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Pensions Bill

My Lords, I shall not be supporting the amendment, but I have lot of sympathy with both the proposal and many of the arguments made this afternoon. The noble Lord, Lord Fowler, mentioned SERPS, which, with your Lordships’ help, I had the delight of seeking subsequently to untangle in a way that did not betray any understandings or misunderstandings of what was envisaged. Let me give some other examples. There was the 1995 legislation and what turned out to be the inadequacy of the minimum funding requirement, and the failure, as a result, to put in place a pension protection fund—a central discontinuance fund—which might have abated that risk. There was the failure when we were dealing with stakeholders, and I was the Minister responsible. We chose not to go for a compulsory contribution from employers because of the argument about burdens on business. We were led to believe that employers would none the less do the decent thing. Not surprisingly, something like 85 per cent of them did not. They erected the schemes but did not contribute; they remained shell schemes. There was a clause in the Bill allowing compulsion to be introduced for 3 per cent. It was not fleshed out; it did not happen; and we therefore have to have personal accounts and a brand new start again. Another example is pension credit, which I am sure we would all agree on. I was delighted that pension credit has done so much to address the poverty of our elder pensioners. Perhaps we did not fully appreciate the fact that if the basic state pension stays price-linked and pension credit is earnings-linked, you have built in an impetus with the best of intentions to bring more and more people into the thicket of means-testing. That is what we have done. All those issues might have been picked up by some version of review. What perhaps surprised me a little was that although we expect Ministers to churn about within departments every 18 months or so, I had not appreciated that senior civil servants churn on average, so far as I can see, about every three years within a department. So departments come to a topic with a departmental agenda but not necessarily with a departmental memory. The result is that, despite all the best intentions and the highest intelligence in the world, you do not actually have a learning loop informally built into the system in which experience can be brought to bear on continuing processes. That is why in my view we need a more structured way of dealing with this. I am not sure whether the amendment is the right way, any more than an independent commission is, and I am hoping that my noble friend can suggest ways that the department will be dealing with this. Certainly we have been doing that for some women's pension issues—gender issues—and that has been extremely valuable. In most areas of social security, if there is a problem with benefits, because they are instantly available—people are instantly eligible and instantly pick it up—we can see problems very quickly. With pensions, we are laying down ground rules that may not mature to affect the individual until 20, 30 or 40 years down the road. If there is no ongoing process of scrutiny, by the time that problems see the light of day naturally, people may have already lost entitlement and rights and may have behaved in ways that end up being against their financial best interest. For all our sakes, we want to avoid that. I am not persuaded that the amendment is necessarily the right way to proceed; but I am persuaded that there is an issue here that needs to be addressed. I hope that my noble friend can tell us how the department proposes to proceed with this.