Pensions Bill

Debate between Jackie Doyle-Price and Anne Begg

Monday 17th June 2013 Commons Chamber

[Dame Anne Begg]

We did indeed. In fact, that was the favoured option of many of our witnesses. The Government did not listen, and opted for “pot follows member”, but we, and a number of witnesses, thought that NEST would be ideal as the source of an aggregated fund.

The communications strategy must also make it clear that savings credit will end when the single-tier pension is introduced. However, one of the main issues dealt with by the Select Committee was the issue of women—for it is usually women who are affected—who currently depend on the pension contributions of a partner or husband and whose pensions are therefore based on derived rights, because that system will end. The Committee recommended that women within 10 years of pension age should continue to enjoy those rights, because in less than 10 years they would not have time to build up a contribution record that would enable them to receive any kind of state pension in their own right. That, we thought, was very unfair, given that all the household planning might depend on the assumption that the wife would receive 60% of the husband’s basic pension.

[Jackie Doyle-Price (Thurrock) (Con)]

I share the hon. Lady’s concern. In their retirement, a group of people who have depended entirely on a single income and have not imposed any burden on the taxpayer are now being robbed of what they had every legitimate expectation of receiving.

[Dame Anne Begg]

Indeed. We talk a great deal about how women’s lives have changed. Younger women may have built up contributions in their own right, either through caring responsibilities or through their own work, but there is a generation of women who may not have retired or reached pension age, who have stayed at home throughout their lives, and who expected at least to receive that 60%, although they did not expect more.

I accept that, ultimately, that system should probably end, but I think it unfair to take the 60% away from people who are too close to pension age to build up contributions in their own right. I also accept what the Government have said about people who do not live in the United Kingdom, but some of those affected will be living here, and that group may include a number of people who have been in work but have not qualified for national insurance credits, because their income has been too low to register, or because they have had a number of very small jobs and have therefore not made NI contributions that would have covered those years.

We have already discussed the group of women who were born between April 1951 and 1953. Some of their fears have been allayed—I think they initially believed that they would suffer a major change in their pension income—but some issues still need to be addressed, partly through the communications strategy. The Government must deal with that group first, and give them the information that they need.

There will be cliff edges, as there are bound to be when any change is made, and there may be some groups whose cliff edges will be worse than the one facing that group of women, although we have not spotted them yet. I hope that those who give evidence in Committee will make the Government aware of any other cliff edges, because the last thing we want is to discover in April 2016 that there are unexpected problems affecting certain groups. There will also be a great deal of complexity in the new system. Nothing will be simple, particularly the migration from the old system to the new system and the calculation of accrued rights. That was never going to be easy, which may be why it has taken the Government so long to come up with a solution.

We know that in the long term the Government will be spending less money. There obviously cannot be more winners than losers overall, because the pensions bill will be lower in 30 years’ time—which, I suspect, is why the Government managed to get the legislation past the Treasury. I hope that that will make the situation more sustainable, but I believe that this will be an election issue in years to come. The level at which the single-tier pension is set will be in the gift of Governments, and it will be up to them to decide whether to increase it or not.

However, overall the Bill is to be welcomed. It is the right step in the right direction, and it will build on the good work that is already being undertaken. It is also important that people realise that the subject of pensions affects not just those of pensionable age, but everyone, and especially those of working age, because if they do not start making provision for their pensionable age now, they will find that they do not have enough money to be able to have the quality of life they expect in retirement.