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Pensions Bill [HL]

My Lords, I declare an interest as a trustee of a pension fund for the National Assembly for Wales. I am not clear as to whether I should declare this at this particular point in the agenda, or whether I should do so at every occasion, but for the avoidance of doubt I will do so. There are five Parliamentary procedures in this United Kingdom, and the one that I am used to would require me to declare an interest, and I hope that is the case and that it is the wish of this House that I do so as well. This amendment is wide in its ability for interpretation, but very narrow in the group of people whom it affects. It is done that way on purpose. Whatever way you look at it, there is a particular group of women, in a particular age bracket, born between particular years, who are going to be adversely affected in a way that those who are outside that age bracket are not. It is that particular interest group to whom I want to address my remarks in respect of this amendment. The fact that this is the group who are accelerated more than anyone else is the reason for the amendment. I accept that, no matter what timetable you have for any acceleration, there is bound to be a group that will be more or less affected, and that there are bound to be some winners and some losers in that acceleration. However, as I described earlier, you could really not see a faster acceleration process in play than this, where a three-month increase in your age means a four-month horizon for your pension arrival date. Already we have debated quite considerably the use of timetabling as a device by which to assist that particular cohort of people, but this amendment looks to provide support for particular groups. It does not specify which groups, clearly because there may be more groups that may be divisible in different ways, and there may be more groups than the Government can think of. Already this afternoon the noble Baroness, Lady Hollis, has described a characteristic that we could apply to the list, when she talked about her age-related premium in addition to JSA or ESA. It is not intended to do more than to provide a way for the Government to look at this particular group of women, who are finding themselves more disadvantaged than advantaged in the acceleration process that is going ahead. It is rather like walking along a road with your colleagues and seeing the horizon in the distance, and, as you walk along, the horizon moves further from you, but the people who are walking along the pathway with you, who may be slightly older or slightly younger, see the horizon moving away at a different rate. It is the group that is seeing it move away furthest and fastest to whom this amendment is addressed. The impact assessment from the DWP quite clearly specifies that that group of people who are most disadvantaged will have the biggest financial hit. The summary of impacts says: "““A rise in State Pension age of one year is projected to decrease the lifetime pension income … by between 3 per cent and 5 per cent … based on DWP modelling … However, if they work to the new pension age””—" I shall come back to the mitigations that are already in place in the changes that the Government are proposing in the universal credit and the work programme— "““and save into a private pension, they would recover about half of this loss of lifetime pension income. For those individuals who will experience the maximum increase in State Pension age of two years, the potential loss is between 7 per cent and 9 per cent””." Again, if you mitigate that by saving in a private pension scheme and working for those extra two years, you suffer a loss of about half of that. A one-year and two-year acceleration is quite different. If you follow my metaphor of moving along the pathway towards the horizon, those who are seeing the horizon moving away the fastest would suffer financially disproportionately to the others. It is that experience that I shall dwell upon in this amendment. Some mitigation factors are already in place and there are some we hope will be in place. I raised this earlier in a question to the Minister, and I will continue to press the point that clearly a significant rise in and simplification of the state pension would make a huge difference to the mitigation that this acceleration would deal with. I can only quote what I see in newspaper reports that state that we should be looking forward to a new state pension that will be in place at roughly the same time when the changes that are taking place in the Bill will impact on people, and perhaps even in advance of that. I hope that the press articles that I have read are accurate and that they produce that maximum mitigation through a new state pension provision. This Government are making two other provisions that will help. The first is the work programme, which will assist people in a manner which is most fitting to them to retain work, to be placed in work and to manage work, whatever is appropriate at whatever age people are at. The second is the universal credit, which is a long-awaited and long-needed change that will match the facts that people will value work, work itself has value, work is good for you and that will make work always pay. I am not as sanguine as some about people’s ability to accomplish change in seeking to work longer. I presume that we have all had the briefing from the Chartered Institute of Personnel and Development with the interesting statistic that 41 per cent of older workers plan to continue working past retirement in some capacity. That research was done last summer, so, although they have been aware that a change was about, a significant proportion of older workers are planning to continue to work on. Of course, 72 per cent of them said that they needed to for financial reasons, but that is perfectly acceptable, as the Minister pointed out. However, 41 per cent—and it is quite interesting that 41 and 72 do not add up to 100—want to continue working because they enjoy the social interaction and the self-esteem that they get from extra work. I am not as sanguine as some about the ability of people to want to continue to work. Those who are coming up to a new state retirement age will be financially harmed by the acceleration in a way that other women will not be. That very particular cohort, particularly the March 1954 group, will be impacted worst by that acceleration and will see their horizon moving out further from them faster than anyone else. The three methodologies in our amendment—as I have said, I am not wedded to there being only three; there could well be more—are as open as I could possibly draft them in order to give the Government the maximum opportunity to come back with some suggestions. If there is an acceptance that there will be an additional financial burden in the lifetime of this group of women, there are ways in which those adjustments can be made to the system. In a sense, it is not a one-off payment, but a very restricted sum of money which would apply only to that specific cohort for as long or as short a period of time as one would wish it to. This amendment provides ultimate flexibility in the hope that the Minister will not reply, as he did to other noble Lords, that it will cost an extra £7 billion or £10 billion out of our £30 billion savings. It could cost only three shillings and thre’pence if the Government wanted it to because there is openness in the amendment for them to do that. I am seeking recognition that a group will be financially disadvantaged by these changes simply because of where they are and the year of their birth. We have already debated the issue of women with serious illness. Again, there is no specification as to the nature of the recompense; this is simply an opportunity to find a way through that, which is why paragraph (c) of our amendment, which reads, "““by slowing the rate of acceleration for a particular group of women””," provides the ultimate flexibility. It could apply to a group of one or up to 500,000, which is roughly the extent of the whole cohort to which the amendment would apply. It also provides a graduated approach. We have had already an example of an acceleration bubble from the noble Baroness, Lady Drake, with the snaky-type balloon, which we used to have and twisted into shapes, with an air bubble in it. This bubble will pass out and therefore be seen as part of the normal process. A very discrete group of people would be involved. This is like a bubble with a bulge. Those people who will be most affected are those who we are seeking to assist in this amendment. Therefore, I hope that the Minister in responding will accept, as I do, that work is good and will pay; that there are definitions of support provided by the Government which will assist in this process; and that there will be mitigation by people being able to work longer. However, a financial hit will be taken by a group of women that will be different from that of the group of women at your shoulder walking along that pathway towards that horizon. On that basis, I beg to move.