Hansard - United Kingdom Parliament

97 Pensions Bill [Lords]
20 JUNE 2011
Pensions Bill [Lords]
98
as compensation for low pay is outmoded now. The pay
gap has not only narrowed but reversed.
Figures from Policy Exchange for the past year show
that the average public sector worker is now paid 35% an
hour more than the average private sector worker, and
Office for National Statistics figures tell us that in the
year before that, the average public sector worker earned
£2,000 more per annum than his or her private sector
equivalent. Today private sector workers are worse paid,
have less security of tenure, and have more fragile
pensions than their public sector equivalents, but under
the current arrangements they are expected to subsidise
the more generous final salary pensions in the bloated
public sector. They are understandably embittered, as,
paradoxically, are the public sector workers, many of
whose jobs were created by the last Government. They
now feel threatened.
But deal with the pensions time bomb we must. The
private sector has absorbed many shocks. So that we
can survive the economic downturn, pensions, along
with salaries and bonuses, have been hit hard. Final
salary pensions are fast becoming a distant memory,
even in larger firms, and new employer rules on automatic
pensions enrolment which are due to come into force
next year are likely to have further detrimental effects.
The public sector, however, needs a culture change.
The current arrangements are simply unsustainable and
unaffordable. The bottom line is that we all need to pay
more into our pensions for longer, which means that the
age at which we retire will be higher: it will be 66 by
April 2020. The last Government legislated for that, but
their legislation will be accelerated by this Bill. We will
also need to supplement what we already pay with
increased contributions.
We are told by Treasury Ministers that if we make
these changes now, there is a chance of a decent and
relatively generous pension for all entitled public sector
workers. We are also assured that 750,000 of the lowest-paid
public sector workers will not be asked to pay more, and
that the extra contributions of another 500,000 will be
capped. I am relieved to hear that the pensions of those
who risk their lives serving their country—members of
the police, fire service and military—will be protected.
Raising the state pension age to 66 and upwards will
take years to implement, even on the revised timetable,
and I am anxious to ensure that some worthy recipients
do not slip through the net. Like others who have
spoken today, I have received many letters and e-mails
from people who are very concerned about the proposals.
Mainly they are from women. The equalisation of the
pension age, causing theirs to rise from 60 to 65, and the
subsequent acceleration causing it to rise to 66 by 2020,
appear to have left some unintended victims by the
wayside. I ask the Secretary of State and the Treasury to
think again about those cases.
In particular, women in their late 50s who were told
to prepare for retirement at 65 have now seen the
goalposts moved again. Overall, 5.5 million women
now aged between 51 and 57 are affected to a greater or
lesser degree, and 330,000 of them— those given less
than two years’ notice of the change—are particularly
badly affected. There will not be enough time for the
women caught up in the scheme to save enough to
address their loss. Many are among the lower-paid,
40% have private pensions, and many part-timers were
excluded from occupational pension schemes until the
1990s. Moreover, members of that age group are more
likely to be economically inactive owing to caring
responsibilities. Perhaps an interim measure can be
introduced to ensure that they are paid what they have
worked for, and that the longer gap before they reach
the state pension age does not cause unnecessary hardship.
After all, those women worked through the years of
genuinely lower pay in the expectation of a comfortable
retirement, only to see it evaporate.
What matters most in this debate is to find a way to
make our pensions fairer, more affordable and as generous
as possible, while taking into account the changes in life
span and the sheer numbers involved. I know that that
is the intention, but now, for all our sakes and those of
our constituents, we must make it a reality.
8.5 pm
Debbie Abrahams (Oldham East and Saddleworth)
(Lab): Like other Members, I am encouraged by the
agreement across the Chamber, particularly on issues
related to fairness that mostly affect women. We agree,
for instance, that we are all living longer and therefore
need to extend our working lives. Contrary to what the
hon. Member for South Dorset (Richard Drax) said,
the last Labour Government took that into account in
the Pensions Act 2007, following the recommendations
of the Turner commission.
My right hon. Friend the Member for Croydon North
(Malcolm Wicks) made a relevant point about variations
in life expectancy connected with socio-economic
inequalities, and about the time for which people in a
healthy condition can expect to live. I agree that more
research should be done on that.
Harriett Baldwin: The hon. Lady mentioned the
steps that the last Government took to deal with increasing
longevity. Does she agree that the figures produced by
the original Turner commission suggest that things are
moving much faster than was anticipated even in 2004,
and that since then longevity has increased by at least a
year?
Debbie Abrahams: I think that the hon. Lady is
referring to the average. It is important for us to consider
not just the average, but how the figure is spread across
different socio-economic groups. It does not explain or
excuse the Government’s failure to protect the women
who are being detrimentally affected by the acceleration
of the equalisation of the pension age.
As many people have pointed out, this is about
fairness. We must focus on what is right, and the Bill
fails the fairness test. Many figures have been cited in
relation to what the Bill means nationally. Half a million
women will have to wait more than a year longer to
receive their state pensions, 300,000 will have to wait an
additional 18 months, and an unfortunate 33,000 will
have to wait a further two years. Moreover, the Government
will increase the state pension age for both men and
women to 66 in 2018.
I asked the House of Commons Library to conduct
an analysis of the impact in my constituency. I discovered
that 4,300 women and 3,800 men would be affected,
and that approximately 200 women would experience a
notional loss of income from their state pensions of up
to £10,700. I have been contacted by dozens of women