Pension Schemes Bill [Lords]

Wendy Chamberlain Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

First, I express my thanks to Members of the other place for introducing the Bill and for their work in bringing it to its current form. Clearly, much expertise and scrutiny have been brought to bear.

Secondly, I want to acknowledge that life expectancy is increasing and that that is good news. It also brings challenges and that is a good problem to have. Older people may now need a pension income that will last for 20, 30 or even 40 years and we should welcome that. As I said in the debate last week on the Social Security (Up-rating of Benefits) Bill, the triple-lock guarantee for pensions has never been more important. It is clear that many working-age people, and especially younger people, are not saving, and are simply unable to save enough, for their retirement. Final salary pension schemes, such as defined-benefit schemes, are increasingly closing to new entrants. This will mean that the state pension will become an increasingly important source of retirement income in the future. That makes this Bill and its consideration of how best to manage workplace pension schemes even more vital. As a result of the work in the other place, there is much to welcome.

I have had a number of jobs over my time in employment. I cannot beat 11 in five years but, at the last count, I am currently a member of four different pension schemes—both private and public sector and both defined-benefit and defined-contribution schemes. It is clear that, as work changes and more people move from employer to employer, such circumstances are more likely, and I welcome the Bill’s acknowledgment of this increasing reality for many.

I will restrict my remarks to a small number of areas. Other Members have outlined the details of parts 1 and 2 and the proposal to introduce collective defined-contribution schemes and collective money purchase schemes to allow savers to take advantage of market highs and avoid the lows. It makes sense to offer a more balanced alternative to having all the risk lying with either the sponsoring employer, as in defined-benefit schemes, or with the employee, as in defined-contribution schemes. The cross-party employer and employee support outlined in the Government’s consultation reflects that and, having outlined the importance of ensuring inter-generational fairness last week, I highlight the Lords amendment to clause 27, which would provide that, whenever the pensions regulator issued a notice requiring a scheme to submit a supervisory return, it must include a requirement that the trustees assess the extent to which the scheme is operating in a manner that is fair to all its members. I seek a response from the Minister on that amendment and on the steps that the Government are taking to ensure that such fairness is there from the outset of any CDC scheme.

On part 4, like many, I welcome the creation of dashboards that will allow people not only to see their current pension provisions all in one place but even find pensions they potentially did not know that they had. That is currently estimated to be one in five people. The burden of responsibility for risk-taking lies increasingly with the individual. They have more flexibility, but they need to have as much information as possible made available to them so they can make the best possible decisions and be protected from the scams that many Members have mentioned.

The recommendation for dashboards dates back to 2016, and I am disappointed that it has taken until now to see concrete measures. Further details on timescales for dashboards would be appreciated. In addition, I am interested in hearing from the Minister about the DWP proposals to allow a pension to follow an individual from job to job. Given the increasing responsibility of individuals, that is one way to ensure that people understand their entitlements, save accordingly and, potentially, reduce their dependence on the state pension in future.

On part 5, I want to highlight, like many, clause 123 and the amendment accepted in the other place relating to the treatment of open and closed defined-benefit schemes. I understand that the Pensions Regulator is concerned that the failure and subsequent cost to fund DB schemes is becoming a risk, but a great many DB schemes are still open. For them, being forced to de-risk would mean that they would not be able to continue to afford paying out as high a pension to their members.

In other words, DB schemes would be forced to make less risky investments, such as on Government bonds, which means that they would create less of a return on their investments, but still be required to pay out the same amount. Given that Government bonds and other low-risk investments will have very low rates for the longer term, as a result of covid, the risks to such DB open schemes’ viability becomes even more stark.

Yesterday, like the hon. Member for Birmingham, Selly Oak (Steve McCabe), I met executives of the railways pension scheme. They explained that closed schemes have a fixed end point in sight. They need readily available assets to pay pensions, and they invest in lower risk assets by default. Open-to-new-member schemes are more balanced, with new members replacing older leavers. Such schemes’ needs and objectives are fundamentally different, and they do not need to sell assets. Primary legislation is needed to recognise the different characteristics, and I hope that the Minister will indicate whether that will be supported in Committee.

Finally, the Liberal Democrats welcome clause 124—it is a welcome step—and the Minister’s comments on asset managers earlier. Beyond covid, the climate emergency remains the biggest future challenge to the UK. As I said at the outset, there is much to welcome in the Bill, but I echo the comments of the SNP spokesperson, the hon. Member for Airdrie and Shotts (Neil Gray), that it does not address previous pension injustices, including the persistence of a gender pension gap and the situation experienced by previous members of the plumbers’ pension scheme—like the hon. Member for Gordon (Richard Thomson), I am a member of the APPG and have affected constituents. I hope that those situations will be looked at further in Committee.

Social Security (Up-rating of Benefits) Bill

Wendy Chamberlain Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

The Secretary of State and other Members have outlined that state pensions rise each year under the triple lock mechanism, which was introduced by the coalition Government and ensures an increase of whichever is the highest of earnings growth, price inflation or 2.5%. As there is expected to be no average growth in earnings between May and July 2019 and May and July 2020, due to the pandemic, the Government have brought forward this welcome Bill to allow a rise to take place. It also allows for an increase in pension credits. However, the Bill does not state a specific rise in the pension; it simply allows the Government to raise it.

The Liberal Democrats welcome provisions in the Bill that mean all retirees— especially the very poorest, who are claiming pension credits—will see a rise in their benefits. The Government have said that they intend to ensure that the triple lock on the state pension is maintained, but as I said, there is no mention of a specific level of increase in the Bill. It is slightly worrying that the Bill gives the Government the power to raise the state pension but fails to say by how much. If the Government were to raise the state pension by less than 2.5%, they would not be maintaining the triple lock as they have pledged to do. I hope the Minister can explain why there is no such provision in the Bill and commit the Government to at least a 2.5% increase, in line with the triple lock.

It is fair to say that concerns may be expressed about the Bill in relation to intergenerational fairness. Things have been very difficult for young people, whether as a result of issues with exams, what they are now experiencing at university or for those looking to enter the job market. Pensions expert Ian Browne has stated:

“There is a danger that guaranteeing a 2.5 per cent boost to the state pension is perceived to be intergenerationally unfair, given it will provide a considerable boost to pensioners’ income when many others are taking a cut in their pay, working less hours or have lost their jobs altogether.”

The Liberal Democrats support the triple lock on pensions, and I hope the Government do not intend to abandon it. I acknowledge the concerns but would argue that guaranteeing a strong state pension is becoming increasingly critical. It is clear that many working-age people—especially younger people—are not, and are simply unable to be, saving enough for their retirement, and final salary pension schemes are largely a thing of the past. That means that the state pension will become an increasingly important source of retirement income. We tend to think of pensions as supporting older people, but if we were to abandon the triple lock and give smaller and smaller increases over the next few decades, that would erode the retirement income of those who are only just beginning to enter the workplace. I hope the Minister agrees that maintaining the triple lock is imperative for ensuring that the next generation of retirees enjoy a comfortable income.

Another reason why the triple lock is welcome is the position of many older women. Many women rely more on the state pension than men do for their retirement income, as women have traditionally found it harder to build up a private pension due to taking a career break to raise children or to care for relatives. Raising the state pension is therefore critical for many women who rely on it and pension credit for the bulk of their income.

As the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), said, although it is not addressed in the Bill, there is a risk that the Government will have to scrap the triple lock next year due to an artificial rise in wages. In normal times, the state pension could be expected to increase by about 3% to 4%, and by a minimum of 2.5%, as per the triple lock rules. Given the disruption caused by the pandemic this year, it is highly unlikely that this increase will be far higher, for reasons outlined by other Members. People have lost their jobs in lockdown and been furloughed. As the lockdown lifts, furlough ends, and as the economy recovers, average wage growth will jump significantly. That will show up in the statistics as a massive wage rise, which would mean that the state pension shoots up too. I hope the Minister will give some indication of the Department’s plan for this largely predictable situation.

In short, this Bill is largely uncontroversial and to be welcomed, but there are clearly issues ahead. Although it is clearly an expedited Bill that the Government are looking to pass quickly for the next year only, it remains the case that many will not benefit from the uprating being agreed today—for example, overseas pensioners whose pensions have previously been frozen. I note that the hon. Member for Glasgow South West (Chris Stephens) intends to raise those issues in Committee. The pandemic has had a devastating impact on the elderly and most vulnerable in our society. Providing a degree of financial security is vital, but our approach to pensions must also be considered in respect of future generations and addressing historical inequalities.

Kickstart Scheme

Wendy Chamberlain Excerpts

Thursday 3rd September 2020 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

The award-winning Tayport Distillery in my constituency is very keen to take part in the kickstart scheme, but it is much harder for small businesses to apply, as they cannot do so directly if they are not taking on more than 30 people, and, frankly, intermediary bodies’ information seems to be, at best, in development. Given the delays already experienced—we still have a couple of months until the first participants start the scheme—will the Secretary of State make it easier for small businesses, which are the lifeblood of many economies, by allowing them to apply directly?

[Dr Coffey]

The scheme is being set up at pace, so I do not agree with the hon. Lady’s assertions. On small businesses, it is far easier than it has ever been for them to participate in this sort of job creation scheme. I am pleased that she already has businesses showing interest, and I encourage her to direct them to gov.uk/kickstart from where they will be able to get the links to their local employment manager.

Statutory Sick Pay and Protection for Workers

Wendy Chamberlain Excerpts

Wednesday 18th March 2020 Commons Chamber

[Richard Fuller (North East Bedfordshire) (Con)]

I am grateful to you for allowing me to speak, Madam Deputy Speaker, and I apologise to the hon. Member for Wirral West (Margaret Greenwood) that I was not in the Chamber for the first part of her speech. I wanted to listen and make a contribution, and I appreciate the opportunity to do so.

I thank the Opposition for holding this debate, which covers two of the things that are on most people’s minds: reducing the likelihood that I, anyone in my family or anyone I work with will get sick, and providing protection for me if that does happen; and trying to protect my job over the next few weeks and as we recover. The debate has raised a number of issues. I am not going to pick out any particular ones, but I want to make some observations.

The first is what a difference a week has made. It is seven days since the Budget, and these are very different circumstances. We should give credit for all the efforts made in this House and for the measures that the Government have taken to respond as quickly as they can on such a wide range of issues. None of us in this room has the power of the Almighty, and we should understand that we work within human frailties. I will come back to the frailties of the systems that we work within.

Secondly, I would like to add to some of the examples given by the hon. Member for Airdrie and Shotts (Neil Gray) about the public’s response. This week, I have met churches that are working on good neighbourhood schemes. I spoke today with a playwright in the village of Arlesey who is setting up a group to bring skills together in the community, to assist people. We are seeing the best of people, but as some Members have said, we are also seeing the worst of people. In a free society, we can see the best, but we can frequently see the worst. Harley Street doctors are reselling tests at a high price that will not be available to everyone. That is a disgraceful thing for anyone with a professional qualification to do. We have seen pictures of hoarders in shops, meaning that elderly and vulnerable constituents of mine—and, I am sure, of all Members—are not able to access the foodstuffs and other products they need. We have seen the reaction of the bosses of some of the largest companies.

[Wendy Chamberlain (North East Fife) (LD)]

On that point, I have been contacted by a constituent who has informed me that their employer is insisting that they cannot work from home because it is waiting for stronger guidance from the Government. Can the Government give clear guidance right now to my constituent’s employer and many others across the country that, if people can work from home, they must?

[Richard Fuller]

I appreciate the hon. Lady’s intervention. I am not speaking for the Government—I am sure the Minister will seek to address that—but I have to say that it sounds to me as though her constituent’s employer is just making an excuse, because the Government have been absolutely clear that it is the right thing to do socially for everyone in this country, if they have a concern, to be able to isolate themselves from others and to work from home. What more does that person need to understand what they should do? I hope they will get that message very clearly from the Front Bench.

On the point of leaders not doing the right thing, the experience of Virgin airlines has been raised. The owner or partial owner of Virgin airlines has suggested that employees should take eight weeks of unpaid leave, and I decided to look at how much that would cost. Eight weeks at the £94.25 rate of statutory sick pay would cost £754 per employee. There are 8,571 employees of Virgin airlines, so if all of them took eight weeks of unpaid leave, that would be a cost of £6.4 million. Sir Richard Branson’s net worth is $3.8 billion. If he is able to get 2% interest on that money for eight weeks, he will earn the equivalent of £9.9 million. So I say: Sir Richard Branson, give up the interest on your wealth for eight weeks, and pay your employees yourself their unpaid leave.

Big or small—a leader of a church in a small village or a leader of the large business—when it comes to looking at the protection of their workers, the time is now, and we will judge them all by their actions. It will be the same for the Government’s actions.

As I say, are we choosing the right policies? We have heard a lot about that today. I congratulate the Government on the staging of the announcements. There is so much pressure—all MPs are under pressure, with loads of questions: small or micro ones, and very large ones covering many issues—but I think the staging of announcements is a good approach, because we need this to bed in with people each day. If we put everything into an announcement on a single day, I would worry that, although we would feel we were communicating, we would find that it was not being received and understood as clearly as it should be.