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Pensions Bill

I beg to move, That the Bill be now read the Third time. I say that with a certain amount of déjà vu, because I said exactly those words almost a year ago. I also said then that we were implementing the most ambitious reform of our pension system in modern times, and with the Bill then—now the Pensions Act 2007—and the Bill that we are debating tonight, that is exactly what we are doing. That déjà vu also applies to the many hon. Members in the Chamber who have followed the Bill right the way through and given such great service on the Committee. No one has as much a sense of déjà vu as the hon. Member for Eastbourne (Mr. Waterson). I believe that this is his fourth Pensions Bill. I do not know what he did in a previous life to deserve this fate, but I am sure that serving on four Pensions Bills is enough to have expunged whatever was wrong with his karma. I also want to pay tribute to my colleague, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), who has taken through many of the clauses of the Bill. In particular, I want to pay tribute to the Minister for Pensions Reform, my hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien), who has a wide range of admirers and who has commanded support and compliments for the effective and consensual way in which he has taken the Bill forward, building on the achievements of his predecessor but two—my right hon. Friend the Member for East Ham (Mr. Timms)—and correcting the many mistakes of his immediate predecessor, whose advice he has been wise to avoid all the way through. So, why is this reform needed? It is needed because of the changes to pensions over the last 20 or 30 years, and it has been built on the recommendations of the Turner commission. I am sure that everyone in the House would like to pay tribute to the commission for its work. It has laid the foundations for the Bill that is reaching completion in this House this evening. Many commissions see their work languish on a shelf. Indeed, some people predicted that that might happen in this case. Tonight, however, we are now putting in place the second stage of the legislation for these reforms. Last year's Pensions Act was the first side of that coin. It made pensions simpler, fairer and more generous, and it built a more solid platform on which people could save. This Bill will make it easier for people to save on the basis of that platform. It also puts in place what I believe will be seen as a genuinely historic change: the right for everyone to have an occupational pension scheme. Why did the Pensions Commission make its recommendations? It did so for two reasons. It recognised the progress that had been made since 1997, stating that"““average pension income today compares well with that of previous generations””." And so it does. The National Audit Office has also recognised the ““real and substantial progress”” that has been made towards helping the poorest pensioners. We are proud of having taken more than 2 million pensioners out of absolute poverty and 1 million out of relative poverty, and to have achieved a situation in which pensioners are now no more likely to be poor than anyone else in the population. That is a remarkable achievement, when we consider that everyone else can rely on their wages going up. The Pensions Commission also said that there was a compelling case for further reform, for two clear reasons. The first was what it called the fool's paradise of ““irrational exuberance””, in which the exceptional equity returns of the 1980s and 1990s—when people saw their investments increasing at a very great rate—allowed many schemes to"““ignore the rapid rise in the underlying cost of their pensions promises””." People were making promises, but they were not putting away enough money to fund them. The Pensions Commission said:"““When the fool's paradise came to an end…companies adjusted rapidly…A reduction in the generosity of the DB pensions promises which existed in the mid-1990s was inevitable.””" That is the first reason why change was necessary. We needed to address that fool's paradise. The second reason, which has not received so much comment, is that final salary schemes, even at their best, only ever benefited a minority. It was always the case that the majority of people did not benefit from them, and tonight's historic change corrects that.