Pensions Bill [HL]

Lord Flight Excerpts

Tuesday 15th February 2011 Lords Chamber

[Lord Flight]

My Lords, it is clear that much of this Bill is about tidying up so the Bill should command cross-party support. I will make three points that have not been fully brought out in this debate.

The first point is the need for a national savings policy. For many of the rising generation, pension saving has become almost a dirty word. It might be no bad thing if they are saving for their retirement in other ways; as has been commented, ISA savings have increased dramatically in relation to personal pension saving. It is fine to clean up the legislation that we have, but there needs to be a framework so I hope that the Government will come forward with a national savings strategy in due course. Following on from that, the Government should not be surprised to find that both employers and employees have pretty strong motivations for opting out of auto-enrolment to the extent that that will be possible.

Another big point, which has been made in different ways by many others, is that the Bill merges retirement ages but does nothing about the planned date of 2046 when the retirement age will rise to 68. Many would share my view that the projected longevity argues for the retirement age to rise much in advance of that and, possibly, to rise to the age of 70. I have campaigned for some time for the neat quid pro quo of a much more generous state pension at 70 that would merge the two different main and secondary pensions that are now available but would be well above the minimum income support level of pension credit. That would be a fair way of balancing the two. I also feel that pension credit has demotivated pension savers. You could get rid of all forms of the obligation to buy an annuity as well if the state pension at 70 was adequate.

A third territory, which my noble friend Lord Boswell mentioned, is that the Bill tackles the obscure territory of GMPs and PUCODIs. I regret that I am not yet entitled to either. Apart from this being something like the Schleswig-Holstein question, there is quite an important point to be made about GMPs. I have a GMP and I know what it is and where it sits, but I have yet to find anyone who has one who even knows that they have one. As Members of the House will know, in essence a GMP is an entitlement when an individual ceases to be a member usually of a DB scheme that has contracted out. As far as I can see, pension schemes often do not keep up with the addresses of members who are entitled to GMPs and do not to write to people about them. I do not know precisely what legal requirements might be missing, but this is a practical issue and there ought to be, if there is not already, a clear legal obligation to keep people advised.

I congratulate my noble friend Lord Freud on his very clear presentation of a difficult Bill. The Bill should command support, and I think that we will have other issues to deal with when the Finance Bill comes before the House.