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Pensions Bill [HL]

My Lords, I support Amendment 1 and others in the group in the name of my noble friend Lord McKenzie. As so many speakers have already said, the amendment is not an argument in principle about whether the state pension age needs to rise to keep fiscal sustainability in the state pension system. It is not an argument in principle about whether or not the timetable for the move to age 66, 67 or 68 should be revisited. On the point made by the noble Lord, Lord Boswell, I do not even argue that one cannot disturb settled expectations; in the face of the longevity trends, it is not sustainable to make that assumption. This is not even an argument about whether or not women’s state pension costs or poor people’s pension credit costs should make a contribution to reducing the fiscal deficit in this Parliament, because the Government’s proposals mean that the savings would flow from 1916—sorry, not 1916; oh that that were true. I mean 2016. The amendment, however, is an argument about an important principle that is valid not only in this instance but whenever one revisits accelerating the state pension age, which might be the case on the subsequent increases—that is, that the manner and the timing of any state pension age increase has to give people fair and sufficient notice to adjust and minimise any disproportionate impact on particular groups of people. The acceleration of the equalisation timetable does not meet that principle. I asked myself three questions. Who is impacted by the accelerated timetable? Are particular groups disproportionately impacted? Can those impacted reasonably adjust to their loss in the time given? I invite the Committee to look at those questions as well. In terms of those impacted, I do not want to rehearse all the figures that we have shared about the position of a particular group of women in their late 50s, but it is worth confirming that it is not a small number—500,000 will have their state pension age deferred for at least 12 months, and 300,000 for 18 months to two years. With regard to the amendment of the noble Lord, Lord Boswell, it is important to see the distributional impact. I would not want the situation to be like the water in a balloon, where you think you have dealt with it moving one way but you have just created a consequence in another. If progress can be made, though, progress is valuable. The issue that the amendment does not address—I wanted to address it with regard to Amendment 7, but my noble friend Lady Hollis has anticipated it—is that of people on pension credit, both men and women. That relates to the impact of this accelerated timetable on the poorest. The age of eligibility for pension credit tracks the state pension age for women, so by definition the poorest people who might otherwise have thought that they could present themselves as eligible for pension credit now have the same timetable problems. Again, I do not want to anticipate some of the more detailed arguments that I want to put in speaking to Amendment 7, but their loss in percentage terms is much greater because of their relative wealth and earnings position. In addition, there is a greater concentration among certain ethnic communities and disabled groups. Again I am slightly anticipating Amendment 7, but people in certain ethnic groups and the disabled are much more likely to present themselves for pension credit at the minimum qualifying age. Consequently there is a sub-concentration impact effect looking at the poorest groups. If the deferment of pension credit was as great as two years on the age of eligibility, the loss could be as high as £15,000, so the question is whether people can mitigate at least a reasonable amount of their loss in the time given. One has simply to look at the time allowed. It is a pretty short period for a lot of people. We rehearsed the figures on Second Reading and found that women in their late 50s face a historic legacy of discrimination in the provision of state and occupational pension from which they simply cannot recover. They have lower lifetime earnings and lower state pension entitlement. On average, in 2010, women were entitled to a state pension of £96 and men £124. Women have lower private occupational savings; men, on average, at age 56 have savings six times higher than women. Women have broken careers and are more likely to be carers. Although the Government argue that there is virtue in their accelerated timetable because it accelerates the reaching of equality between men and women—is that not a good thing?—that argument completely ignores the systemic inequality that has arisen for historical reasons and that you cannot get rid of. Therefore, I do not think it is mitigation to say, ““We have got men and women more quickly on to the same pension age””. In terms of women’s ability to mitigate that loss, we rehearsed the arguments on Second Reading and found that significant numbers would be carers and would not be in the labour market. They were much more likely to be working part-time. If one looks at the pattern of women’s working, there is a peak of part-time working in their 50s. They have lower earnings because of their sector concentration. Because of their income levels they are much less likely to be in a pension scheme. For the poorest and the disabled, if the timetable that was set for the equalisation of the state pension age is held, they are going to have the greatest loss in percentage terms, up to 10 per cent of state pension income lost as a result of that qualifying age for pension credit tracking the accelerated increase in women’s state pension age. This amendment and those associated with it do not argue that people cannot be expected to adjust to an acceleration of the increase in life expectancy. They argue that the manner in which you do that has to allow them sufficient time to adjust; and you have to be aware of disproportional impacts and mitigate accordingly. Notwithstanding the desire to see the distributional merits of the amendments proposed by the noble Lord, Lord Boswell, that is why these amendments are intended to meet the principle of fair and proper notice and the need to mitigate disproportional impacts. The original timetable on the equalisation of the state pension age for men and women should hold.