Hansard - United Kingdom Parliament

109 Pensions Bill [Lords]
20 JUNE 2011
Pensions Bill [Lords]
110
67 and/or 68 years old and, by doing so, at least to give
people 10 or more years in which to plan how they deal
with it. That idea could find a great deal of support,
given that Saga and Age UK have already proposed it,
but I suspect that my support may well ensure that I am
not a member of the Public Bill Committee.
On the third part of the pensions puzzle, we must
make it as simple as possible for people to contribute to
their own pensions provision and to take ownership of
funding their own retirement. As we have heard, 7 million
of us are not saving enough for our own retirement and
44% of working-age employees are not contributing at
all towards a private pension.
That brings me to the fourth element of the solution—
employers’ contributions. It is clear that to fill a funding
gap of the size we are facing, we must strike a balance of
responsibility between the state, the individual and
employers. Mandatory auto-enrolment, as confirmed in
the Bill, exemplifies that balance. The changes in the
Bill will, I hope, do exactly what they aim to do in
making automatic enrolment work, in the words of the
title of the independent review. I hope that the provisions
to raise the earnings threshold for auto-enrolment, to
introduce the optional waiting period and to simplify
the system of self-certification will increase employee
and employer buy-in of the system.
Although raising the earnings threshold would certainly
ease the financial difficulties of the lowest paid, it
would effectively lock out of auto-enrolment those most
in need of extra pension provision. Will the Minister
reconsider that to see whether auto-enrolment could
continue, merely delaying employment contributions
until an earnings threshold is reached? Many examples
of such graduated schemes already exist in the private
sector. It is well known that even £1 invested earlier on
for 40 years is likely to yield far greater returns than any
amount invested 10 years later, once income has risen
sufficiently to cross that threshold.
I agree with my hon. Friend the Member for Ipswich
(Ben Gummer) that the proposals in the Bill are insufficient
to deal with this immense problem. The auto-enrolment
contribution level of 8% that is floated in the Bill is a
start, especially from the low—indeed, at times nonexistent—base
that we have at present, but in many
other countries the level is double that; in Sweden, for
example, it stands at 18.5%. The proposed level is a
good start, but only that.
More than five years ago, the Pensions Commission
stated that
“there is…general acceptance that future policy needs to be based
both on significant reforms to the state system and on a new
approach to private pension saving which goes beyond a wholly
voluntary approach.”
Having expressed my one concern about the Bill, I
believe that it finally makes radical steps towards advancing
that consensus, and I hope that the whole House will
unite in supporting it.
8.52 pm
Alex Cunningham (Stockton North) (Lab): I am very
keen to speak about this issue because it has resulted in
my heaviest postbag for some time, with most of the
correspondence coming from women. Some time ago, I
was declared an honorary woman, which I took as a
great compliment. I was in a discussion with half a
dozen women who were talking about things of a
feminine nature. One woman looked at another and
said, “There’s a man here”, only to be told, “No, it’s
okay—Alex is an honorary woman.”
I am very pleased that I am not a woman, because at
my age I would be one of those losing out under the
formula that the Government have put together. Only
this afternoon, I received a phone call from one of my
constituents, Fiona, who is a 56-year-old nurse. I wish
that the Minister could have heard her voice and learned
a little about the anguish and despair that was in it. She
told me that she started work at the age of 17 and has
worked in the health service for several decades, and
that she now feels that the Government are slapping her
in the face. She said that she had been aware for some
time that her pension age would be going up from 60 to
65, and that she understood that and did not mind—she
even thought it was fair—but that raising the age even
further to 66 was going too far, too fast, and with very
limited warning. In her own words—we have heard this
cliché all day—“They keep moving the goalposts.”
Fiona pointed out that older nurses and other health
professionals, particularly those in their sixties, would
struggle to lift and assist the most frail and elderly
patients. Similar issues exist for manual workers, many
of them women, who simply cannot do the job that they
were originally employed to do. Surely we should value
people such as Fiona, not force them to replan their
future with such limited notice. It was on behalf of
Fiona and many other women in my constituency that I
wanted to speak.
It is great that most people are living longer—of
course, many others are not—but it brings challenges. It
is important that as politicians we confront the difficult
issues raised by the ageing population, not just for
pensions, but in health care, the quality of life we
provide for older people and how society treats the
retired population. Those are all important issues.
My hon. Friend the Member for Sunderland Central
(Julie Elliott) and my right hon. Friend the Member for
Croydon North (Malcolm Wicks) outlined inequality in
a different way today, with regard to manual workers
who will be lucky to reach retirement age and even
luckier if they get to 70, let alone the grand old age of
100 that some Government Members think they and
their relatives will reach. Those manual workers are the
people who have created wealth in our country, and yet
they have never had the advantages of that wealth and
they get very limited benefit from their pensions.
Mr Watts: Does my hon. Friend agree that it is also
unfair that many of the women we are talking about
started work at the age of 15 and so will have worked
for 10 years longer than many other people by the time
they retire?
Alex Cunningham: Indeed, that is the case. Some of
the women in these difficult jobs may not have their
health in later years, so they will lose in all ways.
All too often, the elderly are ignored and not treated
with the respect that they deserve. The Government
should play a big role in ensuring that society takes care
of people when they have retired and are not as independent
as they once were. Family, friends and community all
play a big role, but the Government can and should lead
by example. Pensions, among other things, are a big
part of that.