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Pensions Bill [HL]

The point is that once you are on the system there is a gradual move up, so you do not bounce on and off it. You are on that system. Clearly, we are looking at two systems—a pensions system and a working-age support system. Nothing changes while we have that gradual increase for the individuals concerned. People will join the system at different points, depending on their age. Fundamentally, there is no difference between the Government’s position on either of the amendments. Let me deal with the point raised by the noble Lord, Lord McKenzie, on buying back class 3 voluntary national insurance contributions. There has been a lot of debate about this matter during proceedings on various Bills, as he will be more aware than me. I believe that it took two Bills to allow people, mainly women, to buy additional years, going back to 1975. However, the noble Lord will also recall that this particular easement applied only to people who reached state pension age before 2015. People must weigh up their options when deciding to buy additional national insurance contributions, and we do not have any plans at this moment to provide refunds. Let me turn to the facts about women’s life expectancy. Women will on average still draw their state pension for longer than men after the pension ages are equal—a fact that was rather put to one side during our debate before the Recess. It is important to record that, at the time that the decisions were made about when to raise the pension age to 66, a woman born in 1954 would be expecting to draw her state pension at 64 for an average of 24 years. Thanks to increasing life expectancy she will still on average draw her state pension for 24 years, even with the rise to 66 proposed in the Bill. I pick up the point raised by the noble Baroness, Lady Hollis, about the healthy retirement period, which she said would be squeezed. There are various figures, but the overview is that there is a slight squeeze on health. However, it is not very great. We are living healthier, longer lives with a few months of squeeze. In the figures that I have from 1981 to 2006, the age until which someone aged 65 could expect good health increased from 75 to 78 for men, and from 77 to 80 for women. With the trends that we are seeing, we clearly expect that to continue improving and that women should still enjoy a healthier retirement than men on average. By delaying any rise until the 1995 legislation has run its course, we are perpetuating another sort of unfairness—that which sees those who reach state pension age before we can make any change enjoying all the gains from the rise in longevity without paying any of the price. My noble friend Lord Boswell talked about ways that we could move the age up differentially. It would probably be more convenient to leave a discussion of that until later, because the European directives are complicated. I am sure that he will remind me to come back to give a rather more detailed explanation at that point. I shall sum up. Bringing forward the increase to 66 is about helping to maintain fiscal sustainability beyond 2015. The proposals put forward today by the noble Lord would cost £10 billion, as I said, and my noble friend’s compromise proposal—the third-way proposal—would still cost more than £7 billion. That cost would need to be borne by people in work. I do not seek to underplay the scale of the increases that a small proportion of women will face from the proposals, but they are unavoidable if we are also to achieve a rise to 66 by 2020. For the reasons I have set out, I firmly believe that this is the right course. I urge the noble Lord to withdraw his amendment.