State Pension

Robert Syms Excerpts

Monday 12th December 2022 Westminster Hall

[David Linden (Glasgow East) (SNP)]

On a point of order, Sir Robert. I do not intend this to be an unnecessarily long point of order, but I am aware that the hon. Member for Battersea (Marsha De Cordova) has just arrived in Chamber and will probably take a moment or two to find her notes. I think she has done that now, so I will stop this pointless point of order.

[Sir Robert Syms (in the Chair)]

Thank you. There are still gentlemen in the House of Commons.

[Marsha De Cordova (Battersea) (Lab)]

I beg to move,

That this House has considered e-petition 617603, relating to the state pension.

It is a pleasure to serve under your chairmanship, Sir Robert. I thank the hon. Member for Glasgow East (David Linden) for his point of order.

I start by congratulating Michael Thompson on creating the petition, as well as the creators of the six other petitions being debated today. I thank Age UK and Silver Voices for their briefings, and the whole of the Petitions Committee team for all their hard work. The petition calls on the Government to increase the state pension to £380 a week, and to lower the retirement age back to 60. The petition has already been signed by more than 110,000 people.

The current full state pension is £185.15 per week, and the basic state pension is £141.85. Many of us are here today because we believe that the state pension should provide adequate financial support for the 12 million pensioners in the UK, ensuring that they are protected in old age after paying into the system. Given this country’s wealth, we can afford to look after our pensioners. By increasing the state pension or introducing a minimum pension income guarantee, we could lift thousands of pensioners out of poverty.

While financial support is vital, the issue is not just about money. Measures to address pensioner poverty must include a broad range of actions to underwrite acceptable living standards, including support for our wider public services, such as social care to support our pensioners to live independently, and day centres to reduce loneliness and social isolation. On that point, I thank Age UK Wandsworth in my Battersea constituency. I visited last week and met many of the older people who value the services provided by that day centre, but they really want more access to it, more often. More importantly, all of them wanted the state pension to increase.

Poverty and inequality among pensioners are rising, with more than 2 million people in relative poverty. There are many reasons why some are falling into poverty. The first and most urgent is the cost of living crisis. Research by the Centre for Ageing Better found that a further 200,000 elderly people have already been pushed into poverty in the last year, and a recent report by Age UK found that this Christmas will be among the most difficult ever for nearly 3 million older people.

The measly 3% rise in the state pension this financial year was dwarfed by inflation and the intersecting impacts of rocketing food, fuel and energy bills, with the latter alone forecast to rise to £3,000 by next April. After shamefully reneging on their manifesto commitment on the triple lock last year, the Government finally committed to its reinstatement, as well as a cost of living payment for pensioners, in last month’s autumn statement. However, given that neither measure is scheduled to come into force until next year, they will be too little, too late for many who need the support right now. The misery is compounded by cuts to public services and the Government’s U-turn on their social care reforms: 10% of older people will reduce or stop their care in the coming months because of the cost of living crisis.

These causes of poverty only add to the challenges faced by pensioners. Although older people have a higher rate of home ownership than the general population, many are asset rich but cash poor. That means that some are driven to sell their homes to make up for shortfalls in pensions and are pushed into the higher-cost private rented sector.

Inequalities in state pension rates are also dragging the elderly into poverty. Department for Work and Pensions statistics for the 2020 financial year show that less than 10% of all pensioners received the full new top rate of pension—£185.15—and less than a third of those on the old pension receive the full rate.

The rise in the eligibility age for the state pension from 65 to 66 from 2018 has also increased hardship. According to the Institute for Fiscal Studies, more than 700,000 65-year-olds have missed out on entitlements and postponed retirement. The elderly are compelled to remain in the job market, and they simultaneously lack opportunities to increase their income. The Government need to consider targeted support for people who are much older as endemic age discrimination in employment affects their ability to build a work pension or find work to complement their state pension.

The third factor is the pension credit system, which can play an important part in helping to close the pensioner poverty gap, especially for women, disabled people and black, Asian and ethnic minority pensioners. Since Labour introduced the measure, its efficacy has been undermined by low take-up. In its July report, the Work and Pensions Committee stated that

“an estimated further 850,000 eligible households are not claiming Pension Credit worth £1.7 billion a year.”

It strongly recommended that the Government improve the identification of eligible people, streamline the application process and make it more accessible.

The risk of pensioner poverty is amplified for women, disabled people and black, Asian and ethnic minority pensioner groups. Women disproportionately experience later-life poverty, with the proportion of those suffering rising from 14% to 20% in the eight-year period from 2013. The equivalent figures for men were 12% and 18%. Those figures are expressions of the wider inequalities endured by women. The Women Against State Pension Inequality Campaign highlights a particularly egregious instance of those disparities. The Government have a legal and moral obligation to deliver for the many WASPI women in our constituencies. Pensions, lifetime earnings and national insurance contributions are typically lower for women due to the gender pay gap and caring responsibilities—we are all aware of those factors.

For black, Asian and ethnic minority pensioners, the inequalities are even starker. According to Age UK, 33% of Asian and 30% of black pensioners are in poverty—double the proportion of their white counterparts. Similarly to those faced by women, these inequalities are the expression of lower average wages and labour market discrimination, which translate to less generous state pensions. That has often led to some ethnic minority people earning below the minimum salary threshold for auto-enrolment in workplace pensions. Lowering that threshold would be an easy fix for this injustice; according to a report by The People’s Pension, it would double the enrolment of ethnic minority employees.

Employment and pay disparities also create later-life poverty for disabled pensioners, who are less likely to possess a work pension or a private pension as a result. We know that those effects will be exacerbated by higher living costs of around £600 per month on average for disabled people, including older disabled people.

All that shows emphatically that some pensioners are really struggling. The Government need to look at how they can support them. I hope that the Minister will address the issues I have raised, as well as making reference to the following points. First, the Government talk a lot about tackling pensioner poverty. If they are serious about doing so, why will they not commit to increasing the state pension, or introducing a minimum pension income guarantee for everybody, irrespective of their contribution record, their sex and gender, their age or their marital status?

In the current crisis, the additional cost of living payments announced in last month’s autumn statement clearly will not be enough for some pensioners. Will the Government therefore introduce additional financial support targeted at those pensioners who are most in need?

Have the Government carried out an impact assessment of how the delay caused by the U-turn on social care reform will impact our pensioners? What plans do they have to address the inequality I highlighted of the low percentage of people on the full new state pension rate?

My next point is probably the most crucial; it concerns pension credit. Why will the Government not deliver a take-up campaign to identify eligible pensioners, and introduce a streamlined and accessible application process, so that the pensioners who are entitled to that additional top-up can receive it? Pension credit is there to top up income, and I strongly believe that the Government could be proactive in identifying pensioners who might qualify.

The WASPI women need justice. When will the Government provide compensation for the failings? Will they commit to ensuring that there is a proper, lengthy notice period for any future change to the state pension age?

Will the Government seek to bring down the minimum salary for auto-enrolment to workplace pension schemes? That would increase the participation of under-represented groups, particularly our black, Asian and ethnic minority communities.

We all know, particularly at this time of year, that loneliness and social isolation are key contributors to material deprivation. More investment is needed in public services and the social support networks that are available to older people; in fact, we need an overarching strategy to address that. What are the Government doing to support community and local organisations, such as Age UK Wandsworth in my constituency? It provides a lifeline and vital services to people who live in the local area. I reiterate the point I made earlier: because of the funding available, many can attend that centre only a couple of days a week, but they would like to go three or four times a week. It is unfair that the time they can spend at such centres is being limited.

Finally, I call on the Government to explore alternative ways to fund our pension system. The state pension is unfunded, meaning that its obligations are not underpinned by assets that could generate investment and return. That funding model is implicitly appealed to when the Government object to the rising cost of pensions due to our ageing population and the impact that will have on younger people, although that probably does not apply to any of us in the Chamber, as none of us is very young. [Interruption.] Well, some might be. However, an appreciation of funding models used in other countries could point the way towards a systemic shift that could help fund the state pension system.

We owe it to our elderly and all our pensioners, as well as to the generations that come after us, to be progressive in our thinking and innovative in our approach. We must look at all options to ensure that when people reach their later years they will not fear retirement but embrace it, because they will know that, in the state pension system, there is a safety net in place to support them and they will not be struggling.

[Beth Winter (Cynon Valley) (Lab)]

Thank you, Sir Robert, for the opportunity to speak. Before I became an MP, I conducted more than 10 years of research on how poverty and inequality affect older people’s inclusion in society, so this subject is a particular interest of mine.

Pensioner poverty is significant in the UK, and it continues to increase. It is estimated that over 2 million—one in five—older people are living in relative poverty, with the greatest impact on women and other vulnerable groups. The level of pensioner poverty is similar in my country, Wales. The Older People’s Commissioner for Wales—I am very proud that Wales is still, I think, the only nation in the UK to have an older people’s commissioner—along with other organisations, has expressed serious concern about the detrimental impact that the cost of living is having on older people. My constituency had the third highest death rate from covid in the whole of the United Kingdom. That exemplifies the effect that poverty and the industrial legacy of Cynon Valley have on the health and wellbeing of older people.

Just before the summer, I conducted a cost of living survey in Cynon Valley. Nearly nine out of 10 pensioners who responded said that they felt worse off than they did 12 months earlier. Security in retirement was the biggest cause for concern among pensioners. One older person said:

“Us elderly people have worked very hard over the years and we get very little back to survive on.”

I pay tribute to a range of organisations in Wales, including Age Cymru and Age Connects in Cynon Valley, who are doing amazing work with older people, trying to empower them and giving them a voice in our communities.

The petition calls for an increase in the state pension to £380 a week and a reduction in the state pension age to 60, which would be a significant change. However, the demands of the petition open up a debate on where pension levels are set and what is the right age to start receiving the state pension.

At the 2019 election, my right hon. Friend the Member for Hayes and Harlington (John McDonnell), the then shadow Chancellor, rightly sought to deal with state pension inequality for women and offered a major compensation scheme. He said:

“This is an entitlement. This is not a benefit…This is a historic injustice. We have to address it.”

Over 4,000 women in my constituency are affected, and I am working closely with an active group of local women to continue campaigning for justice for the WASPI women. I have continued to support their demand for compensation, through demands for full restitution and through the minimum compensation proposal of the WASPI campaign and the all-party parliamentary group on state pension inequality for women. As we know, the ombudsman has found that there was maladministration, and we are now waiting for the full report to be published and for the recommendations for remedy. We must compensate these women.

The other group of older people I am working closely with in Cynon Valley are former miners. I welcomed the Business, Energy and Industrial Strategy Committee report in 2021, which recommended giving £1.2 billion held in the investment reserve to former miners. It really is regrettable that the Government have rejected the Committee’s recommendations, and I urge them to look at those again. The WASPI women and former mineworkers are examples of pensioners who have been let down—and let down massively—by the UK Government.

More broadly, there is a debate around the level of the state pension. Much is being said about how pensioners’ incomes have been safeguarded, compared with real changes to incomes and social security in recent years. However, pensioner poverty is growing, and the petition demands a significant increase in the state pension. The National Pensioners Convention says that the state pension should be set at 70% of the living wage and above the official poverty level, at £242.55 a week. That is what a pensioner in the Netherlands gets, with an equivalent of more than £250 a week. The petition demands £380 a week, and in Denmark the folkepension for a single pensioner is £370 a week. This can and should be done here. These other countries’ pensions put the demands of the NPC and this petition into perspective—they are not unreasonable demands.

The question about funding these increases is welcome. There are many sources of untaxed wealth that could deliver the revenues to pay for higher pensions. A wealth tax could raise in the region of £260 billion to £300 billion. The country has the money; it is a political choice not to redistribute the wealth of this country to ensure that older people and many millions of other vulnerable people have the money to maintain a basic standard of living. That is a basic human right, and everybody should have that entitlement.

Before I conclude, I will take the opportunity to highlight the fact that a third of those entitled to pension credit—over 750,000 people—do not claim it, although they are entitled to. As my hon. Friend the Member for Battersea (Marsha De Cordova) said, that equates to about £1.7 billion of unclaimed money. I urge the UK Government urgently to take action on this issue. I truly wish that they would pay as much attention to ensuring that people claim what they are entitled as they do to stigmatising people on social security benefits, who are entitled to that money and should have it as a matter of right.

To conclude, pensioner poverty is rising. Combatting it is a question of principle and values. If we are to achieve justice for pensioners, we must take action to deliver it.

[Sir Robert Syms (in the Chair)]

We now move to the Front Benchers, who normally have 10 minutes or less.