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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
93 Pensions Bill [Lords] 20 JUNE 2011 Pensions Bill [Lords] 94 on, and even at this stage I urge the Government to ensure a fair deal not just for future pensioners but for existing ones. Nevertheless, the Bill represents a good step forward in the attempt to tackle our out-of-date pensions system. The Government should again be congratulated on doing the right thing, even when it might not be the easiest of their duties. Good governance is about taking difficult decisions in the long-term interests of the country, which is what this coalition Government are doing. The Pensions Bill lays a solid foundation for a more sustainable and fairer pensions system, and I look forward to the Government building on it further in future. 7.44 pm Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Coop): I welcome the opportunity to contribute to this important debate. Like many hon. Members on both sides of the House, I have been contacted by a huge number of constituents about the measures in the Bill. Indeed, I expect that the e-mails are continuing to flood in even as I speak. The debate today has rightly focused on women’s pensions, but it is important that we also remember the wider context. The majority of people want to plan ahead for their retirement, and they are happy to make their contributions during their working lives in the knowledge that they will reap the benefit when they retire. I am pleased that today’s debate has not had more heat than light, and that we have heard thoughtful contributions. All too often, insulting comments are made to suggest that people who have a decent pension might be getting something for nothing, or getting more than they deserve. I am genuinely glad that we have not heard any of that today. For many working people brought up to do the right thing, pensions are like deferred wages. They have carefully planned for their later years because they believe that it is right to avoid being a burden on the state or on their families. Unfortunately, however, it is those thrifty, careful planners who are being let down by this Government in the Bill. It is sad that the Government have broken their promise in the coalition agreement not to raise the women’s state pension age to 66 before 2020. As we heard at the beginning of the debate, the coalition agreement clearly stated that the state pension age would rise to 66 but that this would “not be sooner than 2016 for men and 2020 for women.” Ministers have performed dramatic U-turns on a whole range of issues, some of which have been welcome, but this one is most unwelcome. The legislation will now accelerate the equalisation for women to 2018, and then increase men’s and women’s state pension ages to 66 by 2020. Anyone reading the coalition agreement when it was published would not have expected that to happen. Some 2.6 million women will be affected by the Government’s proposals. The state pension age for women born between 6 December 1953 and 5 October 1954 will increase by more than 18 months. I should say that I do not have an interest to declare in that regard; the increase will not affect me, but it will affect many women in my constituency. The Government’s own impact assessment estimates that the measure will affect about 330,000 women. In the most extreme cases, some 33,000 women born between 6 March and 5 April 1954 will see an increase of two years. Those are the points that constituents are contacting me about, because they are worried about the impact that the Bill will have on them. To put this in context, a woman born in April 1953, as one of my good friends in my constituency was, will be able to get her pension at the age of 62 years 11 months. However, another friend who was born just a year later, in April 1954, will have to wait until she is 66 before she can draw her pension. It is completely understandable that people feel that the measures are unfair. We have heard that comment time and again this afternoon. They are certainly not fair to the 1,200 women in my constituency aged around 56 and 57 who are set to lose the most from these changes, and who will have very little time to prepare or to amend existing plans. Many of them have worked in a series of jobs, raised families and perhaps worked part-time over the years. It is difficult enough for those women on low pay to plan for their retirement without this additional burden being placed on them. I think the most significant part of the issue before us is allowing people time to plan adequately for retirement. Age UK has highlighted a number of concerns, not simply about the plans, but about the fact that people are not necessarily aware of them. It estimated that about 32% of the women it polled said that, following the Government’s proposals, they did not know when the state pension age would reach 65 for both women and men. Just one in 10 correctly said 2018. Almost half expected equalisation to happen before the planned date, while 9% thought it would be later than planned. As we can see, there is confusion. In the last few months, despite the public outrage and a campaign supported by different charities and organisations, Members of all parties and affected individuals, it appears that, although Ministers might have begun to listen, they have certainly not come forward with any clear proposals on what they intend to do. We all understand the simple truth that our society is ageing. The previous Labour Government recognised it and, as we have heard, established the independent Turner commission and built a consensus for change around a number of key areas: linking the basic state pension to earnings, raising the retirement age to 68 by 2046, starting the rise from 2024 and making private pensions opt out instead of opt in, with employers also making a contribution. After trying to build that kind of consensus, it is simply wrong to penalise women who have worked hard for their whole lives and now have no time to plan for their retirement. As I have said, many women of this generation are already at a disadvantage when it comes to pensions. They have perhaps been denied access to private pension schemes and have had to take career breaks to bring up children. Raising the state pension age for women so rapidly could result in some women currently in their 50s having to work for two years more than they had previously thought. That might not seem a great deal if people are not at the stage of life when they are thinking about planning for retirement, but for people working in an arduous job with long hours or working very early in the morning, as many in the cleaning or hospitality sector have to do, or late at night, that means a lot. The women affected are being made to accommodate the
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