Pensions (Special Rules for End of Life) Bill
Friday 2nd February 2024
(2 months, 3 weeks ago)
Commons ChamberRead Full debate Pensions (Special Rules for End of Life) Bill 2023-24 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Laurence Robertson (Tewkesbury) (Con)
I beg to move, That the Bill be now read a Second time.
This very small Bill is narrow in scope, but it will provide financial assistance and fairness to people who are terminally ill who have seen the sponsors of their pension schemes become insolvent. It will do that by changing the definition of “terminally ill” for this purpose. I thank the legislative team of the Department for Work and Pensions and my staff for their help preparing the Bill.
I think everyone in the House would agree that those who receive the devastating news that they have a terminal illness should receive as much financial help as possible in their final days. The loss of their right to pension payments is a blow that they should not have to suffer, and that is what the Bill seeks to address.
By way of background, the Bill focuses on the Pension Protection Fund and the financial assistance scheme. The Pension Protection Fund was established by the Pensions Act 2004 and pays compensation to individuals when the sponsors of defined benefit pension schemes—usually their employers—become insolvent and lack the necessary assets to pay those pensions to the level that the Pension Protection Fund would ordinarily pay. That applies to insolvency that has taken place on or after 6 April 2005. The financial assistance scheme applies to individuals whose pension schemes were unable to meet their pension liabilities in full if those schemes started to wind up between 1 January 1997 and 5 April 2005.
The Bill relates to compensation payments from those schemes made to people with terminal illness. When meeting the liabilities of pension schemes, the Pension Protection Fund can pay a one-off lump sum to someone who is terminally ill. The financial assistance scheme can start to make pension payments, but not pay a lump sum, to someone at any age with a terminal illness. The issue is the definition of a terminal illness. The Pension Protection Fund and the financial assistance scheme use the same legal definition of terminal illness, which is that a person is terminally ill
“at any time if at that time the person suffers from a progressive disease and the person’s death in consequence of that disease can reasonably be expected within 6 months.”
Richard Fuller (North East Bedfordshire) (Con)
I commend my hon. Friend on bringing forward this Bill, and I hope that he will not mind that at times I will ask some questions about it; I may also make some comments later. He was talking about the assessment of what is a terminal illness. Can he spend a bit more time on who is making that decision, and what the range of illnesses is? Are the illnesses set down by the NHS? Is there a limited list of those illnesses? Who assesses whether a person is within the bounds of what would be called a terminal illness for the purposes of this Bill?
Mr Robertson
I thank my hon. Friend for his intervention. As I understand it, the assessment is made by a health professional. What illnesses he or she is entitled to take into account goes beyond the scope of this Bill, and I do not think that I can list those illnesses. The Bill is about the length of time someone is expected to live. If he will allow me, I will leave my explanation there.
Sir Greg Knight (East Yorkshire) (Con)
On that point, is there provision for a second opinion to be obtained in cases where there is doubt? If my hon. Friend cannot answer that today, will he write to me?
Mr Robertson
I thank my right hon. Friend for that intervention. I am not aware of the process that someone would have to go through when being assessed. The assessment of the time that someone has to live, which is a technical legal point, is particularly concerning, but I am certainly happy to look into that.
The definition of “terminal illness” is a disease that can reasonably be expected to bring an end to somebody’s life within six months. The Department for Work and Pensions used that definition for calculating benefits, but in the Social Security (Special Rules for End of Life) Act 2022, that six months was extended to 12 months. It therefore seems logical to change the definition of “terminally ill” applied by the Pension Protection Fund and the financial assistance scheme, so that it is consistent with the definition that is applied when considering social security payments. The Bill seeks to make that extension from six to 12 months.
It is hard to know how many people would benefit from this legislation. I suppose, paradoxically, we do not want people to benefit from it, because that would mean that the sponsors of their pension fund had become insolvent, which we do not want to happen. However, the Bill will help terminally ill people where that is the case.
While the Bill’s scope is technically limited to the Pension Protection Fund and the financial assistance scheme, I hope that my bringing it forward will encourage any workplace pension scheme that does not have provision for members with a terminal illness who have a life expectancy of 12 months or less to consider putting that in place. Many private pension schemes can already make what are called serious ill health payments under tax law to a member who has up to a year to live. That would be a change well worth making.
Richard Fuller
My hon. Friend has made another interesting point. He says that the Pension Protection Fund is there for when a pension fund fails, and that the Bill may be an incentive for viable pension funds that do not already use a 12-month period to do so, and to mirror what the Pension Protection Fund does. Will he, or perhaps the Minister, tell me whether there is an understanding of how many pension funds have a 12-month provision? Will the Bill increase that in viable pension funds?
Mr Robertson
I grateful to my hon. Friend for making a good point. I do not have those figures, and I do not necessarily expect the Minister to have them to hand, but we should look into that, and try to take that point forward.
Rob Butler (Aylesbury) (Con)
My hon. Friend is making a powerful speech that I am sure most of us will have no difficulty agreeing with. In the lead-up to the Bill’s introduction, has he spoken to charities and other organisations about what impact extending the period from six to 12 months will have on people’s real lives, and on their families and friends?
Mr Robertson
I thank my hon. Friend for that. Yes, I spoke in particular to the Marie Curie charity, which told me of some very sad cases. It is important to stress that the Bill refers to occasions when the pension fund or its sponsoring company becomes insolvent, so the Bill is narrow in scope. However, he makes a good point. The charity gave me a number of examples, and there are many others. That brings us back to my point that we should look to extend the 12-month provision beyond the Bill to other pension schemes. The last thing that someone given a terminal illness diagnosis needs is more financial problems. If there is anything we can do about that, I am happy to take it forward with the Minister and the Government. I thank my hon. Friends for their interventions.
Determining the length of time that someone has to live falls to health professionals, and it is a heartbreaking and difficult judgment to make. Modern medicine, surgery and palliative care—such as that provided by the excellent Sue Ryder hospice in my constituency—and the general care provided by our NHS staff make that judgment even more difficult. I therefore feel that it is right to extend the definition of “terminally ill” from the very narrow band of six months to the more accommodating threshold of 12 months. That is fairer not only to the people who are ill, but to those who have to make that very difficult judgment—a judgment that it is especially difficult for health professionals to make when they know that a person’s pension payments may rest on it.
The Bill extends throughout the United Kingdom, and would come into force in England, Scotland and Wales
“on such day or days as the Secretary of State may by regulations appoint”,
and in Northern Ireland when the Department for Communities appoints by order. I am about to wind up, but I think my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) wishes to intervene again.
Sir Greg Knight
My hon. Friend is generous. I think he is referring to clause 2(4). Is he entirely happy about the wording of that subsection? The Bill could be passed with unanimous support from all parts of the House, but under that subsection, a Minister could later decide not to implement the measure. We would be unable to do anything about that.
Mr Robertson
I am grateful to my right hon. Friend for mentioning that point. The Government have been very co-operative while I have been preparing the Bill, so I remain confident that they will not hesitate to name the day. Technically, the Bill will not come into force until the Government decide that it will, but I am confident that that will happen. I thank my hon. Friends for their interventions, and for all the reasons I have stated, I commend the Bill to the House.
Philip Dunne (Ludlow) (Con)
Good morning, Madam Deputy Speaker, and thank you for calling me so early in this important debate. Let me start by congratulating my hon. Friend the Member for Tewkesbury (Mr Robertson) on introducing this Bill. He shares with me the prospect of joining the ranks of the pensioners in our community later this year. He failed to declare that in his speech, but I am glad to put that on the record for the benefit of Members of the House. It is a time of life that we will be fortunate to reach, if we get that far.
Thanks to the good work of the NHS, more and more of us manage to achieve pensionable age. As of last May, nearly 12.7 million people were claiming the state pension. The over-65 pensioner population in England and Wales has increased from 9.2 million in 2011 to over 11 million in the most recent 2021 census. Pensioners represent some 18.6% of the population, although now that the pension age is going up, the figure will be slightly different.
My constituency probably shares with my hon. Friend’s constituency the characteristic of having a significantly above-average proportion of the population who are pensionable, at 30.2%. I mention that because, although the Bill is narrow in scope, it is possible that any of us, pensionable or not, could be diagnosed with a terminal illness. Although the Bill applies to members of defined benefit or defined contribution schemes, who are a subset of that population, and hopefully very few of them will have such a diagnosis, it is important that we provide equity to those who do, as he said so well. I therefore think that the objective of my hon. Friend’s Bill is entirely honourable and appropriate, and one that we should support.
On the subject of pensions, as we have the Minister here, I would like to raise a case that was brought to my attention in my advice surgery last Friday by a constituent, whom I will not name, who is a member of the Boots defined-benefit pension scheme. The scheme was acquired by Legal & General, quite properly, last December. According to my constituent, the new scheme administrator has decided, seemingly without consultation with members, to remove the option to take an early pension from the age of 60, so that pensions have to be taken from the age of 65.
If that decision has been taken without consultation with members, I urge the Minister to look into whether the trustees were duly authorised to undertake such a significant potential change in terms for their members without consultation—I would not expect her to know the answer to that now. I have also written to the Secretary of State on this matter, because the Boots pension scheme is probably one of the largest membership schemes of any retail business in the country.
Having put that on the record, I commend my hon. Friend the Member for Tewkesbury for his Bill today, which I shall support.
Jo Gideon (Stoke-on-Trent Central) (Con)
Since we are putting it on the record, I declare that I am a proud pensioner as well as an MP. I thank my hon. Friend the Member for Tewkesbury (Mr Robertson) for bringing forward the Bill. While technical in nature, it addresses a much wider issue that concerns us all.
More than 90,000 people in the UK die in poverty each year, and the figure for my region is over 8,200. Being diagnosed with a terminal illness is shattering, whatever a person’s circumstances, but for those living in poverty the impact can be even more profound. On the news recently, I heard a devastating story of a woman named Helen, who was dying of cancer and of cold. She talked of how she switched off her boiler because she could not afford to pay for heating. Her cancer affected the circulation in her hands and feet and, when the cold started to creep in, she could not hold things and was worried about falling. Helen envisaged travelling during her retirement; instead she was stuck at home worrying about how she could afford to pay her bills in her last months. Helen has been working with Marie Curie on its campaign to ensure that everyone who receives a terminal diagnosis is granted immediate access to their state pension.
As a society, we should be looking out for and looking after the needs of those who are suffering. Those who are terminally ill should not be left to fight for every scrap of warmth. Making ends meet can become impossible once someone receives a terminal diagnosis. Their expenses go through the roof—their heating costs alone can be twice as high—often just at the point when they have to give up work because of their illness. Covering the higher costs of heating, travelling to appointments, childcare and essential home adaptations with little or no income is leaving thousands of dying people and their families in a desperate situation.
People of working age who die are twice as likely to spend their final years of life in poverty compared to people of pension age. Accessing their pensions early would give people back some dignity and independence. Marie Curie estimates that most people of working age who die have paid more than 23 years of national insurance contributions. As a civilised society, we should not put people through the burdensome and time-consuming benefits process or interviews with work coaches that are inappropriate for a person who will never return to work. Some patients have died waiting for the welfare benefits they need, which does not seem right or fair.
Everyone has the right to the best end of life care and support. In Stoke-on-Trent, we are lucky to have the wonderful care provided by Dougie Mac, which in September was named the best charity to work for in the UK. Local people are hugely proud of it, so I was delighted to hear that recognition of just how special the charity is to the people it looks after, both in the hospice and in the local community, and to its staff. It is very much a local charity, supported generously by local individuals and businesses. Last year alone, I heard of a group who canoed an intense 60-mile journey from Fort William to Inverness, and others who cycled the 186-mile “Game of Thrones” route. Some held a one-day book festival in Stoke-on-Trent, and one individual ran the brutal Marathon des Sables—all to raise money for Dougie Mac. We should all show that much care and respect for people approaching the end of their lives.
The small change in this Bill, from a six-month to a 12-month approach, would help ensure that people get the financial help they need as quickly as possible in the most challenging of times. It would be a significant step forward, and all of the experiences shared by individuals in the long process to get to this stage are valuable and important. We need to ensure that more people with a terminal illness can concentrate on making the most of the limited time they have left, rather than worrying about their finances. This must be a time spent in love and laughter, with dignity and compassion. I sincerely hope these changes are implemented quickly to ensure that no more people already facing the most difficult time in their lives have to wait to claim the support that they so desperately need and are entitled to, so I support the Bill.
Philip Davies (Shipley) (Con)
It is a pleasure to follow my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon), who gave an excellent speech about why this Bill is so important and will make a material difference to many people. To that end, I thank my hon. Friend the Member for Tewkesbury (Mr Robertson) for bringing forward the Bill, because this is a very important issue for a number of people and the Bill sets out some important principles. I want to come on to the important point made by my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) about when the Bill will come into operation, because it deserves more explanation from the Government.
For a person to find out that their illness cannot be cured must be a terrifying experience not just for the sick individual themselves, but for their friends, family and loved ones. As a Parliament, we should be committed to alleviating the pressures facing those nearing the end of their lives. Since the 1990s, the Department for Work and Pensions has provided access to key benefits through what are referred to as the special rules for end of life. These are benefit rules that allow people who are nearing the end of their lives to get fast-track access to certain benefits.
The special rules were first introduced in attendance allowance in 1990, following a recommendation by the Social Security Advisory Committee. Attendance allowance claims are subject to a six-month waiting period, and the Committee was concerned that some terminally ill people were dying before that period had lapsed. Eligibility for the special rules was therefore limited to people diagnosed with a condition that meant they were unlikely to live for more than six months, as established in the Social Security Act 1990. Since then, the use of special rules has been extended to disability living allowance, employment and support allowance, personal independence payments and universal credit, all with the same eligibility criteria.
The current pension legislation contains provisions that allow a patient who is deemed terminally ill to claim under special rules and get the highest rate of financial help, and faster. Paragraph 25B(3) of schedule 7 to the Pensions Act 2004 and paragraph 12(3) of schedule 5 to the Pensions Act 2008 both define the eligibility criteria for a terminal illness lump sum, which allows the patient to apply to exchange all their ill health benefits for a one-off lump sum payment if they are diagnosed with a terminal illness and do not expect to live longer than 12 months. The then Work and Pensions Minister said that this would be
“using the same rules to define ‘terminally ill’ as those that are used in the financial assistance scheme and in DWP benefits.”—[Official Report, House of Lords, 14 July 2008; Vol. 703, c. 1060.]
Historically, people eligible under the special rules have not had to wait as long as others to start getting benefit payments, as no waiting period is applied. They are not required to go through medical assessments or face-to-face appointments, and in most cases they have qualified for higher rates of financial help. The form supporting a special rules claim is completed by a clinician and is called an SR1. To access the fast-track route, people have to have been assessed by their healthcare professional as having six months or less to live. This has become known as the six-month rule. My hon. Friend the Member for Tewkesbury made the point about it being a healthcare professional who makes the assessment.
The Pensions Act 2004 established the Pension Protection Fund, which provides compensation to members of eligible defined-benefit pension schemes in cases where the sponsoring employer becomes insolvent on or after 6 April 2005 and the scheme lacks sufficient assets to fulfil its pension liabilities up to the level of compensation offered by the Pension Protection Fund. The financial assistance scheme initially covered schemes that wound up between 1 January 1997 and 5 April 2005. Since its inception, it has undergone reviews and expansions in both coverage and the level of assistance provided. The scheme offers payments to members of qualifying schemes who are unable to fully secure their pension liabilities.
Currently, the Pension Protection Fund has the authority to issue a one-time lump sum payment to individuals who are terminally ill and have not yet received their protection fund compensation. Similarly, the financial assistance scheme allows for the early disbursement of financial assistance in cases of terminal illness.
Both the PPF legislation and the FAS regulations employ the same definition of terminal illness. It is currently defined in pensions legislation as if
“the person’s death in consequence of that disease can reasonably be expected within 6 months”.
That means that both the PPF and the FAS currently make payments when medical evidence shows that a member has a life expectancy of up to six months. This eligibility criterion was set in line with the social security special rules for end of life provisions for certain benefits, originally introduced in 1990. The eligibility rules were extended to 12 months by the Social Security (Special Rules for End of Life) Act 2022, which we all supported.
The Bill seeks simply to restore the original policy intent that there should be an alignment between the Pension Protection Fund and the financial assistance scheme. For more than 30 years, the special rules have ensured that at this most difficult time people have had the financial support to which they are entitled, and that they get it quickly and easily.
Richard Fuller
I am listening to my hon. Friend’s speech with great interest. He is providing a lot of detail, so I hope he will not mind my asking some specific questions. He will be aware that the Pension Protection Fund does not necessarily pay up 100% of what people would have got had their pension fund not become insolvent—and often, insolvency occurs through no action of the employees themselves, but is about how the directors of the companies made contributions. He will also be aware that shortfalls in the Pension Protection Fund are covered by a levy that is charged on other pension funds. I am almost certain that the effect of the changes—which, as my hon. Friend has rightly said, are supported generally throughout the House—will be significant, but has he made an assessment of the cost changes? Has he had any thoughts about what the implications might be for how the Pension Protection Fund might have to change its rules and/or what it might mean for the levy charged on other pension funds?
Philip Davies
My hon. Friend raises typically astute points that need to be considered. The short answer is yes, I have. If he will bear with me, I will come to that, because I have sought professional advice on the implications for those funds. I promise my hon. Friend that I will come to that; if he feels that I have not done so sufficiently, he can feel free to have another bash, so to speak.
Since the special rules were introduced, there have been significant advances in how the NHS treats and cares for people nearing the end of their lives, meaning that many terminally ill people now live for longer with their illness. Given the advances, the then Secretary of State for Work and Pensions announced in July 2019 that the DWP would undertake an in-depth evaluation of how the UK benefit system supports those nearing the end of their lives.
As part of that consultation, the Department sought feedback from the terminally ill, those who support them and clinicians. Much of the reasoning and findings from that report are directly applicable to the Bill.
The purpose of the evaluation was to consider the policy and implementation of the special rules relating to people defined as “terminally ill”. It aimed to take a holistic view of the support provided, and took into account direct contributions from people nearing the end of their life, who shared their first-hand experiences of accessing support via the special rules, as well as from charities and organisations supporting them. As well as receiving written evidence, the evaluation team held engagement sessions, including an event for people living with or affected by motor neurone disease; conducted telephone interviews with people nearing the end of their life; and met charities that provide support for people nearing the end of their life.
The study also took into account the views of healthcare professionals who work with and support people approaching the end of their life, through national expert palliative and end-of-life care clinical groups; and nearly 1,000 clinicians from a range of professions, in England, Scotland, Wales and Northern Ireland, also had a chance to respond through a survey. Their views should not be underestimated, as they play a large part in respect of access to financial benefits under the special rules, which is the bit I want to look at in a little more detail.
The Department’s findings agreed with the purpose of the Bill, showing that there was a consensus across all groups that the Government should extend the current six-month rule and support for the Department for Work and Pensions to adopt a 12-month end of life approach that would allow people in the final year of their life to claim under the special rules. An added benefit of the 12-month approach was that it would also bring greater consistency with the definition of “end of life” used by the NHS and right across Government.
The overwhelming evidence of medical advances in the past 30 years, since the special rules were first implemented in 1990, demonstrates that the law in its current state is no longer fit for purpose. In general, public health has changed dramatically, both with the pandemic, and with the advances in pain relief and other trial drugs that now make living with a terminal illness for longer more likely. The leaps and bounds made in both the care for terminal patients, and the identification and diagnosis of these patients, have progressed extensively. All forms of palliative care have progressed, from how people nearing the end of their life are treated and cared for, and how their conditions are managed, to how clinicians define people nearing the end of their life. That is why the questions from my hon. Friend the Member for North East Bedfordshire (Richard Fuller) are so important: it is because of these huge changes that have taken place.
New approaches in care have been developed using the Gold Standards Framework and the Daffodil standards. The “Ambitions for Palliative and End of Life care: a national framework for local action 2021-2026” NHS guidance has also led the way in reforming caring for people nearing the end of their life. The Gold Standards Framework is a registered charity and has been the UK’s leading training provider for generalist frontline staff in caring for people in the last years of life for more than 25 years. Its aim is to enable a gold standard of care for everyone with any condition, in any setting, given by any care provider, at any time in a person’s last years of life. That is focusing on the medical side of things, and this Bill hopes to provide the equivalent standard in terms of pensions. Both frameworks have been integral to the improvement in palliative care and the greater life expectancy of terminally ill patients, because with better care and treatments, the longer people will live, and hence the need for the amendment proposed by the Bill.
One of the largest issues relating to the Bill is how clinicians define who should be eligible for the special rules. The DWP survey showed a consensus across all groups that the current definition is not fit for purpose, for several reasons. Some patients who have fluctuating conditions or uncertain life expectancy found it difficult to access the special rules, as their life expectancy was indeterminable. Many conditions progress rapidly and then plateau, and some conditions do that regularly. Two groups of patients who struggle with that are motor neurone disease sufferers and cancer patients. In preparing for today’s debate, I contacted the Motor Neurone Disease Association to ask how it feels about the change and how it will affect people diagnosed with MND. I am sure everyone in the House is familiar with the “Scrap 6 Months” campaign, led jointly by the MNDA and Marie Curie, which my hon. Friend the Member for Tewkesbury (Mr Robertson) mentioned and which is supported by thousands of campaigners across the country. They told me:
“This Bill will ensure that a greater proportion of people living with MND will be”—
able to receive—
“terminal illness payments from the Pension Protection Fund and Financial Assistance Scheme...
This is important given the context of the financial impact of living with MND, especially as symptoms of the condition increase”.
So, on that basis, they very much support the Bill.
Macmillan Cancer Support plays a large part in end-of-life care and has its national call centre based in my constituency in Shipley. It told me that it was supportive of the decision to widen the criteria from six months to 12 months, ensuring that those with a terminal diagnosis have timely access to financial support when they need it most.
In some cases, the six-month rule forced clinicians and patients to have very distressing conversations about life expectancy either too early or at the wrong time for them. There are two ways in which this issue can be tackled. The first is the 12-month rule, which is where we are with the Bill, mirroring the end-of-life approach used by NHS England. The second is taking out the timescale and instead using a clinical recommendation supported by guidance, which does not have an explicit timeframe attached to it—in effect, looking at the nature of somebody’s condition.
The first option is an increase in the term of life expectancy to 12 months, which is what the Bill would do. Obviously, this approach aligns the welfare state with the work of the NHS, and so would make it easier for organisations across the UK that support people nearing the end of their lives to understand the application of the special rules, because it makes them all consistent. Clinicians have many difficult conversations when discussing end-of-life care, and this could be added into those conversations instead of being had separately, also saving the NHS time.
However, I just want to point out that any time-bound rule could be subject to the same problems, as life expectancy can fluctuate and nothing is certain—even within a year. There is therefore an argument for basing it on a clinical diagnosis, rather than a fixed term, which by definition is always going to be slightly arbitrary.
Sir Greg Knight
Will my hon. Friend just clarify the position? Is he saying that he would prefer the Bill to be amended, or is he happy with it as it stands?
Philip Davies
I am grateful to my right hon. Friend for his question. I support the Bill, because it is far better than the status quo, and it sensibly evens up those situations, which is what my hon. Friend the Member for Tewkesbury intends with the Bill—in effect, to ensure that the rules for benefits and pensions are the same and that one does not diverge from the other. My point is that this should not be the last word on the matter, because it may not necessarily be the best outcome. It is a sensible measure to take, but there is a bigger issue here about whether—across benefits and pensions—this is the right approach to take. My point is that we should not be wedded to the idea that a time limit is the right way to do it. This matter therefore warrants consideration as to whether fixed-time limits are the right way to go.
The benefits of an open-ended time period clinical recommendation is that it would allow greater access to pensions under special rules for those who have an uncertain prognosis, many of whom still have difficulty accessing benefits, whether it be six months or 12 months. The drawback of that approach is that a broader definition of terminal illness would make it difficult for clinicians to make decisions about who is eligible, which could lead to people missing out.
The aforementioned survey of clinicians’ views on this matter relating to the benefits system found that, when asked what they thought the time criteria should be under special rules, 38% of respondents preferred a 12-month model, 34% preferred a model without reference to a time limit, and only 10% supported the existing six-month model. That goes to the heart of what my right hon. Friend the Member for East Yorkshire was saying, which is that, whereas everyone agrees that the six-month rule should be changed, and that therefore my hon. Friend the Member for Tewkesbury is absolutely right to bring forward the Bill, there is not much in it between whether people think it should be 12 months, or there should not be a specific time limit. Those views should be expressed in this debate for further consideration, given the subject we are debating.
The conclusion on this point from the Department was to make a legislative move to the 12-month rule, which is a perfectly reasonable decision to make based on that survey. That is now codified in the Social Security (Additional Payments) Act 2022, and the exact same reason has been applied in my hon. Friend’s Bill. Changing the six months to 12 months is clearly the most popular option, based on that evidence, and it brings it into line with the rest of the benefits system. It would maximise the opportunity to improve awareness of the special rules and provide consistency in their application. We should be making it easier for people nearing the end of their lives to access their pension benefits and any other financial aid they are entitled to under the special rules system.
The second argument taken into consideration for access to special rules was awareness and communication. The DWP evaluation showed that much more could be done to improve awareness, and respondents felt that the information and guidance regarding access to special rules could be improved. Again, we might want the Bill to say something about making people aware of the change in the rules, because it is no good having those changes if nobody is aware of them. That is something else that needs to be considered.
Of course, charities are vital in helping people to make a special rules claim, as people are often unaware that there is financial assistance and support available from the Department for Work and Pensions for people nearing the end of their lives. However, clinicians can also play their part. Apparently, as written in a DWP report, some are not aware of special rules or have limited knowledge of them. When the Department aligned benefits with the 12-month end of life approach, it expected to be able to improve awareness among clinicians by taking advantage of training and educational resources and that, through those resources, the language should also be simplified. That was the Department’s conclusion and I assume the same will be valid in this case too.
On the point about the report, I should also mention that the clinicians raised concerns over the term “terminally ill”, which is used in the Bill. They say that the term is being used less and less these days, and patients are now more commonly referred to using terms such as “end of life.” That is a change within the field of palliative care, and one that maybe could be taken into account with the language in the Bill and in the rules that the Government use.
What actually happens when someone tries to submit a special rules claim? Is that something the Bill could make easier too? People nearing the end of their lives, or those who support them, provide the DWP with medical evidence that provides details of their clinical condition, treatment and response to treatment. That is most commonly done by a clinician completing an SR1 form. That form can be completed by GPs, by hospital doctors, or by registered nurses working in roles such as advanced nurse practitioner, Macmillan nurse, clinical specialist nurse, or practice nurse with expertise in long-term conditions management. That form can be submitted in either paper or electronic copy, and, in England, by NHS staff using an online tool.
As I said, some clinicians are not aware of the special rules or have limited knowledge of them. Therefore, the clinicians who provide SR1s do not always fully understand the special rules and what needs to be included in them. That means some patients find getting an SR1 or other medical evidence more challenging than it should be. In the DWP’s survey of the clinicians who had completed an SR1 form, the majority believed it was of value; 73% of respondents agreed or strongly agreed with the statement that the form is
“an effective way of providing evidence to support a patient’s benefit claim under the Special Rules criteria”,
but 12% disagreed or strongly disagreed. When asked to explain their reasons for their views, the majority said the form was perceived as easy and clear to use, but some considered that it failed to capture certain information that they felt was important, particularly where the patient meets the definition but is receiving active treatment, or where it is necessary to explain the details of a condition other than cancer.
If the Bill succeeds, as I hope it will, and the change is made from six months to 12 months, that will offer an even bigger chance to develop a more cohesive approach between the Department of Work and Pensions and clinicians, to ensure that the right people are claiming special rules. In order to get benefits, there must be requirements for claims and ways to claim. The Department found that more support around making a claim would improve the experience. It also received feedback on what happens once a special rules claim is made. There was a consensus from those who fed back into the evaluation that having access to an online portal or some information on the progress of their claim would be helpful.
I promised my hon. Friend the Member for North East Bedfordshire that we would talk about the fiscal side of the Bill. I contacted Tim Middleton, the director of policy and external affairs at the Pensions Management Institute, about that—I thank him for giving up his time. Two questions must be considered about the financial repercussions of the policy. First, how many applications for full commutation on the grounds of serious ill health are received by the Pension Protection Fund scheme each year? I was told that the number is in double figures—it is really not many. I should say that Tim Middleton has been working in the pensions industry since 1987, and he has only ever encountered three cases of a special rule being applied to a Pension Protection Fund scheme, so we can safely say that it is not a big number.
The second question, which my hon. Friend the Member for North East Bedfordshire rightly asked, is were the application period extended from six months to 12 months, as the Bill anticipates, what additional costs would the Pension Protection Fund incur? A member being able to apply within the extended 12 months of a diagnosis, rather than six months, would be a change. Tim Middleton, who is an expert in the field—of course, if the Government have any different figures, we would all be delighted to hear them— has said:
“Whilst there is likely to be an increase in cost, it does not seem likely that this would be significant, and, in any event, for a scheme as large as the PPF, it is expected that these costs could be easily absorbed.”
That should give my hon. Friend some comfort that the scheme will not be burdened beyond its means, but it certainly needs to be considered. It would be helpful if the Minister let us know whether her assessment is the same as the one I have been given. By way of context, in the European Court of Justice judgment in the Hampshire case in 2018, it was estimated that the additional annual cost to the Pension Protection Fund would be £215 million, and that it would affect approximately 1,200 members. The Bill changes would see nothing like that figure.
For completeness, I looked at whether anything other countries did could be usefully included in the Bill, based on their practices and experiences. Comparing the terminal illness definitions of countries with comparable systems, I found that Belgium uses the phrase “palliative status”, which is defined as
“expected survival of a maximum of 2 months, due to one or more irreversible disorders and with the intention of dying at home”.
The Netherlands defines it as
“with an expectation to die within 12 months”.
Australia and New Zealand use an “average life expectancy of less than 2 years”. In Canada, a terminal medical condition is a disease that
“cannot be cured or adequately treated and is reasonably expected to result in death within 6 months”.
Spain refers to people who will
“benefit from palliative care for example, those with an incurable, advanced and progressive disease; limited life forecast; low possibility of response to specific treatments… frequent crisis of needs; intense emotional and family impact; impact on the care structure; high demand and use of resources”.
From those definitions, we can see that there is no clear international definition of what constitutes a terminal illness for the purposes of a welfare system, whether that is a benefit system or a pensions system. Some countries, as we can see, have taken a time-based approach, and others have gone for a clinical definition. This is a wider area that needs more consideration generally, but my hon. Friend the Member for Tewkesbury’s Bill is exactly right to make the point that the two systems—the benefit system and the pension system—should be exactly the same. There is absolutely no reason why they should not. Whatever system we have in future, I very much hope that we will always be able to keep a consistency of approach, because otherwise it is not fair.
On the Bill’s commencement, my right hon. Friend the Member for East Yorkshire was absolutely right—to be fair, my hon. Friend the Member for Tewkesbury set it out clearly in speaking to the Bill, so it is not as if anything was being hidden—to focus on the fact that the measures
“come into force on such day or days as the Secretary of State may by regulations appoint.”
I share his concern. We all think something is a good idea, the House of Commons passes a Bill, as does the House of Lords, but lo and behold, nothing happens. I think most of our constituents will find that to be an intolerable situation.
Can the Minister explain why we must have such a woolly starting point in the Bill? I cannot see the need for it. Why can we not have a specific starting date? Surely, at the least, a “no later than” date—based on the reasons any delay might be needed—could be inserted. It is important that the Minister explains why we cannot have a specific date, why there might be a delay, and why we cannot have a “no later than” date added to the Bill. I am pretty sure that we will all want to consider that again either in Committee or the subsequent stages.
Sir Greg Knight
Has my hon. Friend examined clause 2(7), which gives the Secretary of State the power to make transitional arrangements, so that a nine-month period could be introduced for a specific time. I do not understand why we are giving the Government that flexibility. If the House and the other place approve the Bill, and the monarch signs it, it should become law and be implemented.
Philip Davies
My right hon. Friend makes a good point. One duty of Members in scrutinising legislation and holding the Government to account is to ensure that on a day like today, when people are anxious to get through as much as possible, the Government do not sneak into the Bill a few powers to change things more easily in future—powers that perhaps the House might not otherwise want to give them. At the moment, this House passes far too many things that give the Government of the day sweeping powers to change things without coming back to the House for meaningful scrutiny. My right hon. Friend is absolutely right to be wary of those measures.
This is a fairly short Bill, but the most extensive part is clause 2, which basically gives the Government powers to vary this and that, introduce the measures when they want, and so on. We should always be nervous about legislation that is a convenience for the Executive rather than a benefit for our constituents. It is incumbent on the Minister to explain why the Government need those powers. Is there a specific reason that each of those powers has been added to the Bill, or is it a typical catch-all—“Let’s shove the lot in there just in case we might need it at some point in the future”? We should always be wary of such measures. If there is a good reason that each subsection in clause 2 is needed, let us hear it so that we can all make our own minds up about them. If they are not needed and have just been shoved in for a bit of convenience in case the powers are needed at a later date, perhaps the House might want to say, “Well, we don’t think you should have those powers. If you want to do something different, you should come back at a later date and make that case.” I look forward to hearing the Minister’s response on that.
Those are perhaps things that we could come back to in the Bill’s remaining stages, but in the meantime, I certainly support the thrust of what my hon. Friend the Member for Tewkesbury is doing. He should be commended for focusing on something that is important to many people and will make a massive difference to their lives, and he will be thanked by many in my constituency and beyond. On that basis, I support the Bill’s Second Reading.
Rob Butler (Aylesbury) (Con)
It is a pleasure to follow my hon. Friend the Member for Shipley (Philip Davies). I must warn the House that I do not have his great detailed knowledge of this subject, so I hope right hon. and hon. Members will forgive my comparative brevity as a result.
I congratulate my hon. Friend the Member for Tewkesbury (Mr Robertson) on tabling what is an excellent piece of legislation. Being diagnosed with a terminal illness elicits a whole spectrum of emotions for the individual, their family and their friends: initial shock, perhaps denial, then a struggle as they cope with the harsh reality of their prognosis and the plethora of emotional responses that it entirely unsurprisingly generates. On top of that, many have to grapple with getting their affairs in order, adding stress and anxiety, to ensure they can support themselves in their final days and months while also perhaps thinking ahead to provide for those they leave behind. We know from charities and campaigners that financial concerns loom large in the minds of those entering the final stages of their lives, precisely at the time when they understandably want to be focusing on other things.
As such, I am pleased that this Conservative Government have taken action to help those who are terminally ill by extending the definition of terminal illness from six months to 12 months. As has been said, the Social Security (Special Rules for End of Life) Act 2022 ensures that people can claim financial support in the form of personal independence payments, disability living allowance, employment support allowance and universal credit. That is absolutely right, so I am pleased that my hon. Friend’s Bill is before the House today, because it will amend the rules around the Pension Protection Fund to be largely in accordance with those other measures that are already in place. It is a simple administrative change that will allow terminally ill people to claim assistance from the Pension Protection Fund and Financial Assistance Scheme if their death can reasonably be expected within the next 12 months, rather than the current six months. It may seem a small step, but it is a hugely significant one that will provide certainty for terminally ill people and their families at a time of real stress and anxiety.
I also concur with my hon. Friend the Member for Tewkesbury that although the number of people affected may be small, the Bill sends an important signal to pension providers more widely. I hope they will look at the Bill and the decision of this House today and reflect on how they might better look after people who are protected by their individual pension funds. The Social Security (Special Rules for End of Life) Act received cross-party support; I hope the same will be true of my hon. Friend’s Bill. I will certainly be wholeheartedly supporting its Second Reading today.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
I congratulate the hon. Member for Tewkesbury (Mr Robertson) on bringing the Pensions (Special Rules for End of Life) Bill before the House today for its Second Reading. The Bill seeks to expand the eligibility criteria for receiving terminal illness payments from the Pension Protection Fund and the Financial Assistance Scheme to all those with less than 12 months to live, an increase from the existing six months. That will bring eligibility in line with the Department for Work and Pensions’ own definition of terminal illness for the purposes of social security payments.
The shock and distress caused by a terminal diagnosis for the individual and their loved ones cannot be overstated. Those with a terminal illness should have the dignity of spending the time they have left in comfort; their stress should not be further compounded by financial worries. Therefore, we wholeheartedly agree with the aims of the Bill. It will, of course, only benefit a relatively small number of people: it relates only to those who have a defined benefit pension that is being assessed by the Pension Protection Fund or the Financial Assistance Scheme. However, it is a step in the right direction, and I hope we can build on it to improve things for all those living with a terminal illness, because at the moment, the reality is truly shocking.
I pay tribute to the Marie Curie charity for all the work it has done to highlight the financial struggles of the terminally ill. Research carried out by that charity in 2022 painted a harrowing picture: 90,000 people die in poverty in the UK every year, one in four people who die while of working age are in poverty at the end of their life, and one in six UK adults would be wholly reliant on benefits if they became terminally ill. The cost of living crisis has worsened since those figures were published, so I fear that the situation is more severe now.
As I say, the DWP’s definition of a terminal illness for the purposes of social security rules is now set at
“less than 12 months to live”,
having been increased from six months by the Social Security (Special Rules for End of Life) Act 2022. We supported that legislation as it was the right thing to do, it and should provide some small reassurance to those in the most difficult circumstances. I question why the DWP did not look this issue at the time of the change. While the issues do differ—that legislation related to benefit payments, while this Bill relates to workplace pensions—it is important to have consistency, so that those with a terminal illness have clarity on their entitlements. With that in mind, I hope the Minister can offer some reassurance that the definition of a terminal illness will be consistent across the DWP and its various agencies if this Bill makes it on to the statute book.
The Conservative cost of living crisis continues to hit families hard. This Government’s reckless decisions crushed the economy, sent mortgage rates soaring and sent energy bills through the roof. Receiving a terminal diagnosis is incredibly difficult at any time, but too many people are spending the time they have left in poverty. That cannot be right. The Government must do far more to help these people.
I conclude by once again congratulating the hon. Member for Tewkesbury on his dedication in bringing forward this important Bill. It is a step in the right direction, and we fully support its aims.
The Minister for Employment (Jo Churchill)
It gives me great pleasure to confirm that the Government give their full support to this private Member’s Bill. I thank my hon. Friend the Member for Tewkesbury (Mr Robertson) for bringing forward what he said was a small and limited piece of legislation, but we have heard over the past hour and a bit how important these small changes will be to those affected. I thank my hon. Friend the Member for North East Bedfordshire (Richard Fuller), my right hon. Friends the Members for East Yorkshire (Sir Greg Knight) and for Ludlow (Philip Dunne), and my hon. Friends the Members for Stoke-on-Trent Central (Jo Gideon), for Shipley (Philip Davies) and for Aylesbury (Rob Butler) for their contributions.
My hon. Friend the Member for Shipley explained why the alignment is ultimately a good idea. As we have heard, a life-limiting illness can cause unimaginable suffering for the patient and their loved ones—and that is just at diagnosis, yet alone across the trajectory of the disease. Many people have said that they feel as though they have been hit by an emotional tsunami, and we should do anything we can to help and support those nearing the end of life. My hon. Friend the Member for Stoke-on-Trent Central poignantly outlined some of the challenges that people can face at this stage in their life.
Many charities have been mentioned, but I pay particular tribute to Marie Curie, which often provides nurses who sit with people as they near the end of life. It is an incredible service for our constituents, and ensures that people do not die alone. Its work is incredibly important—its motor neurone disease campaign has been mentioned—but we must also thank people in the hospice sector and more broadly across the NHS, particularly those who work in end-of-life and palliative care.
We have heard much about the Social Security (Special Rules for End of Life) Act 2022, which changed the special rules process to allow simple and fast access to financial support through the benefit system. The changes made in the Act covered the disability living allowance, the personal independence payment and the attendance allowance, and ensured that people at this most difficult of times could receive their support more quickly and easily. The special rules were then extended to universal credit and employment and support allowance through secondary legislation that came into force on 4 April 2022. Under those rules, claims are fast-tracked and a medical assessment is not required. No waiting period is applied, and in the majority of cases the highest level of benefit is awarded. Since 1990, eligibility under the special rules had been limited to those who had been diagnosed with a condition that meant that they were unlikely to live for more than six months. The changes that the Government made in 2022 meant that people receiving certain social security benefits who were thought to be in the final year of their life were shown additional compassion and were able to receive that vital support six months earlier.
When the 2022 regulations came into force, they were welcomed by key end-of-life charities such as the Motor Neurone Disease Association, whose chief executive said at the time:
“I welcome the announcement that changes to the Special Rules will come into force next month. This change will enable more people living with complex and unpredictable terminal illness like motor neurone disease to access the support they need swiftly and sensitively. This is an important first step and we hope that this positive change can be enacted for other applicable benefits as soon as possible.”
Marie Curie also welcomed the changes, saying that they would
“make it easier for terminally ill people to access support quickly”,
and that
“the scrapping of the six-month rule for fast track access to benefits is a significant step forward.”
Macmillan Cancer Support said:
“Patients deserve better co-ordination of care into the last year(s) of life and this change gives us a brilliant opportunity to help them benefit from end of life financial support while having treatment, so they can make the most of the last year(s) of life.”
This Bill takes a further step in supporting those with a terminal illness by extending similar support through compensation payments made by the Pension Protection Fund and payments under the financial assistance scheme. As my hon. Friend the Member for Tewkesbury explained, the Pension Protection Fund pays compensation to members of eligible defined benefit pension schemes if the sponsoring employer became insolvent on or after 6 April 2005 and the scheme has insufficient assets to meet its pension liabilities. Members can claim their compensation payments before their scheme’s normal pension age, generally from the age of 55. The financial assistance scheme makes payments to members of qualifying schemes that are unable to meet their pension liabilities in full.
Currently, members of the PPF who are not yet entitled to receive compensation may make an application to their scheme for a terminal illness payment if they are expected to live for six months or less. Terminal illness is currently defined in legislation as
“if... the person’s death in consequence of that disease can reasonably be expected within 6 months.”
The Bill amends that definition to ensure that members with a life expectancy of up to 12 months can now receive the payments. It will restore the original policy intention of alignment between the social security special rules and the Pension Protection Fund. The same definition applies to the financial assistance scheme, and the Bill therefore amends that definition as well. The financial assistance scheme differs from the PPF in that a terminal illness diagnosis allows payments from the financial assistance scheme to be put in place immediately, rather than a specific lump sum being provided.
My right hon. Friend the Member for East Yorkshire and my hon. Friend the Member for North East Bedfordshire asked what consultation we had carried out. As I think my hon. Friend the Member for Shipley mentioned, we have consulted general practitioners, consultants, specialist nurses and other medical professionals.
Some may argue that the Government should take a more open-ended approach and not put any time limit on the payments. That argument, as we have heard, may be particularly pertinent for those who have conditions such as motor neurone disease, chronic obstructive pulmonary disease, Parkinson’s disease and a plethora of other conditions that can make it exceedingly difficult for clinicians and doctors to accurately predict how much time a patient has until the end of their life.
Unfortunately, there is not a clearcut, correct answer on how terminal illnesses should be defined, so as my hon. Friend the Member for Tewkesbury said, that should be left to the professionals. In recognition of that, the 2022 Act was preceded by an evaluation in which the majority of clinicians who responded said that a 12-month definition was preferable, as it would bring the special rules for benefits into line with NHS practice and NHS initiatives, such as the gold standards framework. The Department agreed, and the 2022 legislation aligned the definition of terminal illness with that used in the NHS, providing consistency for clinicians and tying the special rules into the NHS long-term plan to provide proactive, personalised and well co-ordinated care for all those in their final year of life.
This Bill builds on the previous legislation by aligning the definition used for the Pension Protection Fund and financial assistance scheme payments with that used more widely in the Department for Work and Pensions and the NHS. The Government believe that the 12-month timeframe is appropriate for defining the period for serious ill health payments in tax law. For an individual to meet the definition of a person in serious ill health, evidence is required from a registered medical practitioner that the individual is expected to live for less than one year.
The Pension Protection Fund may be a compensation scheme, rather than a pension scheme, but in many ways it is treated as a pension scheme for taxation purposes. That means that the Pension Protection Fund terminal illness payment falls under the category of a serious ill health lump sum. That allows it to be paid without triggering unauthorised payment tax charges on either the individual or the Pension Protection Fund. Extending the definition of terminal illness to longer than a year would open up members to significant tax charges on their terminal illness payments, which is not what the Government want at all.
My hon. Friend the Member for North East Bedfordshire asked about the impact on the levy. We believe that the cost to the Pension Protection Fund will be marginal. Most members will simply get their payments earlier. He also asked about pension funds having a 12-month provision. The benefits provided will depend on scheme rules. We do not know how many schemes have such a provision, but we believe that many schemes already provide early access to lump sums for terminally ill members, or those with a life expectancy of 12 months or less, because that is allowed under tax law.
My hon. Friend the Member for Shipley and my right hon. Friend the Member for East Yorkshire asked about commencement. As with any Bill that passes through both Houses, it will come into force on a day appointed by the Secretary of State. It is the intention for that to be as soon as practicable after Royal Assent, to ensure that all measures relating to the Pension Protection Fund and financial assistance scheme come in at the same time.
I heard that my right hon. Friend the Member for Ludlow had written to the Secretary of State, and I will make sure that an answer comes to him in a timely way. He asked who makes the decisions; the answer is clinicians, medical assessors and specialist nurses. In response to my right hon. Friend the Member for East Yorkshire, let me say that one can obtain a second opinion, and that goes for all the illnesses that I mentioned.
I thank all hon. and right hon. Members for their contributions, and for the sensitive way in which they have approached this matter. I appreciate the “time-bound” argument that my hon. Friend the Member for Shipley put forward, but these matters are always a challenge for clinicians. I agree with him and my hon. Friend the Member for Stoke-on-Trent Central that a better conversation about end of life, and how we treat issues as we move forward into that stage of our life, would be a very good thing for us all. We should be a lot more discussive about it.
I thank my hon. Friend the Member for Tewkesbury for bringing forward the Bill and all right hon. and hon. Members for their contributions. These changes will make a significant, positive impact for people nearing the end of their lives by ensuring that most pension fund members will be able to receive a payment at an earlier stage. That will give them the financial support they need at a most difficult time for them and their families, as well as help them plan more effectively to get the most out of the finances they are due. These changes send a message about end of life: that the conversation must be alive and vibrant for us all, so that we do the best we can. I am pleased to support the Bill and wish it a speedy passage through both Houses.
Madam Deputy Speaker (Dame Rosie Winterton)
I call Mr Laurence Robertson to wind up, with the leave of the House.
Mr Robertson
I thank the Minister for that response and the shadow Minister for her contribution. I also thank my right hon. and hon. Friends for their speeches and interventions. They all raised good points, but I think the most important one, made by my hon. Friend the Member for Shipley (Philip Davies), was that the Bill takes us in the right direction but should not be the last word on this issue. We must look at assessing people in terms of illness, because it is not just about time; it is about the diagnosis and the seriousness of those illnesses. I am pleased that the Minister picked that up. We must look to extrapolate this principle into other pension payments and schemes, as I mentioned in my speech.
Finally, I am pleased that the Minister confirmed that the Government intend to ensure that the Bill starts to have an impact as quickly as possible after Royal Assent. I look forward to working with her and the Government on that basis.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).
Pensions (Special Rules for End of Life) Bill
Wednesday 24th April 2024
(3 days, 19 hours ago)
Public Bill CommitteesRead Full debate Pensions (Special Rules for End of Life) Bill 2023-24 Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, I have some killjoy preliminary reminders for the Committee. Please switch electronic devices to silent. No food or drinks are permitted during sittings of the Committee, except the water provided. Hansard colleagues will be grateful if Members email their speaking notes to hansardnotes@parliament.uk.
On to business, my selection and grouping list for today’s sitting is available online and in the room. No amendments have been tabled. We will have a single debate on all three clauses of the Bill.
Clause 1
Changes to periods of life expectancy
Question proposed, That the clause stand part of the Bill.
Mr Laurence Robertson (Tewkesbury) (Con)
It is a pleasure to serve under your chairmanship, Dame Siobhain. I thank you, the Minister and all Committee members for attending. I also thank the Department for Work and Pensions legislative team, who have been a great asset and a source of useful assistance throughout the process. I thank the Opposition for their support and my hard-working staff for their efforts.
As I said on Second Reading, the Bill is small and narrow in focus, consisting of just the three clauses. It seeks to amend existing legislation that covers the definition of terminal illness for the Pension Protection Fund and the financial assistance scheme, which is currently a life expectancy of only six months. We seek to increase that definition to 12 months. The extension would allow people with a terminal illness to receive terminal illness payments when they are likely to have 12 months or less to live. Such payments are a one-off lump sum from the PPF scheme or an early payment from the FAS.
I am sure we would all agree that when someone receives the devastating news that they have a terminal illness, they should receive any and all financial help possible during their final days. The constant advances in medical science—treatments, drugs and palliative care—make this Bill that much more important, because things are rather difficult to predict. This extends to the pension schemes as well. Most private pension schemes already provide cover in the form of serious ill health payments.
As will be explained, the Government passed legislation two years ago to ensure the same outcome for individuals receiving certain social security benefits such as universal credit, employment and support allowance, and personal independence payments. I came to understand, however, that two aspects of pensions legislation lacked updated coverage. That legislation relates to the Pension Protection Fund and the financial assistance scheme—the focus of the Bill—which retained the six-months definition. The Bill seeks to rectify that.
In case any right hon. or hon. Members present in Committee were not at the Second Reading debate, I shall explain briefly what exactly the PPF and the FAS are. The Pension Protection Fund was established by the Pensions Act 2004. It pays compensation to individuals when the sponsors of their defined-benefit pension schemes—usually their employers—become insolvent and lack the necessary assets to pay pensions to the level that the Pensions Protection Fund would ordinarily pay. That applies for insolvencies that take place on or after 6 April 2005. The financial assistance scheme applies to individuals whose pension schemes were unable to meet their pensions liabilities in full when those schemes started to wind up between 1 January 1997 and 5 April 2005.
Currently, the PPF can make a one-off lump sum payment to someone who has not yet drawn their PPF compensation but is terminally ill. The FAS makes similar provision by allowing the early payment of financial assistance. Both the PPF legislation and the FAS regulations use the same definition of terminal illness. As I alluded to earlier, the Bill will bring the Pension Protection Fund and the financial assistance scheme in line with the Department for Work and Pensions’ definition of terminal illness, which, following the Social Security (Special Rules for End of Life) Act 2022, was likewise extended up to 12 months when calculating certain benefits. Therefore, the Bill seeks to harmonise the legislative definition of terminal illness such that following its commencement all legislation will use the extended 12-month definition.
I repeat that I hope that by harmonising the legislative definition we can encourage all pension providers that do not already have provision for considering serious ill-health payments when the member has a life expectancy of 12 months or less to consider putting that in place or updating or extending their scheme rules. Yes, the Bill has a narrow scope, but it might act as a prompt and as encouragement to other pension providers.
The Bill is legally tight, consisting of just three clauses. Clause 1 amends the current definition of “terminally ill”, normally referred to as “end of life”, from six months to 12 months in all relevant legislation; clause 2 covers the territorial extent and commencement of the Bill; and clause 3 establishes the short title of the Act: the Pensions (Special Rules for End of Life) Act 2024.
Sir Greg Knight (East Yorkshire) (Con)
Is my hon. Friend entirely happy with the wording of clause 2(4)? Has he had an undertaking from the Minister that the Government will bring the Bill into force as soon as possible? I ask because I was lucky enough to take the through Parliament Parking (Code of Practice) Act 2019, which had a similar clause. Some five years later, we are still waiting for the Government to introduce the parking code of practice, which is outrageous. If my hon. Friend has not had an undertaking from the Minister, does he think he should obtain one?
Mr Robertson
I am grateful to my right hon. Friend for reminding me that the Bill’s introduction depends on the Minister taking action. It was not this Minister who spoke on Second Reading but one of his colleagues, and we did receive an assurance that the legislation would be in place as soon as possible. As I understand it, we need to make sure that the situation in Northern Ireland is brought together with our legislation, because it is a devolved matter. I will come on to that in a minute. The Minister on Second Reading assured me that it would be brought in as soon as possible; I do not know exactly when that will be, but I am sure that the Minister will confirm it today. If he does not confirm it as strongly as we would like, maybe we can intervene on him, but I am satisfied that, given the Government’s support for the Bill, they will seek to introduce it as soon as all the ducks are in a row—that is how I can best describe it. But my right hon. Friend’s point is very important.
The Bill’s territorial extent is slightly complicated, given that aspects of the Pension Protection Fund are covered by devolved legislation in Northern Ireland, as seen in clause 1(3) and (4) and clause 2(2). However, officials are working with the devolved legislature on that matter, and as I understand it our colleagues in Northern Ireland are keen to see the alteration happen as soon as possible.
As explained, the Bill focuses on only the Pension Protection Fund and the financial assistance scheme. Thus, clause 1 and its subsequent subsections seek to amend relevant legislation and provisions connected to the Pension Protection Fund and the financial assistance scheme. Specifically, subsections (1) and (2) amend the definition of terminal illness by changing the period of life expectancy from the current six months to 12 months, in respect of Pension Protection Fund compensation.
James Gray (North Wiltshire) (Con)
I warmly congratulate my hon. Friend on this extremely worthwhile Bill. It really is a superb effort and I am grateful to him for it. I am puzzled, however; perhaps I should have asked this question on Second Reading. Who defines whether the person is terminally ill within 12 months? After all, many diagnoses of terminal illness may well last longer than 12 months, and some people may have no such diagnosis. Where does the six or 12 month-period come from? Who decides it, and what is the certification that that is the case?
Mr Robertson
I am grateful to my hon. Friend for raising that point. As I understand it, it is a classification or assessment made by the medical person in charge of a person’s very sad case. One of my motivations for introducing the Bill is that, given advances in medical science, it can be difficult to predict how long somebody is likely to live. Six months is a very short period of time and, through appropriate care, somebody can perhaps live longer than that. I seek to extend it to 12 months, which is somewhat more all-encompassing, but it is still a prediction. It is still drawing a line somewhere.
One of the points raised by my hon. Friend the Member for Shipley (Sir Philip Davies) on Second Reading was that perhaps we should assess the person’s capabilities and physical and mental state rather than try to predict how long they will live. That was a worthwhile intervention from him, but I do not think we are at that stage yet. What we are saying now is to extend the six-month period to 12 months, because that would make it a little more predictable—if that is the right word. It is a difficult area and my hon. Friend the Member for North Wiltshire has picked up on a good point.
Clause 1(1) amends schedule 7 to the Pensions Act 2004 and subsection (2) amends schedule 5 to the Pensions Act 2008, with both substituting six months for 12 months.
Christine Jardine (Edinburgh West) (LD)
I, too, offer the hon. Gentleman my congratulations. The Bill is extremely worth while. We have talked about the difficulties of diagnosis and the fact that 12 months is a more reasonable period, but does he anticipate that extending the period from six to 12 months will bring a lot more conditions and illnesses into the scope of the legislation?
Mr Robertson
I am grateful for that intervention; it is a good question. Not being a medical person, I assume it would bring some more illnesses within the definition, but it will not affect a huge number of people. As I say, the Bill is fairly narrow in scope. What I hope it will do is prompt the providers of other pension schemes to consider adopting the 12-month period rather than six months. Yes, I am sure it will bring in more people with various illnesses. Not being a medic, I would hesitate to go any further, but that is a good point.
Clause 1(3) and (4) make similar provisions to subsections (1) and (2) but for Northern Ireland, amending the definition of terminal illness in respect of Pension Protection Fund compensation payments. Subsection (3) amends schedule 6 to the Pensions (Northern Ireland) Order 2005 and subsection (4) amends schedule 4 to the Pensions (No. 2) Act (Northern Ireland) 2008. Again, both substitute six months for 12 months.
I have a few more provisions to read through yet; I apologise to the Committee. Subsection (5) amends the definition of terminal illness and the period of life expectancy in relation to progressive disease in regulations 2(9) and 17(3D) of the Financial Assistance Scheme Regulations 2005. Again, both substitute six months for 12 months.
Christina Rees (Neath) (Lab/Co-op)
I congratulate the hon. Member on his commendable Bill and thank him for inviting me to be part of his Committee today. Please forgive me, for I should know this, but I cannot find it in the notes: which medical professional would be responsible for assessing the life expectancy term? Would that be confined to one or two medical professionals?
Mr Robertson
I am grateful to the hon. Lady for raising that point. My understanding is that it is one medical professional. I cannot give her a specific answer, but I understand that it is the person who is in charge of that case for that particular person. I do not know exactly how senior they are. I understand that it is not subject to second opinions or anything like that.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I thank my hon. Friend for allowing me to intervene at this point. I was responsible as Secretary of State for doing quite a lot of this realignment. In essence, the NHS treats and issues certificates on the basis—which brings in other elements—that the end of life is, in its view, 12 months, so it will be a doctor, nurse or similar who does that. This is a simple alignment with how the NHS defines terminal illness in practice.
Mr Robertson
I am grateful to my right hon. Friend for providing more information than I have to hand. As far as I can see, that is the right way to go about this. Twelve months probably gives a little more reassurance to the person making that assessment.
Transitional provisions are guidelines that outline how to transition from the old regulations to the new ones, and saving provisions are designed to protect certain rights, privileges, obligations or legal proceedings that are already in place before the new regulations or orders come into effect. That means that subsections (7) and (8) of clause 2 simply allow for the creation of regulations or orders that include special clauses to manage the change from old to new regulations, protecting against any unintended consequences that might arise during the transition.
To return to the Bill—we are getting there—subsection (9) of clause 2 provides that regulations under subsection (4), relating to the Secretary of State for Work and Pensions and with the territorial extent of England, Wales and Scotland, will be made by statutory instrument. That is a form of legislation, as everybody here is aware, that allows a provision of an Act of Parliament to be subsequently brought into force or altered without Parliament having to pass a new Act. Subsection (10) provides that an order made under subsection (5) of clause 2, relating to the Department for Communities in Northern Ireland and with the territorial extent of Northern Ireland, is exercisable by statutory rule—again, a form of legislation that allows for detailed regulations to be created without the need for a new Act of Parliament.
Finally, as I mentioned, clause 3 is simply the short title of the Act, which, if the Bill is passed, will be the Pensions (Special Rules for End of Life) Act 2024. I do hope that it will be passed in this Parliament and that the extended definition of terminal illness—life expectancy of 12 months—will come into force, providing a little bit of ease to individuals who have received the most devastating news. I thank the Committee for its indulgence.
Dr Coffey
It is a pleasure to speak in Committee about the Bill, which I strongly support. As I have already pointed out, some of the realignment involved is intended to ensure some simplicity for people at one of the most difficult times of their lives, so that they do not have to go around getting different aspects of treatment or negotiating. We made that good change a few years ago. There have been various bits of legislation along the way—some welfare and pensions legislation is done through regulations and some through primary legislation, so it can seem cumbersome. But this is the right moment to make sure that this part of the support available to people in their difficult last moments is fully aligned.
I would like to say something to the Minister. I am conscious that getting even regulations through Parliament takes time and more effort from officials. I would like him either to confirm that the regulations have already been drafted in anticipation of Royal Assent, so that they can be laid before Parliament straight away, or to say that he will consider simply changing the element in question. I have been encouraging others leading private Members’ Bills through Parliament to change the commencement dates so that they come into force three months after Royal Assent.
I am conscious that the Pensions Regulator and similar organisations might have to address some issues, but they should know that the Bill has the full support of this House—of both Houses, I anticipate. We should not wait for further legislation to be commenced, given that people at the end of their lives would welcome this matter being put to bed straight away.
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairship, Dame Siobhain. I thank my hon. Friend the Member for Tewkesbury for bringing forward this legislation; I should also thank my right hon. Friend the Member for Suffolk Coastal, the former Secretary of State for Work and Pensions, for paving the way.
This may seem a small and discrete piece of legislation, but it is very important. As my hon. Friend the Member for Tewkesbury explained, the Bill extends the definition of terminal illness for compensation payments made under both the Pension Protection Fund and the Financial Assistance Scheme. Members will be able to claim their compensation on the grounds of terminal illness if a medical professional confirms that they have less than 12 months to live, rather than the current six months. That will enable eligible members to receive the vital support of payments at an earlier point in their illness. The change restores the original policy intent of alignment between the social security special rules provisions and both the PPF and FAS. It will also bring those two schemes into line with the tax definition of “serious ill health”, which allows private pension schemes to make payments where the member has less than 12 months to live.
I will try to cover some of the issues raised today and on Second Reading. There was a particular concern on Second Reading as to whether people whose schemes were not in the PPF or FAS would have a similar opportunity. Although I cannot provide definitive numbers—I do not believe they actually exist—for serious ill health payments, one of the leading independent trustee firms, Dalriada, has confirmed that:
“Trustees may only make such payments in accordance with the provisions of their scheme’s trust deed and rules. In practice, most scheme rules do allow for such payments.”
Officials have also contacted the Association of Pension Lawyers, which collectively acts for many schemes of all sizes. It has confirmed that, in the experience of its members, most occupational pension schemes will have an option of a serious ill health lump sum payable on a discretionary basis.
We have also heard questions today, and as we did on Second Reading, about who would be making the decisions on terminal illness, and the range of those illnesses. I can confirm that those decisions will be made by healthcare professionals, such as clinicians and medical practitioners, who have had direct oversight of the individual concerned. Although there is no definitive list of what constitutes a terminal illness, I imagine that the provisions would certainly include illnesses such as advanced cancer, dementia, motor neurone disease, and other neurological diseases, such as Parkinson’s. However, in my view the definition does not exclude any particular range of conditions, because one’s lived experience of a condition is not determined by the label that we hang around our necks. I find that I have been saying that for 48 years of my life, frankly. We do not determine someone’s lived experience just by the name of their particular condition.
My hon. Friend the Minister for Employment was also asked on Second Reading whether fixed time limits were the right way to go, and whether there would be adequate training for clinicians and communication to make people aware of the changes. The Department engaged widely on time limits ahead of the Social Security (Special Rules for End of Life) Act 2022, and chose the 12-month approach specifically to align with the NHS definition of “end of life”, and to link up with existing initiatives for clinicians that encourage the identification of people in their final year of life. This Bill simply aligns the definition used for the PPF and the FAS with that used more widely by the DWP and the NHS.
As part of the preparations made ahead of the 2022 Act, the Department engaged extensively with senior clinicians from key medical organisations and hospices, as well as representatives from multiple charities and networks of welfare advisers. DWP bulletins were sent out by the British Medical Association, the Royal College of General Practitioners, the Royal College of Physicians, the Association for Palliative Medicine, Hospice UK and NHS England networks across the country. The Department also initiated plans to create a learning module for clinicians to raise awareness among the clinical community of the financial support available for those who are nearing the end of life. That learning module went live in February.
Assurances were also sought that the definition of a terminal illness would be consistent across the DWP. I can provide that assurance today. As the Minister for Employment said on Second Reading, this Bill builds on the previous legislation—which we have just heard about—which changed the special rules for social security benefits. The scope of that legislation limited the changes that we could make to social security benefits administered by the DWP, as they involved the fast-tracking of benefit claims. This final change brings payments made by the PPF and FAS into alignment with those changes.
As I mentioned a little earlier, this Bill aligns the PPF and FAS definition with the tax rules for serious ill health. That will ensure that the payments made by the PPF do not trigger unauthorised payment tax charges on either the PPF or the individual to whom the payments are made. If the definition was to be amended beyond 12 months, as some have suggested, members could have faced significant tax charges on their payments, which I am sure no one wishes to see happen.
I have noted the comments today from my right hon. Friends the Members for East Yorkshire and for Suffolk Coastal about the commencement of the provisions in the Bill. I can confirm today that the intention is for that to happen as soon as practicable after Royal Assent. I see no reason for delay or obfuscation. We have all agreed today that this is a vital piece of legislation that will benefit many of the most vulnerable in our society at the time they need help most, so I have no intention at all of delaying it.
Sir Greg Knight
I am most grateful to the Minister for what he has just said. Can he confirm that that is an undertaking that he has given, and that it is unequivocal?
Paul Maynard
Given that the phrase I used was “as soon as practicable”, I can give that solemn undertaking. I would hate it if either scheme had some kink in its processes that might cause delay. I will do everything in my power to ensure that this is done as soon as possible. I meet the PPF regularly, and this will be on the agenda for the next meeting to make sure all its ducks are in a row, like all the Department’s are.
To conclude—
James Gray
Before the Minister does that, does he agree that one person who would have been very pleased by this legislation is that great champion of pensions and of pensioners, Frank Field, who died yesterday? He was a great man and a great gentleman.
Paul Maynard
I am grateful for that intervention, because I should have thought to start my speech by paying tribute to Frank Field and the immense amount of work he did in the Department for Work and Pensions. He was a thoughtful and humane man, respected on both sides of the House, and I am more than happy to join in paying tribute to him.
Being told that one is nearing the ends of one’s life can be a devastating and frightening experience. It is crucial that those reaching the final stages of their life do not have to worry as much about their finances and can focus on spending their time with the people who matter to them. The Bill takes us one step further toward ensuring that that can happen, building on the changes made back in 2022. I am grateful to my hon. Friend the Member for Tewkesbury for promoting the Bill, and I commend it to the Committee.
Mr Robertson
I thank the Minister for that positive response. We look forward to the measure being introduced as soon as practicable. I also thank all members of the Committee for their attendance and contributions today, as well as the team who helped to put the Bill together.
It was rather remiss of me to forget to pay tribute to Frank Field, and I am grateful to my hon. Friend the Member for North Wiltshire for reminding us. A long time ago, before I was elected to this House, I had the pleasure of working with Frank on a charity project I was involved with, just across the river at Lambeth Palace. We were raising money to create a hostel for homeless women in London at Marylebone complex, just off the Marylebone Road, and Frank was very active member of the fundraising committee. There was no benefit to him; he did it because he felt it was the right thing to do. I pay sincere tribute to Frank.
That seems a good point to finish my speech by restating my thanks to everyone who helped with the Bill.
The Chair
I am sure we are all united in sending our condolences to the family and friends of Frank Field, a man who showed us all how to be a Member of Parliament.
Hon. Members
Hear, hear.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 and 3 ordered to stand part of the Bill.
Bill to be reported, without amendment.