Pensions Bill

Debate between Richard Graham and Mark Reckless

Monday 17th June 2013 Commons Chamber

[Richard Graham (Gloucester) (Con)]

It is a great pleasure to speak in this debate. The Bill is a major piece of legislation that is ready to make us more fit to face the challenges facing pensioners in the 21st century. Of course, the complexity of the subject is responsible for the reduction in the normally large number of Members in the Chamber—it also baffles most of our constituents. Therefore, the major goals of this Bill must surely be to make pensions simpler and clearer, to reduce the amount of means-testing, which is responsible for much of the complexity, and, above all, to implement the pledge that it always pays to save. That mirrors the other important work of the Department for Work and Pensions: implementing the promise that it will always pay to work. Those two pledges, I believe, are the two most important things the Government are trying to achieve. It is a great shame that the Labour party, which was in power for so long, contributed to a system in which it certainly did not always pay either to work or to save. Surely the major goal of this Bill is to put that dire situation right.

I welcome the entirely new state pension system outlined by the Secretary of State, which has a single state pension that is much easier to understand, and the contracting out of defined-benefit pensions, which takes away one area of complexity that is potentially open to abuse. I also welcome the new state pension age, which incidentally is lower than those of four other European Union countries and a great deal closer to the reality of life expectancy, which is that we all need and expect to work longer.

That raises the interesting issue of intergenerational fairness, which has not yet been mentioned in the debate. As many of us here draw closer to retirement age, and access to a pension, than to our time at school, college or university, it is vital that we do not inadvertently preside over a system that is grossly unfair to our children and to the next generation. It is also valid to remember Age UK’s response when the new state pension age was first raised in the House, which was to focus on the opportunities available to older people as well as the reassurance needed by those who feared that they would have to work longer in demanding occupations.

Another aspect of the Bill that I think deserves a brief comment is the new framework on the retirement age for the state pension, which gives clarity. Some Members have asked whether that inadvertently raises an expectation that the retirement age will be increased every five years at the reviews, but I am sure that that is not the intention of the provision. Perhaps the Minister will clarify that.

The Bill also covers bereavement, focusing more on short-term support and the 40,000 recipients—those with children—who will benefit from a one-off payment of £5,000, following an injection of £120 million. There is a longer-term issue in that regard that I will return to later when I will refer to a letter from a constituent.

On the consolidation of the so-called small pots—the defined-contribution pots—I think that many people will welcome the auto-transfer proposed in the Bill. Clearly some of the bodies representing pension schemes fear that some of their members might lose out as a result of being transferred into weaker schemes, but it seems to me that, in general, that provision, which is broadly welcomed by the National Association of Pension Funds, the Association of Consulting Actuaries, the Association of British Insurers and the CBI, will benefit many of our constituents, because at the moment there are too many pots that are unlooked at and unknown. The provision will make it easier for our constituents to engage with the whole business of saving and to have a greater understanding of what their savings really are.

The Bill also provides for the abolition of refunds for short-service membership of defined-contribution funds, which means that someone who has been in a scheme for less than two years will not be able to demand that the employer refunds their contributions. I think that that will be welcomed, because it reduces complexity for future pensioners and ties in with the consolidation of the small pots that I mentioned earlier.

The details of the Bill’s provisions complement the earlier introduction of the auto-enrolment scheme, which in itself should be responsible for introducing an additional £11 billion in savings and between 6 million and 9 million new savers. The object of the exercise is clearly to widen the pool of those constituents who are saving and make it easier for them to have savings that they can later draw on in their retirement. The Bill complements that earlier work in helping to meet the challenges of a century in which we will all live significantly longer than our parents, let alone our grandparents.

An important point that I would like to highlight, in particular, is the improved situation for many women. The right hon. Member for Birkenhead (Mr Field) suggested that those born between April ’51 and April ’53 appear to be disadvantaged. I would be grateful if the Minister could confirm some of the figures, because they are complex and, as several Members have mentioned, need to be communicated. My understanding is that there are currently 2.8 million women receiving less than £80 a week in pension—the comparable figure for men is 474,000—so there are huge numbers of women on low pensions. My understanding is that 750,000 women who will reach pension age in the decade after the introduction of the Bill—after 2016—will get an extra £9 a week. Over a lifetime, that is a significant amount of money. I would be grateful if the Minister could confirm that.

Will the Minister also confirm that 90% of the women born between April ’51 and April ’53 will actually get more than the “men’s deal”—men at the moment reaching retirement age later—and up to £26,000 more over the average retirement period? Those are quite difficult figures, but I would be grateful for confirmation. I think that the point made by right hon. Member for Birkenhead was that a group of women appear to be worse off, but actually they are being considerately treated, not least as a result of the coalition Government’s earlier amendments, and that needs to be communicated, particularly through bodies such as Age UK.

Today we have heard what I would describe as a “glass half full” response from the Opposition, and about an issue on which it should surely have been possible to achieve consensus.

[Mark Reckless]

Does my hon. Friend not mean that we have heard a “glass half empty” response?

[Richard Graham]

My hon. Friend is probably right, in the sense that the overwhelming response from the Opposition was one of ambiguity. It was ambiguous because they would neither oppose, nor strongly support. It was ambiguous because the shadow pensions Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is in his place, said in February 2013 that the triple lock

“was a triumph of rhetoric over reality”

and that, three years into its operation,

“the increase in the state pension is less than it would have been if the uprating method used by the previous Government was still in place.”—[Official Report, 13 February 2013; Vol. 558, c. 1002.]