Pensions Bill

Debate between Madeleine Moon and Nigel Mills

Monday 17th June 2013 Commons Chamber

[Nigel Mills]

It is unusual for Ministers to welcome that, given my record of moving amendments, so the Minister might want to be a little careful, before he gets too excited. [Interruption.] Yes, it might spare me.

We all share the Government’s vision for pension reform. We want predictable, non-means-tested state pension provision, so we know roughly what we will receive when we retire; then we want to encourage private saving in high-quality, fair, low-cost schemes and to know what we will get for our money when we pay into such schemes and how that will convert into retirement income when we reach retirement age, whatever that might be—being 38, I dread to think what mine will be: I suspect it might begin with a 7, which seems an awfully long way off.

The Bill addresses some of those aspirations—it will make it much clearer what state pension some will get when they reach the happy age and it will improve the private pensions system—but will do nothing to improve the final part of the journey and make it clear what will happen when someone reaches that happy retirement age and is told they need to convert their pension pot into a pension income. There remains a big weakness in the system around how fair a deal someone gets when they default into the annuity their pension provider offers them—that was something the Select Committee raised in our pensions governance report. Action is needed. In my view, we should not allow a pension provider to provide an annuity to the same customer. That might be too radical a market restriction for most people, but there is a real problem if people, having saved for years, see their retirement income reduced because they do not know that they can shop around and choose their annuity.

The Bill is clear that people who will retire a good few years after 2016 will get £143 plus indexation, whatever that is, but it is less clear for those retiring in 2016 or the first few years thereafter. For them, there is a complicated calculation involving what they built up under the current scheme and how that is added to under the new one. We need to educate people about the pension they will get and what the change means. In my surgeries, I hear many concerns and fears from people who thought this was some kind of big bang—that if they retired on the new date, they would get a much bigger state pension than those retiring the day before—and did not want to miss the start date. I suspect that for many people the difference will not be huge, however, so those concerns should not be there.

[Mrs Madeleine Moon (Bridgend) (Lab)]

I appreciate that the hon. Gentleman has been honest in saying that his retirement is some way off, but many people—especially women—who thought they were approaching their retirement have now been told they must work extra years and pay more in, without feeling that they will get an awful lot extra out of it? We have to acknowledge that there will be losers. Does he agree?

[Nigel Mills]

I think we recognise that in any change some people will lose out—it was particularly difficult to explain that point to those women whose retirement age increased at the start of this Parliament—but sadly these things are necessary in our financial situation.