New clause 2 - Re-employment of armed forces
Armed Forces (Pensions and Compensation) Bill
2:30 pm
Mr Gerald Howarth (Aldershot, Conservative)
You will be pleased to know that I did not hear that sedentary intervention, Mr. Griffiths. I am sure that if I had heard it, I would thoroughly disapprove of it.
I was dealing with a key aspect of the early departure payments scheme, known as the EDPS, and want to seize the opportunity to correct the record. I inadvertently misled the Committee over the index linking of payments between the ages of 40 and 55. I suggested that the current immediate pensions scheme provided for inflation adjustment during the period when the immediate pension is taken, up to the age of 55, but it does not. The new scheme is four-square with the existing scheme. I shall return to the re-employment of those who have left the service.
As I said before lunch, we welcome the announcement that the Minister made when he provided us with the papers setting out the details of this exciting scheme, which he gave to us by way of a letter to the Chairman of the Defence Committee on 2 February. It is particularly welcome, given that as recently as last month, the Government responded to the Select Committee's report and said that no decision had yet been taken on the issue. Clearly, a lot of footwork has been done, and it is fair to say that we welcome that announcement. There will be inflation uprating for those who reach pension age at 55. Perhaps the Minister will clarify that they will be in the EDPS until they receive their preserved pension, currently at the age of 60, and at the age of 65 in the future. The difference is that from the age of 55 to 65, it will be uprated annually to take inflation into account. The Minister nods, so I can welcome that, too. This is a very helpful Committee.
Issues of principle flow from the changes. The immediate pension arrangement is subject to the protections that apply to pensions. The Government changed it to prevent the payment of pensions generally before the age of 55 and had to invent a new scheme—the EDPS. The Minister argued that it is
the secondary legislation behind this measure that will give the new scheme the same protection, and that people are therefore protected because the scheme can be altered only by negative procedure. Will he confirm that the EDPS will be protected from internal Ministry of Defence cost-saving exercises and that it will not be possible to raid the pot without the Secretary of State altering the scheme through secondary legislation?
As I said, we are exchanging a pensions scheme, with all the attendant protections arising from pensions legislation, for a new scheme that enjoys no such protection. As a result of parliamentary questions that I tabled, we have been assured that national insurance contributions will not be applied to that income stream. However, we are entering new territory and cannot anticipate how well protected the new scheme will be from attack by the Inland Revenue or elsewhere. What investigations has the Minister undertaken to verify the robustness of his new scheme? Will he assure the Committee that he is confident that it will be secure from attack from elsewhere?
Those are not academic questions. The Government's response to the Select Committee report said that
''divorcing the EDP scheme from the constraints of pension rules allows a more flexible and targeted approach, responsive to manning needs and in particular reflecting the various manning exit points.''
It is important to recognise that the Government accept that the scheme will not come under the constraints of existing pensions rules.
There is also the issue of commutation, which is perhaps not a matter of principle so much as of practicality. The immediate pension, which currently prevails, and the proposed scheme are both designed to provide a pull-through.