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Pensions Bill

My Lords, I warmly welcome the Bill, which will ensure big changes in retirement saving, making it worth while for many for whom previously this has not been the case—especially women—to have access to a decent private pension for the first time. I strongly support the noble Baroness, Lady Hollis, in the work that she has been doing to ensure the right for women to buy back up to nine years of insurance contributions. I cannot understand why the Government find it so difficult to introduce that change, and I hope that something will be done to get it right. I also agree with the noble Lord, Lord Oakeshott, that our current state pension is still too low. If raised, it would deal with a lot of the problems of means-testing, and it needs to be relinked to earnings sooner than the Government plan for the obvious reason that a lot of the people about whom we are most worried will be dead by the time they would receive that benefit. I welcome many aspects of the Bill, particularly the ones that I shall mention briefly, such as the broad definition of ““jobholder”” so that people with no formal contract can be included, and the personal accounts that are essential for jobholders who are not in current qualifying pension schemes. By ensuring automatic enrolment and compulsory employer contributions to personal accounts, people will be able to support themselves much better in the future. This automatic enrolment can combat the tendency not to act when faced with financial difficulties, which, sadly, as the noble Lord, Lord Oakeshott, said so eloquently, is a problem that many, particularly younger people, face at the moment. The Government need to ensure that personal accounts are offered to low and middle-income people who want to save, regardless of whether they take breaks from work for short periods. Age Concern has pointed out that that is very important. I am also worried about non-employed people, some of whom are the carers on whom we depend so much for the care of the very frail people in our population. We must ensure that such people are able to join personal accounts because, as the Bill is currently drafted, they may be excluded unless they have previously been a member of a scheme. I hope that the Government will be able to do something about that. I agree with the noble Baroness, Lady Hollis, about trivial commutation. We have a fast-ageing population and many people will live to be very old and very frail. They need capital, not just income, and we need to ensure that poorer pensioners have access to some capital if they are to achieve the essential changes to their homes which enable them to stay in them in some comfort. The Commission for Equality and Human Rights, on which I serve, has pointed out that there may be some individuals for whom savings will not pay, as their savings in personal accounts or other savings products will serve merely to replace means-tested benefits, such as pension credit, housing benefit or council tax benefit to which they would have been entitled had they not saved. The Pensions Policy Institute has pointed out that dilemma and I hope that the Government will be able to solve it. Another group that has been mentioned to me is people who change employers regularly. Each time they leave a job they are given the option of taking back their pension contributions. When they ask what their contributions have bought in the way of a pension, they find that the amount is so little that they do not think it is worth keeping the pension in place. If we are not careful, such people will have no private pension at all when they eventually retire. We need to consider that group. Some young people, often those who are self-employed, have very high, even interest-only mortgage repayments and they are putting off paying into a pension scheme. They have been relying on increasing property values which are now falling very fast and the prediction is that 1 million people will face negative equity in the near future. The Government should consider what incentives or help they can give to that group. A fully effective compliance regime is vital to ensure that no individual suffers detriment due to their employer failing to help them or attempting to coerce them into opting out of a scheme. We must ensure that that does not happen. There is an understandable concern in the pensions industry that some currently available and very sound pension schemes might be undermined because of the introduction of extremely flexible and low-cost products, which we know are essential. We need flexibility but the Government need to ensure that the mechanisms for levelling up do not result in levelling down elsewhere. I am sure that some of these points will be looked at in detail as the Bill goes through the House. We need to ensure that the Bill fulfils its potential to be of enormous benefit to our population as a whole. Lastly, I agree that information and advice services are essential, particularly for the target group of people for whom this Bill can do so much. We must get it right, as they need this Bill.