Pensions Bill [HL]

Baroness Anelay of St Johns Excerpts

Wednesday 27th April 2011 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Pensions Bill, has consented to place her interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Amendment 1

Moved by

--- Later in debate ---

[Baroness Hollis of Heigham]

My Lords, the amendment in my name would require the Secretary of State to introduce a report on the single state pension by June 2016, before Part 1 of the Bill, which refers to the delay in the state pension age for women, is commenced. I would also ask the House to ignore the word “universal” on this amendment—

[Baroness Anelay of St Johns]

I ask that colleagues carry out the normal courteous procedure. Those who are remaining in the Chamber wish to hear from the noble Baroness, Lady Hollis. Could those who are leaving do so rather quietly?

[Baroness Hollis of Heigham]

I thank the Chief Whip. The delay in women’s retirement age so that, for the most unfortunate, retirement is delayed by two years, was discussed and determined, narrowly, on Report. No one, I think, was happy about the bunching effect, including the Minister. It is the consequence of insisting, despite the coalition agreeing to the contrary, that the state pension age for women would rise to 66 by 2020. I remind the House that the coalition agreement that women’s state pension age would not begin to rise to 66 until after 2020 was not an election pledge that was broken in the name of coalition dealings and agreement but was part of the post-election coalition agreement from both government parties in the full knowledge of the costs and circumstances. To break that joint, agreed, published, post-election pledge within the year is, in my view, pretty disreputable. However, that is where we now are, regrettably. I hope very much that the other place will try to smooth out the bunching effect, which narrowly this House allowed to continue.

Since Report—I think on the day after—we have had the long-awaited Green Paper on the new single state pension. I am sure that noble Lords greatly welcome it, as I certainly do. It proposes bringing the basic state pension, the state second pension and pension credit into one pool, allowing the payment of a single pension based on national insurance contributions a few pounds above pension credit level. This would both tackle pensioner poverty, especially among women, and encourage saving. Existing accrued rights would be honoured, but possible future accrued rights would be capped in much the same way as when this House decided—rightly, in my view—to replace SERPS with S2P. That mostly capped men’s higher earnings-related pension entitlement with a scheme of more generous redistribution to lower wage earners, mainly women. To me, the Green Paper is very good news, and I congratulate the Minister and his right honourable friend in the other place, Mr Steve Webb, on achieving it in the face of, I suspect, the agnosticism of HMT at best, the scepticism of HMT at least, and the hostility of HMT at worst.

The new single pension is important in a couple of ways. I am raising it now because we did not have the opportunity to raise it on Report, given that the Green Paper just happened to be published the day after Report. There is agreement around the House about the desirability of NEST. It will effectively reintroduce an earnings-related pension, so to speak, to top up the new single pension, performing the same function but in a very different way from the old SERPS. However, as we all know, NEST is risky, particularly for low-earning women. If they do not have a partner at retirement whose pension income lifts them both off pension credit, they find that their savings in NEST are severely depleted by the operation of the pension credit taper. There is no way that someone at 30 can predict whether it is worth saving in NEST if it depends on what partnership and household arrangements they have 30 or 40 years down the line.

Pension credit has done a superb job of tackling the poverty of existing pensioners. It means that pensioners are no more or no less likely to be poor than any other group in society. However, it has added to the risk of future pensioners who seek to avoid poverty by building savings. The single state pension cuts through all of that. It means that your pension income from NEST will depend not on your household but on your own income, which is a far safer, clearer and cleaner path for savers. With a new pension, every penny you normally save in NEST will return to you as your pension. It has built out the risk from saving; it pays to save. That is why, on all sides of the House, we welcome NEST, and I am sure will welcome the new single pension. Hence this amendment.