Mr Ian McCartney (Minister for pensions, Department for Work and Pensions; Makerfield, Labour)

The Government have a strategy of encouraging all pensioners to take up their

entitlement. Research has shown that pensioners are currently put off claiming their entitlement because of the intrusive nature of the MIG claims process, so in this clause we are taking steps to reduce the barriers. We have already reduced the MIG claim form from 40 to 10 pages. In devising pension credit, we are determined to make further significant improvements. We have therefore introduced the proposals for an assessed income period.

I think that we have all accepted the introduction of the five-year period, and our debates on clauses 6, 7 and 8 have reflected that. We are confident that the changes will help pensioners who have settled and regular income that is not subject to frequent changes, and to do so in an unintrusive way. The assessed income period dramatically reduces the number of changes that a pensioner needs to report; it effectively removes the weekly means test that Opposition Members keep banging on about. [Interruption.] I am not saying that in a derogatory sense. I have been banging on about the five-year term. The assessed income period will take a significant step towards removing the reasons why pensioners do not claim their entitlements, thereby encouraging them to claim what is rightfully theirs and, in turn, helping to reduce pensioner poverty.

Clause 9 contains the provisions that govern the length of the assessed income period; indeed, it is at the heart of our proposals to abolish the weekly means test. For the vast majority of pensioners aged 65 and over, the assessed income period should last for five years. During that period, pensioners will not be required to report any increases in their retirement provision—that is, non-state retirement pensions, income from annuity contracts or income from capital. Under the MIG rules, however, pensioners must report any changes, however small, to the first two items and to capital over £6,000. With pension credit, pensioners will no longer have to endure the continuous requirement to report changes, or annual inquiries into their financial affairs. That is a radical step, which will make it easier for pensioners to claim their entitlement.

Amendment No. 32 seeks to remove subsection (2), and with it the Secretary of State's power to set an assessed income period of less than five years—or not to set one at all. It would mean that all pensioners over 65 would have a five-year assessed income period. However, we realise that some pensioners' retirement provisions may not be finalised when they claim pension credit, particularly if they do so as they approach pension age. Some may expect an endowment policy to mature; others may find that their occupational pensions have not been finalised. Some pensioners' incomes may always be subject to wide fluctuations—for instance, the erratic payment of foreign pensions. Some of us regularly receive letters from pensioners who worked for other Governments in the old empire days, or for other countries in the Commonwealth and elsewhere, about the erratic nature of their payments, and we have to be able to intervene in a positive way.

Subsection (2) provides that when consideration is given to setting an assessed income period, if the income is not likely to be typical of the next 12 months, a shorter assessed income period may be set. Indeed, one may not be set at all. That is all about assisting pensioners, and it works like this. As people near retirement, as part of the assessment for the basic state pension and for pension credit, they are asked specifically whether there will be any other significant item of income during the next 12 months. Gentleman A or woman B may say, ''I have an endowment policy coming up in the next three or four months.'' Surely it is reasonable to set the assessment period and then to reassess. However, it should be remembered that pensioners will be asked if their level of income is likely to remain the same for the next 12 months; if it remains the same, the assessment will commence from that point for five years. As in the previous debate—the virtuous circles debate—the net effect will remain the same, and they will not lose.

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