Pension Schemes Bill

Baroness O'Cathain Excerpts

Thursday 5th February 2015 Lords Chamber

[Lord Lipsey (Lab)]

My Lords, I should first declare that I am the unremunerated president of the Society of Later Life Advisers, which provides independent advice to older people. I am sorry that I have not taken part in the proceedings on this Bill so far, knowing, as I have, that it is so safe in the eloquent hands of my noble friend Lady Hollis, but I want to intervene in this case to draw to the House’s attention one particular, very dramatic effect of what is happening.

Let us imagine two people, A and B. They both have £40,000 in their pension pot, and they both retire on the same day. One buys an annuity, the other takes the money as a lump sum. A few weeks later, by coincidence, they both have to go into a care home. As they go into the care home, they both say, “I don’t want to sell my home which I am leaving to go into this care home. I might get out one day. Please don’t make me sell”. To person A, the following applies: the council, under the Government’s deferred payment scheme, has to give them a loan to cover the cost of their care, which is repaid when they die, so they do not have to sell their home. However, person B, because they have £40,000 in their pocket, exceeds the £23,250 limit—the arbitrary limit which I have drawn attention to on a number of occasions—on non-housing assets that they are allowed to have to take advantage of the deferred payment scheme, so they instantly have to go off to sell their home.

The Government promised that nobody would have to sell their home to pay for care. That transposed gradually into a universal guarantee and was then narrowed down still further so that nearly half the people eligible for it were disqualified—but now we find arbitrariness added to arbitrariness because so much will depend on whether you chose to take a lump sum or an annuity. This is beyond rectifying now, alas, as the secondary legislation has gone through, but one thing we can do is to make sure that before somebody decides to take a lump sum, they know that they will in future not be eligible for the deferred payment scheme. That requires authoritative advice. Is that really too much to ask?

[Baroness O'Cathain (Con)]

My Lords, surely there must have been discussions since the Bill had its First Reading between those in the pension business and those who act as financial advisers to people. Frankly, most people do not understand anything about pensions, and I think we have to accept that. Maybe people here do, but most people do not. You go to a financial adviser, who explains. I say, “Oh, take away all that small print. I can’t be bothered to read it”. That is the first thing, and that is a sin that I have committed several times.

The second is that you do not understand the way it is written. The noble Baroness, Lady Hollis, made a point about plain English. I think that should be made on every single Bill that we pass in this House, because it is so convoluted and it is just hopeless. People deliberately make things complicated so that they can hide behind them, but that is not the Government’s fault; it is ours for not insisting that we have much easier ways of looking at these things and for not making people like me, instead of throwing it into the waste-paper basket, take some responsibility for my decision, which I have not made on the basis of proper information.