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Pensions Bill [HL]

I thank the Chief Whip. The delay in women’s retirement age so that, for the most unfortunate, retirement is delayed by two years, was discussed and determined, narrowly, on Report. No one, I think, was happy about the bunching effect, including the Minister. It is the consequence of insisting, despite the coalition agreeing to the contrary, that the state pension age for women would rise to 66 by 2020. I remind the House that the coalition agreement that women’s state pension age would not begin to rise to 66 until after 2020 was not an election pledge that was broken in the name of coalition dealings and agreement but was part of the post-election coalition agreement from both government parties in the full knowledge of the costs and circumstances. To break that joint, agreed, published, post-election pledge within the year is, in my view, pretty disreputable. However, that is where we now are, regrettably. I hope very much that the other place will try to smooth out the bunching effect, which narrowly this House allowed to continue. Since Report—I think on the day after—we have had the long-awaited Green Paper on the new single state pension. I am sure that noble Lords greatly welcome it, as I certainly do. It proposes bringing the basic state pension, the state second pension and pension credit into one pool, allowing the payment of a single pension based on national insurance contributions a few pounds above pension credit level. This would both tackle pensioner poverty, especially among women, and encourage saving. Existing accrued rights would be honoured, but possible future accrued rights would be capped in much the same way as when this House decided—rightly, in my view—to replace SERPS with S2P. That mostly capped men’s higher earnings-related pension entitlement with a scheme of more generous redistribution to lower wage earners, mainly women. To me, the Green Paper is very good news, and I congratulate the Minister and his right honourable friend in the other place, Mr Steve Webb, on achieving it in the face of, I suspect, the agnosticism of HMT at best, the scepticism of HMT at least, and the hostility of HMT at worst. The new single pension is important in a couple of ways. I am raising it now because we did not have the opportunity to raise it on Report, given that the Green Paper just happened to be published the day after Report. There is agreement around the House about the desirability of NEST. It will effectively reintroduce an earnings-related pension, so to speak, to top up the new single pension, performing the same function but in a very different way from the old SERPS. However, as we all know, NEST is risky, particularly for low-earning women. If they do not have a partner at retirement whose pension income lifts them both off pension credit, they find that their savings in NEST are severely depleted by the operation of the pension credit taper. There is no way that someone at 30 can predict whether it is worth saving in NEST if it depends on what partnership and household arrangements they have 30 or 40 years down the line. Pension credit has done a superb job of tackling the poverty of existing pensioners. It means that pensioners are no more or no less likely to be poor than any other group in society. However, it has added to the risk of future pensioners who seek to avoid poverty by building savings. The single state pension cuts through all of that. It means that your pension income from NEST will depend not on your household but on your own income, which is a far safer, clearer and cleaner path for savers. With a new pension, every penny you normally save in NEST will return to you as your pension. It has built out the risk from saving; it pays to save. That is why, on all sides of the House, we welcome NEST, and I am sure will welcome the new single pension. Hence this amendment. This amendment seeks to ensure that the new single pension is locked into the pension structure of the future so that NEST in particular is safe. It in no way seeks to reopen an issue that this House has already decided—although I wish we could—on the indecent bunching of women’s state pension age so that some women have to wait two years longer than they could reasonably expect for a state pension to be paid to them. Instead, what the amendment tries to do is to build into the Bill a commitment on the new single pension before the commencement of the accelerated raising of the state pension age, which so many of us in this House deplored on Report. It also seeks to ensure that, at a time when NEST is completing its transitional stage in 2016 and with the 2017 review of NEST in sight, it is securely underpinned by the state platform. Hence, the amendment contains the words ““June 2016””. I cannot, even if I wanted to, make the one conditional on the other. In any case, I do not wish to suggest that it is acceptable to delay women’s state pension age because those recipients will get a higher pension from the state. I do not accept any such trade-off. I believe that the Minister is probably unhappy about the bunching as proposed by the Government on the grounds of equity, as a majority in this House probably are. That bunching is simply wrong and unfair, and I hope that the other place will have another go at sorting it out. It is over to them now. What would be even worse is for women to have their pension age postponed as the Bill currently proposes and then to find that they were still drawing only the existing state pension, with possible vague rights to a state second pension and pension credit very unclear. Under the Companion’s rules, I cannot fully introduce new material, even though this pivotal Green Paper was produced one day after Report so that we could not take it into discussion then. I have had to produce this very mild amendment, which states that the Secretary of State should lay a report on the new state pension before June 2016 changes to state pension retirement age come into effect. It is an attempt, in other words, to ensure that the new single pension does not get kicked into the long grass some time down the line, as I suspect HMT wishes it to be, while the cost-cutting delays to women’s pensions continue on their merry, savage, way, and while saving in the NEST auto-enrolment scheme continues to seem precarious. I am well aware that a consultation exercise is currently under way and is to be completed in June, and no Government can give a full commitment before that exercise has been completed. However, from my knowledge of those who have been campaigning for such a single state pension over the years, criticism will come primarily from one group and one group only—those who will find themselves excluded from it because they are already pensioners. However, we all hope that, as the economic situation improves, that too may be revisited, perhaps with the older pensioners—those over 80 and 85—enjoying the new single pension along with newcomers into pensions. The two groups over time may meet; I very much hope so. This is a tidying-up, Third Reading, probing amendment, by which we can take note of the Government’s intentions in this respect, but it is really a chance for the Minister to ensure that the single state pension is locked into the new pensions structure. It will to some extent mitigate the worst effects of bunching, but that still needs to be sorted out in the other place, and it would ensure the safety of NEST. In the hope that the Minister can confirm that, subject to the results of the consultation exercise, it is the secure intention of the Government to proceed down this path, I beg to move.