Pensions Bill [HL]

Baroness Howe of Idlicote Excerpts

Wednesday 27th April 2011 Lords Chamber

[Lord Boswell of Aynho]

My Lords, I congratulate the noble Baroness, Lady Hollis of Heigham, on her ingenuity in inserting this into the delicate business of amendments at Third Reading, of which I have, with modesty, rather less experience than her. I also associate myself with the spirit of her intentions in this matter at least in two respects.

First, many of us across the House felt some dissatisfaction or sadness that we were not able to resolve some of the issues of rough justice connected with the bunching of women's pensions. While I appreciate that we cannot reopen that in this House now, that area might repay further consideration. I have seen some correspondence subsequent to our debates on Report which would have suggested, for example, that a minor adjustment in the entitlement for the male pension above the age of 65 might be a way to finance a smoother progression for women without a net cost to the Treasury. I hope that Ministers have not shut their minds to this area, although I appreciate that it is difficult and that there will always be losers as well as gainers. However, it would be inappropriate to go further into that.

Perhaps I would be on more confident and more positive ground in saying, secondly, that I share the noble Baroness's enthusiasm for the single state pension, which I believe would be a considerable social advance. It would help to make pensions and saving for them, including private pensions and NEST, worth while. That must be an objective for us all. It would also be an important advance in simplifying the system. We could not discuss this previously because of the timings of government proposals and I appreciate that pensions' evolution and development is an incremental business. However, I would like to share with the House some considerations which the Minister, even if he does not consent to a formal review—I know that those things are not easy for Ministers to do—may at least wish to ponder in moving through the consultation process on the state second pension and in looking at the interaction with NEST.

With due respect to the noble Baroness, I will not confine my remarks specifically to women's issues because some wider issues are also appropriate to consider. First, it is in the nature of pensions, particularly where they are guaranteed or organised by the state, to reflect long-term commitments. Any mid-term corrective action, even if benignly intended—and this is so—may therefore inevitably subvert arrangements which have already been made. I cite as an example that when we reduced the qualifying years to 30, with a view to trying to do something about women's pensions in the past, it had the converse disadvantage of nullifying the benefits of some individuals who had made contributions above that period in order to safeguard their entitlement, on the rules as they stood and in good faith.

At the same time, if we moved to a single state pension, I would find it personally important to retain an element of the contributory principle. Again, a post-Bill development, as it were, has been the issue of whether there should be some association either of administration or even of coverage between the tax and national insurance systems. Paying for something and getting something back is both morally and prudentially wise, although there is a huge amount of further work to do on that area. There are also potential differential impacts, as the noble Baroness has already touched on, from the change not just on women but for those with interrupted or overlapping working patterns. For example, there are people who have spent time abroad or who may have saved for a private second pension at different times. All that is complicated and requires a good deal of careful thinking through.

At some stage—the Minister can help us by giving some indication of this—we need therefore to take a dispassionate and careful look at all aspects of the proposed changes as they now come out. This should be designed to minimise any retrospective unfairness and to look prospectively to minimise any moral hazard, where people may feel that they lose when they have acted in good faith; but remembering at all times as we do that—and pursue the hard cases, which we must—that there is a grand prize to follow in simplicity and in providing a good platform for additional, personal private saving. That must be our overriding objective.

[Baroness Howe of Idlicote]

My Lords, I congratulate the noble Baroness on her amendment, which shows us that there are very few people who know as much about pensions as the noble Baroness, Lady Hollis; we recognise her ingenuity, certainly, but above all her knowledge and her belief in getting the right and honourable thing for all pensioners. I too am extremely sad that we were not able to convince this House to amend the proposals affecting those women turning 57 in March and April this year who were going to be required to work an extra two years, a group of women who had far fewer opportunities for flexible working than women have today. I believe that an attempt in the other place will be made to return a more equitable answer to this problem, and I hope that it would be well received in this House. I too support the idea of the single state pension. It would go quite a long way towards a more equitable set-up for both men and women into the future. I would like to end by very much hoping that we will see a better outcome in many respects than we had first thought when looking at this Bill.

[Lord McKenzie of Luton]

My Lords, my noble friend Lady Hollis has been an initiator of thinking about, and a passionate advocate of, a single state pension for a number of years. She is truly a leader of the pack on this issue. As she explained, the nature of her amendment this afternoon is simply that it makes a request that the Secretary of State be required to lay a report before Parliament before the end of June 2016, which of course is the start of the timeframe for the acceleration of equalisation of the state pension age under the Bill. That would assess the consequences of the Bill on any proposals for the introduction of such a pension. This does not seem an unreasonable request.

From time to time during our consideration of this Bill, there have been references to proposals for a single-tier pension and the Minister acknowledged this himself at Report, when he referred to being challenged by his noble friend Lord German to say more about the single-tier pension. The Minister duly obliged by referring to a Green Paper, which was due to be published a few days later.

The Green Paper effectively consults on two propositions. One is accelerating the existing reforms so that the state pension evolves into a two-tier flat-rate structure more quickly; and the second, as my noble friend advocates, is a single-tier flat-rate pension set above the level of the pension credit standard minimum guarantee. The Green Paper, incidentally, also consults on proposals for automatically uprating the state pension age, but we are not focusing on that this afternoon. The consultation is just under way and not due to be completed until 24 June 2011. Which option, if any, the current Government wish to pursue may not emerge for a little while, but like all noble Lords who have spoken I will be interested to hear today’s thinking. Indeed, we as a party need to consider the outcome of this consultation, but see the thrust of the benefit of a single-tier flat-rate pension. A number of considerations will doubtless be brought to bear, particularly the voice of the Treasury. I think that it was the noble Lord, Lord Boswell, who made the point that we need to reflect on these in terms of long-term issues—pensions are about long-term issues—and, I suggest, of the need to drive consensus where we can. The Minister also referred to the contributory principle, and that is very much the same position that my noble friend is in, which is why she prefers the single state pension to a universal pension that would not rely on such provision.