---

Pensions Bill

Obviously the hon. Gentleman can see into the future far better than I can. We do not know what kind of Governments will come in, whether they will continue with any kind of means-testing or whether the pension credit will survive. We are looking up to 50 years into the future, not at the next 10 years or so. As we do not know what will happen, it must be right that we encourage young people to save as much as they possibly can today in order that the scenario that the hon. Gentleman describes does not happen in future. Whatever the system with regard to the state pension, if we are dependent on all pension provision in future being down to the state, means-testing will grow, not lessen. To ensure that means-testing develops a much narrower focus, we must encourage more and more people to invest in their pension today so that when it comes to retirement they will already have lifted themselves out of any kind of means-testing. People do not know what their employment record is going to be. Since the second world war, there have been huge changes in the working patterns of women. The Bill moves us ever closer to individual entitlements and away from the old dependency culture that existed under the married person's allowance and the basic state pension. Pension provision and the working lives of women and men have changed so much in the past 60 years that I foresee that in the next 10 or 20 years they will change a huge amount more. The basic message that we have to get over is that it is important that individuals who are working today continue to save in an occupational scheme so that they will have more than just what the state is able to provide through the basic state pension. It is important that we understand that this is about deferred wages. Many people have not opted into some of the very good occupational schemes even when they have not had to pay anything themselves. I remember speaking to one young man who had lost out on 10 per cent. of his wages because he had not got around to signing the form, although he was not even expected to add anything to his employer's contributions. Compulsory opt-in is very important in terms of getting over that inertia. We must ensure that there is auto-enrolment and that people do not have to make such decisions. We must also bear in mind low earners who have multiple jobs. As the hon. Member for Beverley and Holderness (Mr. Stuart) said, they are mostly women who have to find some way of increasing what they can contribute. I can understand why there is currently a contribution cap of £3,600—it is obviously because the Government do not want people who are sitting in fairly good schemes to move their contributions across into personal accounts, which are not aimed at that market. I hope that once the scheme beds down, the contributions cap can be lifted. The cost must be as low as possible. I would like it to be as low as three basis points. People say that 1 per cent. does not sound very much—it does not, but that was probably partly the death knell of the stakeholder pension. It is 1 per cent. not as a flat rate of contributions but 1 per cent. of the pension pot; once someone has built a big pot, 1 per cent. becomes a viable amount to be taking out of it every year. I hope that we can get it down to 0.5 per cent., but if possible it should be even lower. If the scheme is going to work, it is crucial that costs are kept as low as possible. I welcome the Bill. I am glad that there was generally consensus on its principles, although other areas will have to be worked through as it proceeds through this House and the other place.