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Pensions

My Lords, I, too, congratulate my noble friend Lord Hunt of Kings Heath in taking up his role and thank my noble friend Lady Hollis of Heigham on her splendid work in government over a number of years. Debates such as this do not always enhance the search for consensus that was called for by the noble Lord, Lord Hunt of Wirral, but it is the right message to give in advance of Adair Turner’s report. After all, debates about pensions have one thing in common with debates about nuclear power stations: the years that we are talking about often relate to 2040 or 2060. It is not tomorrow or the next day, and the leak in today’s Financial Times about increasing the retirement age to 67 mentions the year 2020. That is tomorrow in the world of pensions. We are not unique in this country in having a problem. There are some dramatic figures on the support ratio. Our ratio in 1948 was five workers for every person who was retired; today that figure is three and will move to two by the middle of the century. In South Korea, that figure will fall from 9.1 today to 1.7 in 2050. In China, it will fall from 8.8 to 2.4. Those figures have been provided by the same sources that we have to believe in all such statistical questions, but we should bear the figures in mind when we consider that we may have a crisis—not today but, as with many other countries, we are at the benign end of the spectrum. The fundamental problem of pensions was characterised recently by the director of the National Institute of Economic and Social Research, who said that people want something without having to pay for it. That may be a ““square one”” remark, but it is fundamentally true. That is why what we often call compulsion is another way of saying that we have to take decisions collectively, not only for the common good but because, left to ourselves, as my noble friend Lady Turner said, there is a lack of confidence in how to take these decisions ourselves. That is because, among other things, we lack confidence in what we have been sold by the financial services industry—although my noble friend did not put it that way. I am in favour of a mongrel, collective, public/private solution and I believe that Adair Turner and his two colleagues, my trade union friends Jeannie Drake and Professor John Hills, are the best people to give us a road map. On compulsion, a point that has not been discussed, but which I believe is essential, is how much employers want to employ older workers. We seem to be debating this subject in an abstract world in which people want to employ those aged 67, 68 and 69. Over the years, I have been involved in Third Age Employment Network. Anyone in the House who has been so involved knows that that is far from the case. Next year will be a very important year because we shall have the EU framework of anti-discrimination legislation and it will be important that both sides of industry find a way to get that up and running. The kindest way to describe the preaching from some employers, especially when one considers their record of dismissing older workers and not wanting to employ older workers, is that it is schizophrenic. In many cases, they want to sack people when they want to and yet they want to preach about later retirement. Apropos the stronger messages from the noble Lord, Lord Fowler, about the Civil Service, it was only in recent years that the Civil Service employers wanted staff to reduce their retirement age from 65 to 60. That was not from altruism; they would save on the average pension that would be payable, given the turnover in the Civil Service. I believe the noble Lord, Lord Fowler, referred to the privileged minority, although he did not use that exact phrase. If I were to ask Members of the House what was the average Civil Service pension in the past financial year, they might think it was £10,000, £8,000, £6,000, or £4,000. It was £2,000. Although the noble Lord, Lord Hodgson, made some very good points, there is a caricature of those at the top end of the Civil Service on the gravy train, but that will not be recognised by most people in the Civil Service.