Women’s Pensions

Iain McKenzie Excerpts

Tuesday 8th October 2013 Westminster Hall

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Main. I was delighted to be granted this debate, which is extremely relevant and important to many thousands of households across the country, including in my constituency of Inverclyde. I also thank the Minister for his time today.

In these uncertain times, when it can be difficult to find a good employer, and a good employee pension is even more difficult to find, many could be forgiven, as in the past, for counting on their state pension—an agreement they believe will deliver on their regular contributions. “Thank goodness,” they might think, trusting that all those deductions from their pay over the years will finally secure a reasoned and equal pension in retirement. They could never have foreseen or taken into account the Government’s recent pension reforms, which many believe to be unfair. I am, of course, talking about the reforms to the state pension age, and particularly how those reforms have disproportionately affected women born in the early 1950s.

The Government’s intention was to introduce a single-tier state pension from April 2017, but as the Minister will be aware, in this year’s Budget that date was brought forward to April 2016. I accept that that is good news for thousands of women, but it still excludes the group on which I am focusing. I believe we all welcome the single-tier pension, but there is one major injustice that can be identified within that new system. Implementing the single-tier pension on 6 April 2016 means that there is a group of women born between 6 April 1951 and 5 April 1953 who will not be eligible for the single-tier pension, even though a man born on the same day will qualify, because the pension age will be unequal on implementation day in April 2016.

The Government’s changes to the state pension have consistently hit hard-working women, and now the single-tier pension will let down 700,000 women across the UK. That is simply not good enough, and it is unacceptable to that group of women. For the single-tier pension to be successful and to achieve its designated goal of equality, it should treat women and men of the same age equally. When the Government’s White Paper was originally published, my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) was quick to spot the issue. He identified that, as a result of the 2017 implementation date, 429,000 women will not receive the flat-rate state pension, even though a man of the same age will.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House, and I look forward to the Minister’s response.

Does the hon. Gentleman share my concern, as I suspect that he and many others do, that some ladies will have to work to the age of 72, or possibly 73, thereby holding back a job from an 18-year-old, who will be put on jobseeker’s allowance? Is there not a better way of balancing the issue?

[Mr McKenzie]

The hon. Gentleman makes a very good point. The age to which such women are being asked to work will affect not only them but younger generations who are looking for jobs. I will expand on how working longer affects longevity, and how the argument about longevity does not apply to all of those women.

It is important to note that 80,000 women born in the early 1950s have already had their state pension arrangements changed by the Pensions Act 2011. Surely the Government cannot continue to claim that the new Pensions Bill is fair. What is the Government’s justification for making a change that is unfair and unjust for hundreds of thousands of hard-working women across the UK?

In my constituency alone more than 600 women born on or after 6 April 1951 and before 6 April 1953 will be deprived of, on average, £884 a year, which I think we can agree is not an insignificant sum to lose out on in these tough financial times. Those women are rightly angry at what they see as the dual adverse impact of an increase in their pension age and their non-eligibility for the single-tier pension. I have met many of the affected women in my constituency, and they have expressed their dismay and disgust at the policy. Possibly the phrase that best describes the fate of those women is “So near, yet so far away.” How would the Minister and his Government colleagues feel if, after planning for their retirement date and making what savings and plans they could, they were told they had to work for longer and would be excluded from the new single-tier pension scheme? I suspect they would agree that it is simply not fair.

These women, most of whom left school at 15, have been paying into the system year after year after year. They have made the necessary savings and plans for their retirement, and above all they have spent a lifetime working hard, paying taxes, keeping a home, caring for their families and, naturally, looking forward to their retirement. With all of that, they hoped and expected to receive their state pension at the age they had come to expect. Those women will now be forced to wait longer to retire, and they will miss out on the new £144 a week single-tier pension for the rest of their lives; indeed, they will now receive about £127 a week. Once again, does the Minister find that fair?

Although the coalition Government are fond of quoting a figure of some £4 billion as the overall cost of including these women, the Department for Work and Pensions published an estimate showing that the true cost is closer to £220 million. In his evidence to the Select Committee on Work and Pensions, the Minister agreed that those women will be financially worse off than a man of the same age. He also stated that 90% of those women would fare better because women live longer. It is a weak point for the Government to claim that those women may recoup the money they lose out on because women live longer. Life expectancy differs vastly across the country. Life expectancy from boundary to boundary in my constituency varies hugely—by as much as 10 years—which means the policy is extremely unfair and unequal for the women I represent.

Women born in Inverclyde in the 1950s have worked in some of the toughest industries our country has ever seen. Mills, sugar refineries and shipyards are extremely heavy industries that have had a huge impact on the health of women in my constituency, resulting in a much shorter life expectancy than in other parts of the UK. Even late in their employment life many worked in the electronics industries, which are perceived by some to be less demanding and hazardous than the industries of the past. The electronics industries, however, still exact a health toll on my constituents and reduce the longevity of the women who transferred their skills from the mills, sugar refineries and shipyards to the sunrise electronics industries of the 1980s and 1990s. Those women might have worked alongside chemicals, for example, that we have now discovered eat holes in the ozone layer and are thus banned from use even in aerosols. We are yet to acknowledge, accept or see the effects on their health.

The industries of the ’80s have yet to produce their health casualties, but the evidence thus far paints a bleak future for many hard-working women in my constituency. We need only ask the women who are fighting past employers for recognition of responsibility for cancer clusters to know that, for many, catching up on their pensions will not be an option. If that level of inequality in working conditions and life expectancy exists within a community the size of Inverclyde, it beggars belief to imagine the differences facing larger communities throughout the United Kingdom.

Let me tell Members about Mrs Angela Hurrell, who lives in my constituency. Angela was born on 26 March 1953. Her retirement plans have changed drastically, as she will not reach pensionable age until 6 March 2016—four weeks before the introduction of the single-tier pension. Angela will now work until she is 62 years and 11 months old, and she will receive the old pension figure of approximately £127 a week. She will be £884 a year worse off than a woman born just 10 days later. For her, it is truly a case of so near, yet so far away.

Let me also highlight the case of Angela’s friend, Mrs Maureen Hamill, who is also a constituent. Maureen is a hard-working self-employed local business woman. She was born on 27 March 1953, and her retirement plans, like Angela’s, have changed drastically. Maureen is on her feet all day and works long hours. She does not have the luxury of reducing her working hours, which means that if she is unable to work, her business closes. Despite all that, Maureen will also be excluded from the single-tier pension. Again, she seems to have been born too early, to be retiring too late and to be £884 a year worse off. We can see a pattern forming: so near, yet so far away. I hope the Minister will agree that that does not sound like the fairer system his Government promised.

Angela and Maureen are no different from the hundreds of thousands of other women from across the country whom I could have mentioned. As with many women close to retirement age, every pound is important to them in these difficult financial times. They are but two examples of ordinary, hard-working women in my constituency who deserve to be treated fairly. They simply ask to receive the same improved pension a man the same age will receive.

The inclusion of the women I have talked about would allow the Government to fulfil one of their goals: a universal new state pension built on fairness and equality. I accept they have improved the Pensions Bill, but if the parameters have been changed once to include thousands of women, why can they not be changed again, so that we can end the inequality for the women I have talked about? I urge the Minister and the Government to think about the examples of Angela and Maureen and about the 700,000 women across the UK who share their circumstances. I hope the Government will reconsider. Let it not be so near, yet so far away for these 700,000 women.

--- Later in debate ---

[Steve Webb]

That is what I meant—I was gesturing, but that will not be in Hansard. It could be argued that the person retires and everyone else moves up a step, and the young unemployed person comes in at the bottom; but what has been lost is the productivity, skills and experience of the older worker. If that worker has not been adding anything to the firm, then fine—get rid of them—but they are. That is the point. On average—not in every case—older workers are, by definition, the most experienced; they are often very productive and less likely to take time off sick than slightly younger people. They contribute a huge amount. The evidence from around the world—not from Government research but from work by the Institute for Fiscal Studies and others—is that pensioning them off does not benefit younger workers. There is not a battle between the generations; in many ways they are complementary, because the older, experienced worker can mentor, and use their skills to bring on, younger workers.

[Mr McKenzie]

I thank the Minister for his detailed response, but I cannot help but think that his argument about elderly workers not retiring to release jobs to younger workers implies that employers should hold on to employees as long as possible, even when they are near retirement age and want to retire.

[Steve Webb]

The hon. Gentleman is putting words into my mouth. I am saying that older workers, on average, are very productive. Clearly there comes a point when our productivity declines, as we get much older. We should bear in mind that the 700,000 women who are the subject of the debate are in their early 60s. I think that many of the hon. Gentleman’s constituents would be offended at the suggestion that they are not productive, valuable members of the work force. We do not say that employers should be forced to go on employing them if they want to stop working, but the evidence from the IFS has debunked what has been called the lump of labour fallacy—the idea that there is a lump of labour to be done, and so it is possible to knock out an older worker and slot in a younger one. That neglects the valuable contribution of older workers.

Clearly there is a limit. The hon. Gentleman mentioned the age of 72 or 73, although the statute book takes us only to 68 at the moment, so I am not sure where he got that from.