---

Pensions Bill

My Lords, like other noble Lords who have spoken, I am glad to welcome, in principle, this next step in the Government’s legislation for pensions. It follows logically from the Pensions Act 2007 and helps to meet a number of concerns raised by my noble friend Lord Turner in his report. As the Minister said, it is intended to create a retirement savings framework that no longer excludes those on low incomes, or those with erratic earnings, and which establishes a framework for savings that far better reflects the increasingly flexible and changeable world of work. Almost no one today has the same employer from the moment they start work to the moment they retire. That gives you a tiny flavour of how fast everybody moves in and out of jobs, even if they are working full time, as they gain more experience and move on to the next thing. But, above all, I hope that this Bill will make it possible for the less well-off, and particularly carers, whether of children, the ill or the aged, to make maximum retirement savings from their inevitably interrupted job opportunities throughout their working lives. As we all know, the majority of carers are women, and it is women who also form the majority of pensioners living in poverty. A vital question that Which? and others stress in their excellent briefings on the Bill is whether carers will be able to join personal accounts and on what terms—and in particular, if they deem themselves self-employed but unpaid, whether they are eligible. That was a point raised by my noble friend Lady Greengross. If this crucial group is really to be excluded from the benefits of this important retirement scheme, it simply beggars belief, and we must clearly go back and look harder at that area. We know that already there are nearly 5 million UK citizens aged 75 and over, and this number will increase by more than two-thirds in the next 25 years. Unsurprisingly, against that background, we are all being encouraged to work and pay taxes and national insurance well beyond today's statutory retirement age, which is anyhow due before long to rise dramatically—and, I emphasise, for both sexes. We know, too, that the state of citizens’ finances today is not good, for all the reasons mentioned by other noble Lords. However, equally, as we heard during Question Time earlier, any form of further and higher education except for a very few costs a lot. That has to be paid for. That is something that my generation, thankfully, did not have to pay for; we had that ability for free and could start our savings from that point. It is surely sensible, therefore, against that relentless background, to give individual citizens in low-income groups every kind of encouragement to save now, via this limited and means-tested scheme, and particularly those who are currently saving the nation huge sums by their caring responsibilities. Amendments to this Bill to clarify the whole situation will be essential, unless the Minister can reassure the House on this point. It is obviously good news, that the employers’ federation, the CBI, is firmly behind the principle of auto-enrolment. I take the point of the noble Baroness, Lady Dean, and have some sympathy with it, when she talks about rather more coming from the individual than from the employer. But that percentage will be able to be paid either to the new personal accounts scheme or to a qualifying workplace pension. It is clearly good news, too, as I think I have understood it, that auto-enrolment is agreed as lawful under EU law. I hope that I am right about that, because I do not think that I have heard many people mention it. But equally, the CBI's emphasis on minimising other costs, reducing bureaucracy and increasing flexibility—and, incidentally, maximum flexibility seems a vital ingredient for all the parties that briefed us—is also right. So, too, is the need, which again the CBI emphasises, for the Government to put in place a targeted support package for the very smallest firms, because some of them will be badly hit. There is also clearly a need for stronger powers for the pensions regulators, not least to judge the quality of proposed schemes. That was emphasised by the unions and the third sector. There is a need, too, for expert advice on choice of schemes to be available to employees from outside their own employing companies. Above all, there is a welcome determination by everyone involved to ensure that savers get a fair deal, with emphasis on the theme ““it pays to save””. One of the suggested amendments from Which?, that certainly makes sense to me, is to include among PADA principles a duty, "““to act in the best interests of prospective members””." There are clearly many hours of debate ahead of us as the Bill goes through its various stages. Apart from general support, I am particularly glad to welcome it for two quite different reasons. But, above all, for the opportunities it provides to return to the attack on these other fronts. The first of these has already had full support from noble Lords on all sides of the House, as well as very determined lobbying from Which?, Age Concern and, indeed, the People’s Pensions Coalition and the women's pension network. I refer, of course, to the superbly argued amendment of the noble Baroness, Lady Hollis, during the passage of the previous Pensions Bill, which would have allowed people with interrupted work patterns, mostly of course women who have had caring responsibilities, to buy back up to nine years of national insurance contributions and thus improve their state pension. For the Government, with their otherwise excellent record on support for equal opportunities, not to have followed through the clear hint that was given at the time, that this amendment would be accepted, was nothing short of disgraceful. This time, unless the Government have realised the error of their ways, it is clear that they will have an even more determined fight on their hands. Alas, I cannot say that I expect my second additional reason for welcoming the Bill to receive quite the same universal support. I refer, of course, to the current unequal treatment of men and women in pension annuities. But if I fail again, do not expect me to give up the battle—if I am still around—when the next pensions Bill presents itself. I shall make the case as briefly as possible. If equal treatment for men and women is to have any substance, it should surely apply to that portion of an individual's earned retirement pension which the Government rightly require each individual to take as an annuity. That is not the present position; on the contrary. Although a man and a woman will have equally contributed to identical retirement pensions, the annuity sum paid annually to the women is currently less than that paid to the man because of a presumed longer life expectancy, and even that, until last year, has been closing. It is that difference in the annuity payable that is really unacceptable. The suggestion is not that the insurance industry should bear the cost of correcting that inequality, but that the cost of the differentials involved should be spread evenly between men and women. In order to help the state cope with the considerably higher costs of the longer life expectancy that I and other noble Lords have mentioned, anticipated for both sexes, men and women are rightly being required to move towards a higher, but ultimately the same, statutory retirement age—a hike of considerably more years for women than for men. But still they will receive unequal annuity payments. Surely, it is high time to get rid of this unjustifiable sex discrimination.