Pensions Bill

Baroness Turner of Camden Excerpts

Monday 24th February 2014 Lords Chamber

[Baroness Turner of Camden (Lab)]

My Lords, in this section of the Bill employers are given a new power to change the provisions of a scheme in order to cover the NI costs to which they will be subjected. They may apparently do so without having to seek the agreement of staff or their unions. As my noble friend has pointed out, this is an overriding power to which a number of us objected at earlier stages when discussing the Bill. Schedule 11 sets out the provisions in some detail.

At Second Reading I referred to the development of what we now call defined benefit schemes, and what used to be called final salary schemes, as a result of which generations of pensioners have enjoyed excellent retirement provision. There was a move some years ago to change such schemes to money purchase schemes or schemes with less generous protection. Where the workforce was strong enough, probably with active union involvement, such schemes have been maintained. There is now, as a result of this Bill, concern among those who have not yet reached retirement age that these schemes will not continue and that employers will utilise the provisions in Schedule 11 to undermine or change them. Hence my amendment, which stipulates that an employer may not change these benefits without the agreement of the current scheme members, which under my amendment could be ascertained through a poll. I hope that the Government will agree that it is reasonable for the members of the scheme to have the final say. If an employer wants to change the existing arrangements, it must be by negotiation with the staff and their representatives and by agreement. Again, I hope the Government will agree that that is reasonable. If they do not, I would like to oppose the whole clause and the schedule.

I want to make another point about so-called protected persons. This was raised during earlier discussions and referred to again by my noble friend today. The Government have agreed in principle that individuals who were members of schemes when their employing companies were being denationalised would retain their pension provision. I believe the assurance is that where this protection has been agreed by statute, it will continue. I welcome that, and would like to see an endorsement of the point by the Minister. There are others who believe that they are covered not by statute but because their own private scheme gives them cover. Because of a change of ownership that might happen, they are concerned about their position in the future. Their position is not protected by statute, only by their own scheme. These people have concerns about what might happen to their DB scheme. My amendment would provide some cover because of the necessity to get the agreement of scheme members to any changes to benefit.

I wait with interest to hear what the Minister has to say to this, and in particular what he will say about his own Amendment 14, which looks like a tentative step in our direction. I hope that it is more than a tentative step and that he is undertaking to do something of the kind that we have been campaigning for and would like to see in the Bill before it leaves this House. I support the amendments already spoken to.

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Moved by

[Baroness Turner of Camden]

16: Clause 27, page 13, line 29, leave out from “to” to “and” in line 30 and insert “the type of work undertaken and the degree to which this may impact on health and life expectancy”

[Baroness Turner of Camden]

My Lords, this is a short amendment dealing with the section of the Bill that allows for the periodic review of rules about pensionable age. When I read it, I was concerned that there was nothing at all about the type of work people undertook before they retired. At Second Reading, I said that there were many people who were quite happy to go on working past normal retirement age but it depends on the kind of job you do, whether you are well paid, whether your job has authority, whether you enjoy your job and so on. However, there are many people who do work that is very necessary if the rest of us are to lead reasonably comfortable lives, such as people who work in construction and other industries where there is strenuous activity and, sometimes, danger. It is not a good idea to have elderly people in this kind of work.

It is too late in the day to make a long statement about this, but if there is to be a review of retirement ages it must be understood that people do very different types of work and it is not a good idea to think that one size fits all. I hope the Government will realise that in a periodic review of retirement ages it is sensible also to take on board the kind of work being looked at and the sort of people who are expected to do it. If they do not, it will not be very popular and may lead to problems in the future. You do not want future problems in a pensions Bill, so I suggest the Government think very seriously about this. I quite like Amendment 17, which is also concerned with a review of how retirement age is judged and brings a range of representatives of parties, including trade unions, into consultation, which is also very sensible. In the mean time, I beg to move.

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[Lord Freud]

My Lords, as your Lordships know, the purpose of the review of state pension age is to inform the Government. The reports from the Government Actuary and the independently led review, which will feed into the review, should collect and analyse the latest data, and give the Government of the day the information they need to make what will always be a difficult and contentious decision.

We are all keen that the Secretary of State receives a report that is impartial. Because we are requiring that all reports compiled as part of the review are published and all future changes to state pension age continue to go through primary legislation, any proposal based on a report that is not impartial, credible and comprehensive will quickly fall apart when scrutinised by stakeholders and both Houses of Parliament.

Turning first to the substance of the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, if one thing is apparent it is that there is no clear consensus on who should sit on the review, what they should look at, or how they should collect the necessary evidence. We have been clear in Grand Committee and in the other place that this Government’s vision of the review is one similar to the independent review of public service pensions. That review was run by the noble Lord, Lord Hutton, a member of the opposition Benches and an expert in his field. It was transparent, comprehensive, independent and established a consensus.

Noble Lords will also be aware that the Pensions Commission, set up by the previous Government, had three commissioners from the areas of business, trade unionism and academia: not a single politician or Cross-Bencher. That commission gained support through comprehensive and open debate about the issues and trade-offs, rather than being based on the inherent characteristics of the commissioners’ backgrounds.

In short, the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, would preclude these two successful models. It would result in a body of at least six individuals from stakeholder groups, the other place and this House. It would not necessarily have the expertise to review the relevant data and would effectively create a mini parliamentary process before the parliamentary process proper. We do not think that is the right way to run a review designed to inform the Government. In the Bill as currently drafted there is nothing to prevent a future Government running the review in whatever way they think best. That is a key point underpinning our approach to the review—getting future Governments to take active ownership of and responsibility for all aspects of the review, instead of just going through the motions.

Turning to the factors to be considered as part of any review, I must note that in response to the recommendation made by the noble Baronesses, Lady Turner and Lady Sherlock, we do not have the data regarding the relationship between specific occupations or types of work and life expectancy and healthy life expectancy. Beginning to collect such data would be both burdensome and, I imagine, for some professions simply impossible. More generally, we do not think it is necessary to specify any factors to be considered in legislation. We have already consulted stakeholders on what factors they think are important, and stated the factors we expect to be considered in the White Paper. The Opposition are worried that by not specifying the factors in legislation, future reviews simply will not consider important variables. However, what kind of support would such a review generate?

We want to encourage all interested parties to feed in their thoughts and contributions to better involve them. Specifying factors in the Bill could send out the message that we have already thought of everything important, and that future Governments do not need to consider additional factors as they are not set out in primary legislation. Such an approach could lead to a tick-box mentality, with Governments simply going through the motions instead of taking a proper, considered approach to each review. My point is illustrated by the fact that another factor has been added to the Opposition’s amendment since its predecessor was tabled only a month or so ago. Other noble Lords have also previously suggested additional factors, including life expectancy of the lowest income decile, prevalence of smoking and quality of diet. This demonstrates that the determination of relevant factors should take place after a thorough and extensive consideration and on an iterative basis for each review.

I turn now to the review’s remit. We believe that the Government should maintain control of this to keep it focused on the task at hand. There is nothing in the Bill to prevent the Secretary of State of the day updating the remit of the review, and we—or, more importantly, stakeholders—would fully expect him or her to do just this if new and compelling factors were identified during the course of the review.

The amendment of the noble Baroness, Lady Sherlock, also requires evidence to be gathered in public sessions. Although there is nothing in the Bill to prevent some evidence being taken orally—rather as Select Committees do—noble Lords will be aware that the nature of the analysis around state pension age, such as the myriad tables, charts and graphs, does not lend itself well to public sessions. Underpinning our approach is the idea that each Government will fully own and be responsible for the review. Setting out membership and factors to be considered restricts rather than increases that responsibility. It would instead limit the scope of reviews and reduce engagement by stakeholders. I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank the Minister for his response. It does not surprise me, but, on the other hand, I still think that the type of work that people do is very important. There are, of course, already industries in this country in which there are different ages of retirement for different types of work. It is not unusual for that to happen; indeed, it is quite a common practice, if an industry is particularly stressful or difficult, for there to be a lower retirement age for that kind of work. It is not an unusual state of affairs but one that is highly regarded where it applies—and people accept it. They think, “Oh well, that sort of work is very tough, but at least you go a bit early for it. You don’t have to stay and work there—after a certain time you can go”.

My husband, who was a pilot in the war, tried to stay in the Air Force because they were recruiting people to fly civil aircraft when the war ended. He tried to get into civil aircraft because he was a pilot, with decorations, but he was disappointed to find that he could not do so. He wanted to get into the civil air force because they had an early retirement age; he thought that he could retire at 50 and start becoming a full-time artist, which is what he had always wanted to do. But he did not manage to do that. I give that as an example, because the age of retirement was different than for general people. So it is not an unusual situation.

I still think that it is quite sensible to have a provision under which it is possible for a review to take seriously into account the type of work that is involved. However, I note what the Minister has said this evening and I shall study it with interest. In the mean time, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.