Pensions Bill [Lords]

Lord Watson of Wyre Forest Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Duncan Smith]

I recognise the hon. Gentleman’s concern. We are not blind to the issue, but we have decided to strike a balance between making the scheme work from the beginning and avoiding driving people on very low incomes into sacrificing too much and therefore not seeing the rewards. It is important to make the point that in the Green Paper, as the hon. Gentleman will have noticed, we talk about the single-tier pension, from which there will be very significant benefits to women. We hope that in due course that will achieve a balance.

I do not dismiss the hon. Gentleman’s considerations. We keep the issue constantly under review and will watch carefully to see what happens. It is important that we get auto-enrolment off the ground in a stable manner. I hope hon. Members on both sides of the House recognise that these are balanced decisions—sometimes nuanced decisions—that we have to take, but we will make sure that we review them.

[Mr Tom Watson (West Bromwich East) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

Indeed. How can I resist?

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[Mr Watson]

The right hon. Gentleman knows that I have always admired his ambition, but is he familiar with the Burkean maxim that change always brings certain loss and only possible gain? What appears to sit within the proposals he is outlining today is certain loss for many thousands of women facing retirement. Will he sketch out a little more how he intends to give them security, given that many trade unions—the Public and Commercial Services Union, Unite, GMB and Unison—have just voted for strike action? I strongly contend that fear about insecurity in retirement is fuelling that.

[Mr Duncan Smith]

It is always nice to be accused of having ambition. I thought I was supposed to have given that up a few years ago, but I will be tempted by the hon. Gentleman. Workers can still opt in. They must be told that they can opt in, and if they feel it is the right thing to do, auto-enrolment will still be open to them. I will not be tempted just yet on the other subject to which the hon. Gentleman refers, which is the pensions age. I will take an intervention from him, if he wishes, when we get to that. For the moment I want to stay on auto-enrolment. As I said earlier, I recognise that these are not absolutes. In other words, to get the scheme going we have taken some of these decisions, but we will see where that goes. If there is a very big drive for more to go into it, we will take that into consideration.

Amendments made in the other place will ensure that the strength of the certification test is maintained by requiring that I and subsequent Secretaries of State ensure that at least 90% of jobholders receive at least the same level of contributions under the certification test as they would have received based on the relevant quality requirement for automatic enrolment. Employers told us in discussions that the certification test will significantly ease the process of automatic enrolment.

I believe that these changes, taken together, will allow us to present individuals and businesses with a credible set of reforms that will bring much of the next generation into saving for the first time, which was Labour’s intention when in government, and one that we will pursue, thus beginning to improve the poor level of saving. There has been some talk, not necessarily by hon. Members here, about the possibilities of mis-selling. We have retained the powers to prevent excessive charging in automatic enrolment schemes and will use them as necessary and keep them constantly under review.

Part 3 of the Bill covers occupational pension measures, including a few relatively minor changes to the legislation governing the uprating of occupational pensions. The Bill amends existing legislation to set the indexation and revaluation of occupational pensions at the general level of prices. These changes are consequential amendments that follow the Government’s decision to use the consumer prices index as the most appropriate measure of inflation for benefits and pensions.

I remind the House that the key legislation for setting the statutory minimums for the revaluation and indexation of occupational pensions is not in the Bill, as we have already considered the issue in previous debates on the Social Security Benefits Up-rating Order 2010. This is not the time to revisit those debates, but no doubt someone will want to. Hon. Members might wish to note that all the Government will do is set out the minimum increases; if schemes want to pay more than the statutory minimums, that is a matter for them. I think that the move to CPI is supported, by and large, by Members on both sides of the House. That is certainly the indication I was given by the right hon. Member for East Ham (Stephen Timms) and his previous leader, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

We must also consider judicial pensions, although I am not sure how long Members will want to spend on them. Part 4 introduces provisions to allow contributions to be taken from members of the salaried judiciary towards the cost of providing their personal pensions benefits. I know that the House will be very worried that this might be too tough on members of the judiciary, but I will resist any pressure to reduce this provision. Judges currently pay nothing towards the cost of their own pensions, while the taxpayer makes a contribution equivalent to about 32% of judges’ gross salaries, which we think is both unaffordable and unfair to the taxpayer. [Interruption.] I sense that the House is united at least on that.

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[Mr Duncan Smith]

I fully recognise the hon. Lady’s point. It applies to the whole debate. One could argue that even an extra year’s planning does not allow people time if they are not well. People living longer but being more ill is an issue for the health service—it is already having an impact on the health service. It is a reality—and a good thing—that people are living longer and are able to enjoy their retirement properly. For the most part, they can do that in good health, but I recognise that there are problems for those in poor health.

[Mr Watson]

rose—

[Tom Blenkinsop]

rose—