Guaranteed Minimum Pensions Increase Order 2024

Baroness Janke Excerpts

Tuesday 27th February 2024 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, I feel obliged to make a contribution. As I said last year, if I was on “Mastermind” my specialist subject would be the GMP. I was waiting to pounce on the Minister if he missed anything out, but he provided a very comprehensive— I leave it to others to judge whether it was a clear—explanation of the system that applies.

The only thing I want to add is that, post 2016, retirees lose out on these increases and some of them are very angry about it. However, as the Minister indicated, they gain in other ways. The continued accrual post 2016 more than compensates for the loss of these increases—except, that is, for those who retired in the year 2016-17, because they did not get any additional accrual that counted towards their pension. I pointed that out at the time when the Act was going through but, as happens all too often, nobody listened.

[Baroness Janke (LD)]

I thank the Minister for his explanation, which was indeed very clear on a fairly complicated issue. We support this order but, at the same time, I would like to use this opportunity to raise some issues relating to pensions.

First, I welcome the Government’s support for retaining the triple lock. Although there has been a reduction of the numbers, there are still 1.7 million pensioners in poverty and the value of the state pension is still lower in the UK than in comparable countries.

The next thing I would like an update on is: what has happened about the large number of pensioners who are entitled to pension credit but do not take it up? Some of us had frequent meetings with the Minister’s predecessor about this. There were many suggestions as to how awareness could be raised and the potential benefits of the scheme promoted among poorer pensioners. Can the Minister update us on what measures have been taken to improve take-up and what level of success the campaign has achieved to date?

We also welcome the measures to expand auto-enrolment by giving powers to end the lower earnings limit and increase the eligible age range. Can the Minister provide us with a progress report on the implementation of these measures? Are the Government planning to review the rate of contribution, which quite a few people say is too low?

Have the Government taken any action on the pensions gender gap? The average pension for a woman aged 65 is one-fifth of a 65 year-old man’s, and women receive £29,000 less in state pension than men over 20 years. This deficit is set to continue, with all else being equal, closing by only 3% by 2060. What is the Government’s response to the embedded unfairness in this system? Will the Minister tell us what progress has been made in the Government’s plans to streamline tax administration, perhaps to enable low-paid workers, who are typically women, to receive pensions tax relief on their contributions?

A lack of awareness of the value of pension assets and pension complexity, as well as the increasing number of online divorces, has led to many divorced women having no pension savings at all. Women’s pension rights are much harder hit than men’s by divorce, so has any progress been made to ensure the fair sharing of pension benefits after divorce? I look forward to the Minister’s response.