Clause 5
Pensions Bill
9:10 am
Sally Keeble (Northampton North, Labour)
I beg to move amendment No. 69, in page 5, line 24, at end insert—
‘(aa) the amounts of the additional pension that different persons are entitled to receive;’.
This is a probing amendment to find out the Government’s thinking not only on this matter, but on how the total pension package will look over time. The amendment would include the state second pension in the general index-linking to earnings of the state pension.
Clause 5 has been profoundly welcomed. It is seen as righting a wrong done by the previous Conservative Government by ensuring that the value of the basic state pension keeps pace with the increase in earnings. However, the one thing that seems to be missing from the list of items covered is the state second pension, so the amendment would add it to the list. The state second pension will be index-linked to earnings and accruals and will keep pace with the rises in them as people pay in during their working lives. However, in terms of paying out, it is not listed as one of the items that will be linked with the rise in the level of earnings.
I should make a couple of points about that. First, I hope that the state second pension will be a substantial part of people’s income during retirement and I have recently tabled several questions to find out how many people receive it. I have not heard people talking about it much in my constituency, but it is obviously relatively new and its impact has perhaps not been fully felt. When it first came in, it was dubbed the carers pension because it would particularly help people with lower earnings and interrupted work patterns.
I believe, in fact, that the level of state second pension will be quite substantial. My hon. Friend the Minister will correct me if I am wrong, but I think that it will be about 40 per cent. of people’s income in retirement, where they get both the basic state pension and the state second pension. For an awful lot of other people, the real issue may be what is in their personal accounts, occupational pensions and other pension schemes. However, for those on lower earnings who get the carers credit, the state second pension will be a really big component of their income after retirement
The other point that I want to stress to the Minister is that women are particularly interested in the state second pension, and it is important that their income in retirement is maintained. Of course, women live longer than men, so it is even more important that a pension that is designed for women should retain its value over a longer period. As we have seen with the erosion of the value of the state pension, if a pension is not linked to the rise in earnings, over the longer time that women live during retirement, it will actually lose value. In addition, the effect of a lack of index linking would, for women, be more substantial.
The total package in the Bill is extremely goodand the difference made to the income of women pensioners will be important. However, it is also important, not just that women retire on a decent income in their own right, but that they continue to have that during retirement. Many women do not have access to personal accounts, but we also know from the work of the Turner commission that women do not have the same access to occupational pensions. Therefore, the kind of package that is in the Bill will be particularly important for them and the state second pension will be a vital part of their retirement package. Will the Minister set out what the thinking is on that issue? First, why was the decision taken not to add additional pensions—the state second pension—to the list in clause 5? Also will he set out what he expects the pattern of women’s income during retirement to be and how their package will be made up?
When talking to women in my constituency, I am struck that it is not simply a matter of saying, “You have had your income and that’s it,” or “You have your occupational pension.” While they are working, women receive a package of income made up of different things and in retirement they have a package of retirement income made up of different bits of pension and benefits. How is it envisaged that that package will be made up and, as the value of the state second pension goes down, what will be brought in to get that income up again? It is generally accepted that costs increase as people get older because they need more fuel and they do not have mobility. As this is a probing amendment to find out how the Bill will work in practical terms, could the Minster say whether the Government will monitor the gender issues surrounding the state second pension? Also, over time, will they look at the impact of not having the same index linking for the state second pension as for the basic state pension and, in particular, would they consider a gender impact assessment on that issue?
The progress made for women pensioners has been astounding. I know that the Opposition do not like the pension credit, but it has been incredibly important for women to maintain their income during retirement. The carers credit and the state second pension have also been important additions and the carers credit that is set out in the Bill will transform the situation for many women. The arrangement in the Bill will last decades, and as we move forward it is important that we do not see an erosion of what should be a good and secure package for women pensioners.