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Pensions Bill

I received a lot of briefing from the TUC on Clause 61. I say at the outset that I agree with a great deal of what my noble friend Lady Hollis said in moving her amendment. The briefing caused me to give notice of my opposition to the whole of Clause 61, but that was simply a way of being able to say what I have to say about the clause. The problem is that there is not enough flexibility. There should be flexibility for individuals to put extra money into their personal accounts when they can, perhaps when they receive a small inheritance, there is a divorce settlement, when some kind of investment matures, or perhaps with some saving through something like an ISA. The argument for allowing such additional contributions is that personal accounts will build up to a significant pension only if employees contribute throughout their working lives. Not everybody can or is willing and able to do that. In particular, that may not apply in the case of older workers who will start to save for a pension for the first time when personal accounts commence in 2012. Moreover, there are the working patterns of many women, to which my noble friend Lady Hollis has devoted quite a lot of time. They are much more likely to have breaks in pensionable employment due to child rearing and caring responsibilities, to work part-time or to be in low-paid employment that does not give them the opportunity to build up significant savings for retirement. Anyone who has missed out on the opportunity to contribute may want to catch up later in their working life. It would be sensible to encourage this and to increase personal responsibility, which has always been a key government objective in the Bill as in other respects. It seems odd that the new system should forbid extra contributions of a size that would probably not make much sense if invested elsewhere in a separate private pension. People in the target market, with no experience of private pension arrangements, would probably be put off from seeking a further pension product. As indicated earlier by the noble Baroness, Lady Noakes, I suppose that there is the possibility of unlooked-for competition with private investment business. On the other hand, the sort of people for whom this Bill is intended to provide benefits are not liable to be tempted into other investments if they are putting their pension investment into this scheme. It is intended, as everyone has said from the beginning, for people who are not well paid and who otherwise would not have any occupational pension provision except through the personal accounts scheme. If the scheme does not allow them sufficient flexibility to contribute, when can they contribute so that when they actually retire they have a pension entitlement that enables them to lead a reasonable life? They will be forced on to the benefit scheme, as indicated by my noble friend Lady Hollis. I hope that the Minister will consider carefully what has been said about the possibility of allowing extra payments in order to make absolutely certain that when people retire they have adequate retirement benefit.