Pensions: Interim Guidance for Superfunds
Guy Opperman Excerpts(3 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The pensions regulator has today published an interim regulatory regime for defined benefit pension “superfunds”.
A superfund is a privately funded “for profit” consolidation vehicle, which takes over responsibility for defined benefit pension schemes liabilities from the sponsoring employer. To enter a superfund, sponsoring employers are required to pay a significant, upfront sum to improve the funding level of their scheme, in exchange for discharging their pensions liabilities.
This is an interim regime. The Government will continue to develop the permanent regime before legislating, with full and proper parliamentary scrutiny in the usual way.
Operation of the interim regime will be kept under review by the Government to ensure that it is properly protecting and advancing the interests of pension scheme members and the pension protection fund.
The Government will continue to develop a permanent regime for superfunds. This is an innovative area and market participants should not assume that the permanent regime will automatically replicate the interim regime. Alongside responses to the defined benefit pension scheme consolidation consultation, the Government will be informed by experience gained during the interim regime when considering the features of the permanent regime, including those relating to capital adequacy. The permanent regime may include an alternative set of requirements, including more prudent requirements, compared to the interim regime, but we cannot pre-empt the parliamentary process.
The permanent regime will be designed to protect pension scheme members and the pension protection fund, including by ensuring that superfunds have the necessary flexibility to continue contributing to a strong pensions ecosystem in which sponsoring companies and scheme trustees have a range of options open to them.
The Government believe that superfunds have the potential to improve the likelihood of members getting their benefits in full whilst providing employers with a new, affordable option to manage their legacy pension liabilities. However, if at any point it appears that changes to the interim regime are required in order to protect and advance the interests of scheme members, the Government and the pensions regulator will take prompt, robust action.
Today’s publication will mean that the pensions regulator will have a much firmer basis to take action against a superfund should they deem it a necessary and proportionate step.
The guidance can be accessed at the following address:
https://www.thepensionsregulator.gov.uk/en/document-librarv/regulatorv-guidance/db-superfunds
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Pensions
Guy Opperman Excerpts(4 years ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman) [V]
I beg to move,
That the draft Automatic Enrolment (Offshore Employment) (Amendment) Order 2020, which was laid before this House on 16 March, be approved.
Mr Deputy Speaker (Mr Nigel Evans)
With this we shall take the following motion:
That the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020, which were laid before this House on 16 March, be approved.
The Minister is asked to speak for no more than 20 minutes
Guy Opperman
I am pleased to introduce these instruments, which follow the statement that I laid before the House on 16 March. It is an honour to address the House remotely, and to be the first Member of Parliament for Hexham to do so. I hope that it is also the last time I do so, and that we can get back to business as usual and to the Parliament that we had before.
Before I turn to the substance of the instruments, Mr Deputy Speaker, I hope that you will indulge me briefly while I comment on some of the matters before us. We have a situation in which 25% of the working population are furloughed, with their wages paid for by the Government, and the Department for Work and Pensions is undertaking the Herculean task of taking well over 1 million people on to universal credit. As you will know, Mr Deputy Speaker, it is also Star Wars Day. While I am absolutely certain that the force is with you, I hope that the force is also with my broadband provider. If it fails, I can assure you that I will not blame the Government.
It is an honour to be a Minister at the DWP and to be the first to move regulations in this way. In her statement earlier, the Secretary of State rightly thanked our fantastic workforce, who have worked day and night to ensure that all the DWP’s services are provided in a professional and competent manner. I should like to put on the record my thanks to all the staff who work at the DWP, including those in jobcentres up and down the country, such as Hexham jobcentre in my constituency.
I also thank everybody at Team Pensions, who have worked tirelessly to ensure that covid-19 does not adversely impact local and national populations. In particular, we have cancelled the pension levy increase, help has been given to defined contribution and defined benefit providers, and we continue to try to stop the public being scammed. Finally, I thank my team in Hexham, led by James McArdle, and my team at the DWP, led by Lauren Thomas.
Mr Deputy Speaker, you are aware of the importance of automatic enrolment in all our constituencies, and these instruments are important. Automatic enrolment is one of the great cross-party success stories. Conceived under a Labour Government, formulated and brought forward under the coalition, and expanded under a Conservative Government, it is one of the finest public policy successes in the last generation. We now have 10 million plus people who have been automatically enrolled on to an occupational pension; automatic enrolment has transformed workplace savings. They are now saving 8% per annum on an ongoing basis, which simply was not the case previously.
The instruments will implement the conclusions of the 2018 statutory review. The review concluded that automatic enrolment into workplace pensions should continue for eligible employees in the maritime industries, ensuring their access to a pension in the same way as workers in the rest of the UK economy. Subject to the approval of the House, the instruments will remove the sunset clauses contained in the original 2012 legislation so that it continues in force beyond the current expiry date of 1 July 2020. The business of the Government goes on notwithstanding the impacts of covid-19. We will overcome this pandemic, we are Great Britain. I commend these regulations to the House.
Mr Deputy Speaker (Mr Nigel Evans)
I ask the shadow Minister not to speak for longer than 15 minutes.
Guy Opperman [V]
I will speak briefly in response. I thank both hon. Gentlemen for their support for the regulations. It is entirely right that my Labour colleague, the hon. Member for Birmingham, Erdington (Jack Dromey), should say that this is a cross-party success story, and I thank him for the commendable way in which he has approached these regulations and the work that we do together. On the comments by the hon. Member for Aberdeen South (Stephen Flynn), who speaks for the Scottish National party, I would merely point out that approximately 24% of the population have been furloughed and are being supported by taxpayers and the Government and that over 1 million people have recently moved on to universal credit, massively enhanced. There is no doubt that there are great difficulties in the north-east of Scotland, but I am certain that the Chancellor and the entire Government are fully supportive, whether through the coronavirus job retention scheme or any of the other schemes that they are putting forward, to ensure that this country gets through this terrible pandemic.
Question put and agreed to.
Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020
Resolved,
That the House has considered the Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020.—(Stuart Andrew.)
Pensions: COVID-19 Response
Guy Opperman Excerpts(4 years ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I am writing to inform the House of the steps this Government are taking to support pension savers, pension schemes, trustees, employers and existing pensioners during the coronavirus pandemic.
General pensions levy
On 31 March 2020, the Government revoked the planned increase in the general pensions levy on occupational and personal pension schemes that was due to take effect on 1 April 2020. The levy recovers funding provided by the DWP in respect of the core activities of the pensions ombudsman, and part of the activities of the Pensions Regulator and the Money and Pensions Service. These measures will result in an estimated £4.9 million of savings for the private pensions sector.
We will now be focused on reviewing the structure of the levy and engaging with industry, at the appropriate time, on the best way forward on levy funding.
Coronavirus job retention scheme
Key to supporting both businesses and pension savers is the coronavirus job retention scheme (CJRS) which offers an unprecedented package of support for businesses. This scheme has been designed to be as straightforward as possible, ensuring it aligns with and works for most business practices.
Under this scheme, the grants available to employers will support business by covering up to 80% of a furloughed worker’s regular salary, capped at £2,500 per month. Additionally, these grants will also cover employer pension contributions into registered pension schemes on behalf of furloughed employees for any workplace pension scheme. Employers can claim up to the minimum employer pension contribution of 3% of qualifying earnings required under employers’ automatic enrolment duties, even if it is not an automatic enrolment pension scheme.
By easing the burden of workplace pensions for employers with furloughed staff we are helping them better manage costs during the crisis while supporting long-term saving for the future. The measures recognise the importance of protecting the hard won improvements in retirement provision for millions of savers achieved through automatic enrolment.
The CJRS went live on 20 April and claims can be backdated to 1 March where workers have already been furloughed. Information on the scheme can be found here:
https://www.businesssupport.gov.uk/faqs/.
To help support employers, the Pensions Regulator has detailed guidance on its website here:
https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/automatic-enrolment-and-pension-contributions-covid-19-guidance-for-employers.
We are continuing to work closely with the pensions industry to explain the detail of the CJRS scheme and to help providers take a pragmatic approach to disruptions to workplace pensions experienced by their clients.
Defined benefit schemes
The Government also recognise that these are challenging times for defined benefit pension schemes. The current scheme funding regime, overseen by the Pensions Regulator, is sufficiently flexible to cope with the current situation and the Regulator’s guidance published on 27 March sets out specific easements to its regulatory regime in recognition of the difficulties that some schemes and sponsors may have in the context of the current emergency. This can be found at:
https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/db-scheme-funding-covid-19-guidance-for-employers.
The best possible protection for members of defined benefit schemes is a strong profitable employer, and with the existing flexibilities and easements there is no reason why a pension scheme should push an otherwise viable employer into insolvency.
In the event where a sponsoring employer does become insolvent, and the scheme is not well enough funded to secure full benefits, the Pension Protection Fund, which is well equipped to weather market turbulence, will pay members compensation.
The Pensions Regulator has already set out its expectations of trustees of both defined benefit and defined contribution pension schemes and for employers and administrators, including the key risks they should focus on. The Regulator has confirmed that it will take a proportionate and risk-based approach towards compliance and enforcement decisions during these challenging times, with the aim of supporting employers, providers and savers.
Pension scams and transfers
The Government are committed to protecting savers during these unprecedented times and we are working with regulators to identify additional ways to support and safeguard individuals. At present, there is no robust evidence to suggest that savers are making hasty decisions to transfer pension funds or are being targeted by fraudsters. However, we are continuing to work closely with the Pensions Regulator, the Financial Conduct Authority (FCA), the Money and Pensions Service (MaPS) and pension providers to identify any new trends or issues and will take proportionate action if required.
In addition, we have supported the collaborative approach the Pensions Regulator, the FCA and MaPS have taken, communicating to savers to use MaPS, Pensions Wise or the Pensions Advisory Service channels for guidance before making decisions about retirement to protect people against scams. Furthermore, MaPS has produced information and guides to support individuals in making decisions about their money, debt and pensions at this challenging time. This includes reiterating that where appropriate Pension Wise guidance sessions can help an individual to understand their options fully. This can be found at: https://www.moneyadviceservice.org.uk/en/articles/coronavirus-what-it-means-for-you.
Access to state pension and benefits for people asked to shield themselves
There are approximately 900,000 users of the Post Office card account (POca) system for accessing their pensions or benefits. These POca customers ordinarily need to leave the house to access payments at the Post Office. The Department has worked closely with the National Shielding Service which is contacting clinically vulnerable citizens who have been advised by NHS England to shield as a result of the coronavirus pandemic.
We launched a new service on 10 April through which we have contacted 27,000 citizens who have POca accounts and we considered who may need support to access their benefit or state pension payment.
The Department has worked tirelessly to identify those older, vulnerable customers who urgently require help to access their payments. For those needing help, DWP visiting officers are able to discuss a number of options available to customers over the phone and we have worked closely with Post Office Ltd to provide contact free cash payments by Royal Mail special delivery to support the most vulnerable, with guaranteed next day delivery. This cash service adds to a range of measures we are using to support these individuals shielding at home.
State pension
In November 2019 the Government announced measures to increase most state pension rates by 3.9% in line with the annual growth in earnings, at the same time as announcing an end to the benefit freeze.
This meant that on 6 April 2020 the full rate of the basic state pension increased from £129.20 to £134.25 per week and the full rate of the new state pension increased from £168.60 to £175.20 per week—with working age benefits uprated by inflation. This was the largest increase in state pension in eight years.
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Seafarers and Offshore Workers'Pensions: Automatic Enrolment
Guy Opperman Excerpts(4 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I am tabling this statement for the benefit of hon. and right hon. Members to bring to their attention secondary legislation to ensure that seafarers and offshore workers continue to benefit from automatic enrolment into workplace pensions.
Our workplace pension reforms are designed to address the fact that millions of people were not saving enough for their retirement, and automatic enrolment (AE) was created to help them with their long-term pension savings. AE has been a great success to date. Over 10 million people have been automatically enrolled into a workplace pension and more than 1.6 million employers have complied with their legal duties across the whole economy. It is estimated that 26,000 more workers in the maritime industries were saving into a workplace pension in 2019 as a result of AE.
After the Pensions Act 2008 became law, most employers were brought into AE duties via secondary legislation introduced in 2011 but it was decided to give more time for employers in the maritime industries to allow for fuller consideration of the circumstances of workers in this sector. Seafarers and offshore workers were subsequently brought into AE in July 2012, via regulations and an Order in Council, and following a further public consultation. The 2012 legislation included sunset clauses taking effect on 1 July 2020.
Following a post-implementation review (PIR) in 2018 (which can be viewed, here: www.legislation.gov.uk/uksi/2012/1388/pdfs/uksiod_20121388_en.pdf) and, based on the available evidence, the Government concluded that AE should continue to apply to all qualifying workers in the maritime industries. In order to deliver on the review’s recommendation, I am today announcing my intention to lay instruments in both Houses. These instruments will remove the sunset clause from the existing legislation so that it continues to provide for workplace pensions for eligible employees in those industries.
In accordance with section 149 of the Equality Act, I can confirm I have given due regard to the need to: eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Act; advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; foster good relations between persons who share a relevant protected characteristic and persons who do not share it. In respect of these instruments, I have considered my duties under section 31(3) of the Small Business, Enterprise and Employment Act 2015. In my view, it is not appropriate to make provision for a further statutory review in The Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020.
A regulatory impact assessment will be published alongside these instruments, and can be viewed at: www.legislation.gov.uk. The Regulatory Policy Committee has validated this impact assessment which has been given a green rating.
A copy of the committee’s opinion will be published on www.gov.uk.
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Oral Answers to Questions
Guy Opperman Excerpts(4 years, 1 month ago)
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Harriett Baldwin (West Worcestershire) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
You have impeccable timing, Madam Deputy Speaker.
Workplace pension participation rates have more than doubled since the introduction of automatic enrolment under the coalition Government in 2012, rising from 42% in 2012 to 85% in 2018. In West Worcestershire, my hon. Friend’s constituency, 9,000 eligible jobholders have been automatically enrolled, and thanks are due to the 2,600 local businesses that are supporting them.
Harriett Baldwin
This has truly been one of the great policy successes of the last decade, but many would argue that people are still not saving enough for a comfortable retirement. Does the Minister plan to use other nudge techniques, such as automatic uplifts whenever a person gets a pay rise, to encourage saving for old age?
Guy Opperman
We have the 2017 review, which we continue to monitor and will implement going forward. Automatic increases are not part of the Government’s present plans, but I am actively looking to learn from private sector companies that are carrying out similar initiatives. I welcome my hon. Friend’s interest and would be happy to discuss this in more detail.
Jack Dromey (Birmingham, Erdington) (Lab)
Auto-enrolment, the creation of the last Labour Government, has transformed the lives of millions, with 10 million more now saving into a workplace pension, but 5 million people are still not covered because they are too young, because they earn too little or because they are self-employed.
The hon. Member for West Worcestershire (Harriett Baldwin) is right that 8% cannot be the summit of our ambition to ensure security and dignity in retirement. Does the Minister agree that 8% cannot be right, and will he agree to cross-party talks on putting right that wrong?
Guy Opperman
As the hon. Gentleman knows, we frankly speak far too often—virtually on a weekly basis —to ensure a cross-party approach to pensions policy. He is right that automatic enrolment was conceived under a Labour Government, implemented under the coalition and brought forward by the Conservatives. I accept that 8% is not enough going forward, but we await the 2017 review, the implementation of that review and further discussions on an ongoing basis.
Stephen Crabb (Preseli Pembrokeshire) (Con)
This Government need to demonstrate that they stand on the side of self-employed people. Given that millions of self-employed people are not saving enough for their retirement, what update can the Minister provide the House on the incentives and encouragement we are providing for self-employed people to pay into a pension?
Guy Opperman
As a formerly very fat, self-employed jockey and a self-employed white-collar barrister, I fully appreciate the issues concerned. I agree with my right hon. Friend that these are issues we have to address. He will be aware that we are trialling self-employment matters on an ongoing basis with the National Employment Savings Trust and a variety of private sector organisations. We welcome unions and other organisations that wish to be part of that, and it is front and centre of what we are trying to do.
Nick Smith (Blaenau Gwent) (Lab)
Too many young people do not save for their pensions, so how can the Minister ensure that young workers are better represented in workplace pension schemes?
Guy Opperman
The statistics are actually getting better by the minute. In 2012, only 35% of young people aged between 22 and 29 saved into a workplace pension. Now 85% of 22 to 29-year-olds save, but there is more we can do, including for the self-employed. The 8% that is being saved has made a transformational difference, and the opt-out rate among the young is the lowest of all the cohorts.
Giles Watling (Clacton) (Con)
Joanna Cherry (Edinburgh South West) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Government are committed in legislation to undertake a review of state pension age every six years. The 2017 independent review was by John Cridland. The next review will be conducted by 2023 and will give consideration to the latest life expectancy projections. The latest Office for National Statistics projections of cohort life expectancy, published in January 2020, showed that it is projected to continue to increase, and the WHO Global Health Observatory data show that people in the United Kingdom have better life expectancies than European or world averages.
Joanna Cherry
The new Marmot review has shown that a decade of Tory policies, from cruel benefit cuts to the unfair treatment of the WASPI women, have stalled life expectancy and increased the years spent in ill health for the poorest in our society. Which Tory policy would the Minister reverse first to begin to undo that damage?
Guy Opperman
I am afraid that the hon. and learned Lady is wrong. I will quote from the Marmot review, which says on page 13 that
“Increases in life expectancy have slowed since 2010”,
but then adds at page 15 that
“Life expectancy at birth has been increasing since the beginning of the 20th century.”
Mark Fletcher (Bolsover) (Con)
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Changes to state pension age were made by successive Governments from 1995, including the Labour Government from 1997 to 2010, and addressed the long-standing inequality in pension age. This includes the Pensions Act 2007, which I believe the hon. Lady supported. Women continue to have the same eligibility for support from the welfare system as men with the same date of birth, and this country presently pays more in welfare support than ever before.
Mrs Hodgson
Approximately 6,100 of my constituents have been affected by the equalisation of the state pension age, and many have told me of the financial hardship that they and their families are suffering because of the change and their inability to work any longer. Last week, there was another lobby of Parliament that I, together with lots of people who will be in the House today, attended—it was packed. Another one is coming up soon. These women stressed to me last week that they are not going away and are not going to give up, so what is the Minister going to do to give some justice to those amazing women?
Guy Opperman
The hon. Lady will be aware that full restitution would cost something in the region of £215 billion and that a case was before the courts last year: on all grounds, these ladies lost their case. Clearly, that matter is subject to appeal, but the case was lost in respect of every ground, including notice.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
Felicity Buchan (Kensington) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
As my hon. Friend will be aware, this was introduced in 2012 and has been a cross-party success story. It is fantastically good news for her constituents in Kensington, where 39,000 residents are signed up to an 8% automatic enrolment. Due thanks need to be given to the 5,300 local businesses who are supporting individual constituents, who are receiving 8% per annum workplace savings.
Margaret Greenwood (Wirral West) (Lab)
The Government tried to justify introducing the new bereavement support payment in April 2017 on the grounds that it modernises support, but couples who are not married or not in a civil partnership are not eligible. Last month, the High Court in England found that that is incompatible with human rights legislation and discriminates against children of unmarried parents. The Prime Minister has admitted that that is an injustice, so when will the Government put it right?
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
Four out of 10 older people say that the TV is their main source of company, yet as a result of Government decisions, millions of older pensioners are about to lose their free TV licences. The Budget is the last opportunity for the Chancellor to step in and overturn this unfair policy. Will the Secretary of State urge him to do so?
Guy Opperman
As the right hon. Lady knows only too well, this is a BBC decision. The Government remain very disappointed at its decision and urge it to think again.
Automatic Enrolment Thresholds
Guy Opperman Excerpts(4 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Automatic enrolment into workplace pensions (AE) has been a great success to date with over 10 million people having been automatically enrolled and more than 1.6 million employers meeting their duties. Over 2019-20, working people will save an estimated extra £18.8 billion into workplace pensions as a result of these reforms.
The main focus of this year’s annual review of the AE earnings trigger and qualifying earnings band (the AE thresholds) is to ensure the continued stability of the policy while learning from the April 2019 AE contribution rate increase. We also want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions while also ensuring affordability for employers and the Government. The review has concluded that the earnings trigger will remain at £10,000 and both the lower and upper earnings limits will continue to be aligned to the national insurance contribution thresholds.
I intend to lay an order before Parliament following the February recess which will serve to amend the Pensions Act 2008 so that, for 2020-21:
the lower limit of the qualifying earnings band will be £6,240;
the automatic enrolment earnings trigger will be maintained at £10,000;
the upper limit of the qualifying earnings band will remain at £50,000.
The analysis supporting the proposed revised AE thresholds will be published in due course. A copy of this will be placed in the Library of the House and will be available on the www.gov.uk website, following publication.
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Pensions
Guy Opperman Excerpts(4 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I beg to move,
That the draft Guaranteed Minimum Pensions Increase Order 2020, which was laid before this House on 27 January, be approved.
The GMP increase order is an entirely technical matter that is attended to in this place every year. It is subject matter that is dealt with under every successive Government. The statutory instrument provides for defined-benefit or final-salary occupational pension schemes that are contracted out to increase members’ guaranteed minimum pensions that accrued between 6 April 1988 and 5 April 1997 at 1.7%, in line with the increase in the consumer prices index to September 2019. I commend this order to the House.
Oral Answers to Questions
Guy Opperman Excerpts(4 years, 3 months ago)
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Ruth Edwards (Rushcliffe) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
With over £1.6 trillion in assets, UK occupational pension schemes have a significant role to play in supporting the Government’s commitment to net zero by 2050. Our environmental, social and governance regulations, introduced by this Conservative Government in October 2019, mean that schemes are now required to disclose their policy on climate change. In March, we intend to publish game-changing guidance on climate-related financial disclosure. I have written to the 50 largest schemes in the country to urge them to act on their investment duties and to tackle climate risk.
Jerome Mayhew
I welcome the progress that has been made on pension funds addressing climate change and ask the Minister to meet me concerning a constituent who is unable to access her pension fund without paying in excess of £2,000 in fees for independent financial advice —money she does not have until she accesses her fund.
Guy Opperman
I welcome my hon. Friend to the House, and I am happy to meet him—that will happen very soon. His constituent should understand that Parliament collectively required a £30,000 threshold whereby no individual can withdraw their defined benefit pension without first receiving advice from an independent financial adviser. As a Conservative, I am of course very keen for individuals to make their own decisions about their own money, but this decision was made and it ensured that an individual is protected from a decision without advice.
Ruth Edwards
As my constituents in Rushcliffe save for their retirement, they want to know about the potential financial risk to their pension pots from climate change and that their savings are helping to tackle, rather than embed, the climate crisis. My hon. Friend has done a lot to ensure that ESG plays a key part in pension providers’ decision making. Will he consider requiring them to disclose their exposure to climate-related risk to their members?
Guy Opperman
It is a pleasure to welcome my hon. Friend to the House. She obviously knows that Ken Clarke was a legend to us all, and I am sure that she will be a great champion on behalf of the citizens of Rushcliffe.
Sadly, too few schemes are making any form of disclosure about their environmental investments and their climate risk, and I am determined to change that. Every private occupational pension holder should be able to know, individually, how their fund is invested and be able to hold the trustees and asset managers to account.
Jack Dromey (Birmingham, Erdington) (Lab)
With Australia burning, South sea islands drowning, millions suffering from pollution and many dying, the world faces an unprecedented climate crisis. The power of pension funds is immense and, while I welcome the funds that have demanded that investment managers must, in the words of the Minister, “do the right thing”, so much more can, and should, be done. Will he therefore agree to cross-party, Front-Bench discussions, including on convening a pensions summit of all those with power, urging them to discharge their responsibilities to clean up our world?
Guy Opperman
I have been fortunate to work with the hon. Gentleman on a number of policies over the two and a half years that we have both held this portfolio. Clearly, I will wait to see the details of his proposals, but I would be delighted, subject to having read and considered them properly, to meet him and, at the very least, discuss how we take these matters forward.
Ms Angela Eagle (Wallasey) (Lab)
It is important that there is cross-party working on things that are as long term as pensions, but will the Minister assure the House that this transparency, which we all welcome, will not be paid for by massively increased fees charged to savers?
Guy Opperman
The hon. Lady will understand that there are two points to her question: the Task Force on Climate-Related Financial Disclosures is a voluntary arrangement that organisations have already entered into, and ongoing disclosure takes place; and in respect of the fees, the Government have agreed to review the matter in 2020, and we will look at that.
Jack Dromey (Birmingham, Erdington) (Lab)
The Government have said that the aim of the Pension Schemes Bill is to support pension saving, putting the protection of people’s pensions at its heart. However, this weekend, we learned that the Financial Conduct Authority is preparing to write to just over three quarters of firms that advised individuals on pensions between 2015 and 2018 about “potential harm” in their defined benefit transfer advice. How can the Government claim to have a joined-up pension policy when pension freedoms can be exploited, giving licence to rogue financial advisers to put at risk people’s savings for retirement? Some have paid a terrible price, impoverishing them for years to come.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The hon. Gentleman will realise that FCA rules already require an individual to seek independent advice when making a DB transfer, but I urge the FCA both to crack down on transfer scammers and to ensure that the quality of advice is fit for purpose. I welcome the FCA’s action at this stage.
Rob Roberts (Delyn) (Con)
Guy Opperman
My hon. Friend is right to raise that important point. We already publicise pension credit as much as we can, but we are working hard to get material into jobcentres and local authority premises to ensure that take-up is as high as possible.
Stephen Timms (East Ham) (Lab)
Oral Answers to Questions
Guy Opperman Excerpts(4 years, 6 months ago)
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Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Universal credit ensures that support goes to those who need it, allowing 700,000 more people to receive benefits than did previously—this is worth approximately an extra £2.4 billion. Those who move to UC from legacy benefits and whose circumstances remain the same will be eligible for protection of their entitlement at the point of transition.
Patrick Grady
This is Challenge Poverty Week, and plenty of people are challenged by UC. They face what Citizens Advice Scotland describes as an “acute dilemma” between enforced hardship for five weeks, while there is no income whatsoever, and ongoing hardship if they choose to take out a loan and have to face reduced monthly payments while they pay back that loan for the first five weeks.
Guy Opperman
The situation is that this is an assessment period and no one has to wait to receive a UC payment; an advance of up to 100% is available to those in need, and significant funding has gone to Citizens Advice Scotland.
Martyn Day
Some 700,000 households yet to move to UC have insufficient savings to cover that five-week wait, which clearly proves that UC is not working. Will the Minister consider making that advance payment to claimants a non-refundable first UC payment?
Guy Opperman
As the hon. Gentleman is aware, there is a managed migration pilot in Harrogate, where we are learning lessons, and I take on board the points he makes. That completes at the end of 2020 and, obviously, everyone not in the pilot stays on the legacy system as it currently runs.
Stephen Crabb (Preseli Pembrokeshire) (Con)
One important way for people on UC to build their financial resilience is through regular saving, although that can feel incredibly difficult for those on lower incomes. Does the Minister agree that the Government’s Help to Save scheme, which is precisely for people on tax credits and UC and which provides a 50% bonus on their savings, is a really important tool?
Guy Opperman
Just today, I met Toynbee Hall and other organisations that are championing the idea of Help to Save. It is making a massive difference, and it is linked to automatic enrolment and to various other schemes we are trying to pioneer in order to ensure that people have savings as well as UC.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I visited my local jobcentre, and it is very positive about the effects of UC. Specifically on financial resilience, how many people have been helped into work and the security of a regular pay packet as a result of UC?
Guy Opperman
My hon. Friend makes the good point that hundreds of thousands of people have been helped into work, but more particularly this is about the difference between the current system and the legacy system: we now have a dedicated work coach and personalised support; we have scrapped the 16-hour cliff edge; there is more help with childcare; and we have given additional support that was never there under the legacy system.
Rachael Maskell (York Central) (Lab/Co-op)
Guy Opperman
If the individual case is sent to the Minister with responsibility for UC, they will take that up and respond accordingly.
Kevin Hollinrake (Thirsk and Malton) (Con)
If people are paid on a four-week cycle, once a year they get paid twice in the same month, which disrupts the UC payment for two months. Will the Minister meet me to see what we can do to prevent these cash flow issues?
Guy Opperman
I take the point that my hon. Friend makes, in his usual astute way, and I know that the Minister concerned will be happy to have a meeting with him.
Ruth George (High Peak) (Lab)
Guy Opperman
As we discussed before the start of questions, the hon. Lady knows that I will soon write to her in great detail on those particular points. The individual issue is being addressed so that there is a much gentler way forward. We are reforming the way that advances are made so that there is no fraud involved in the process.
Heidi Allen (South Cambridgeshire) (Ind)
I hope the Minister will forgive me, but I was hoping to address my question to the new Secretary of State. I am interested to know what she has learned so far about the five-week wait and the damage it does. People have more debt when they come on to universal credit than they had on legacy benefits, and the advance payment is another debt that must be repaid from a meagre amount of benefit, frozen for three years. When is the Secretary of State going to look into getting rid of the five-week wait so that people get non-repayable money into their pockets more swiftly? They cannot wait for five weeks.
Guy Opperman
I am sure the Secretary of State looks forward to appearing before the Select Committee on Work and Pensions, of which the hon. Lady is a member, next week.
An advance is available to people in the usual way. Supported by the Treasury Committee and the Work and Pensions Committee, we have brought in the Money and Pensions Service to provide debt advice and budgeting support for claimants. There is no doubt that the extra money for Help to Claim, which is administered by trusted providers—whether that is the citizens advice bureaux or Citizens Advice Scotland—is very much helping the process.
Brendan O’Hara (Argyll and Bute) (SNP)
As my hon. Friend the Member for Glasgow North (Patrick Grady) said, it is Challenge Poverty Week in Scotland, and 400 events will take place to highlight the reality of living in poverty. One of the most significant push factors that take people into poverty has been the five-week waiting time between applying for universal credit and receiving it. Today, three quarters of a million households are unable to cover their outgoings during those five weeks and are trying to repay their universal credit advance. We know it, the public know it and I suspect the Department knows it; when will the Minister do something about it?
Guy Opperman
The hon. Gentleman will understand that it is an assessment period and no one has to wait to receive a UC payment. On migration, there will be a two-week run-on for both housing benefit and employment support benefits.
Brendan O’Hara
As part of Scotland’s Challenge Poverty Week, the Joseph Rowntree Foundation has published a report that shows that the Scottish Government’s actions—such as the building of 87,000 affordable homes and the introduction of specific child poverty legislation—are making a real difference in tackling poverty. Given the fact that there is at least one Government on these islands who are determined to tackle the scourge of poverty in our society, is it not time for social security to be devolved fully to the Scottish Parliament?
Guy Opperman
There is much that I could say about the Scottish Government and their approach to welfare, but I will pass on that. The point is surely that this Government have introduced childcare changes, more employment and support on an ongoing basis, including through lower taxes. It is obvious that there is a benefit from the changes and advances we have made.
Maria Caulfield (Lewes) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
We have extended the right to request flexible working, abolished the default retirement age, and introduced and financed the returner programme. I have seen the success of the returner programme through the company Release Potential, which is based in my Hexham constituency and which I have seen help many people back into work.
Maria Caulfield
If WASPI women were successful in appealing last week’s Court ruling, would the Government abide by that judgment and compensate women accordingly?
Guy Opperman
I spent 20 years as a lawyer, and my last client was a Mr Ed Balls, when he was Secretary of State for Education. I can assure my hon. Friend that this Government will abide by court decisions and follow the law. If there are any changes—two independent High Court judges heard the case and made the decision— clearly the Government will obey that decision.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I have been contacted by my constituent, who said:
“I have to work as a cleaner and it is hard physical work. I am nearly 63 and getting health problems. Our retirement age has been changed and we have had little time to plan for this so have little alternative but to keep working.”
Does the Minister not get that the real injustice here is that so many women have had no time to plan their pensions, no time to plan their savings and no time to plan for their families, and were told in their late 50s that they would have to work for so much longer? The WASPI women are not going to go away, so when will the Minister give them a fair deal?
Guy Opperman
I say with great respect and gentleness that the right hon. Lady, I believe, served in the Department for Work and Pensions as a Minister during the period when the state pension age was raised by successive Labour Governments. The Court in the judgment last Thursday—[Interruption.] She asked me a question, and she should let me finish. The Court in the judgment last Thursday indicated that the state, including the Labour Government of 13 years, acted appropriately by giving due notification in the way that it did.
Several hon. Members rose—
Guy Opperman
With great respect to my right hon. Friend, I refer him to the judgment in last Thursday’s case, a copy of which I will place in the Library of the House of Commons—in particular, paragraph 118 and the successive paragraphs in which the High Court outlines the exact work that was done in copious detail.
Jack Dromey (Birmingham, Erdington) (Lab)
Some 3.8 million women born in the 1950s who built Britain face hardship as a consequence of pension changes by this Government. Before the Court, they were told with cavalier disregard that they had no right to be consulted on the change of retirement age. Labour has already committed to some preliminary measures—early retirement and pension credit—and we will now consult with the women concerned about how much further we can go to bring justice to them. Thus far, the Government have committed to nothing. However, the Prime Minister said during the Conservative leadership contest that he is committed to doing “everything” he can to bring justice to the 1950s women. Can the Minister update the House on progress, or will this be another cynical broken promise on the part of the Prime Minister?
Guy Opperman
This is the matter of a court case which may be the subject of appeal. With great respect to the hon. Gentleman—who is, to his discredit, a friend of mine—the honest truth is that he should be consulting with a 1950s-born woman who was Secretary of State at the Department for Work and Pensions: the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who is also his wife and who was responsible for the continuation of the self-same policy that he now objects to. For 13 years, the Labour party did the perfectly proper thing of taking due account of equality and the rises in life expectancy, and it should stick to that, having made those decisions for 13 years.
Jack Lopresti (Filton and Bradley Stoke) (Con)
Ronnie Cowan (Inverclyde) (SNP)
There are over 5,700 WASPI women in Inverclyde. Many have worked their entire adult lives. They have paid their dues and they were expecting a pension, not a benefit. If we mucked around with MPs’ pensions in the same fashion, many Government Members would be standing and asking questions. Will the Secretary of State commit to undertaking an impact assessment for all women affected by changes in the state pension age and, once completed, offer a payment acknowledging any disadvantages caused?
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I am sure that the hon. Gentleman will be speaking to his own Government, who have the power under sections 24, 26 and 28 of the Scotland Act 2016 to take interventions and address the problem that he has raised.
Cat Smith (Lancaster and Fleetwood) (Lab)
Why are the Government not tracking young people when they leave the youth obligation? As such, how do they know whether the scheme works? [Interruption.]
Mr Jim Cunningham (Coventry South) (Lab)
One way that the Government could start to put right the injustices done to the women born in the early ’50s who were denied their pensions is to have a discussion with their colleagues in the Department for Transport and local authorities and provide free bus passes. That would help them a lot.
Guy Opperman
I refer the hon. Gentleman to the judgment given by the High Court on Thursday and, obviously, any individual local authorities that wish to address that point in a particular way.
Mr Speaker
The hon. Member for Edinburgh West (Christine Jardine) is being addressed by her leader, which is a very solemn matter. Nevertheless, I intrude, in the hope that she still wishes to ask a question.
Access to Pension Credit
Guy Opperman Excerpts(4 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It is a pleasure to serve under your chairmanship, Ms Buck.
I congratulate the hon. Member for Ogmore (Chris Elmore) on securing this important debate, which I accept addresses significant and real issues. I must also congratulate him on his marriage. He will agree with the Prime Minister—bear with me—when she made the point at Prime Minister’s Question Time today that those who choose to marry a Member of Parliament do so with great bravery. It is an honour and privilege to get married, but choosing to marry a Member of Parliament is a bold thing. I wish Mrs Elmore well, and I wish them both well for the future.
It is also a great privilege and pleasure to welcome the hon. Member for Newport West (Ruth Jones) to this place. This was the first time I have heard her speak; she spoke most eloquently. I congratulate her on her win, and wish her good fortune and enjoyment of this great privilege to hold a position in this House, where she will hold Government to account and possibly, in about 30 years, have a Labour Government—obviously under a new leader, as everyone in the House of Commons seemed to agree today.
Before I get into the nuts and bolts of the debate, I will make a point that is fair across the board and yet matters. It is entirely right for the hon. Member for Ogmore and the Opposition parties generally to hold Government to account, but it is also right that we all celebrate, support and talk glowingly about the various voluntary and charitable organisations that do such great work in all our communities.
Alex Chalk
I am grateful to the Minister for making that point. Does he agree that organisations such as the Gloucestershire Older Persons’ Association, which helps with everything from digital technology to benefits and so on, are precisely the ones that Government ought to be supporting to ensure that those who are entitled to pension credit or any other benefit get them? Supporting those charities is something that, respectfully, the Government could do.
Guy Opperman
I will not necessarily make fresh policy on Government support for charities—
Guy Opperman
Much though I am urged to do so by the hon. Gentleman. The hon. Member for Glasgow South West (Chris Stephens) asked if my phone was turned on, but it is most definitely turned off—with respect and due deference to the Chair—and it is not for me to make new tax or incentives policy.
A perfectly legitimate point, however, can be made in two ways in answer to my hon. Friend the Member for Cheltenham (Alex Chalk) and several other speakers. Voluntary organisations do a fantastic job of explaining to our older community—some of whom are digitally challenged and some fully up to speed online—the opportunities to claim and the things out there that the Government will provide, and that applies to any Government down the years. Basically, those organisations should have all our support, and anything that individual Members of Parliament, local authorities and local organisations can do to assist their efforts is entirely right. In my constituency, I have visited the Men’s Shed in Hexham and various support organisations, such as Age Concern in Corbridge. I fully accept that they do a fantastic job, as similar organisations do in Cheltenham and as does my hon. Friend. If we have the ability to use them more, I am happy to take any suggestions on board.
I accept that Government actions are criticised and I understand that it is for us to make our case, but I make a further point that the pension credit toolkit that we reissued in April, with two versions this year, provides copious advice not only to the individual who wishes to claim but to the voluntary organisations out there. I urge any voluntary organisations without access to the pension credit toolkit—which gives guidance, advice, assistance and recommendations of how to disseminate vital information to our constituents—to take it up, because it is of great importance.
All those things having been said, I want to make it clear that part of our case is that we would love pension credit take-up levels to be higher. The benefit is specifically intended to provide support to some of the poorest and most vulnerable pensioners in our community, and there is no question but that we are already committed to ensuring economic security for people at every stage of their life, especially when they reach retirement.
We are forecast to spend more than £120 billion on benefits for pensioners in 2019-20, which includes £99 billion on the state pension. As a result of the triple lock, from April 2019 the full yearly amount of the basic state pension is about £675 higher than if it had been uprated just by earnings since April 2010. That is a rise of more than £1,600 in cash terms.
In respect of pension credit, the value of the standard minimum guarantee this year is the equivalent of more than £1,800 per year higher in cash terms for single people, and more than £2,700 for couples, than it was in 2010. As a Government, we also spend £2 billion a year on winter fuel payments, which are payable to all pensioners, including those on pension credit.
The overall trend in the percentage of pensioners living in poverty has been a dramatic fall over recent decades. Rates of material deprivation for pensioners are at a record low. In fact, between 2009-10 and 2017-18, material deprivation for pensioners has fallen from 10% to 7%, and rates of relative pensioner poverty before housing costs have halved since 1990. We want to maintain that achievement. It is important that hon. Members understand that more than 1.6 million people already claim pension credit. That equates to £5.4 billion of claims. Indeed, as of November 2018, there were 2,450 pension credit claimants in the constituency of the hon. Member for Ogmore, and over 100,000 in Wales as a whole.
Moving on to the point about the BBC—
Guy Opperman
I am going to answer several of the hon. Lady’s points, but I will give way.
Patricia Gibson
Before the Minister talks about TV licences, will he tell us whether he will investigate the concerns brought to me by constituents about the claim line not being properly staffed?
Guy Opperman
I was going to come to that at a later stage, but I will address it now. I am told that there is no evidence that not enough people are manning the phone line, which is a freephone number. However, if the hon. Lady provides me with the specific information by letter, I will look into it and respond to her. She also raised the issue of the ability to communicate by post. Anybody can make an application by post; it is not restricted to Northern Ireland, as I think she seemed to suggest. There is a difference because Northern Ireland is a devolved Administration and is dealt with in a different way, but 20% of the population make a paper claim by post. As I understand, postal applications are possible—I will be corrected if I am wrong.
Guy Opperman
I will not give way again, because I have a lot of points to cover.
I want to deal with the point that the hon. Lady and other Members made about the state pension age increase. The hon. Member for Birmingham, Erdington (Jack Dromey) is married to a former Minister, now Mother of House, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who was in favour of the state pension age in the dim distant past in 1997, when she was Secretary of State for Work and Pensions. Hon. Members will understand that I am the latest in a long line of Ministers who have continued the policy of successive Governments to increase the state pension age by reason of equality legislation and the increase in life expectancy, which is light years away from the three score years and ten of our grandparents.
The hon. Member for North Ayrshire and Arran (Patricia Gibson) raised the situation of the Scottish Government in answer to my hon. Friend the Member for Cheltenham; I refer the House to the letter of 22 June 2017 from my opposite number Jeane Freeman to my hon. Friend the Member for Watford (Richard Harrington), in which she explains the section 26, 28 and 24 powers under the Scotland Act 1998, which provide opportunities for the Scottish Government to intervene should they so choose, particularly in respect of the section 26 discretionary payments.
I now turn to the issue of the BBC. Its decision to limit free TV licences only to those aged 75 and over and in receipt of pension credit is disappointing. We expected it to continue the concession, and we want it to look at other options to help more elderly people who rely on TV to stay connected to the world. The BBC has indicated that it will write to all existing TV licence holders, advising them of how the new policy will work and when they need to act.
The Government look forward to hearing more from the BBC about its detailed plans for communicating and implementing that change. That is clearly a matter for the Department for Digital, Culture, Media and Sport; Government officials continue to engage with the BBC, but it would be wrong not to point out that in 2015, when the decision was made, the director-general at the time stated:
“I think we have a deal here which is a strong deal for the BBC. It gives us financial stability...The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC…I think being in control of our income…is a very grown-up response for the BBC and a grown-up response for any organisation”.
The House can draw its own conclusions from what Lord Hall said in 2015 and the consequent decision that it has made. I hope that the BBC will think again once it has reflected on the comments that it made in 2015 and the nature of the pushback that there has been.
Jack Dromey
Is the Minister seriously suggesting that the Government bear no responsibility whatsoever for the BBC’s decision? Does that not sound like the Government are washing their hands of responsibility?
Guy Opperman
No; I was quoting what the BBC said about the fiscal settlement, which made it clear that it was a strong deal that gave the BBC financial stability, and that the decision to put the cost on the BBC had been
“more than matched by the deal coming back for the BBC”,
which it then decided to take a differing approach to. Officials will continue to monitor the position.
I want to talk briefly about historical activity. Successive Governments have tried to promote pension credit, yet the take-up has remained stubbornly at around 60% for some considerable time. When pension credit was launched in 2003 there were higher figures, of up to 74%, but the Office for Budget Responsibility’s fiscal risk report from May 2008 stated that
“experience from 2003 to 2008, suggests that very large increases in take-up are unlikely”.
The Department for Work and Pensions under the Labour Government commissioned and examined that report. Successive Governments have put forward a variety of innovative approaches, but research in 2010 indicated that the most common reason given by those identified as eligible, for not claiming pension credit was that they believed they would not be entitled, typically because they had savings or other sources of income.
Guy Opperman
I will not give way because I only have a minute before the hon. Member for Ogmore will make his closing remarks. There are other reasons, and I urge hon. Members to publicise pension credit. I urge the voluntary organisations, which are the most trusted organisations in a community, to support the processes. We use a variety of channels to communicate information about benefits, whether pension credit or other benefits. People can check whether they are likely to be entitled using the online calculator on gov.uk, or they can make a claim by calling a freephone number.
We engage with people who may be eligible for benefits at pivotal stages, such as when they are approaching state pension age. An accompanying leaflet contains information about pension credit and advice on how to check eligibility, and a freephone telephone number if they wish to discuss their pension credit entitlement. We also target those who report a change of circumstances. We know that the best way to reach eligible customers is through trusted stakeholder organisations, which may be best placed to understand the local circumstances and needs in their communities. That is why I strongly recommend the online toolkit for the agencies and individuals, but I welcome the opportunity to discuss this matter.
The Government are committed to increasing the number if at all possible. I thank the hon. Gentleman for raising the debate, and I wish him very well in his future married life.
Chris Elmore
I thank all hon. Members who have taken part in the debate today. There seems to be a bit of a Celtic theme coming from across the Scottish and Welsh nations, but I also thank all those colleagues from across the House who represent seats in England.
I thank the Minister for his response—it would be churlish of me not to—but it is disappointing, because there is a real need not just to rely on the voluntary sector to increase the use of pension credit.
Chris Elmore
I can see the Minister nodding, and I am sure he would acknowledge that. The reality is that pensioner poverty is increasing. The Government need to do more, not only in advertising; they need a constructive way, through other DWP benefits such as housing benefit, which I mentioned, to try to increase the uptake. They should be talking to Independent Age about how the Government can finally start to increase the access to pension credit.
I do not think it is just a case of the Minister’s saying that he wants to do this; the next Minister or the next Secretary of State, whoever they may be in the rolling hours, needs to take this on as a real task, to ensure that pensioners get the benefits that they are entitled to. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) said, those pensioners built this country; they deserve our support and it is crucial that they get the benefits they are entitled to. I am grateful to everyone who made a contribution, and to the Minister and various hon. Members for their congratulations on my recent marriage on Saturday. I can confirm that my wife is a good advocate for marrying an MP; she ensures that I behave myself and everything else.