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Pensions Bill

moved Amendment No. 126: 126: After Clause 88, insert the following new Clause— ““Equality of annuity rate between men and women Notwithstanding any statutory provision or rule of law to the contrary, any compulsory annuity forming part of a pension shall be payable at the same rate to men and women upon reaching a common retirement age.”” The noble Baroness said: In many ways, but not all, Amendment No. 126, a probing amendment, is similar to the one I moved in June 2006. Its aim is that the intentions of the Equal Pay Act and the Sex Discrimination Act 1975—equal treatment for men and women—be applied to annuities, thus ending this, sadly continuing, discrimination against women in their retirement income. The history of this takes me back to my early days as the junior partner of the noble Baroness, Lady Lockwood, on the Equal Opportunities Commission. When the EOC was first established in 1975, retirement age and pensions were firmly outside the scope of the Sex Discrimination Act and were not the commission’s concern. However, it was not long before pensions, following a decision in the court, were firmly ruled to be a part of pay and, thus, became the EOC’s responsibility. Interestingly, we received an almost equal number of complaints about pensions from both sexes. Men thought it was unfair that they had to work five years longer than women before they could receive their pension, while most complaints from women were that they were not allowed to work beyond 60 and were thus deprived of any opportunity to earn a higher pension. The situation today, of course, is very different. Plans to increase the state pension age for women to equal the male pension age of 65 by 2020—we have already had a preliminary discussion on that—are already under way. Perhaps over time there will be a further rise of three years to a new common retirement age of 68. Interestingly, when this happens, men’s statutory retirement age will rise by only three years, while for women there will be a hefty rise of eight years. At least, both would retire at the same statutory age, or range of ages, with the same pension expectations. Equality will have been achieved at last. But, will it? There remains the problem of annuity injustice, which I have pressed on this House for years—no doubt I will continue to do so for many more. Understandably, the law requires a percentage of the benefit from private pension schemes to be taken from the date of an individual’s retirement as an annuity. But a woman with a pension entitlement that is, on the face of it, identical to a man’s receives a smaller annual pension from a sum set aside for an annuity on the basis that women live some three years—a number that is declining, as the Minister confirmed—longer than men. All that this amendment proposes is that when the equal retirement age is reached and an equal pension pot becomes available to man and woman alike, the annuity payable to each of them should be the same, which certainly is not the case today. Let me inform the Committee about what happens by referring to a report in the Times on Saturday, 24 May 2008. Based on a pot of £100,000, six insurance companies gave their varying quotes. I shall take just one of them, from Legal & General. At the age of 65, the annuity offered for a man is £7,674, while for a woman it is the considerably lower figure of £7,075—an inequality of £600 a year for the rest of the woman’s life. I would argue that that is hardly just. I do not suggest that the insurance industry should bear the huge extra cost that may or may not be incurred, merely that an annuity should be split evenly between the sexes in employment. I have two further arguments to put to the Minister in support of my case. First, a final-salary company pension scheme will pay an equal annual sum to employees of either sex who have reached a common statutory retirement age of, say, 65, and who retire at the same management level. Each will receive the same annual pension for the rest of their lives. What possible justification is there, then, for continuing sex discrimination in annuities on the basis that women live for a tiny percentage of years longer than men? Secondly, the new equality legislation will outlaw discrimination on the grounds of age, which presumably includes longevity, and make illegal different pay for men and women working for the same employer at the same job level. This surely strengthens my case. When the equality Bill is passed, will the Government instruct insurance companies to quote exactly the same annual sum for both sexes from the same pot? I gather that I am going to be disappointed, but I hope that I shall be given rather more detail about the reasons why. When the noble Baroness, Lady Andrews, repeated the equality Bill Statement on 26 June, I asked her what effect this Bill, covering as it will both age discrimination and sex discrimination in pay, will have on the annuity situation. I cannot claim that she said that, once passed, the equality Bill would provide an instant solution to this injustice. However, I was encouraged when she said that the issue, although ““extremely sensitive””, was both ““very important”” and, "““alive and flourishing in this House, and there will be opportunities to address it””.—[Official Report, 26/6/08; col. 1597.]" I certainly hope that there will be. As I said, this is a probing amendment. I look forward very much to hearing the contributions of other noble Lords and particularly the Minister’s reply. I beg to move.