Debate on the Address

Debate between Jim Cunningham and Ian Blackford

Monday 14th October 2019 Commons Chamber

[Ian Blackford]

My hon. Friend is correct. Some 3.8 million women are affected by these pensions changes. We have been over this time and again: the lack of notice given—in some cases, only 14 months. Some women have lost years of pension entitlement—in some cases, tens of thousands of pounds. The callousness, the lack of consideration! The fact that many of these women are suffering is absolutely disgraceful, and they have had nothing but contempt from this Government.

[Mr Jim Cunningham (Coventry South) (Lab)]

I totally agree with the right hon. Gentleman about the pensions of women born in the ’50s. Has he noticed that something else was missing from the Queen’s Speech? There was no commitment to do anything about the issue of pensioners’ television licences either. Does he agree that that should have been included?

[Ian Blackford]

I very often agree with the hon. Gentleman, and I absolutely agree with him on this. There ought to be a commitment in the Queen’s Speech that the TV licences of those over 75 will be paid by the Government. My question to the Prime Minister is: where is that? Let us have a signal that those over 75 will have the comfort of being able to watch television and having their TV licences paid for.

EU Withdrawal Agreement

Debate between Jim Cunningham and Ian Blackford

Tuesday 18th December 2018 Commons Chamber

[Ian Blackford]

Thank you, Madam Deputy Speaker. I am most grateful for that. Obviously, I have taken a number of interventions and I may take one or two more, but I am conscious that many people wish to speak in this debate. I have a number of remarks I wish to make—

[Mr Jim Cunningham (Coventry South) (Lab)]

Will the right hon. Gentleman give way?

[Ian Blackford]

I will give way in a little while.

The recent European Court of Justice judgment provides clarity at an essential point in the UK’s decision making over its future relationship with the EU. It exposes as false the idea that the only choice is between a bad deal negotiated by the Government or the disaster of no deal; remaining in the EU is still on the table, and the Prime Minister cannot insinuate otherwise. We, as Opposition parties, cannot allow the Government to kick the can down the road and we cannot allow them to run down the clock. I repeat: this is not a binary choice of this deal or no deal—there are other ways forward. The Prime Minister is simply scaremongering, trying to prevent a second EU referendum. This Government claim to want to fulfil the will of the people, yet they deny the people of the United Kingdom a say. This is a democracy, not a dictatorship. After two years of chaos, people have the right to change their minds. Why would this Government deny them a say? We cannot go on like this. We need clarity, certainty and conclusion; this continued turbulence is sending our economy into further insecurity. At a time when this place should be doing more to end homelessness, to decrease worklessness, to stop universal credit hardship, to safeguard our NHS—I could go on—this Prime Minister and this Government are distracted and divided. It is time they got on with the day job.

[Mr Cunningham]

I picked up a point the right hon. Gentleman made earlier in response to Government Members. Scotland faces the same as the rest of the country. Under this deal there is a lot of uncertainty and unknowns. The EU can almost tell us what to do. So far, the Government have come forward with no plan B. We do not even know at the end of this deal what is going to happen. Expenditure has been guaranteed only up to 2020. That affects universities, research and development, and the major manufacturers in this country. Does he agree that this is a disgrace?

State Pension Age: Women

Debate between Jim Cunningham and Ian Blackford

Wednesday 29th November 2017 Commons Chamber

[Ian Blackford]

I will make progress before giving way again.

The Government have an opportunity today to do something about it. I remind the House that 250 Members of Parliament have presented petitions on behalf of WASPI women. That is 250 Members of Parliament who I expect to go through the Aye Lobby tonight. There is no point signing a petition unless they are prepared to go through the Lobby, otherwise they have duped the WASPI women. I trust that no Member would wish to do that.

Our motion is a simple one. It calls for mitigation. It is written in a way that allows all Members of Parliament to recognise the injustice that women born in the 1950s are facing, and it allows the Government to bring forward proposals. Let me state at the beginning of this debate that if parliamentary democracy means anything, the House must divide on this motion. The Government must either support mitigation, which we are calling on them to do, or they must have the guts to vote against it.

Now is the time for Members on both sides of the House to signal that we need to put mitigation in place. Let us stand up today for 1950s women, because I believe parliamentary arithmetic is on our side.

[Mr Jim Cunningham (Coventry South) (Lab)]

Will the right hon. Gentleman give way?

[Ian Blackford]

I will give way one more time.

[Mr Cunningham]

I congratulate the right hon. Gentleman on securing this debate. He and I have been involved in a lot of debates. I think the Government can find this money. It is no good their trying to blame the Scottish Parliament. This is a UK issue, full stop. I assure him that I will be backing him in the Lobby today.

[Ian Blackford]

I am grateful to the hon. Gentleman. I hoped he would be backing me, and he has been resolute on this issue over a long period of time. He is absolutely right; we can find money on the magic money tree for Northern Ireland and, as I said in the Budget debate only last week, we found £70 billion for quantitative easing last year. A £70 billion cheque was written for the Bank of England to put into the financial markets, so do not tell us that the Government cannot find the money. Of course, the answer to the question is that the money is there because the national insurance fund is sitting on a surplus.

Debate on the Address

Debate between Jim Cunningham and Ian Blackford

Wednesday 21st June 2017 Commons Chamber

[Ian Blackford]

Let me make absolutely clear the role that the Scottish National party will play in this Parliament. We will be a force for progressive politics. I commend my very dear friend the previous hon. Member for Banff and Buchan, who was responsible for pushing through the private Member’s Bill on the Istanbul convention. I will certainly commend to the Scottish National party the idea of supporting the Government on any reasonable moves in that regard. I want to work for us so that we can get the best deal for the people of Scotland, particularly when it comes to Brexit.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate the hon. Gentleman on being elected the leader of his party. Has he noticed, as I have, that in the Queen’s Speech there are no measures to deal with austerity? That suggests that the Government have learned nothing, particularly when it comes to the plight of WASPI women.

[Ian Blackford]

I thank my friend for that intervention, and I agree with him. There is unfinished business, certainly for me, having been the pensions spokesman for the SNP in the last Parliament. We will not leave the WASPI women without a voice. It is utterly disgraceful that some of the worst-affected women were given 14 months’ written notice of an increase in their pensionable age. I have said before that, in this ridiculous situation, a woman born in February 1953 would have retired in January 2016 just shy of her 63rd birthday, but a woman born in February 1964 will not retire until July 2019, when she will be 65 and a half.

Quite simply, a two-and-a-half-year increase in a woman’s pensionable age over a one-year period is unacceptable. Cridland identified in his review of the state pension age that we should not be looking at an increase in pensionable age of more than one year in every 10 years. As I have often pointed out to the Government, there is a very easy solution, which is to reverse the Pensions Act 2011. The cost of doing so would be £8 billion, which is easily affordable given that there is a surplus of £30 billion in the national insurance fund.

State Pension: Working-class Women

Debate between Jim Cunningham and Ian Blackford

Thursday 9th February 2017 Westminster Hall

[Ian Blackford]

I apologise, Mr Flello, but you can understand the anger that the women feel. A Member of Parliament on the Government Benches laughing when we are discussing this important issue is beneath contempt, and the Member should actually stand and apologise to the women who have been affected by this, rather than sitting there smugly as he is.

As I mentioned, it is no surprise that women were unaware of the changes because when the DWP commissioned research in 2004 it highlighted that only 2% of respondents mentioned that they had been notified of changes to the state pension age via a leaflet. Perhaps the hon. Member for Rugby (Mark Pawsey) wants to rise and try to defend that—quite frankly, it is indefensible. It is an insult that the Government at the time thought that changes affecting a woman’s retirement age could be dealt with by a leaflet. That is an abrogation of responsibility and each and every Member who refuses to do something is culpable.

We should all receive an annual statement from the DWP on our expected entitlement, just as we do from private pension providers. Why has that not been happening? Do the Government not know where we all live? [Laughter.] It is a fair question. Why were the women not written to? Why have we not had an answer to that question? Why did it take all the years that it did? The case is not defensible—it is shameful—and the way the Government still refuse to accept responsibility is shameful.

The failure to communicate was highlighted by a DWP publication in 2004 called “Public awareness of State Pension age equalisation”, which found that only 43% of all women affected by the increase in state pensionable age were aware of the impact on them. If the Government accept that women were not informed in a timely manner and therefore did not have time to react, why do the Government not accept their responsibilities?

We also know—you couldn’t make this up—that the Government sent out 17.8 million letters to men and women between May 2003 and November 2006 on automatic state pension forecasts but, wait for it, they did not contain any information about the state pension age. That is quite remarkable. Letters were written, but they were just the wrong letters—they did not have the important information. They said, “To find out more about the state pension age for women, please see ‘Pensions for women: your guide’. See page 10 for details on how you can get a copy of this guide.” That is no way to convey information. The Government should have communicated accurate, clear and transparent information. That was another massive failure to communicate.

At some point, rather than hand wringing, the Government have to take responsibility, because 2.6 million WASPI women have been let down. I am going to wind up because I realise that time is pressing. Research in 2011 by the English Longitudinal Study of Ageing found that by 2008 only 43% of women affected by the change were aware of it. Just think about this: over half of women who were expecting a pension at age 60 were going to be denied that. I cannot imagine the shock when they realised that they were not going to get what they thought was rightfully theirs. It is not the women who are at fault; they have paid in, expecting a pension. It is the Government who have let them down and it is the Government who have a moral and ethical responsibility to do something about it.

[Mr Jim Cunningham (Coventry South) (Lab)]

Will the hon. Gentleman give way?

[Ian Blackford]

I will happily give way.

[Robert Flello (in the Chair)]

Order. May I gently suggest to hon. Members that, while I appreciate that there has been other business in the Chamber, we are on the wind-ups and Members really ought to be here for the debate rather than coming for the wind-ups? I will allow my hon. Friend a very brief intervention on this one occasion, because I am sure he has been in the Chamber previously up until now, but I remind Members that they really need to be in for the entirety of the debate.

[Mr Jim Cunningham]

I will be very brief. I apologise, Mr Flello; I was actually over in the Chamber because there were some important debates there as well and I cannot be in two places at once even if I would like to be. This is a timely debate because next month we will have the Budget. If the Chancellor can find billions for high-speed rail and other issues, surely he can find a couple of billion to give these women a decent life.

[Ian Blackford]

That is a very good point. We can find the money for high-speed rail. We can find, at the drop of a hat, £170 billion or more for Trident renewal. We are even due to debate the renewal of this place. If I were given a choice, I would want to make sure that the WASPI women were compensated and not that £7 billion was spent on reforming this place. That can wait, but the WASPI women need their money and they need it today.

The DWP told the Select Committee on Work and Pensions last year:

“Until 2009, direct communication with people affected by increases in state pension age was very limited.”

The Government must reflect on that and on the fact that women have not been properly informed. The Pensions Minister, in a parliamentary answer to me on 23 November last year, stated:

“The Government has committed not to change the legislation relating to State Pension age for those people who are within 10 years of reaching it. This provides these individuals with the certainty they need to plan for the future. We recognise the importance of ensuring people are aware of any changes to their State Pension age”.

We have put an option to the Government that is affordable and is about doing the right thing. The Government should agree with us. Frankly, I do not want to see any of us back here again. It really is about time that when the Minister rises today, she recognises the wrong that has been done. For the love of God, do something—do the right thing.

State Pension Age: Women

Debate between Jim Cunningham and Ian Blackford

Wednesday 30th November 2016 Commons Chamber

[Ian Blackford]

I thank the hon. Gentleman for that point, and he is absolutely spot on. This is about justice and fairness. It is about people who have paid into a pension and who expected to get that pension—in the case of most of these women, at age 60. The discovery that they were not given adequate notice is a clear reason why the Government must change course and act in a responsible manner.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman has spoken in many debates on this issue, and I pay tribute to him for that. The situation gets worse. The Government, through the back door, are examining the triple lock for existing pensioners. More importantly, responsibility for television licences for pensioners over 75 is being shoved on to the BBC, which will get the blame instead of the Government.

[Ian Blackford]

Again, I find myself agreeing with the hon. Gentleman.

As a House, we must reflect on the situation in which there are still 1.2 million pensioners in this country living in poverty. I am ashamed when I hear Members of the House saying that we should examine the triple lock, because we should protect our pensioners. One thing on which I will give an absolute commitment is that if we had responsibility for pensions, the triple lock would be secured by the Scottish National party. Pensioners would be secured with the SNP.

State Pension Age: Women

Debate between Jim Cunningham and Ian Blackford

Tuesday 15th November 2016 Westminster Hall

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for securing the debate. He has certainly done women a great service, because he has been working on this issue for a long time. The other dimension to the issue, which we see when we do an analysis of it, is that it affects women in different ways. There are different poverty levels involved, so things such as bus passes may not be accessible to them.

[Ian Blackford]

Absolutely. The hon. Gentleman makes a valid point. I will come later to the proposals that my party has made. We have been able to test the number of women who would be taken out of poverty as a consequence, and it is a very important point.

We should remind ourselves what a pension is. It is deferred income. Women and men have paid national insurance in the expectation of receiving a state pension. That is the deal, plain and simple: people pay in, and they get their entitlement. They do not expect the Government, without effective notice, to change the rules. What has been done to the WASPI women has undermined fairness and equity in this country.

Local Government Pension Scheme

Debate between Jim Cunningham and Ian Blackford

Monday 24th October 2016 Westminster Hall

[Ian Blackford]

I will give way in a moment but I want to finish the point. It is important, therefore, that we have the debate about infrastructure investment. There is an important opportunity, but that opportunity must be seen by local pension schemes as being about investing in their local economy. The Government have to think very carefully about that inter-relationship.

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for giving way and I agree with everything that he has said, and with the comments of one or two of my colleagues.

There is another issue to consider when we talk about the ability of local authorities to invest in various assets for pension schemes. We can have an ethical foreign policy but local authorities must be unethical in their investments, which is a contradiction. I am thinking particularly of cluster bombs and things like that. In the west midlands, a pension scheme might not want to invest in companies that manufacture cluster bombs but has to do so because the Government say so.

[Ian Blackford]

I thank the hon. Gentleman for his contribution and he makes an interesting point. We must have the wider debate about sustainability and ethical investment. There are certainly very attractive funds that exist in the area of sustainability, corporate social responsibility and so on, and it is very important that local authorities are allowed to have the debate about what is in their members’ best interests. They must be able to satisfy them that they are acting in their interests. It is entirely legitimate for pension schemes to have a debate about what they consider to be ethical investments, and they should be allowed to pursue them provided that they can demonstrate that they are acting in the best interests of their members.

Guaranteed Income for Retirees

Debate between Jim Cunningham and Ian Blackford

Tuesday 17th November 2015 Westminster Hall

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I beg to move,

That this House has considered Government policy on guaranteed income for retirees.

It is a pleasure to serve under your chairmanship, Mr Betts. It is also a pleasure to see the Economic Secretary here to respond to the debate, given the popularity of pensioners to the Government and to the rest of us. I know there is always some conflict between the Department for Work and Pensions and the Treasury regarding who has responsibility for such matters.

I am delighted that we are having this debate. We in the Scottish National party believe that the Government have a duty of care to ensure that our elderly population has security of income in retirement, and healthy and fulfilling lives. The Government should also ensure that they carry on as much as possible of the progress made in the last few years in ending pensioner poverty. I want to focus specifically on the pension freedoms that were introduced in April of this year, and the responsibilities that we in the SNP believe the Government should have for pensioner protection.

We in the SNP support many of the measures introduced over the last few years to encourage and enhance the growth of pension saving, while recognising that there is still some way to go before we reach a level of saving that matches the desire of many of our citizens to have an adequate level of income in retirement. To that extent, we support auto-enrolment and look forward to taking part in the debate over the coming months and years about how it can be strengthened, based on the three pillars of individual, employer and Government incentives to engage in pension saving.

It is in that regard of encouraging pension provision that we should take stock of the pension freedoms introduced in April and, in particular, consider what steps might be appropriate to ensure that the principle of securing an income in retirement is supported and fostered. When pension freedoms were introduced, the Chancellor of the Exchequer said that people

“should be trusted with their own finances”.—[Official Report, 19 March 2014; Vol. 577, c. 793.]

Although that is an admirable aspiration, it must come with the recognition that there has to be protection from pensioners aggressively running down pension pots to the extent that pensioner poverty could creep back on to the agenda. We should be mindful of the fact that a pension is a deferred income. It is not a cash machine, but is there to deliver security in retirement.

The untested nature of the pension reforms poses a potential risk to individuals and to the state. It is essential that the Government closely monitor consumer outcomes and identify risks to the state and to individuals over the longer term.

In the context of this debate, the Strategic Society Centre published a paper in July year entitled “Income, Security and Wellbeing”. The report was commissioned to explore the potential impact on people’s retirements of lower private pension incomes that might result from the freedom of choice changes. The Strategic Society Centre undertook quantitative research, looking at how the level of guaranteed income affects people’s experience of retirement. It found that, regardless of the level of someone’s financial wealth, the level of guaranteed income is significantly associated with various aspects of wellbeing and leisure, including going to the cinema, reading a daily newspaper, taking a holiday and participating in community groups and other activities. The study also found that income is associated with how people feel about their life and whether they report, “The conditions of my life are excellent,” and “I have got the important things in life that I want.”

In the light of the research findings, the Strategic Society Centre set out a number of policy recommendations, including the need for the Government to actively

“promote receipt of a guaranteed income in pension policy to improve the wellbeing of retirees. Educate savers before retirement about the role of guaranteed income for a good retirement. Include information about the importance of guaranteed income to wellbeing in retirement in Pension Wise guidance and information. Ensure receipt of a decent, guaranteed retirement income is the default option for DC”—

defined contribution—

“pension savers. Undertake regular research into the effect of the April 2015 changes on older people’s wellbeing.”

The Strategic Society Centre study has been followed up by a study into pension flexibilities by the Social Market Foundation, which has left me increasingly concerned that the Government have not yet put in place adequate safeguards for older people opting to free up pension assets.

With life expectancy increasing and savers gaining unprecedented access to their pension savings, the Government have an obligation to oversee individuals planning ahead and to support society to plan for the future by making the public aware of the importance of securing a guaranteed income for life. As I have said, pensions are a deferred income and should not be seen as a cash machine. We in the SNP are not against people having an element of choice, but there must be a guaranteed income before funds can be drawn down, to protect individuals in later life.

Before April 2015, 75% of people with defined-contribution pension schemes used them to purchase an annuity. We should also recall that the opportunity existed for pensioners to take up to 25% of their pension pot as a tax-free lump sum. That mixed ability to draw down cash and to secure a regular income is still, to us, far and away the most attractive option for most pensioners. A key advantage of annuities is that they provide a guaranteed income throughout retirement, protecting individuals from longevity insurance and investment risk. However, annuities have become unpopular with some consumers, partly because annuity rates have fallen, but also because of reports by important bodies such as the Financial Conduct Authority, which have highlighted ways in which the market has not always worked well for consumers. Also, many prospective pensioners did not shop around, and whether consumers were getting value for money was therefore a cause for concern. We acknowledge all those things. There was, and is, a case for reform, but in our opinion the challenge was to enhance the market for annuities.

Many people welcomed the principle of increased choice introduced by the Government, but there were also concerns that that would bring with it a significant burden of responsibility on individuals to understand the complexities of the choices they were making, leaving them to bear the risk that the value of their savings might fall and that they might even exhaust them prematurely, leaving them dependent on the state pension later in retirement.

There is also the potential for scamming. The report of the Select Committee on Work and Pensions, entitled “Pension freedom guidance and advice”, states:

“Readier access to pension pots combined with the difficulties consumers have in making decisions regarding retirement finances mean that the pension freedom reforms have increased the potential for scamming.”

Regulators are also working to raise awareness. The FCA has launched the ScamSmart campaign and has taken enforcement action in a number of cases.

I acknowledge that the Government’s establishment of Pension Wise is an important step, but take-up of the service has been limited. The Work and Pensions Committee recommended that the Government urgently redouble their publicity efforts about pension scams and that the FCA tighten its scam awareness and reporting requirements for regulated firms.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate the hon. Gentleman on securing this timely debate. He mentioned that there have been abuses since the new pensions regulations came into effect, and it is right that the matter should be looked at. He is also right that there should be some guarantees and better policing. In the past people took out annuities for mortgages, and I am sure we all remember the mortgage scandal. Does the hon. Gentleman agree that there is a real danger that the same thing could happen in this case unless there is proper policing and regulation?

[Ian Blackford]

I thank the hon. Gentleman for his contribution. I agree that all of us in this House have a responsibility to ensure that an adequate level of protection is in place for consumers. We must learn from the large number of mis-selling scandals that have happened over many years. I am concerned that, as things stand, there are not yet adequate safeguards in place to protect consumers from the changes.

The Work and Pensions Committee described the scarcity of information about Pension Wise as being

“not conducive to effective scrutiny”

and asked the Government to publish statistics on a quarterly basis, including on the take-up of the different channels of guidance and advice, and on the reasons for not taking them up. The FCA claims that eight out of 10 savers would have got a better deal if they had shopped around when choosing the best product for retirement. That illustrates another reason for clear, understandable, accessible guidance for consumers. The untested nature of the reform demands close monitoring and data collection.

--- Later in debate ---

[Ian Blackford]

Yes, I do, and I was going to come to the issues of gender, because they are important in the context of this debate. My hon. Friend makes some reasonable points. When we talk about the risk of pensioners exhausting their pension pot, we know that that is particularly true for women, given two factors. He alluded to the first, which is that women in general tend to have smaller pension pots. They also tend to have longer life expectancy, and there are particular issues in that regard. The second factor relates to the reforms to the state pension, which I argue have not allowed for a significant length of transition, thus yet again exposing women to a much greater extent than men to the negative side of the changes. I would like to see the House come back to that debate.

The Financial Services Consumer Panel and the Pensions Policy Institute called for a rolling research programme to tackle the longer-term consequences of pension freedom decisions. Some organisations have called for action to require providers to offer default options for people who do not make a decision. The Pensions Policy Institute has argued that that would mean people being offered something with an element of life expectancy insurance that would kick in at some point when they get older.

We must learn from experience elsewhere. The Social Market Foundation has looked at overseas experience to see whether there are lessons for the UK. The SMF report, “Golden Years? What freedom and choice will mean for UK pensioners”, modelled the potential long-term outcomes for UK retirees based on outcomes in Australia and the USA. It looked at three scenarios: a “cautious Australian” who decumulates their pension wealth by less than 1% a year; a “quick-spending Australian” who decumulates very quickly and exhausts their pot by the age of 75; and a “typical American” who draws down his pension pot by 8% a year. The report’s key findings include the conclusion that:

“UK retirees are at risk of pension pot exhaustion.”

Those who follow the “typical American” path or the “quick-spending Australian” path would on average exhaust their pot by retirement year 17 and year 10 respectively.

Retirees are at risk of low replacement rates. Retirees who over-consume in early years of retirement may enjoy a rate of income closer to their working income for some time, but will then face much lower rates later in life. Retirees are at risk of low incomes. The new state pension and pension credit mean that retirees are at a low risk of falling into poverty, but retirees are at substantial risk of falling below the 70% median low-income threshold in later life if they spend their pensions quickly.

Preservation of pension wealth is possible through under-consumption, but has big drawbacks. The “cautious Australian” path results in a very low risk of running out of pension wealth, but means that people would receive very low levels of income as a consequence. That can mean a reduced income and lower replacement rate, as well as subdued demand across the broader economy. Retirees face variation in investment returns and uncertain incomes. Investment returns can result in huge variations in incomes in retirement and in the age at which pension savings run out. There are significant risks to the state as a consequence. Decumulation paths could also mean fiscal risks to the state associated with the costs of increased claims for means-tested benefits.

[Mr Jim Cunningham]

The hon. Gentleman is being generous in giving way. What he is saying prompted a thought in my mind: if pensions are mishandled by individuals, we get a problem later in life with the need to pay for care, which adds to pensioner poverty. People are struggling to pay for care, but pensions freedom could make that worse if it is not regulated properly.

[Ian Blackford]

The hon. Gentleman is absolutely spot on. One of the examples given in the SMF report is of an individual with a pension pot of £184,000. Many people would consider that to be a reasonable sized pension pot. However, based on the behaviours I have described, it would not be unexceptional for them to exhaust such a pension pot and have to rely on the state in later life for support, particularly with council tax and care costs. That is why, for two reasons, this is such an important issue for us to discuss: first, because we are exposing the consumers of this country to risk; and, secondly, because we run the risk of placing an additional burden on the state as a consequence.

Specific sub-groups are also exposed to enhanced levels of risk. Those sub-groups include women and early retirees who are likely to face a longer period of retirement; those without other savings or assets to fall back on, particularly non-homeowners; and those with defined-contribution pension savings only, who will not have other private income to top up their budgets. The report recommends that the Government develop an early warning system to monitor closely what retirees do with their pension savings and identify risks to groups of individuals and to the state. That would involve the creation of a retirement risk dashboard to help the Government to monitor retirement decisions and to provide a view on long-term outcomes for consumers and the state. By establishing personal pension alerts, it would also allow for policy makers to intervene where appropriate with the sub-groups the Government have identified as being at particularly high risk.

The level of uncertainty about the impact on savers is concerning. The Office for Budget Responsibility said that there was a high level of uncertainty about the Exchequer impact of the reforms and that the impact depended on take-up and other behavioural responses, which were uncertain. The OBR said:

“Some people will temporarily increase pension saving in order to benefit from tax-free lump sum withdrawals. It is possible that funds will be redirected from annuities and into other assets, such as other financial products or housing. It is also possible that such funds could be used to finance consumer spending”.

Would we consider that to be desirable?

The available data for the first quarter of 2015 show sales of drawdown products increasing and those of annuities reducing. The number of income drawdown contracts sold by Association of British Insurers members during quarter one of 2015 increased by 64% over the past year, from 6,700 to 11,500. The number of annuities sold continued to fall, with 20,600 annuities sold in quarter one, compared with 28,700 in the previous quarter and 74,100 in quarter one of 2014. The volume of interest is indicated by the 80% increase in provider call volumes during the first six months compared with the same period in 2014. A consequence of the changes is the massive £2.5 billion paid out as cash to customers in the first six months. To put that into context, £2.5 billion has been invested in other pension products over the same period. In other words, 50% of the value of pension pots accessed has been cashed in over the past six months.

We do not know what the long-term developments will be, but that must surely raise concern that such a high percentage of cash has been withdrawn. If we put that in the wider context of defined-contribution pension pots, there is today approximately £175 billion held in those pots by more than 2.2 million consumers. Do we as a society want to see pensioners draw down their pension pots at such an aggressive pace? Frankly, I believe we should not. There will be a price paid both in terms of pension pots running out and, ultimately, as has been said by various hon. Members, the state will have to pick up the pieces and support those whose income has gone.

To reflect again on some of the numbers, 60% of all cash lump sums have been paid out to people younger than 60 and 80% to those younger than 65. In 95% of cases where cash lump sums have been accessed, the entire fund has been withdrawn, and fewer than one in 10 of those accessing their pension pots are using the Pension Wise service. The Government need to take on board the evidence of what has been happening and explore other options. Reinstating a requirement to annuitise would help to address some of the concerns.

The UK Government must learn the lessons from abroad. Concerns over the rates of exhaustion of pension savings and the subsequent impact on retirement income led the Australian Government to commission an independent review of their retirement system.

The Murray inquiry published a range of recommendations for the Australian financial system in December 2014, including a recommendation for schemes to put in place a default comprehensive income product for retirement to address longevity risk. In October, the Australian Government announced their intention to implement the inquiry’s retirement income default recommendation, and a consultation is expected later this year.

We also need to look at affordability—for example, by introducing measures to keep costs down; introducing products such as a NEST-style decumulation option to act as a beacon of good value; enabling the state to play a bigger role in providing a low-risk, good value alternative or capping charges in drawdown products; allowing Pension Wise to provide a personalised service or recommend specific products or options to consumers; or strengthening the disclosure and governance requirements relating to complex retirement income products.

I want to engage positively with the Government on how we in Parliament can together discharge our obligations to those who will be accessing their pension pots not just in the years, but the decades to come. Although it is understandable that we want to create opportunities for those with spending pots to make their own decisions about their plans for accessing cash, it must be done from the premise that we give clear guidance that securing a regular income in retirement should be the default position.