Baroness Thomas of Winchester (Spokesperson in the Lords, Work & Pensions; Liberal Democrat)
I support Amendment No. 11 of the noble Baroness, Lady Hollis. I am glad to be one of the usual suspects led by the noble Baroness whose mission in life in this context is to try to help low earners with irregular working lives, usually women, save enough for a better pension.
We on these Benches support the amendment, which, as we have heard, would allow employees to make contributions into personal accounts over and above the annual contribution limit in order to make good any shortfall in the preceding year or years. As the noble Baronesses, Lady Hollis and Lady Turner, have explained, this would particularly help women with broken work records in one year to top up their contributions as their circumstances improved in the next. It would also help older workers who will not start to save for a pension until 2012 and who will need all the help they can get to build up a significant pension by the time they retire. Neither should we forget what could be another group: those who have not been pensioned yet and leave it comparatively late to start saving for a pension because of debt problems at the start of their working lives. This last group may be graduates with student debt, whose earnings are generally expected to be quite high—but that will not necessarily apply to all graduates or all people with large debt problems.
Last week, we heard about the Government's plans to help women gain salary equality with men. Bravo for that, but in other fields there is clearly a long way to go before financial equality between the sexes is achieved. Women need the Government to understand how difficult it is for many of them regularly to put enough money by for a pension and why flexibility in the annual contribution limit for personal accounts is desirable, so that they have the option of making good a shortfall if their circumstances change.
To those who say that employees can find other pensions savings schemes besides personal accounts into which they can deposit any extra funds they have available, as the noble Baroness, Lady Noakes, said, research from the consumer organisation Which?, cited by the noble Baroness, Lady Greengross, shows that anyone wanting to make such contributions above the annual limit may struggle to find an appropriate pensions vehicle outside personal accounts. One reason is that the pensions industry does not offer cost-effective alternatives. Which? found that 52 per cent of people would be put off saving more by the,
"hassle of finding and opening a separate pension plan".
Which? also makes the comment, which is worth repeating, that the Treasury, no less, was quoted as saying that those on modest earnings who leave their pension savings late should not find that they are restricted in the amount of extra contributions that they can make each year. That was in a paper entitled Simplifying the Taxation of Pensions of November 2003. Perhaps the right hand of the Government should take account of what the left hand is saying. I urge the Government to accept if not the amendment, then the spirit of the amendment.