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Pensions Bill

““Campaign”” may be putting things too strongly. First, I thank noble Lords. I am grateful for the range of contributions; they were thoughtful and helpful. Perhaps I may comment on the concerns that people raised over and beyond the support from the noble Lord, Lord Fowler, and my noble friend Lady Dean. The noble Lord, Lord Kirkwood, said that PADA offered essentially a simple product, a point reinforced by my noble friend the Minister, and that this amendment might add bells and whistles that would make it more expensive to deliver. I accept that it would make what is currently a simple product more complicated. My argument is that it would make it more attractive and would produce greater staying power and robustness in the longer term as a result. Much of my noble friend’s speech seemed to miss the point: ““Pensions are for retirement; therefore retirement savings are for retirement””. Yes, we know that. The problem arises when people feel that they cannot afford retirement savings because they may face a higher risk in their pre-retirement age. How do you manage to persuade them not only to auto-enrol, which I think they will do, but to continue to save at points of crisis? The alternative may be to go for high rates of debt, rates of 15 per cent or 20 per cent, when the CAB will say, ““Stop making your pension contribution””. My noble friend has not begun to think about how we keep women in auto-enrolled schemes when the first financial crisis begins to hit. They will auto-enrol—inertia will see to that—but they will not necessarily stay in. Currently, half of all women drop out of a pension scheme on the birth of their first child. It will be even higher with auto-enrolment because they did not make a conscious choice to join in the first place, unlike today's schemes. I heard what the noble Lord, Lord Hunt, said, and I thought that his words were very elegantly phrased. He said that pensions were ““a poor fit for the risks and realities that women face””. One of those risks and realities is the rollercoaster of risk through lone parenthood and financial problems. A product such as this would simply add a top slice of liquidity to a pension pot. That is all that it is doing. We have that top slice of liquidity now and it is called the tax-free lump sum. It is already divorced from pensions and payment. You can take it at 50 though you may not take your pension until you are 75. All I am trying to do is to remove the age bar. I accept that that complicates the product and that PADA would therefore not want it now. I accept that without industry support it will not go anywhere, and I accept this may be an appropriate subject to return to in the 2017 review if, as I hope, industry and Governments of any and all persuasions follow this through. But I think that we will have a problem of staying power with auto-enrolment when women hit their first financial crisis and cannot access their savings. This product might help to keep them in when otherwise they would opt out. As for how often, I would not put a limit on the circumstances in which you could access the funds. That would be unnecessarily intrusive, as my noble friend suggested. You might wish to limit the number of times you could access them in order to keep the tracking mechanism simple, but I would not want to prescribe the circumstances. As I say, I think that my noble friend missed the point. He talked about how much we have done for women’s income in terms of the changes in pensions in retirement. That is precisely my point. Women will do relatively much better in retirement as a result of all the changes that the Government have made. But we have not helped them fully to address the risks pre-retirement. If we do not, that may damage the very agenda that my noble friend has for post-retirement issues. There is still a failure of mindset to engage in the risks and realities for women which the noble Lord, Lord Hunt, described. This may not be the right solution and I do not expect industry to be enthusiastic. Why would it be? This would be a product sold to very poor women, with poor returns. But if Government come to realise, as they may do, that if women have to choose between current rainy-day savings or money in an emergency and longer-term pensions, most women—and there is plenty of DWP research to support this hypothesis—will cut back on pension saving. They, and we, will be the poorer as a result. I have said enough. I am grateful for noble Lords’ contributions to this short debate. I hope that my noble friend will take this away. I would like to see the department beginning to carry out some research on this, possibly on an all-party basis, to see whether there is a market and a need and whether it is structurally viable. Some time down the road—and I take the point about DC schemes, DB schemes and all the rest, so it is a longer-term haul—if they are so minded, when we come to the review in 2017, perhaps such a project could be added to the Bill that will be winding its way through your Lordships’ House. Under those circumstances, and again with gratitude for the contributions, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 16 [Automatic enrolment schemes]: