Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Sally-Ann Hart Excerpts

2nd reading
Friday 26th November 2021 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

Today, I welcome the private Member’s Bill introduced by the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier). It is very commendable. On 29 May 1970, the Equal Pay Act gained Royal Assent. With its passing, this House took an important and laudable step towards ensuring the equal treatment of men and women in the workplace and our society more generally. Since the Act’s passing and its later commencement in 1975, even greater strides, both de facto and de jure, have been taken towards gender equality, but as colleagues will know, much work remains to be done to that end. We all have responsibility as lawmakers to strive towards it continuously, through pieces of legislation substantial, modest or otherwise. The Bill can rightly be seen as a means to do that. Specifically, it will help right a historical oversight by making important clarifications in relation to pension schemes and guaranteed minimum pensions.

The historical oversight has been explained comprehen- sively —I will not go into that—but we see that it has its roots in the state earnings-related pension scheme that was introduced in April 1978, as well as the Pension Schemes Act 1993, which required GMPs effectively to be calculated on a fairly unequal and unfair basis. It has ultimately meant that the age at which GMPs could be calculated and the rate at which benefits built up were different for men and women. It is far from clear which sex received the greater total benefit as a result of this discrepancy, primarily as related advantages fluctuate over time. Whether it is men or women who benefit, such equality cannot be considered just.

There have been consultations over time about guaranteed minimum pension schemes and how equalisation in occupation schemes should be looked at. There was a consultation and proposal in 2012, and another in 2016-17. Compared with the 2012 consultation and methodology, the Department for Work and Pensions stated that there was broad agreement that the newer method was a distinct improvement and offered a relatively simple way to convert GMPs into ordinary scheme benefits, thus ensuring equality across the board and assisting the industry to deliver the change without policies being excessively onerous. That development was welcome, but concerns have continued to be raised by the industry that existing legislation is unclear in some areas, including, for example, that it fails to provide for circumstances in which the scheme’s sponsoring employer no longer exists and therefore cannot consent to a proposed conversion exercise as per the methodology.

For the full benefits of the 2016-2017 proposal on methodology to be secured in the relevant regulations, including the positive results for equality of outcomes for the sexes, these concerns must be properly addressed in legislation, and that is what the Bill seeks to do. As I understand it, the Bill will make it clear that the legislation applies to survivors as well as earners; provide for a power to set out in the regulations the conditions that must be met in relation to survivor’s benefit; provide for a power to set out in regulations detail about who must consent to the GMP conversion; and remove the requirement to notify and inform HMRC.

The Bill has been welcomed by industry leaders for covering key areas where clarification is most needed, which will in turn make the important process of equalising benefits using GMP conversion easier. With this positive impact on the industry in mind, and given the broader message that it sends out—that the equality of the sexes is important in all legislative matters, both significant and modest—I welcome the Bill, which is worthy of support from across the House.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is a privilege and an honour to address the House on behalf of the Government, and to set out our position on this small but very important Bill.

Let me first congratulate the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) on her success in the ballot, because without the ballot she could not have presented any piece of legislation. It is important for people to understand that. I also congratulate her on the massive support—of which the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) spoke eloquently—that she has managed to garner across the sector for a piece of amending legislation to address a small, discrete but genuinely important measure, and on the way in which she introduced the debate. She is right, and the hon. Member for Gedling (Tom Randall) is right: this is not simple stuff. It is technical, but it matters tremendously. She set out, with great eloquence and fairness, the background to the problem and how her three-clause Bill will address it. She brought to the attention of the House the need for schemes to make progress with the equalisation of scheme benefits to take account of the unequal effect of guaranteed minimum pensions. She set out why this issue is of paramount importance and how the House can help to clarify the legislation, and I can confirm that the Government will support the Bill.

As we all know, there are 13 days a year on which we consider private Members’ Bills. Some of those days are interesting, to put it charitably, in that the Bills will not necessarily be supported by the Government or even the Opposition on many occasions. Points of great importance are raised but the Bills do not go forward with the will of the House. However, that is not like today. Today is a very special day, and I cannot overstate the sense of genuine achievement that Members across the House should feel about the progress of the Down Syndrome Bill. Anybody who was in the Chamber to hear what was said will have been utterly moved and taken away by the wisdom and significance of the speeches and the differences that that Bill will make. We have now come to a very different Bill, but it is no less important.

I am now—I believe—on my fifth pensions Bill, Madam Deputy Speaker. As a former Pensions Minister, you were one of the architects of automatic enrolment, which my hon. Friend the Member for North West Durham (Mr Holden) so eloquently—

[Sally-Ann Hart]

Will the Minister give way?

[Guy Opperman]

Of course.

[Sally-Ann Hart]

My hon. Friend said that he is on his fifth pensions Bill. Is it right that pensioners are better off now than they were 10 or 15 years ago?

[Guy Opperman]

In a whole host of ways, the answer is yes. The state pension, by reason of the triple lock, is now £2,050 higher than it was prior to the introduction of the triple lock in 2010. There is automatic enrolment, and it would be fair for me to give a quick history of that because we have the esteemed former Minister in the Chair. Automatic enrolment was conceived by the Labour Government and the Turner commission. It was introduced by the coalition Government in 2012. Without a shadow of doubt, it has been utterly transformational. For example, 6,000 constituents of my hon. Friend the Member for North West Durham are saving the 8% thanks to the 1,580 employers in his constituency who support that. He made a very telling point about the 2017 automatic enrolment review, and given that he raised it—not for the first time— I will finish this point on automatic enrolment and the importance of this change before I go on to GMPs.

I am proud to say that the success of the provision now means that 10.5 million employees have been automatically enrolled into a workplace pension by more than 1.8 million employers. It was specifically designed by the Labour Government and brought in by various other Governments to help groups who historically have been less likely to save, particularly women, low earners and young people—this goes to the point made by my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart). It has helped many in those groups to begin to save into a pension for the very first time. Workplace pension participation among eligible employees has grown to 88% overall compared with 55% in 2012. The proportion for women and young earners was less than 40% in 2012; it is now above 80%.

There is more that we can do, and we very much hope we will, and we recognise that challenges remain. Our ambition, as my hon. Friend the Member for North West Durham set out in relation to the 2017 review of automatic enrolment, is to enable people to save more and start saving earlier. Abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18 in the mid-2020s will benefit younger people, the low-paid and part-time workers as they will receive contributions from their employer from the very first pound earned. I want to stress that as a Government, we remain utterly committed to those measures. I have been clear that the implementation will be subject to the learnings that take place from the 2018 and 2019 contribution increases. That is significant and it is important that that is done.