Transitional State Pension Arrangements for Women

Ben Howlett Excerpts

Monday 1st February 2016 Westminster Hall

[Ben Howlett (Bath) (Con)]

Hopefully I can be a little more measured.

I echo the opening remarks of the hon. Member for Warrington North (Helen Jones) and congratulate the WASPI petitioners on securing the debate. As a member of the Petitions Committee, may I say that I would not even contemplate the idea of treating the Chair of the Committee as a doormat?

[Helen Jones]

Very wise.

[Ben Howlett]

Thank you.

I think that both sides of the House agree that changes to the state pension age are necessary but, famously, when von Bismarck created the state pension in Germany in 1889 for all those of the age of 70, life expectancy was only 35, whereas a woman who reaches 65 in 2018 has a life expectancy of nearly 90 years. Increased life expectancy has presented a challenge to pension systems all over the world, and equalising the state pension age is an important step in addressing that.

[Natalie McGarry (Glasgow East) (Ind)]

Will the hon. Gentleman give way?

[Ben Howlett]

No, I will make some progress.

The reality is that there has been no shock. People have been living longer for decades, and it is frustrating that Governments of all colours have done nothing about it. In fact, during the 13 years of Labour nothing was done to remedy the issue—at least the Scottish National party has an excuse.

[Several hon. Members rose—]

[Ben Howlett]

I want to try to make some progress. I note the time, and I do not want to go on for too long.

There is a legal obligation here, and also a European Union directive on gender discrimination, with several EU members already having equalised the state pension age. One of those is Germany, the birthplace of the state pension. I am, therefore, supportive of the Government’s state pension changes but, as a member of the Women and Equalities Committee, I think there is a case for transitional arrangements for the most vulnerable. However, that must be balanced against the implications for our yet-to-be-eradicated deficit. Even the most minimal of mitigations would come at a significant financial cost; just paying the state pension for an extra 12 months to the women affected would cost £2.2 billion, and that is aside from the further complications that would be caused to the system. However, I must note the concerns I have heard about the changes, and I know that the Department for Work and Pensions continues to deny that the women affected were not contacted.

[Ian Blackford]

Does the hon. Gentleman not understand that a contract exists, in effect, between the affected women and the Government? If someone was paying into a private pension and the rules were changed at the last minute, my heavens the matter would end up in court. This is not about the Government’s deficit; it is about doing the right thing, and about a commitment that the Government have to women of a certain age.

--- Later in debate ---

[Ben Howlett]

I thank the hon. Gentleman for his intervention. He makes his point in his own way, but any changes in welfare come with a cost implication, as he well knows.

[Peter Grant (Glenrothes) (SNP)]

Will the hon. Gentleman give way?

[Ben Howlett]

No, I will make some progress. As I said, I must note the concerns I have heard from constituents who have come to my surgeries. The Department for Work and Pensions continues to deny that women who were affected were not contacted, but a number of constituents have contacted me to say that they did not receive adequate notification. It was also concerning to hear that the Department failed to send out a significant number of state pension estimates, citing, in part, reasons of data protection.

Apart from for actuaries and accountants, pensions are confusing; indeed, I am no expert myself. Not only do the Government need to investigate their contact with women about the changes, and the methods used, but there is a wider issue about financial education and I am pleased that the Money Advice Service is working on a new strategy for the financial education of children.

[Several hon. Members rose—]

[Ben Howlett]

I am happy to give way.

[Ms Gisela Stuart]

I am extremely grateful to the hon. Gentleman for giving way but, given what he has said, how does he defend the disproportionate hit that is being taken by this small group of women? This group had low incomes and therefore could not build up their pension contributions, then they got hit by the reduced rates and they have now been disproportionately hit by the transition period? Why should that cohort take the biggest hit?

[Ben Howlett]

I thank the right hon. Lady for that intervention but, as I said, as a member of the Women and Equalities Committee and as someone who has campaigned on equalities issues for a while, I believe that the most vulnerable people need to be looked at, if the Government are to review the policy. Unequal pension ages are unfair and unsustainable in an age of greater life expectancy and of women working longer, but we must remember that there are still glaring financial inequality issues for women in this country, despite huge strides made in recent years.

[Natalie McGarry]

In some parts of my constituency of Glasgow East, life expectancy is 67, so it is simply not correct to say that life expectancy for all is increasing. As Age UK says, it is the people in the poorest areas and in the lowest-paid jobs who are disproportionately hit.

[Ben Howlett]

As I said earlier, transitional arrangements need to be made for the most vulnerable. I completely understand the hon. Lady’s position and I hope that the Minister will look into it. Indeed, in my constituency, and in the south-west in general, there is a nearly 20% difference between the earnings of men and women. My colleagues and I on the Women and Equalities Committee are currently taking evidence on that issue and we will publish a response later this month.

At my surgery last week I met with women affected by the changes, and they brought to my attention the issue of divorce and pensions. As women earn less than men they tend to save less towards their retirement and are often dependent on their spouses’ income, but the vast majority of them do not choose to consider their husbands’ pension in a divorce settlement. I hope that the Minister will consider that further issue in his summary.

Given that emotions are running high, it is important that the Government learn lessons. Although the changes are necessary, we must consider how we can better educate people about their personal finance. We must also remember that women remain economically disadvantaged in both pay and private pension provision. If we address those things we will be able to avoid a recurrence of this regrettable situation in the future. There is little doubt that we will all be living longer and we should not make the same mistakes in communicating such changes in the future.