Financial Guidance and Claims Bill [ Lords ] (First sitting)

Debate between Yvonne Fovargue and Mhairi Black

Committee Debate: 1st sitting: House of Commons
Thursday 1st February 2018 Public Bill Committees

[Mhairi Black]

The amendment is pretty straightforward and sensible. It would clarify the important differences between information, guidance and advice, which we know have a major impact on people’s decisions and how reliable they are if things go wrong. It is not often that parliamentarians admit ignorance, but before I became pensions spokesperson, I did not realise that there was any official difference between the three terms. I am a Member of Parliament and I have only recently found that out, so the Committee can imagine what it must be like for the general public. As long as the Government clarify the definitions of the three terms, I will be happy to withdraw the amendment.

[Yvonne Fovargue]

I support the hon. Lady’s request for definition of the terms, although I recognise that it is difficult not to stray into other areas. A further concern is that the information, guidance and advice need to be free and impartial. There are too many pensions providers that spend a lot of money—I heard of one spending £15 million—on ensuring their advice is compliant with all the FCA impartiality rules. As somebody said, if pension providers are spending £15 million on making their advice impartial, they must be expecting some return on their investment. That worries me—that people are gently steered towards a particular product if they go to a particular service.

I believe that some of the comparison websites that people use are not always impartial. If they take money for the top rankings, they are not providing a properly impartial service. People do not understand the differences between those comparison website that have paid-for rankings at the top and those that are completely impartial, based on objective criteria. Guidance on the types of investment can be different when it leads to a product sale, unlike when it is just helping a consumer through their options, completely free of any sales pitch.

Financial Guidance and Claims Bill [ Lords ] (Second sitting)

Debate between Yvonne Fovargue and Mhairi Black

Thursday 1st February 2018 Public Bill Committees

[Yvonne Fovargue]

With respect, I think the Minister probably underestimates the public’s disengagement with pensions. I sat through many pensions discussions when I worked with Citizens Advice, and also discussions on my own pension, and I stared out the window and wondered when I could stick nails under my fingernails—and I was vaguely interested in the subject.

I praise the work of the Behavioural Insights Team, of which I am a big fan. It is about time we made policy based on what people actually do, rather than what we think they should logically do. It has some interesting analysis. The extent of consumer distrust and disengagement was evident from the trials of the Behavioural Insights Team’s pre-retirement “wake-up” packs last year. Those trials were run in collaboration with Pension Wise, the free pension guidance provider. The packs had a limited impact on the number of customers who subsequently used guidance. The strongest performing wake-up pack increased customers’ likelihood of calling Pension Wise by only 3.5%. Nothing indicates better the impact of disengagement and distrust and the low capability. It is unrealistic to expect customers to absorb the level of information required from provider communications or online contact. The FCA’s retirement outcomes review found that only 10% of customers had even read the pre-retirement wake-up guides, which also indicates why provider signposting is likely to have a limited impact.

Pension providers have exploited that inertia. Three previous investigations into the old annuity market identified low levels of shopping around and poor awareness of the available product options. That is still evident today on a timeline that has been produced, showing attempts since 2001 to make an impact on people’s awareness of pensions.

The FCA retirement outcomes review interim report said:

“We are concerned that consumers motivated by mistrust in pensions”—

I do not think that trust has been increased by such matters as Carillion, the state pension scheme or women of state pension age. It brings distrust of the whole pensions system, whether state pensions, occupational pensions or cash purchase pensions, which make it extremely difficult to understand what will be paid at retirement age.

The report goes on to say that such people

“may be making uninformed decisions that result in paying more tax than they would have paid otherwise…or missing out on the benefits of staying invested”

and that they

“do not always take advantage of the help and guidance”.

People need to take advantage of that before making a decision. It is not like switching bank accounts. People cannot switch pensions for a year and then think, “Actually, I’m not very happy and I want to go back.” It is a long-term decision, and an important one.

Let us stop pretending that the wake-up packs are a legitimate source of information, and not build on them. I am pleased that we will consider measures further, but they need to be strengthened now. New clause 1 does not strengthen anything; it weakens it. Relying on looking at it later is not good enough for something as important as a pension.

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I apologise for my lateness, Chair; there were travel disruptions outwith my control. No discourteousness was intended. I appreciate the Minister saying that he would get in touch with me about my amendment.

State Pension Age (Women)

Debate between Yvonne Fovargue and Mhairi Black

Thursday 7th January 2016 Commons Chamber

[Mhairi Black]

I could not agree more with the hon. Gentleman and I will touch on that point later.

The 2011 Act made women wait an extra year to a year and a half to claim their state pension. However, we have to remember and take into account the context which is women did not know about the initial 1995 Act. We have a situation where there is a whole host of women who read about the 2011 Act and went, “Oh, God. Okay, I am going to have to be working an extra two years. I’d better start making plans. Oh no, wait a minute, I’m working till I’m 66. Where did that come from?” There is a whole host of women who have been given a double whammy. The Government have not and are not giving women enough time to prepare alternative plans. There have to be better transitional arrangements.

The Conservative ethos is to encourage independence and responsible choice, but how can that happen if we do not give people the time to make the responsible choices? By continuing this policy at such a high speed, the Government are knowingly and deliberately placing another burden on women who are already trying to deal with consequences of an Act passed 21 years ago that they have only now found out about. To put that into context, I am 21—that’s how old this is.

One of my constituents told me that she began working at 17 and chose to pay the full rate of national insurance on the basis that she would retire at 60. Other options were available to her, but she said, “I want to retire at 60 so I’ll pay the price, through national insurance, my whole working life.” She put it in a way that I think is a very good and accurate description of what is happening. She has now found out that she is not retiring until she is 66. She says:

“The coalition and this present Government have stripped us of our pensions with no prior warning and with no regard to the contract we all entered when we were 17.”

She uses the term “contract”. That is an important point, because pensions are not benefits; they are a contract. People enter into them on the basis that if they pay X amount of national insurance they will receive Y at a certain age.

[Yvonne Fovargue (Makerfield) (Lab)]

That is also the case for my constituent who at 57-and-a-half realised she would no longer be able to retire at 60. She is a care worker doing an extremely physically demanding job. She now has to work until she is 66. She has had a low income throughout her life working as a care worker and now has to carry on doing this demanding job for a further six years.

[Mhairi Black]

I could not agree more. Every Member, if they contact their constituents, will recognise that this problem spreads across the whole of the UK and affects women of all classes, from different backgrounds and with different jobs.

In criminal law, if we want to send someone to jail, it has to be agreed beforehand how long that person is going away for, and if that needs to change, there are appropriate measures to deal with it. In civil law, if we enter into a contract, there are terms and conditions stating, “If you want to change this contract or break out of it, there will be a price to pay.” Why are pensions any different? This is a contract people have entered into, but it is now being broken and nothing is being done to allow them to transition. These women have done exactly what was asked of them—they have worked hard all their lives and paid their national insurance—but it is now being taken from them behind their backs.

What is worse, if the Government choose to continue with the policy, they will be completely ignoring the years of gender inequality these women have lived through. Another constituent of mine, Kathleen Birney, explains that she worked until her children came along. Her husband could no longer work because of a disability, but she was determined not to depend on state benefits, so she studied and became a primary school teacher. She cared for her husband and her children, and she never claimed a penny. She has based all her life plans and financial plans on the basis that she would be retiring at 60. She has now found out that she cannot retire until she is 66. Unpaid carers are the unsung heroes of our economy. They have saved consecutive Governments an absolute fortune time and again. Sadly, women in our society have had to live with years of performing gender roles, meaning that the vast majority of unpaid carers are women. They are the type of people this policy is hitting: people who cannot afford to go another six years without a pension. Some women, such as Kathleen, are being left penniless. They have nothing and are being forced to turn to the state for benefits. How does that fit into the logic of reducing public spending?

We will most likely hear the Government say, “It’s all okay because women will do better under the new single-tier state pension”, but there is a campaign called CARIISP—the collection against real inequality and injustice of the state pension—which is a collection of women rightly pointing out that a person only receives the higher rate of the new pension if they have paid 35 years of national insurance, but many women have not had the chance to build up that level of contribution. It is a separate issue; I mention it, first, to raise awareness and, secondly, in the hope it will earn a debate on its own merits.

The Government have said:

“The policy decision to increase women’s state pension age is designed to remove the inequality between men and women.”

That is a strange definition of equality: I am being shafted and short-changed purely because of when I was born and because I am a woman. That is not my definition of equality.

To conclude, there are two problems at the heart of this. First, there is the poor communication over the years, but all we can do is learn from that. I accept that the 1995 Act has happened, and all we can do is reflect on the mistakes made and not repeat them. The second issue, however, is the 2011 Act and the rapid changes the coalition and this Government have made. We can do something about that. Unlike most things that come from this Government—I mean this sincerely—I do not believe that this policy was vindictive or done in the knowledge that it would hurt people. I genuinely think we have ended up in this mess purely because of mistake after mistake, but any mess can be cleared up. If they continue with this policy, however, in the full knowledge of everything that has been and will be outlined, it will become vindictive and deliberate, and it will be done in the full knowledge that people will be hurt.

I understand that we have to work in tandem and with responsibility when it comes to the economy, but that does not mean punishing people who are about to retire. Every topic we speak about in this Chamber comes down to: “Where are you gonna find the money?” I understand that, but the answer is always austerity, no matter how brutal or who it affects. In this Chamber since I was elected we have had a go at people on low wages, the disabled and women, and now we are having a go at pensioners. We can afford to send airstrikes to Syria and to pay for nuclear weapons, but we cannot afford to look after our pensioners? I just do not buy it. The women up in the Gallery right now did not cause the financial crash, they are not responsible for the state of our economy and they did not make the irresponsible decisions that got us here. I understand the question, “Where are you gonna find the money?”, but I refuse to accept or believe that it has to come out of the pensions of older women.