State Pension Age Equalisation

(Limited Text - Ministerial Extracts only)

Wednesday 2nd December 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing the debate. I recognise that the subject is hugely important and I commend all the contributors, who have spoken eloquently and passionately. It has caused a huge amount of correspondence for all of us as Members of Parliament. In the course of my comments over the next 10 or so minutes, I shall address as many of the points made by colleagues as possible.

The debate provides me with an opportunity to set out the Government’s position on state pension age equalisation, in particular regarding women born in the 1950s. The acceleration of state pension age equalisation and the increase to the age of 66 under the Pensions Act 2011 achieved gender equality in state pension provision, while also saving more than £30 billion for the state, thereby ensuring the affordability and sustainability of our reformed pensions system. It is important to recognise that we must have a pensions system that is affordable and sustainable.

It is also important to remember that gender equality was one of the main purposes of the state pension age changes.

[Barbara Keeley]

We have heard equality mentioned many times. The generation of 1950s-born women have not known equality in their lives, in pay or in pensions. Why should they carry the weight of the savings that the Minister has just lauded? Why should that group of women who have suffered so much inequality in their lives carry the weight?

[Mr Vara]

I hear what the hon. Lady says, but I think even she would agree that in the 21st century it is right that there should be equality for all people, particularly in Britain.

[Barbara Keeley]

Not at that cost.

--- Later in debate ---

[Mr Vara]

In terms of the cost, it is an issue of sustainability, and I hope she will recognise that £30 billion is a significant sum of money. I will come later to concessions that were made, the transitional arrangements referred to and so on.

[Several hon. Members]

rose—

[Mr Vara]

I see that two or three Members are rising to their feet. I shall give way to the hon. Member for Ross, Skye and Lochaber (Ian Blackford), but I have only seven or so minutes and I seek to address a number of points already raised. I therefore ask Members to be mindful of the fact that the more questions I take, the less I get to put on the record.

[Ian Blackford]

I will be brief. I am grateful to the Minister for giving way, but this is about fairness. It is about women having the time to make adjustments and the fact that the period for transitional arrangements is too short. Such changes have never taken place in such a short period in the past. That must be addressed and there must be fairness for women. That can only be done by lengthening the transition period.

[Mr Vara]

The hon. Gentleman speaks about fairness and transition arrangements, and I will come to that, but I repeat the point that there is a cost to all of this. I am trying to make this apolitical, but given that so much political comment has been made against the Government and the previous coalition Government that my party, the Conservative party, led, I gently remind all colleagues not to forget that between the Pensions Act 1995 and the Pensions Act 2011 there was the small matter of a 13-year Labour Government, which seems to have been conveniently forgotten in everything said about communication, concessions and so on.

[Barbara Keeley]

Will the Minister give way?

[Mr Vara]

I will also say that while this is an important subject, it is not something—[Interruption.]

[Geraint Davies (in the Chair)]

Order. Carry on, Minister.

[Mr Vara]

This was not mentioned in terms of redress in the Labour manifesto, either.

[Nick Thomas-Symonds]

I do not know how the 1997 to 2010 Labour Government can be responsible for the 2011 Act, or indeed the 1995 Act. First, the Minister talks about equality in the present, but we are talking about inequality that has taken place in the past and been suffered by this generation of women. Secondly, transitional arrangements are transitional by definition, so they do not necessarily affect long-term sustainability.

[Mr Vara]

The hon. Gentleman has said nothing that had not already been said, and I will refer to issues as I progress.

Equalisation was necessary to meet the UK’s obligations under EU law to eliminate gender inequalities in social security provision. The five-year gap in men’s and women’s state pension age dated back to the 1940s and is not fair in a world where women’s employment opportunities have opened up and provisions are made for carers. I hope that all colleagues on both sides of the House agree with that.

The resources made available allowed the new state pension reforms to take place in the form that we have introduced, benefiting those women who would have had poor outcomes under the current system largely as a result of lower average earnings and part-time working. About 650,000 women reaching state pension age in the first 10 years will receive an average of £8 a week more in 2014-15 earnings terms owing to the new state pension valuation of their national insurance record.

To encourage and enable those who want to work longer is a priority for the Government. That is the real solution to ensuring a comfortable and fulfilling later life. People having fuller working lives would not only help our pensions system to remain sustainable but could greatly benefit the economy. Research by the National Institute of Economic and Social Research has shown that adding just one year to people’s working lives would add 1% to GDP a year.

Recent polling indicates that many people want to work longer. A YouGov survey has shown that 74% of people in their 50s who have not retired would like to be in work between the ages of 60 and 65. To help older workers in the labour market, the Government have extended the right of flexible working to all employees. In the same YouGov poll, more women than men said that they would prefer to work flexibly or part-time before retiring. Of course, working longer also provides the opportunity to build up a bigger retirement income.

We know that some people cannot work. For some, that is because they have caring responsibilities; others will suffer from disability, making the continuation of work difficult. We must remember that women affected will be eligible for the same in-work, out-of-work or disability benefits as men of the same age.

For those who cannot work because they have caring responsibilities, carer’s allowance will be available. Those who get carer’s allowance are also awarded national insurance credits automatically.

[Barbara Keeley]

The Minister needs to understand that the question is not whether women born in the 1950s need more national insurance credits. Almost every WASPI campaigner I have met has 40 to 44 years of credits already. There is no question of their needing to pay any more national insurance.

[Mr Vara]

I do not think that the hon. Lady speaks for everyone. I am sorry that she derides the additional benefits that the Government have sought to introduce; I am sure that some women out there will appreciate the fact that, in 2011, credits were introduced to help grandparents and other adult family members who look after a child under 12 to help working parents. It is noteworthy that independent analysis by the Institute for Fiscal Studies has shown that the rise in women’s state pension age since 2010 has been accompanied by increases in employment rates for the women affected.

The reforms would leave more of those women, and their male counterparts, who really need the state pension better off than if we had retained the current arrangements. That is a better use of taxpayers’ money than spending on transitional arrangements, which will inevitably prolong gender inequality. I am minded to say that removing state pension age gender inequality is right.

When the first contributory state pension was established in 1926, men who reached 65 could expect to live for another 11.3 years. In 2014, however, a man who reached 65 could expect to live for another 21.5 years. Importantly, the Government listened to concerns expressed at the time of the 2011 Act and shortened the delay that anyone would experience in claiming their state pension, relative to the 1995 timetable, to 18 months. That concession, which came after the speech by the Secretary of State on Second Reading that has been referred to, benefited almost a quarter of a million women who would otherwise have experienced delays of up to two years. A similar number of men also benefited from a reduced increase. The concession was worth some £1.1 billion in total, and, as a result, 81% of women affected will experience a delay of 12 months or less.

It is argued by some that these women were not given adequate notice of state pension age equalisation. I do not accept that. Following the 2011 Act, the Department for Work and Pensions wrote to all those directly affected to inform them of the change to their state pension age, using the address details recorded by Her Majesty’s Revenue and Customs at the time.

I am conscious of time, I so will conclude. The decision to increase women’s state pension age is designed to remove the inequality between men and women. The cost of prolonging this inequality would be several billions of pounds. Parliament extensively debated the issue and listened to all arguments both for and against the acceleration of the timetable to remove the inequality. The achievement of this by 2018 was considered and approved by Parliament and there are no plans to make any policy changes.