Oral Answers to Questions

Debate between Angela Rayner and Shailesh Vara

Monday 11th July 2016 Commons Chamber

[Mr Vara]

I remind the House that in 2012 the DWP conducted a survey and found that only 6% of women who were due to retire within the next 10 years were unaware of an increase in the pension age. As I said earlier, the Government have no plans to review the matter.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

A little over a week ago, thousands of women from across the United Kingdom came to Parliament in a display of solidarity that reminded me very much of the Dagenham women some decades earlier. Is not the Secretary of State’s refusal to revisit the financial issues faced by the 2.6 million women whose pension ages have been increased without adequate notice a slap in the face for those women? Given that the former Pensions Minister admitted that the coalition Government had got it wrong, why is the Under-Secretary being so unreasonable?

Oral Answers to Questions

Debate between Angela Rayner and Shailesh Vara

Monday 14th March 2016 Commons Chamber

[Mr Vara]

The hon. Gentleman talks about mitigating things. May I just say to him that transitional arrangements were made at the time? Those transitional arrangements cost £1.1 billion. The period that women would have to work before they retired was reduced from two years to 18 months, and 81% of the women affected by that period of 18 months will not have an extension of beyond 12 months.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

I am really disappointed that the Minister still does not recognise that those women were given a totally inadequate notice period. Given that unfairness and the Secretary of State’s earlier comments—this Government are pretending they want to take people out of poverty—will the Minister look at the six options we have presented to the Government to deal with this injustice? Will he, as many Members of his party would support doing, allow those affected—[Interruption.] I am coming to that, if the hon. Member for Hexham (Guy Opperman) would listen. Will the Minister allow those affected to take a reduced state pension at an earlier age and be paid a lower state pension for a longer period?

[Mr Vara]

As far as the six options are concerned, all of them have a cost. It is time that the Opposition started to think about where the money would come from. The hon. Lady lays the blame at the feet of this Government, but she might reflect on the 13 years during which her party was in power, when it did absolutely nothing. [Interruption.] She is chuntering from a sedentary position about £20-something billion. May I just say to her that the cost of undoing the Pensions Act 2011 would be £30 billion?

Draft Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016

Debate between Angela Rayner and Shailesh Vara

Thursday 3rd March 2016 General Committees

[Mr Vara]

My right hon. Friend makes a good point, and I did intend to touch briefly on the governance of master trusts and fit and proper individuals. The hon. Member for Ashton-under-Lyne spoke at length about master trusts and raised several concerns, so I assure her that master trusts already have to meet a number of governance requirements under the current law. A voluntary master trust assurance framework has been developed by the Institute of Chartered Accountants in England and Wales in partnership with the Pensions Regulator. It is designed to help trustees to assess the quality of their scheme against an industry-wide quality benchmark. It also helps employers to find a well run pension scheme that can be used to comply with their automatic enrolment duties. The Department for Work and Pensions and the Pensions Regulator are exploring whether additional protections would be appropriate for the future regulation of this part of the market.

Well run master trusts can and do offer good deals for consumers and employers, and we are keen that the market develops in the right way. We are aware that potential issues have been suggested and we are working with the Pensions Regulator to ensure that the right protection is in place. Once the measures are firmed up, we will inform the public.

[Angela Rayner]

Does the Minister know how many master trusts have signed up to the voluntary arrangement and how many are yet to do so?

[Mr Vara]

I do not have a specific figure to hand. The hon. Lady suggested a number of figures, but I want to be careful before I commit myself to any specific number—[Interruption]—although it is my understanding that it may be five. That is my present assumption.

The Government agree that it is important that members’ interests are represented and their views considered. Requirements from April 2015 ensure that independent governance committees and multi-employer scheme boards have arrangements in place to ensure that members’ views are directly represented. Annual chair statements must also include the details of those arrangements. As for contributions paid, the Pensions Regulator works with the industry to monitor the ongoing payment of contributions.

I am grateful for Members’ contributions this morning. The regulations that we have put forward will improve the management of the pensions industry generally. Good governance is fundamental in securing good outcomes for members, and the regulations will help ensure that schemes are well run in members’ interests.

Question put and agreed to.

Social Security

Debate between Angela Rayner and Shailesh Vara

Monday 8th February 2016 Commons Chamber

[Mr Vara]

May I take this opportunity to welcome the hon. Member for Ashton-under-Lyne (Angela Rayner) to her new position? I look forward to discussing and debating various issues with her over the coming months. I thank her and the hon. Member for Banff and Buchan (Dr Whiteford) for their contributions. In the short time that we have, I will try to address as many of their questions as possible. I also thank the hon. Member for Denton and Reddish (Andrew Gwynne) for his one or two interventions. I am grateful to the hon. Member for Ashton-under-Lyne for welcoming the triple lock and to her party for its support for that initiative.

The issue of communication has come up repeatedly. I just want to say that there is an awareness campaign, which is particularly targeted at those aged 55 and above. They will receive a letter—their addresses will be obtained from payroll and benefits data—providing details of their own state pension. The first phase of our communications campaign aims to build awareness among those in that age group, who will be the first to reach pension age after April 2016, and we are encouraging them to get a personalised statement. Between September 2014 and October 2015, we issued nearly 500,000 personal statements. We have factsheets, infographics, videos, calculators, YouTube videos, toolkits for stakeholders and weekly stakeholder bulletins. We will continue to do whatever is necessary and whatever we can to ensure that people are made aware of what is coming. I urge all colleagues on both sides of the House to do their bit, as Members of Parliament with access to media and to local communities, to make sure that people are aware of this very important change.

It is our intention, and it will be the case, that the new state pension will be a lot simpler and clearer for people than the previous situation, when there were opt-outs in relation to the state earnings-related pension scheme and additional pensions, as well as private pensions, occupational pensions and so on. The hon. Member for Ashton-under-Lyne said that not everyone will qualify for the new rate of £155.65, and she is absolutely right, because the new state pension is based on people’s national insurance contributions. In recent years, some people have not paid full national insurance contributions to the state because they have opted out or contracted out. Some of those people contracted out into a second, additional pension, and that has to be factored in. Alternatively, the national insurance contributions that they had contracted out of were used for an occupational pension or a private pension. If the two pensions are added together, the total will in many cases be more than £155.65.

I hope that the hon. Lady and her colleagues appreciate that if we have a system in which people’s pensions are based on national insurance contributions, they cannot, if they have not paid such contributions, be expected to get the full payment due notwithstanding the fact that some of their national insurance contributions have gone to another pension. I hope she will reflect on that point.

[Angela Rayner]

I gave the Minister a specific example of someone who had not contracted out because of a second pension. Will he address that point and the fact that some people have not been given adequate notice of the changes? I appreciate the point he makes about contracted-out contributions, but some people have not been given such information. I am asking for people to be given that information so that they can make alternative provision.

[Mr Vara]

The hon. Lady will appreciate that I cannot give advice on individual cases at the Dispatch Box. As for communication, I have read out a whole list of measures we are putting in place to make sure that people are communicated with. If we were not doing our job properly, we would not have issued nearly 500,000 personal statements between September 2014 and October 2015. We continue to make sure that people are aware of the change. As I have said, she has a role to play, as do others. I am sorry that she expresses such disappointment, given that in the forthcoming year the Government will spend an additional £2.1 billion more than we are spending at present. There is also the pension credit standard minimum guarantee, which will ensure that the minimum threshold must be met. The state is there to assist people.

The hon. Member for Banff and Buchan mentioned frozen pensions. It has been the policy of successive Governments for the past 70 or so years not to uprate pensions for everyone. The issue is complex, but she will be aware that uprates are made in some countries where there is a legal obligation to do so. It should be remembered, however, that the pensions people get in some countries are based on a means test: if we gave everyone from Britain who is now resident in another country an uprate, our contribution to that uprated pension would be taken into account by their new home country and they would therefore be given less by the new home country.

Oral Answers to Questions

Debate between Angela Rayner and Shailesh Vara

Monday 1st February 2016 Commons Chamber

[Mr Vara]

A concession was made in 2011. On Second Reading, the Secretary of State said that he would go away and consider matters. He did so, and when he came back he made a concession worth £1.1 billion and reduced the two-year extension to 18 months. In the case of 18 months, 81% of women affected will have to work no more than 12 months.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

More than 2.6 million women will be hit by this change, more than 5,000 of them in the Minister’s constituency. The least they deserve is to be given the facts to allow an honest debate. We know that the Government considered £3 billion-worth of transitional protection but allocated only £1 billion, as the Minister outlined. In the spirit of an open and honest debate, will the Minister release to the House details of all the options for transitional protection that the Government have considered?

[Mr Vara]

Perhaps an apology should come from the hon. Lady about the fact that there was no element of communication when her people were in power for 13 years. Let us not forget—[Interruption.] Precisely! The hon. Lady mentions 1995; she will recall that within two years there was a Labour Government, who were around for 13 years. As I have said, there was no communication from any of the 10 Pensions Ministers. As far as the transitional arrangements are concerned, I responded to the hon. Member for Leeds West (Rachel Reeves) that a concession worth £1 billion was made, and the time period was reduced.

Draft Pensions Act 2014 (Consequential and Supplementary Amendments) Order 2016 Draft State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016

Debate between Angela Rayner and Shailesh Vara

Tuesday 26th January 2016 General Committees

[Angela Rayner (Ashton-under-Lyne) (Lab)]

It is a pleasure, Ms Buck, to serve under your chairmanship in my debut in a Delegated Legislation Committee. I thank you for your kindness in allowing me to sit down throughout the proceedings. As Members will have noticed, I am not quite operating at full capacity. I had an accident over the weekend, in which I managed to fracture my elbow and damage my ribs. I am sure that that will not stop me carrying out my duty as a member of the Opposition to scrutinise the measures before us.

[Mr Vara]

And the Whip insisted that you turn up.

[Angela Rayner]

Absolutely—the Opposition have some fantastic Whips. As the Minister outlined, in the Pensions Act 2014, the coalition Government legislated to introduce a new state pension for persons reaching state pension age on or after 6 April this year. We are considering regulations that will implement several key features of that settlement. Several aspects of the new legislation have significant implications for future pensioners, and I will touch on some of them in my contribution.

Under the new scheme, the Government intention is that individuals who qualify for the new state pension will receive it on the basis of their contribution record. The rule that allows an individual, under the current state pension, to derive entitlement based on the national insurance record of a former spouse or civil partner will end, with some transitional protection. Although the changes are likely to affect a relatively small number of people, their impact on those who are affected may be large. Perhaps the Minister will confirm that in an extreme scenario, a woman who has no entitlement in her own right and is widowed could end up with no state pension, rather than the £115.95 she could expect to receive under the current system.

In addition to the amendments on inherited graduated retirement benefit, there are new features that will affect pensioners overseas. In the new pension scheme, as the Minister outlined, state pensions will be uprated in line with earnings only if the recipient is resident in an EEA country or in a country with which the UK has a reciprocal agreement. Furthermore, many people who receive the state pension and who live abroad may have been impacted by the Government’s temperature test for the winter fuel allowance, which was introduced for the first time this winter. The changes could result in an overlap between those who become ineligible for winter fuel allowance and those whose pensions have not been uprated.

State pension deferral is of particular significance. The option to defer one’s pension in order to receive a larger amount has been part of the system since 1948. Under the new state pension, the terms of such deferral will change, resulting in a less generous return. Given that the bulk of the measures before us today are technical, I hope not to divide the Committee, but there are a number of comments that I wish to make and questions that I hope that the Minister can answer. Let me start by making the general point that the Government’s track record in communicating pension changes falls well short of what the public would hope and expect. Recent analysis that the Department of Work and Pensions published on the new state pension makes it clear that millions of people will receive a significantly lower state pension in future. Some will be more than £500 a year worse off. The Government should be doing far more to inform those affected, especially people who are nearing retirement and therefore have the least notice or time to consider the impact.

The same is true for the regulations we are considering, especially the changes to derived entitlement and inheritance rules. The regulations apply to the new state pension that will be introduced in April, so they have come before us are very late in the day, given that they arise from primary legislation that the House agreed in 2014. Perhaps the Minister can tell us why the Government have left it until now to table these measures.

In any event, Age UK, among others, has called on the Government to do far more to contact people who are likely to be affected. In its evidence to the inquiry by the Select Committee on Work and Pensions on the state pension, it said:

“There are DWP materials highlighting credits and ways to increase the State Pension, but people need to know they may be affected. We believe the DWP should contact people with gaps in their record individually to highlight the changes and explain options…In the most extreme situation, a woman with no entitlement in her own right, who is widowed, could end up with no State Pension compared to an expected £115.95 under the current system. Most will have some contributions in their own right so will not lose this much, but they could still receive significantly less than they are expecting. Couples in this situation need to be made aware of the changes as they may be able to review their retirement plans.”

When asked how the Department was planning to communicate with those affected, the Minister for Pensions replied that we cannot foresee who is going to become widowed in future. I think it is fair to say that that is not exactly a helpful response. I would be grateful if the Under-Secretary provided clarity on what action the Government are taking to communicate these changes, in particular to those with gaps in their record who are likely to be directly affected. I believe there is a pool of people they can inform who could potentially be widowed in future.

Will the Minister also give us an estimate of who will be covered by the transitional protection? How many people does he estimate will lose out as a result of the changes in future years? In the context of those facts, what would be the cost of directly contacting individuals with gaps in their national insurance record? Does the Minister think that that cost is prohibitively expensive? While these changes are likely to affect a relatively small number of people, the impacts on those affected may be very large—the Minister may wish to expand on that, based on official estimates. That is one reason why the Select Committee, in considering the draft legislation, recommended that the Government go further in finding a solution for those women who might be seriously affected.

I will not repeat the debates that were had in the House, but if the Minister can give those women any further reassurance on the terms of transitional protection, that would be welcome. In any event, it is crucial that the Government take the issue of communication far more seriously and learn the lessons from previous instances when they failed to communicate changes effectively: most notably, of course, there is a group of women born in the 1950s who were not given proper notification of acceleration in their state pension age.

On that issue, will the Minister inform us whether the Department has undertaken any further work on transitional protection for the group of women most affected? Will he commit to provide the House with details of any modelling the Government have used when looking at different options for transitional protection; for example, for specific cohorts, such as those born between 6 April and 5 December 1953, who will be particularly affected by the acceleration? He will note that I have tabled questions on that subject, but given Ministers’ stated goal of being the most transparent Government ever, perhaps he can commit to answering them fully and publishing the relevant material before Monday’s debate on the issue.

Turning to another aspect of the regulations, many people who live abroad and receive a state pension may have been impacted by the Government’s temperature test for winter fuel allowance, which was introduced for the first time this winter, as I mentioned. Will the Minister tell the Committee how many people became ineligible for winter fuel allowance as a result of these tests? What is the overlap between those who became ineligible for winter fuel allowance and those whose pensions have not been uprated?

As well as freezing overseas pensions, the Government are freezing the savings credit element of the pension credit, as announced in the autumn statement. Will the Minister confirm that some of Britain’s poorest pensioners will be worse off as a result of this measure, and will he commit to publishing a more detailed impact assessment than has been produced to date? Exactly how many people will be worse off, and by how much? Finally, on the issue of state pension deferral, how much do the Government expect to save from the changes to the deferral? How many people have chosen to defer their state pension in this financial year, and what are the Government doing to ensure that those who defer are made aware of these changes to the deferral provisions under single tier pensions? I hope that we have some substantive answers on those points and in that spirit I look forward to the Minister’s response.

--- Later in debate ---

[Mr Vara]

I do not have the precise details to hand, but I can say that it is an accepted fact that many people now use the new form—the technological advances of the 21st century—for communication purposes. We fought a general election less than a year ago in which the modern form of communication was used by politicians across the political divide. If it were the case that that was ineffective, and people were not taking note of that, we as politicians who aspire to lead and represent our constituents would probably have resorted to the old system. The fact is that the new, modern communication does work and that is why every single person in this Committee resorts to it.

As I said earlier, when DWP conducted a test in 2014 issuing 6,000 personalised letters with the aim of encouraging people to ask for a state pension statement, only 79 requests for a statement resulted from that mailshot. I think that answers the questions more than anything else.

[Angela Rayner]

May I try to help the Minister? In my contribution, I was referring to the fact that we have to learn the lessons from the past. Since becoming the shadow Pensions Minister, it is clear to me—and my mailbox makes it clear—without going into the issues of the WASPI campaign and women in the 1950s, that people do not feel that they are being communicated to in the most effective way. I urge the Minister to take all opportunities—written, social media, magazines, telephone—to do so. Whatever way he does it, it needs to be done, because of the implications for some of these people. It is not acceptable for the Minister to say, “Well, it may not affect them because they may not be a widower”. Something needs to be done to improve communication to people who are affected by these measures.

[Mr Vara]

I take on board what the shadow Minister says. Following the Pensions Act 2011—I know we are not dealing specifically with that issue—millions of people did get a letter, and the letters were sent out according to the details that were held by Her Majesty’s Courts and Tribunals Service.