Oral Answers to Questions

Steve Webb Excerpts

Monday 1st September 2014 Commons Chamber

[David Mowat (Warrington South) (Con)]

2. What steps he is taking to ensure that employees will not be auto-enrolled into high-cost pension schemes.

[The Minister for Pensions (Steve Webb)]

As part of our strategy to ensure value for money in pension savings, we announced earlier this year that we would protect members of pension schemes used for automatic enrolment by introducing a default fund cap of 0.75% from April 2015. We will shortly publish more details on the implementation of the charges measures.

[David Mowat]

I thank the Pensions Minister for that answer, and I congratulate him on introducing that cap, which is half the level of the one introduced by the previous Government for stakeholder pensions. Over time, our cap will save pensioners £1 billion a year. Can he confirm, for the avoidance of doubt, that the cap will also apply to older, legacy pension schemes, some of which currently charge up to 2% per annum?

[Steve Webb]

I am grateful to my hon. Friend for his supportive comments. Focusing on automatic enrolment, I am pleased to tell him that we aim to protect as many members of automatic enrolment qualifying schemes as possible, regardless of when they started contributing. From April 2015, the cap will therefore apply both to members of schemes newly set up for automatic enrolment and existing qualifying schemes for auto-enrolment.

[Barry Gardiner (Brent North) (Lab)]

How concerned is the Minister about savers who want to take advantage of new pension flexibilities being subject to huge penalties in exiting their scheme? What action is he taking to ensure that that cannot happen?

[Steve Webb]

The hon. Gentleman raises an important point. A review of legacy pension schemes is under way, under the auspices of the Association of British Insurers, and the issue of excessive exit fees is part of it. In most cases, the terms of schemes will allow people to access their budget flexibilities, but there may be some where the contract and scheme rules impose a charge, and that is a contract that people have entered into.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Locally, auto-enrolment seems to be working smoothly for those on monthly salaries, but it is incredibly difficult for those on weekly wages. Are the Government familiar with that? Is the Minister able to assist in that regard?

[Steve Webb]

We have made a number of changes to make sure that auto-enrolment works as smoothly as possible for the whole diversity of employment scenarios, such as the one to which my hon. Friend refers. The point about automatic enrolment is that where someone who is paid weekly exceeds the threshold once, they should be automatically enrolled. If in a subsequent week they earn below the threshold, nothing happens—no payment is due and no payment is made. If they go above the threshold again, payment is made, but there is no re-enrolment, disenrolment or leaving of the scheme. The complexity is often in perception, rather than in reality. If she is aware of individual employers who have particular problems, I would be pleased, as always, to receive details.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

May I press the Minister further on the question asked by my hon. Friend the Member for Brent North (Barry Gardiner)? The Government have changed the rules on pension flexibility at retirement, or are in the course of changing them, yet there are members of pension schemes who will face huge exit penalties if they wish to take advantage of those flexibilities. Does he think pension savers in that situation will be comforted by his saying today, “Well, they entered into a contract and they have to put up with it”? The Government are changing the rules, so surely those savers deserve to be able to take advantage of the flexibilities just as much as anyone else.

[Steve Webb]

I do not think that the hon. Gentleman in his heart of hearts really wants these flexibilities. We announced in the Budget the flexibility for people to access their money at 55, in full and in cash if they want to do so. Clearly a minority of schemes—it is important not to exaggerate the scale of this—have contractual terms that relate to the basis on which money can be withdrawn. We are not overwriting the rules of existing schemes, but we are talking to the industry to ensure that as many people as possible can access their cash.

[Nick Smith (Blaenau Gwent) (Lab)]

3. How long the average wait for an assessment for a personal independence payment was on the latest date for which figures are available.

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[Mr David Amess (Southend West) (Con)]

5. What recent steps his Department has taken to support older workers.

[The Minister for Pensions (Steve Webb)]

The Government have abolished the default retirement age, extended the right to request flexible working and given people more freedom in how they draw their pension pots to smooth the transition to retirement. We recently published “Fuller Working Lives: a framework for action”, which sets out the business case for employing older workers, and we have appointed Dr Ros Altmann as the Government’s business champion for older workers.

[Mr Amess]

Does the Minister agree that with changing demographics—for instance, on Sunday 5 October in Southend there will be the largest gathering of centenarians in the world ever—employers should recognise the experience that an ageing population has to offer?

[Steve Webb]

My hon. Friend is quite right that older workers have valuable knowledge and experience and that employers who fail to retain their older workers are losing important skills from their work force. However, I can assure my hon. Friend and the centenarians who will be attending his event in Southend that we do not require them actively to seek work.

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

What will the Government do to support those workers who, owing to the raising of the pension age in some key public services, might not be physically active enough to do their current jobs?

[Steve Webb]

The hon. Gentleman raises an important point. In a world where people will be of working age for potentially 50 years, assuming that they will do a single job for their whole life is increasingly unrealistic. We need to do a great deal more to enable people to transition into less physically demanding jobs. We have recently piloted something called the mid-life career review, which starts people thinking much earlier about what they might be able to do later in life and other courses of action that might be open to them. We also need to challenge employer attitudes, which we are doing.

[Nick de Bois (Enfield North) (Con)]

Although unemployment in my constituency is down a welcome 35% and youth unemployment is down by 40%, unemployment among those over 50 has stubbornly not reduced by the same rate. Will the Minister therefore endorse and welcome Enfield North’s first online older employees forum, which we have set up, along with our older employees forum and jobs fair on 26 October?

[Steve Webb]

I am very pleased to hear about the activity in which my hon. Friend is engaged. We are not asking for charity as regards employing older workers, and we often find when we talk to employers that many of them get it already. They realise that recruiting and retaining older workers benefits both young and old in the work force, and we want to see a lot more of that.

[Fiona Mactaggart (Slough) (Lab)]

Why does “Fuller Working Lives” not recognise the difference in the experience of older women workers and older men workers? Older women are about four times as likely to be carers and the biggest pay gap is between women and men over 50. What are the Government doing about that, apart from appointing Ros Altmann?

[Steve Webb]

I wonder whether the hon. Lady has read the document, given that one of the key groups on which we focus is carers. We specifically state in the document that carers face particular barriers in the labour market and that is why we need more flexible employment, such as our extension of the right to request flexible employment to all workers as of this year.

[Nia Griffith (Llanelli) (Lab)]

6. How many people were awaiting a work capability assessment on the latest date for which figures are available.

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[Robert Flello (Stoke-on-Trent South) (Lab)]

7. What progress he has made on the introduction of face-to-face pensions advice.

[The Minister for Pensions (Steve Webb)]

Our summer response to the consultation “Freedom and choice in pensions” outlined the policy and legislative details underpinning the implementation of the guidance guarantee. We will bring forward amendments to the Pensions Schemes Bill to introduce the guidance guarantee, and the Treasury implementation team continues its extensive service design work. We will publish an update note on the project in the autumn.

[Robert Flello]

Despite the announcements made in the summer, I understand that the pensions industry continues to express considerable concern about funding the guarantee levy, whether the service will be ready in time and how the scheme will operate. I understand that there is also widespread concern among consumers about how the scheme will operate and whether it will be ready in time. Given that this is perhaps the most important decision that people will face in their lives—it is certainly one of the most important decisions—and that there is concern that people will receive guidance and think it is advice, or that the guidance will not be comprehensive enough, what will the Minister do to ensure that the proposal works properly and quickly?

[Steve Webb]

We are actively engaged in making those preparations, but we entirely accept that the time scale is tight. I contrast our proposals with the current situation, in which hundreds of thousands of people reach an age at which they choose whether or not to buy an annuity and get no guidance, advice or help whatever. This will be free. The guidance will be independent and will be face to face if people want that. It will be a vast improvement on what currently happens.

[Paul Burstow (Sutton and Cheam) (LD)]

Given that this decision is one of the most important that people make, and that one point they will consider is how they might meet the costs of their long-term care later in their old age, will the Minister take the necessary steps to ensure that this advice covers how to make the right decisions on paying for long-term care?

[Steve Webb]

My right hon. Friend has a strong track record on long-term care and making it affordable—he and our right hon. Friend the Minister of State, Department of Health, have introduced legislation on that. On the guidance guarantee, I have to be slightly wary of trying to jemmy in large numbers of different topics, but it is clear, as my right hon. Friend says, that retirees need to think about financial liabilities later in retirement. The guidance conversation offers an opportunity to start that process and to signpost people to places where they can find further information.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

8. What steps he is taking to limit the availability of benefits to migrants from other EU member states.