Pensions Bill

Debate between Steve Webb and Julian Sturdy

Tuesday 29th October 2013 Commons Chamber

[Steve Webb]

I would be happy to provide the hon. Lady with the clarification she seeks, either while I am still at the Dispatch Box or subsequently, if that would be helpful.

Part 4 of the Bill, which occupied the majority of our time in the House, deals with automatic enrolment and one of the many issues not addressed until this coalition Government came to power—the issue of small stranded pension pots. We anticipate that there could be tens of millions of small stranded pension pots, which is not something any of us want. I think that the prospect of the pot-follows-member system, under which people change jobs and the small pension pots go with them and build into what I have called a big, fat pot, is a better model. It will engage people with pension saving and result in people knowing where their pensions are and getting better value for annuities. That will be of great value.

It would be fair to say that a Bill such as this does not just happen, but depends on the work of an army of officials with expertise in both state and private pensions, on parliamentary counsel and on the many stakeholders who have given us advice and encouragement and enabled us to refine the Bill. I put on the record my appreciation to all of them.

[Julian Sturdy (York Outer) (Con)]

Like the Minister, I support the Bill, but I have constituents concerned about the 35-year rule, as they fall a few years short of it. There is genuine concern for them. What reassurances can he give me on this issue?

[Steve Webb]

My hon. Friend raises an issue that has caused a little confusion, but I can reassure him that although the single-tier pension is based on a 35-year contribution, 35 years buys someone a £144 pension, so each year has been valued at a more generous rate than the 30 years for the £110 basic pension. Under the new system, nobody will lose out from the change because we compare someone’s entitlement under the current system with their entitlement under the new system, and their foundation amount going forward is the higher of those two amounts. If the move to 35 years prejudices any of my hon. Friend’s constituents, they will get the figure they would have got under the current system, and if it benefits them, which it will in many cases, they will get the higher figure. I hope that that offers him the reassurance he seeks but I am happy to respond to him in writing.