was, after all, Labour
which committed to increasing the state pension age in
the Pensions Act 2007—but, sadly, that does not appear
likely. In the light of new evidence about the rate of
increasing life expectancy, I firmly believe that it is right
to review the original time scales set by the previous
Government and to speed up the process. I admit that
that is not an easy decision to take, but it is vital that we
grasp the nettle on this specific aspect of the Bill. If we
are to pursue a policy to bring about long-term, sustainable
change, we should do so courageously and without
compromise to the Bill’s main principles.
I therefore urge the Government to resist calls from
some to slow down their approach to increasing the
state pension age, and I am pleased that the Secretary of
State outlined his commitment in that regard earlier.
Having said that, I acknowledge, as have many colleagues,
that a sizeable group of individuals will now qualify for
their state pension more than a year later than they
would have qualified under the present arrangements,
with more than 30,000 women qualifying more than
two years later. Obviously, those affected will feel harshly
treated, but it is encouraging to hear that the Secretary
of State is willing to listen to the arguments put during
the passage of the Bill. I very much welcome that; it is
an important factor in the process. However, we must
remember the previous Government’s regrettable
mismanagement of Britain’s economy. Had we inherited
a slightly more stable financial state of affairs, we might
perhaps have been able to do more for those who now
face a delay in their state pension entitlement.
The second part of the Bill deals with reforms relating
to workplace pensions. I welcome the fact that the
Government appear to be implementing the findings of
“Making automatic enrolment work”, an independent
review of automatic enrolment into workplace pensions.
Independent reviews tend to be rather more balanced
than those carried out by Whitehall Departments. I
largely support the deregulatory nature of many of the
workplace pension reforms. Reducing the cost of
bureaucracy to small and medium-sized businesses should
always be a cause for celebration. Indeed, I am led to
believe that even the TUC supports this aspect of the
Bill. Perhaps Labour Members can confirm that. Such
support is wholly justified, as these reforms will ensure
that, from 2012, millions of people will be saving for a
pension for the first time. I have always believed in
encouraging a new savings culture, and auto-enrolment
is a really positive step in the right direction.
In summary, the challenges facing our pensions system
can fairly be described as a ticking time bomb. The
measures in the Bill alone will not be enough to turn the
tide and reform pensions as widely as is necessary.
Reforms of the state pension are currently being consulted