Women’s State Pension Age: Ombudsman Report

Debate between Alistair Carmichael and Stephen Timms

Thursday 16th May 2024 Commons Chamber

[Sir Stephen Timms]

I would hope quite quickly, and I will explain why.

The payments involved would be adjusted within a range, based on the ombudsman’s severity of injustice scale. It would depend on two variables: first, the extent of the change to the individual’s state pension age—how much it increased by—and, secondly, the notice that the individual received. The less notice someone had of the change, and the bigger the change to their state pension age, the higher the payment they would receive. An arrangement like that would not be perfect, but it would be quite quick and relatively inexpensive to administer compared with a more bespoke system, because it would involve applying known data to a formula to work out the amount that was due. I ask the Minister whether he accepts that, in principle, a rules-based system would be the best way forward.

Beyond that, it was suggested to the Work and Pensions Committee that there should be some flexibility for individuals to make the case, after the standard payment has been calculated, that they experienced direct financial loss as a result of the maladministration, and that they should therefore be entitled to a higher level of compensation. Flexibility would be needed, because although the ombudsman did not see direct financial loss in the six sample complaints that it looked at, it did not exclude the possibility that there could be in other cases. For example, Angela Madden, the chair of the WASPI campaign, suggested to us that somebody whose divorce settlement was less than it would have been because it was based on the expectation that she would receive her state pension at the age of 60, might well be entitled to a larger amount because of that particular development.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The right hon. Gentleman makes a very important point. Looking at the experience of other compensation schemes—the one that comes to my mind is the Icelandic trawlermen compensation scheme—it is clear that the longer we leave these things, and the longer the passage of time, the more difficult it gets to resolve them. Does that not underline the need for speed here?

[Sir Stephen Timms]

I agree that we need to get on and resolve this issue after a very long period.

The ombudsman suggested a remedy based on level 4 of its severity of injustice scale, given the finding that individuals had experienced indirect financial loss. We on the Work and Pensions Committee did not seek to question that view, and I do not intend to do so this afternoon. Regardless of the level of remedy or the means by which remedy is delivered, it will need parliamentary time, financial resources, and the data and technical systems that are available only to the Department for Work and Pensions. Even if a Back Bencher brings forward a private Member’s Bill, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) has done, it cannot become law without Government support. It will need a money resolution that only the Government can bring forward, so it is not realistic to say that Parliament can resolve this issue; it must have the Government’s full-hearted involvement.

There will be different views on the findings of the ombudsman’s report. However, as the interim ombudsman told the Work and Pensions Committee last week, she is appointed by Parliament to carry out these investigations and is accountable to it through the Public Administration and Constitutional Affairs Committee. I will read out what Karl Banister from the ombudsman’s staff told the Work and Pensions committee last week. He said:

“We want everyone to comply with our recommendations, but it is implicit in the scheme that because we don’t have enforcement powers, it may be, sometimes, that an organisation thinks it doesn’t want to. Then the partnership is that Parliament, as our supervisor, will do something about that.”

That goes to the point made by the hon. Member for South West Bedfordshire (Andrew Selous) earlier. Mr Banister continued:

“I think what would damage the standing of the ombudsman is if Parliament declined to do that.”

It is important for all of us that we see this through. We have asked the ombudsman to undertake this role, and it has done the job that we asked it to do. We now need to play our part in ensuring that this matter is resolved. Time is not on our side, and the Government have been aware of this issue for a while.

Pension Schemes

Debate between Alistair Carmichael and Stephen Timms

Thursday 2nd May 2024 Commons Chamber

[Sir Stephen Timms (East Ham) (Lab)]

I welcome the debate, and congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing it at a time when a lot is happening in pensions policy. I will take advantage of its broad scope to comment on wider issues, as well as picking up on the points that he made. I agree with a great deal of what he said.

Auto-enrolment, which was devised by a Labour Government, legislated for under the coalition, and implemented under subsequent Conservative Governments, has been a huge success in increasing the number of employees saving for a pension, but a lot of challenges remain. Above all, the amounts that people are saving under auto-enrolment are not enough for an adequate retirement income, and if we do not increase pension saving soon, we will have a crisis of inadequate pension incomes before very long. The gender pension gap remains much too big. Pension saving among self-employed people, to whom auto-enrolment does not apply, has plummeted.

The Chancellor is rightly looking at how he can boost investment in the UK economy from pension funds, but UK pension funds, for understandable reasons, some of which the right hon. Member for Orkney and Shetland touched on, have largely withdrawn from investments in companies, as regulation has pushed them to reduce the risks that they face. We must not force those defined benefit funds that are still open and investing to close prematurely.

The right hon. Gentleman highlighted this afternoon, as he has previously—he mentioned his debate in Westminster Hall—that members of some defined benefit pension schemes, such as those of BP and Shell, and I think ExxonMobil, as the right hon. Member for New Forest East (Sir Julian Lewis) pointed out, have in recent years not received the discretionary increases that they used to. We looked at that issue in the Select Committee report on defined benefit pension schemes, which we published on 26 March. We took oral evidence from the BP Pensioner Group, and we also heard from the HP Pension Association—the right hon. Member for Orkney and Shetland also mentioned that company. The association represents people who previously worked for the computer company Digital, which Hewlett-Packard acquired. Much of those people’s working lives was before 1997. There was no general requirement to uprate pensions in payment before 1997, and our witness told us that Hewlett-Packard pensioners had received only three discretionary increases to pre-1997 benefits, amounting to 5% in total, since 2002, which is just over 20 years.

In our report we called for the Pensions Regulator to find out how many schemes had discretionary increases on pre-1997 benefits in their rules and how that discretion has been exercised in recent years. Given recent improvements in scheme funding levels, we also called for DWP to look at

“ways to ensure that scheme members’ reasonable expectations for benefit enhancement are met, particularly where there has been a history of discretionary increases.”

Perhaps the Minister, when he winds up, would comment on whether he will look at the reasonable expectations for benefit enhancements for scheme members with a lot of pre-1997 service, and whether they can be met. The Hewlett-Packard Pension Association is calling for a code of ethical practice to be drawn up between the Pensions Regulator and DWP, particularly on pre-1997 pensions, and for their former employer and its pension trustees to work out a policy for sustainable future discretionary increases.

[Mr Carmichael]

I am grateful to the right hon. Gentleman for touching on an area that I should perhaps have given more attention to. The most important protection we can give the beneficiaries is through ensuring that there are independent trustees, and that the office of trustee cannot be manipulated by the company. Does the Select Committee have any proposals for improvement in that regard?

[Sir Stephen Timms]

The right hon. Gentleman is quite right. We have noted a bit of a move towards sole trustees in a number of cases, which clearly gives rise to concerns about how one person can represent the interests of the members of a pension scheme. We are reflecting on that in our work, but one of the members of the Hewlett-Packard scheme wrote to me this week—he may well also have written to other Members—about

“the further fear and despair they are now feeling as it dawns upon them that their company and pension scheme trustees are meanwhile preparing plans to derisk by transferring their Pensioner responsibilities to an Insurance Company”—

something the right hon. Gentleman touched on. That transfer will quite possibly mean

“no subsequent possibility ever for pre-1997 increases.”

He calls that “a frightening prospect”, and it is hard to disagree.

The Committee also looked at concerns about the new defined benefit funding regime to be introduced for scheme valuations from September. We noted that the regime had been developed

“in a different era when the vast majority of DB schemes were in deficit and amidst concern that employers were seeking to evade their responsibility to underfunded schemes.”

There have been big changes since then, especially in the wake of the liability-driven investment crisis following the Budget of 18 months or so ago. In particular, there have been significant improvements in scheme funding, but the principles of the new regime have not been changed. Schemes are expected to target a position of low dependency on the sponsoring employer, meaning low-investment risk at the point of significant maturity. That has promoted concerns that the funding code will, when introduced, force more unnecessary de-risking, particularly among open schemes, as well as among those that are closed but have long time horizons, which would increase costs to employers and result in premature closure.

We said that the DWP and the Pensions Regulator needed

“to act urgently to ensure they do not inadvertently finish off what few open schemes remain by further increasing the risk aversion”.

In a letter to the Committee on 18 December, the Minister told us that both the Department and the Pensions Regulator were

“acutely aware of the need to take account of the specific needs of open schemes,”

and he agreed that

“open schemes should not be forced into an inappropriate de-risking journey.”

We welcomed that assurance, but it needs now to be reflected in the final wording of the funding code and in the regulator’s approach.

The vote in Parliament on the statutory instrument came before the final version of the funding code was published, so Members did not quite know what they were voting for at that point. We recommended that the Department and the Pensions Regulator should work with open schemes to address their concerns, particularly on the employer covenant horizon—the length of time for which they are confident in the sponsoring employer’s willingness and ability to support the scheme—and report back to us on how they will do so before the new funding code is laid before Parliament.

Since our report was published, feedback from schemes suggests that things may not be moving in the right direction. In a consultation response last week, the University Superannuation Scheme—a large and still open scheme—described the regulator’s proposed approach as

“university superannuation schemes”.

In its view, the statement that it will be required to complete under the terms of the new code will demand

“significant…resource for little or no benefit to our members.”

To the USS, and to me, that appears inconsistent with the assurances that open schemes will not be adversely impacted by the new funding regime. The USS adds:

“Not…having had sight of the revised…Funding Code and accompanying covenant guidance has exacerbated”

their worries.

I know that the Minister understands these concerns well. Closure of those schemes would reduce pension fund investment in the productive economy at a time when the Chancellor wants—absolutely rightly—to increase investment from pension schemes into the productive economy. Can the Minister tell us when he expects the new funding code to be published, whether he will report back to the Committee before then on how the concerns of open schemes have been addressed, and whether he is open to considering a separate chapter in the funding code, setting out how the code will apply to open schemes?

Let me take a few minutes to talk about what is happening on the defined contribution side of the picture.

Illegal Migration Bill

Debate between Alistair Carmichael and Stephen Timms

Committee stage
Tuesday 28th March 2023 Commons Chamber

[Mr Carmichael]

I hope that the Minister gets a hold of Hansard tomorrow, reads what he has just said and, as my mother used to say to me, takes a long, hard look at himself, because the idea that that is a justification for locking up children is absolutely disgraceful. For him to try to draw and to invent a causal link where none exists is a consistent line of the way this Government act. It is the same way that they tried to draw a causal link between the Modern Slavery Act and those coming in small boats—it just does not exist.

[Sir Stephen Timms (East Ham) (Lab)]

I agree with what the right hon. Gentleman is saying. The current proposal in the Bill is that unaccompanied minors coming here to claim asylum will spend the balance of their childhood here knowing that the day they become 18, the Home Secretary will have an obligation to remove them from the country. Is that not an unconscionable way for any Government to treat children?

[Mr Carmichael]

“Unconscionable” is one of the more polite and measured terms that we could use about it. I reflect on the fact that when I visited Dungavel in 2007 or 2008, my own children were about six and 10 years old. The staff in Dungavel did a phenomenal job to mitigate the horrors of what they were dealing with, but at the end of the day, we were keeping children behind a razor wire, lockdown institution, and that was downright inappropriate and unacceptable. Nobody will ever persuade me that we should treat any child differently from the way in which we would want to treat our own.

Immigration and Social Security Co-ordination (EU Withdrawal) Bill

Debate between Alistair Carmichael and Stephen Timms

Consideration of Lords amendments & Ping Pong & Ping Pong: House of Commons
Monday 19th October 2020 Commons Chamber

[Mr Carmichael]

It is a pleasure to follow the Chair of the Home Affairs Committee, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). Like others, I would like to thank all those in the other place for their time and their attention to the Bill. The amendments that they have sent to us are undoubtedly significant improvements and, like the right hon. Lady, I regret that all we have had from the Government is a de plano refusal of them. There are not even any amendments in lieu, which would have shown a level of engagement.

This is particularly true in relation to Lords amendment 1, an eminently modest proposal that has elicited the quite remarkable assertion that, somehow or another, the purpose of immigration is to keep wages and salaries low in the British care sector. I have to say that I struggle with that somewhat. I just do not buy the idea that, if we were to increase the level of pay in the care sector, we would see a flood of local labour going back into it. Notwithstanding that, it is quite remarkable to think that the Government would not want to have an impact assessment for an area of public policy with whose financing we have struggled for almost as long as I have been in this House. Indeed, I cannot remember a time, in any part of the United Kingdom, when we did not struggle with its finances.

I want to touch briefly on Lords amendment 5, which was promoted in the other place by my noble Friend Lord Oates. Various points on this were made exceptionally well by the right hon. Member for East Ham (Stephen Timms). The promise made by the Government at the election last year was that there would be some sort of evidence-based settlement scheme, but now we are told that it will be enough just to rely on a digital provision. I strongly suspect that, inside the National Audit Office, there are alarm bells and lights that flash every time a Minister stands at the Dispatch Box and says that there will be a digital solution to a problem. In my experience, any digital solution generally creates a new problem, especially for those who are older and those who are digitally excluded, for whom this is going to create a further and unnecessary level of exclusion.

I want to focus the bulk of my remarks this evening on Lords amendments 6 to 8 and 10, which were promoted in the other place by my noble Friend Baroness Hamwee. Subject to your agreement, Madam Deputy Speaker, I hope that we might test the opinion of the House in relation to these amendments later this evening. It is worthy of note that the United Kingdom is the only country in Europe that locks people up indefinitely for immigration purposes. Detaining people for months on end without giving them any idea of how long they will be there is clearly inhumane, but it is also expensive and unnecessary.

I have long since given up trying to plead with Home Office Ministers on the basis of humanity and compassion, but I would have hoped that a case based on economy and efficiency would find some favour. However, even that seems not to be the case. When I made an intervention on the Minister, he deftly ignored my point that £7 million was paid out last year and that there were 272 cases of wrongful detention. That is the scale of the crisis in this area. It really worries me that there is so little concern about the fact that no fewer than 272 people were detained wrongfully. That is wrong, it is inefficient and it is expensive. Surely for those reasons at least, the Government should be looking to find a better and more humane basis for doing this.

[Stephen Timms]

I very much agree with the right hon. Gentleman. He says that he has given up asking the Home Office for compassion, but I wonder whether he has seen, in the comprehensive improvement plan, that theme 2 involves a more compassionate approach.