Judicial Pensions Regulations 2022

Rachel Reeves Excerpts

Thursday 21st April 2022 General Committees

[Rachel Reeves (Leeds West) (Lab)]

These regulations are to be welcomed for bringing clarity after the period of legislative conflict that followed the introduction of the judicial pension scheme in 2015. The Minister will recall that in January 2017, an employment tribunal found in the case of McCloud v Ministry of Justice that the transitional arrangements for judges for the introduction of JPS 2015 were not lawful under EU equality law and under the Equality Act 2010. A key issue was the loss sustained by unprotected and taper-protected judges due to the tax-registered status of the 2015 scheme. Judges alone suffered the combined effect of significant adverse changes to their pension scheme and radical change to the tax treatment of their pensions.

I therefore note the Ministry of Justice’s intention that a uniform contribution rate would promote fairness between members, remove anomalies that occur at the boundaries of different bands in a tiered structure, and ensure that fee-paid judges who sit the same number of days contribute the same amount to their pension, regardless of their sitting pattern. We would, however, welcome the Minister’s thoughts on the matters raised by the judicial associations, which suggest that some judges may be financially worse off under the new regulations due to the apparently less favourable lump sum death benefits and uniform contribution rate. Has the Department made any assessment of the number of judicial office holders who may find the new regulations to be less favourable?

Regarding the new proposal, I would like to raise the question of equity for newer judges and those who intend to come into the system. It has been argued that if the new pension scheme is less favourable than the existing framework, the younger, less experienced judges will be the ones to lose out financially in the long run. The Council of Her Majesty’s District Judges responded to the new pension scheme by saying that even with the time-limited mitigation that the Minister referred to, it is difficult to support a proposal whereby the least well-paid judicial tier is the one that will suffer a month-on-month reduction in income. Does the Department recognise this, and how does it plan to mitigate its effects for those who argue the scheme is going to affect those coming into the judicial system? Does the Ministry of Justice believe that this could not only affect the retention rate but dissuade up-and-coming, newer legal minds from joining the judicial service in the longer term, as it may not benefit them financially?

We are all acutely aware that the court backlog currently stands at 60,000, and the availability of experienced judges will be vital in reducing that figure. As such, while we welcome a uniform system, it would be helpful if the Minister could address some of those concerns so that we can ensure the new system works for everyone moving forward.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 14th January 2020 Commons Chamber

[Robert Buckland]

I congratulate my hon. Friend on his recent honour, which is thoroughly deserved after a lifetime in public service, both here and in other elected assemblies. His suggestions are well made. I am already having a number of discussions with ministerial colleagues and thinking very deeply about the range of expertise and individuals that we need, and the diversity of that panel, so that we make sure that the commission, or the committee, is in the best possible place to gather evidence and come up with measured, sensible reforms.

[Rachel Reeves (Leeds West) (Lab)]

9. What plans his Department has to reduce the disparity between the number of rapes reported to the police and the number of suspects charged with that offence.

[The Parliamentary Under-Secretary of State for Justice (Chris Philp)]

The hon. Member is right to raise this issue. It is extremely serious and, frankly, far too few reported cases are being progressed into the criminal justice system, so I entirely agree with and accept the premise of her question. The Government are taking action in this area. The extra 20,000 police officers will greatly help to get rape victims through the system and to get their cases into court. I referenced earlier the extra £85 million for the Crown Prosecution Service. A great deal of that will be targeted towards helping to progress those often very complicated rape cases. As recently as last September, the Under-Secretary of State for Justice, my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), provided an extra £5 million of funding for rape centres and ISVAs—independent sexual violence advisers—because one of the issues is rape victims dropping out of the process before the case reaches court. I hope that in the upcoming Budget and spending review, there is more we can do.

[Rachel Reeves]

In West Yorkshire, the number of rapes reported increased by 25% last year, but just 4.4% of those cases resulted in someone being charged. The same is true across the country, so what are the Government doing to ensure that the criminal justice system is properly resourced and that it does not let down victims and add to the trauma that they have already experienced?

[Chris Philp]

As I said, we are putting 20,000 extra officers into the system and £85 million into the CPS, and we are increasing expenditure on rape centres and ISVAs, although I am sure that in those areas, there is more we can do. There is also a review urgently under way to see what further steps we can take, but I believe that the actions that I have outlined, which are taking place as we speak, will move us back in a happier direction.

Bailiffs: Regulatory Reform

Rachel Reeves Excerpts

Wednesday 9th January 2019 Westminster Hall

[Emma Reynolds]

How very convenient for the bailiff involved! We had a similar case in my constituency. At one point, we were told that there was a body cam, but when we pressed to see the footage, we were then told that there was not a body cam. The hon. Gentleman raised that in the form of a written question to the Minister and we should consider it. It will not solve all of our problems, but it would go some way towards helping to look at these disputes.

One man told me that, although he had moved out of his mother’s house and the debt was his and not hers, the bailiffs told her that if she did not pay, her son would go to prison. They marched her to the post office, where she was pressed to withdraw £550 to cover the debt. His mum was 73 at the time. There are countless examples of bad practice from all over the country.

[Rachel Reeves (Leeds West) (Lab)]

Like other Members, I congratulate my hon. Friend on securing this debate. Is she aware that there is a private bailiff trade body called the Civil Enforcement Association? Its code of conduct says that its members should be

“professional, ethical…polite, honest and non-threatening”,

yet all the examples that my hon. Friend has given are of behaviours that are the exact opposite. In 2016, the Civil Enforcement Association received 255 complaints about its members yet expelled none of them. Is that not a perfect example of why we need better enforcement and regulation of the bailiff industry?

[Emma Reynolds]

I could not agree more. I have had contact with that trade association. It is simply not realistic to expect a trade association, which is there to represent its members, to take action against those members. In fact, the lead of that organisation was on “World at One” on Radio 4 today claiming that there was a robust complaints procedure. I beg to differ and will address that point towards the end of my speech.

The worst case of this kind that I have heard—I know that my hon. Friend the Member for Croydon Central (Sarah Jones) has raised it with the Minister and will speak about it today—is the devastating case of Jerome Rogers, who took his own life. He had offered to pay back the debt in stages, but the bailiffs refused. I pay tribute to the brave campaigning of his family, who are here today. We owe it to them to do all we can to change the culture of the bailiff industry so that they are there to help, not penalise people. There is a positive example from Hammersmith and Fulham Council in London, which has stopped using bailiffs to enforce the collection of council tax arrears because it thinks it is better to try to work with the people involved and help them pay back that debt rather than forcing them into a spiral of ever more debt.

--- Later in debate ---

[John Howell (Henley) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Evans, and to follow the hon. Member for Wolverhampton North East (Emma Reynolds), who introduced this important debate.

The debate is timely. The subject is very much on the lips of the Minister and of members of the Justice Committee, as both the Minister and the Committee are undertaking inquiries at the moment. The Ministry of Justice inquiry, which has called for evidence, will look at the effect of the 2014 legislation, which although it has brought some benefits, clearly did not go far enough and has created new problems, as the Lady told us. Those problems are due to the behaviour of many bailiffs—the way they go about their job is a real problem for us. I believe the Ministry of Justice has promised that any proposed changes will be put out to consultation, so we will all have the opportunity to engage with them.

The Justice Committee also decided to conduct an inquiry on the subject, and we discussed yesterday how it would feed into the Ministry of Justice inquiry and how we could submit it as evidence. The Committee’s inquiry will look at the 2014 legislation and the way in which complaints are handled and dealt with throughout the process. Two issues emerge above all: the extent of regulation and the complaints system. The two are of course associated, but they need also to be looked at separately.

As the hon. Member for Leeds West (Rachel Reeves) mentioned, the Civil Enforcement Association exists, but it is not independent. The system of regulation is effectively one of self-regulation or, in this case, pretty much no regulation. I listened to all the points made by the hon. Member for Wolverhampton North East about why the system of regulation is not very effective. One point that came in, but was not actually mentioned, is that no sanctions can be levelled against a firm of bailiffs conducting its business in such a way.

[Rachel Reeves]

The hon. Gentleman makes an important point. The Civil Enforcement Association is just a trade body. People have to pay a fee to be a member, but a bailiff does not have to be a member. The answer is to have an independent bailiff regulator capable of banning and prosecuting bailiffs who break the law. Does the hon. Gentleman agree that that is in the interests of bailiffs who respect the law and their customers, particularly vulnerable ones?

[John Howell]

I very much agree with the hon. Lady’s description of how the regulatory system should work, but I do not think we should concentrate solely on the regulatory system. I completely take on board everything she said about what the regulatory system needs to include, but we need also to examine how complaints are dealt with if we want to have an effect on bailiffs who are not doing their job properly or are abusing their position.

The current complaints system has seen an enormous increase in people trying to make complaints, but fewer people have been able to do so legitimately. I propose to the Minister that, before she proceeds with the results of the call for evidence, she and I have a conversation. I chair the all-party parliamentary group on alternative dispute resolution, and I think we have the solution to the problem. The solution, which the rail system is using to try to deal with complaints, is to have in place a system of alternative dispute resolution, including such things as mediation, that can deliver quick advice.

One great thing about alternative dispute resolution is that it is much cheaper than going to the courts. That is what we need. If the Minister would like to have a conversation with me, I will propose a system to do that. From the experience that we have of how ADR has been used elsewhere, I think it will satisfy all the requirements that the hon. Member for Wolverhampton North East set out.

--- Later in debate ---

[Rachel Reeves (Leeds West) (Lab)]

It is a pleasure to speak under your chairmanship, Mr Evans, and I wish to make a few brief points in this important debate—there have already been many valuable contributions from across the House.

The debate should be seen in the wider context of growing household debt. The rise of rogue bailiffs speaks to a wider malaise in our economy. People face a range of challenges, including insecure work and zero-hours contracts, stagnant wages, benefit cuts and access to affordable credit, which all put pressure on household finances. It is no surprise that the No. l money concern for people seeking help from Citizens Advice is household debt. UK households owe an average of just over £15,000 in unsecured lending from credit card firms, banks and other household debt, and unsecured debt is now the highest it has ever been—indeed, it is higher than before the financial crisis.

It is not a sound basis on which to build our future economic prosperity if more of our wages go towards servicing debt than spending on our basic needs. It is therefore not surprising in such an environment that more people are racking up debt and struggling to pay household bills, council tax and some of the other debts we are discussing. It is also not surprising that into such an environment step those rogue bailiffs who exploit people who are already struggling with debt, and who are vulnerable or in precarious circumstances.

Like the hon. Member for Redditch (Rachel Maclean), I am not arguing—I do not think any Member of the House would argue this—that creditors are not entitled to pursue their debtors. It would be unfair on those who do pay their debts if others were not encouraged and made to do so. The issue, however, is about obeying the law and exploiting people, especially if they already face financial hardship and are vulnerable. In truth, ballooning household debt means that bailiffs now have more scope to exploit some of the most vulnerable people in our society by refusing to accept affordable payment offers, and by misrepresenting their rights of entry or acting aggressively or unsympathetically on the doorstep. That is the issue we need to focus on, and where we need Government action.

Members have already mentioned the letter sent today to the Justice Secretary to ensure that the Government take seriously calls from across the House for an independent regulator. As my hon. Friend the Member for Makerfield (Yvonne Fovargue) said, the 2014 reforms have not worked and it is now time for such a regulator. I hope the Government seize this opportunity and take heed of the concerns raised and the examples that Members have given, put in place that independent regulator, and ensure that those struggling with financial difficulties are not exploited in the ways we have heard about.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 18th December 2018 Commons Chamber

[Neil O'Brien (Harborough) (Con)]

14. What recent estimate he has made of the number of rogue bailiffs.

[Rachel Reeves (Leeds West) (Lab)]

16. What steps he is taking to tackle rogue bailiffs.

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

We are determined to protect debtors from aggressive behaviour by enforcement agents while balancing that against the need for effective enforcement of debts. We launched a public call for evidence on 25 November to help us to understand the extent of the problem, and it is open until 17 January.

[Lucy Frazer]

I am sorry to hear about the experience of my hon. Friend’s constituent and I am happy to discuss the matter further with him. The 2014 reforms require bailiffs to send a letter before they visit to set out where a debtor can go for advice, but we want to ensure that that mechanism and others are working. We are asking that question in our consultation, so I encourage his constituent to tell us more about his experience in our call for evidence.

[Rachel Reeves]

I welcome the Government’s call for evidence. Since it was launched, the Minister has said that a small number of bailiffs are breaking the law. The truth is that a YouGov poll shows that a third of people contacted by bailiffs in the past year have experienced law breaking, so this is much more than a small problem. Will the Government therefore change the language and see where the evidence takes them, rather than concluding that a minority of bailiffs are behaving in this way?

[Lucy Frazer]

It is important to gather the evidence, which is what this consultation will do. As the hon. Lady will know, because she asked a question at the previous Justice questions when the Citizens Advice report had just come out, we want to examine the evidence fully, and we are asking for evidence not just from individuals, but from the enforcement agencies themselves. My officials have asked Citizens Advice for a meeting to discuss the content of the report, which identifies a large amount of inappropriate behaviour.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 13th November 2018 Commons Chamber

[Lucy Frazer]

That was a very intriguing question on one about bailiffs. This matter is reflected in our female offenders strategy, and I am sure that the Minister responsible, the Under-Secretary of State for Justice, my hon. Friend the Member for Charnwood (Edward Argar), will be very happy to discuss it further with my hon. Friend.

[Rachel Reeves (Leeds West) (Lab)]

Following on from the question asked by my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) about the experience of her constituent, 2.2 million people contacted by a bailiff in the past two years have experienced the bailiff pushing the legal limits—my hon. Friend’s constituent experienced that—including forced entry into a home, removing goods needed for work and refusing a reasonable payment plan. The 2014 reforms clearly are not working. Does the Minister not agree that it is time to have an independent bailiff regulator to get a grip on these abuses of justice?

[Lucy Frazer]

I know that the hon. Lady cares deeply about the matters under discussion and was quoted this morning in relation to them. I recently met Peter Tutton, who is head of policy at StepChange. He made the point about independent regulation and we will consider it in due course.

European Union (Withdrawal) Bill

Rachel Reeves Excerpts

Committee: 7th sitting: House of Commons
Wednesday 13th December 2017 Commons Chamber

[Mr Vaizey]

The implications of leaving Euratom, some of which have already been identified by the hon. Member for Central Ayrshire, also extend to our nuclear industry, which provides 20% of this country’s energy. At the moment, we simply cannot move nuclear material around unless we are members of Euratom. So when we leave Euratom, we will have to have, in effect, a Euratom-style arrangement to allow us to move goods around. “Goods” can mean a variety of things. We imagine highly radioactive canisters being moved in special trains at the dead of night, but the movement of goods also involves mundane things such as heat pumps, motors, spares and other components, all of which, because they are part of the civil nuclear ecosystem, have to be moved under the terms of these treaties.

Euratom covers not only objects but the freedom of movement of people. We depend on our membership of Euratom for a nuclear power industry, for our medical industry—isotopes have been mentioned—and for the Joint European Torus at Culham, where Britain has done extraordinarily well. Huge advantages have been made in robotics and other sciences, and there are £500 million-worth of contracts already in ITER, the successor to Culham, thanks to the expertise we have built up here.

Let me make it clear that, throughout this process of our technical move to leave Euratom, Ministers have been absolutely brilliant in engaging with me and other hon. Members who share my concerns and have similar interests. They have bent over backwards to do what they can to accommodate our concerns. Looking forward, we need Ministers to give us clarity on a number of issues. We need nuclear co-operation agreements with other countries—the United States, Canada, Australia, Japan and possibly the European Union as well—and they need to be in place by March 2019. These agreements can be complex, and they can depend on the legislation in other legislatures. For example, the US Congress would have to pass a new nuclear co-operation agreement with us. We will also need a new safeguards regime, and this will come in through the Nuclear Safeguards Bill as a contingency, although I understand that the Government might want Euratom to continue to cover the safeguarding role.

[Rachel Reeves (Leeds West) (Lab)]

I thank the right hon. Gentleman for tabling this amendment. As he knows, the Business, Energy and Industrial Strategy Committee published a report today on our future relationship with Euratom. The cross-party Committee agreed that we needed as close a relationship as possible with Euratom, in part because of the safeguarding issue. Dr Golshan of the Office for Nuclear Regulation said in evidence to the Committee that our safeguarding would not be at Euratom standards by March 2019, notwithstanding the Nuclear Safeguards Bill that is going through Parliament. Does the right hon. Gentleman agree that until we have reached Euratom standards, we need either a transition period or a close association with Euratom to ensure that there is no deterioration in standards in our civil nuclear sector?

[Mr Vaizey]

The hon. Lady and her Committee have published an excellent 45-page report this morning, and I read it when it was hot off the press. It makes all the points that I want to make about the need to have as close an association as possible with Euratom, particularly in regard to safeguarding. What worries me about the Office for Nuclear Regulation is that, while the will and desire are there, this is another job that cannot be done overnight. It will need to triple the number of inspectors over the next four years, for example. Training a qualified inspector takes between 12 and 18 months; it takes five years to train an unqualified one. The ONR already needs another £10 million just for recruitment and IT, not even for specialist equipment. Some people argue—in fact, I think it is in the BEIS Committee report—that the specialist equipment at Sellafield, which is currently owned by Euratom, would have to be replaced, at a cost of £150 million.

We need clarity on the nuclear co-operation agreements, clarity on the safeguarding regime and who will conduct it, and clarity on whether we will reach International Atomic Energy Agency standards, which the ONR is currently aiming for as a realistic target—Euratom’s standards are higher. We also need free movement of nuclear workers in the broadest sense, and I am not talking about nuclear scientists; I mean the people who actually build nuclear power stations. For example, I think the UK has 2,700 registered steel fixers, half of which will be needed to build Hinkley Point C. That kind of specialist construction worker will come under the category of nuclear workers. As for the future of our continued international co-operation, a particularly live issue at the moment is the extension of funding for the Joint European Torus, which is currently going through the Council for the fiscal years 2019-20, and the European Union is keen to get clarity from the Government on our intentions.

--- Later in debate ---

[Dominic Raab]

The Government intend to present a written ministerial statement to Parliament before Report which will set out our vision, or strategy, for a close association with Euratom. I hope that the commitment to that statement will reassure my right hon. Friend, and that he will not feel the need to press his amendment to a vote.

[Rachel Reeves]

Will the Minister give way?

[Dominic Raab]

I want to make some progress, but I will give way once to the hon. Lady.

[Rachel Reeves]

On the subject of amendment 300, will the Minister confirm that the Government intend any implementation period for leaving the EU to apply to leaving Euratom as well?

[Dominic Raab]

That will be addressed in the written ministerial statement and the strategy that will be forthcoming very shortly, and the hon. Lady will have an opportunity for scrutiny then.

We will work with the Commission on addressing those international agreements when the parties have a shared stake, and a shared interest, in continuity. Similarly, the Government recognise the need to maintain a strong relationship with the EU in the future. We are seeking to forge a deep and special partnership with our EU friends, and our relationship with the EU’s agencies and bodies on exit will be evaluated on a case-by-case basis. No final decisions have yet been made on our future relationship with the EU’s agencies and bodies after leaving the EU, and we are carefully considering a range of options. Where there is a demonstrable national interest in pursuing a continued relationship with an agency or other EU body, the Government will look very carefully at whether and how we can pursue that, and of course it is a matter for negotiations.

That brings me to why these amendments are, while well-intentioned, unhelpful. The first reason is because negotiations are ongoing and we cannot allow our negotiating position to be prejudiced or pre-empted. The Government are working to achieve the best possible deal with the EU. We welcome the constructive and thoughtful amendments from hon. Members, but we cannot accept any that might undermine the Government’s negotiating position or restrict our room for manoeuvre, not least in terms of striking the kind of arrangements that hon. Members in tabling these amendments want to see.

Domestic Violence Victims: Cross-Examination

Rachel Reeves Excerpts

Monday 9th January 2017 Commons Chamber

[Sir Oliver Heald]

As I said in my initial response, a great deal of effort has gone into training both CAFCASS and court staff to provide the emotional support that is needed.

[Rachel Reeves (Leeds West) (Lab)]

I think that we all welcome the tone of what the Minister has said today, but this is supposed to be an urgent review, and many women are going through cases of this kind right now. Will the Minister make it clear that the review will be concluded by Easter at the latest and that we can then hope to see improvements in our courts?

[Sir Oliver Heald]

Yes.

Pension Freedoms

Rachel Reeves Excerpts

Wednesday 6th July 2016 Westminster Hall

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House has considered advice and guidance on pension freedoms.

I am grateful for the opportunity to have this debate on the crucial issue of advice and guidance in the world of pension freedoms. In 2014, the Government announced one of the biggest shake-ups of the pensions industry in its history. Those changes will, as the Minister knows, affect millions of people. The reforms undoubtedly give people more choice over what to do with their pension pots—one of the most important decisions on their finances—but with those choices come great risks.

At the heart of the so-called pension freedoms is the idea that people with defined contribution pensions no longer have to buy an annuity. Instead, they have an unprecedented number of choices when it comes to making financial decisions. People are suddenly being asked to make an irreversible decision by weighing up how much to save; how long they will live; how much they need to live on; the risk of investments decreasing in value; how much they will be charged by pension providers; what tax they will have to pay; and what state pension they will receive. Let us not forget, they will have to live with the decision for the rest of their lives.

The Pensions Institute’s “Independent Review of Retirement Income”, which I commissioned from Professor David Blake when I was shadow Secretary of State for Work and Pensions, warned that:

“The unifying thread that runs through funded pension scheme is the requirement to annuitise enough pension wealth, at the appropriate age, to provide an adequate lifelong income in retirement when combined with the state pension – which is the rationale for establishing a private-sector pension scheme in the first place. It is this requirement which makes a funded pension scheme different from any other type of savings scheme.

When annuitisation becomes optional, that unifying thread is no longer present and there is a real danger that the pension system begins to unravel. At best, it just becomes a tax-favoured arrangement for operating a multi-purpose spending pot and once the money has been spent for one purpose, it cannot be spent on another. At worst, it becomes a honey pot for thieves and other opportunists: while you cannot steal someone’s pension, you can steal their pension pot, as a number of people are now discovering. Lying between these extremes are millions of people who are now in control of their pension fund and who will be trying to do the best for themselves and their families…many of these people could well find themselves in the same kind of control as a yachtsman in the middle of the Atlantic in a force nine gale.”

When the pension freedoms were announced, we in the Labour party were clear that we would in principle support reform. We recognised that annuities did not work for everyone, but that reforms must be accompanied by the provision of guidance to help people to make important and difficult decisions about how to use their money. In response, the Chancellor committed to a new guarantee enforced by law that everyone retiring with defined contribution pensions would be offered free, impartial, face-to-face advice on how to get the most out of their choices. That commitment materialised to some extent—although it was guidance, not advice—in the form of Pension Wise, a single guidance service launched to coincide with the introduction of the pension freedoms in April last year.

The Pension Wise service offers face-to-face or phone appointments to those aged 50 or over with a DC pension. In each appointment, impartial guidance is given on pension options and tax and there is a discussion of the options that may be most suitable for the client. The ratings from those who have used the Pension Wise website are positive. The gov.uk performance site shows user satisfaction at 89%. I pay tribute to all those who work at Pension Wise for providing an excellent service.

However, the problem, and the reason for the debate today, is not the effectiveness of Pension Wise; it is how few people are using the service. The Financial Conduct Authority estimates that fewer than one in five consumers are using it. In response to a recent parliamentary question I tabled, the Government revealed that there have been 61,000 completed appointments since launch. That represents only around 12% of DC pension customers who have accessed their pensions since the reform came in. That is deeply troubling, and I am interested in what the Minister has to say about improving the use and take-up of the service. Put another way, almost nine out of 10 people are not seeking advice or guidance from Pension Wise when cashing in their pensions. That figure is worrying and suggests that millions of people are not getting the impartial guidance they need. If that is the case, as it seems to be, we should be alarmed about the quality of financial planning guidance that some people are getting and the subsequent impact that could have on their standard of living in retirement.

The Government published their “Financial Advice Market Review” in March and their plans for a new comprehensive pensions guidance service. They have a shared objective of ensuring that all consumers can access the help they need to make effective financial decisions. As the review says:

“Both industry and consumer groups also felt that many people, even those who did not necessarily want or need regulated advice, would benefit from more support and guidance in financial decision-making.”

In addition to those efforts to bolster the pensions guidance offering, welcome regulatory scrutiny will also be applied to the evolving retirement market, with the FCA identifying pensions as a priority area in its 2016-17 business plan. Although those are welcome developments, the results will arrive too late to benefit the 1.5 million people expected to access pension savings before spring 2018.

Critically, evidence suggests that poor outcomes are likely for consumers who do not seek professional support with their retirement options. UK and overseas analysis shows that factors such as disengagement, underestimation of how long people will live and weak financial capability lead to poor outcomes. Although it is too early to say what the new pension freedoms will mean for outcomes, the FCA estimated the losses from failing to shop around when people were required to buy an annuity:

“The majority of consumers (60%) do not switch providers when they buy an annuity, despite the fact that we estimate 80% of these consumers could get a better deal on the open market, many significantly so.

We estimate that the aggregate benefits that consumers miss out on by not shopping around and switching is the equivalent of between £115m and £230m of additional pension savings.”

The OECD has suggested that, although the pension reforms might increase pensioners’ control of their money, which I welcome, they could be

“detrimental to both retirement income adequacy and incentives to work”

because of

“myopic behaviour and insufficient financial literacy”.

What is more, research from the International Longevity Centre-UK suggests that there is limited knowledge about relevant financial products and services. Only half of those with a DC pension said they understood what an annuity is “quite” or “very well”. Just one third said they understood what a joint life annuity is quite or very well. Most shocking of all, just 3% said they understood what income drawdown is quite or very well. These are people in DC schemes who have to make big decisions, yet they do not seem to have the knowledge about the products they have to choose between.

Research by the Pensions and Lifetime Savings Association found that 53% of people incorrectly believe drawdown products offer a guaranteed income. The majority of people believe that a drawdown product is a guaranteed income, which it most definitely is not, while one quarter believe that drawdown carries no investment risk at all, which is incredibly worrying.

Meanwhile, the Pensions Institute’s “Independent Review of Retirement Income” states:

“It is important to be aware of the risks involved in the generation of retirement income from pension savings”—

such as investment risk, inflation risk and longevity risk. It continues:

“Following ‘freedom and choice’, these risks are now borne directly by DC scheme members”

in a way that they were not when everyone had to annuitise. It continues:

“Even with improved financial education, it is unlikely that many people will fully understand some of these risks. This is because some risks have to be experienced before they can be genuinely understood, and often it is too late by that stage to do anything about them. In addition, many people will have problems understanding the full range of product choices that are now available. All this makes it difficult for many people to be in a position to make ‘informed’ choices.”

Demand-side weaknesses and lack of knowledge from people making decisions are compounded by the repeated failure of parts of the pensions industry to, in my view, treat customers fairly. Mis-selling in the UK retirement market has been catalogued at length by the FCA and its predecessor, the Financial Services Authority. Poor buying decisions have also been identified by some organisations and consumer groups to the National Audit Office, which in its report on mis-selling described the concerns as being centred on regulatory approaches that are

“based too much on monitoring and implementing detailed disclosure requirements, rather than assessing whether consumers truly understand what they are buying.”

If disengagement and low take-up of guidance remain the norm, it reduces competition and undermines confidence in the new pensions market. Again, I stress that this is a real concern when we have consumers without the information to make the best decisions, and a pensions industry that is not necessarily helping people to make the decisions that are best for them.

Pension Wise has run three national marketing campaigns across TV, radio, print and digital media, but take-up, as I said earlier, remains low at just over 10%. Such problems must be addressed. That is why I call on the Government to issue new guidance to make sure consumers seek proper guidance before drawing on their pension pots. At the moment, the so-called wake-up packs sent to DC pension customers ahead of retirement are often more successful in driving consumers to the providers’ own product solutions than directing people to the Pension Wise guidance service, something that Baroness Altman has pointed out:

“I have seen the retirement packs from some of the better pension providers who are hiding away Pension Wise. They are doing this while promoting their own internal help lines.”

The whole point of Pension Wise is to be readily available to the people who are making the decisions, but they are not directed there by their pension providers and will probably never find out about it. So what is needed is a new approach whereby customers who decide to cash in their pensions must either seek guidance from Pension Wise or actively opt out of doing so before progressing. That would not only improve outcomes for customers, but dramatically reduce the opportunities for mis-selling, cut the risk of savers falling foul of financial scams and other potential abuses, and help people to make the right decisions at such an important time in their lives. It would enable guiders to alert consumers to the existence of fraudsters who use techniques such as cold calls and text messages to con people into placing their savings into wholly inappropriate investments. The Government must take a number of additional actions to support that.

The Government must work with industry to introduce a system to allow pension providers to book guidance appointments directly for their customers, or to put them through, if they can make contact by phone, to the appointment booking service without a break in service. Such handovers should be based on ensuring that the customer journey is as smooth and continuous as possible and that as many people as possible get the right guidance. The Government should consider allowing providers to share certain data with each other, so that when a customer is passed from one service to another, the second engagement does not need to start from scratch, with the customer forced to repeat all the information that they had previously provided.

Looking further forward, the new pensions guidance body should also link with the pensions dashboard being developed by 2019. The dashboard will enable people to see all their pension savings in one place—that is welcome—help people to engage with retirement planning and prompt them to take action. It is critical, therefore, that there is co-ordination with the new guidance body, so that consumers are signposted and directed to access guidance when looking at their dashboard. Links to the guidance service should be embedded within the pensions dashboard from the start, and the Government should consider how to improve engagement as the dashboard is introduced. That will also encourage consumers to seek pensions guidance at an earlier stage.

Currently, people are prompted to seek guidance at the point of, or close to, making a decision on how to turn their pension savings into a retirement income—for example, when receiving a wake-up pack from their provider. Proactively contacting people at an earlier stage in their working lives would also give people more time to make changes to their savings strategies if needed. As with other measures to improve the customer journey, solutions should be tested with consumers to ensure that they are effective and meet their needs. Although I believe all this is critical, we must not take our eye off the bigger picture. The Blake review makes excellent recommendations for the direction of pension reform, and that should be the focus of future Government policy making.

In conclusion, failure to address low guidance take-up is likely to lead to negative outcomes for those most at risk of making poor choices, reducing pensioner wellbeing, undermining competition in the retirement market, and having a toxic impact on confidence in the pension system just when good progress is being made through the roll-out of automatic enrolment. The guidance structure is already in place in the form of Pension Wise, which has received positive feedback, as I set out earlier, from those who have used it; it has the scale and budget to deliver guidance to the full range of consumers who need it. But without action from the Government, take-up looks set to remain low. That is why I am calling on the Government to introduce the default guidance approach. Crucially, that would in no way undermine or inhibit the central purpose of the pension freedoms. Consumers would retain complete freedom to draw down as much or as little of their pension pot as they wish at any time they want.

That change would provide a vital safeguard for millions of people when they plan for their retirement. It would give them the security of knowing they have had the benefit of impartial guidance before making a decision that could have a huge impact on how comfortable they will be in retirement. It would have a dramatic impact in helping people to use their pension pots, which they have saved for, wisely. I urge the Government to take that on board to help to ensure that as many people as possible can enjoy a secure income in their retirement.

Transitional State Pension Arrangements for Women

Rachel Reeves Excerpts

Monday 1st February 2016 Westminster Hall

[Helen Jones]

The hon. Lady is absolutely right. Again, I will come on to that point a bit later.

Part of the problem in 2011 was that the Government did not seem to understand the implications of their own Bill. When the former Pensions Minister gave an interview to the Institute for Government after the 2015 election, he said, somewhat ungrammatically, I think, but fairly clearly:

“We made a choice, and the implications of what we were doing suddenly, about two or three months later, it became clear that they were very different from what we thought.”

I have known a few Ministers in my time who did not seem to understand the implications of their own Bills, but this was a former Pensions Minister—an acknowledged expert on social security—who did not understand what was going to happen. If he did not understand the position, how on earth could he expect the many thousands of affected women to understand it?

[Rachel Reeves (Leeds West) (Lab)]

I thank my hon. Friend for securing the debate. She quotes the former Pensions Minister, but the current Minister for Pensions said in 2011:

“The Government has not given women enough time to change their plans…I believe the Government’s decision is unfair and disproportionately hits women who are now around 56 years old.”

She said that then, so it is a shame that now she is in government, she is not trying to change the situation.

[Helen Jones]

I could not agree more with my hon. Friend.

Let us remember that during our consideration of the 2011 Bill, the then Pensions Minister promised to look at transitional arrangements for some of the women affected. Towards the end of the Bill’s passage, the Government made amendments that at least prevented people from having to wait longer than an extra 18 months for their state pension. That certainly helped some women born between January and September 1954, but there was still a whole load of anomalies that were not dealt with. One of the things that has made the situation worse, as has been said, is the lack of notice that women received about the changes.

--- Later in debate ---

[Rachel Reeves (Leeds West) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hanson. I congratulate my hon. Friend the Member for Warrington North (Helen Jones) on securing the debate and, of course, I pay tribute to the superb campaigners who are here and who are watching today’s proceedings.

The women who are being forced to wait longer for their pension, and who have been hit twice—by the changes in 1995 and then again in 2011—have been done an injustice. In 2011, as shadow Pensions Minister, I was proud to work with Age UK, USDAW––the Union of Shop, Distributive and Allied Workers—and many women, including my mother, in calling on the Government to think again. We were pleased then that we won a partial concession so that no woman would have to wait for more than an additional 18 months before they could claim their pension. However, I said then, and say again today, that that does not go far enough in righting this wrong. There are still 2.6 million women who have lost out as a result of the Government rewriting the rules, and 300,000 will have to wait an extra 18 months before they can retire.

Last week, I caught up with Barbara Bates, who lives in County Durham, with whom I campaigned in 2011. Even after the Government’s concession, Barbara still faces working an extra 78 weeks before she will see her state pension. The osteoarthritis that affected her wrists and thumbs when I first got to know her five years ago has now spread to her hands, knees, neck and right foot. She said:

“no government can change the way our bodies age, and in particular those of us who started work at 15 in the 70s, a lifetime of menial and heavy jobs that are vital but un-noticed”.

Like other Members, I have also been contacted by constituents. This morning, Margaret Cutty phoned me during her office tea break. She works mostly on her feet, doing lots of lifting as well, and she has had three operations in the past year. Her husband has just had a triple heart bypass. She wants to be able to spend more time caring for him as he grows older but, because of these changes, she will not be able to do so. The experiences of Barbara and Margaret are just two examples of what we know are hundreds of thousands of stories.

[Mrs Hodgson]

I was also recently contacted by two constituents: Lorraine Derret and Evelyn Winstanley, who have worked for 42 years and 45 years respectively. Like others, they have said that they were not told at all by any letter that this was going to happen to them. The DWP has been negligent, so there should be some transitional arrangements.

--- Later in debate ---

[Rachel Reeves]

I absolutely agree. The reality is that the 300,000 women who are suffering the maximum 18-month delay have lost out on £12,000 of pension. Official statistics show that only six in 10 women aged 55 to 64 have any private pension at all. For those who do, the average size of their pension pot is only 57% of that of a man of the same age. Women such as Barbara, Margaret and others whom my hon. Friends have mentioned—women earning little more than the minimum wage who are often struggling to work full time because of their caring responsibilities, and who are desperately trying to conserve what savings they have to ensure at least a minimal standard of living during their retirement—are very worried. For those women, moving the goalposts for the second time, as the Government have done, can have a devastating impact on their finances, families and life plans. That is why I propose that, at the very least, the Government should offer some specific protection for those women.

My proposal would mean restoring the qualifying age for pension credit to the 2011 timetable for women’s state pension age, thus providing at least some buffer for those who are least able to cope financially with this unfair move. Previous Government costings suggest that that would be affordable, with the money being well targeted at those who have been hardest hit. Let me be clear that I would like the Government to go further, but at the very least they should provide that support to those who have the least. Given the wrong done to those women by the Government, that is the least we should ask for and the least we should expect.

I agree that the state pension age needs to be increased to keep it affordable, and I agree that men’s and women’s state pension ages must be equalised, but I also agree with the part of the 2010 coalition agreement that stated that women’s state pension age should not rise to 66 before 2020. I agree with the former Minister for Pensions—the former Member for Thornbury and Yate—who admitted last month that reneging on that commitment was a “bad decision”. That is an understatement, but at least he came late to the party. I also agree with the current Minister for Pensions who has said:

“Unfortunately, the Government has not given women enough time to change their plans. These women have already accepted an increase in their state pension age, but they were given time to adjust. Suddenly, these same women are being targeted again, but this time they are not being given enough notice as the changes start in just five years’ time. I believe the Government’s decision is unfair and disproportionately hits women who are now around 56 years old.”

How right she was, and I hope that she will now stand by those for whom she spoke up then, as I and other hon. Members will continue to do until we get justice.

[Several hon. Members rose—]

--- Later in debate ---

[Mr Vara]

We have also abolished the default retirement age so that people can work for as long as they wish without fear of age discrimination. We have introduced the most fundamental reform to how people can access their pension in almost a century through pension freedom, which has abolished the effective requirement to buy an annuity.

No one can say that the changes have not been fully considered. The parliamentary process was fully followed. We held a full, public call for evidence alongside extensive debate in both Houses. Between January 2012 and November 2013, the Department for Work and Pensions wrote to all those affected.

[Rachel Reeves]

Will the Minister give way?

[Mr Vara]

I will not.

More than 5 million letters were sent to addresses then recorded by HMRC. Crucially, the Government also listened during the process. On Second Reading of the Pensions Bill in 2011, the Government said:

“we will consider transitional arrangements.”—[Official Report, 20 June 2011; Vol. 530, c. 52.]

On Report, after considering the matter, Ministers made a concession worth £1.1 billion, and the time period was reduced from two years to 18 months. For 81% of those affected, the increase in the time period will be no more than 12 months.

To reverse the Pensions Act 2011 would cost more than £30 billion, which simply is not sustainable, and nor is it sustainable to reverse the 1995 changes, which some wish to do, as that would cost many billions more. It is noteworthy that if we went back to the 1995 position, it would mean that women would be campaigning for a state pension age of 60—[Interruption.]

--- Later in debate ---

[Rachel Reeves]

Will the Minister have some courtesy and give way?

[Mr Vara]

I will give way to the hon. Member for Warrington North, who moved the motion, but I will not give way to others as I have limited time.

[Mr Vara]

If the hon. Lady is a little patient, I will tell her about the issue concerning communications.

[Rachel Reeves]

Get on with it then.

[Mr David Hanson (in the Chair)]

Order.