Clause 9
Pensions Bill
12:30 pm
James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge and Hyde, Labour)
We now enter the delightfully complex area of the state second pension, which we hope to make simpler by means of the Bill. Committee members will know that, since the state second pension was introduced in 2002, certain groups have been deemed to be earning at the low earnings threshold, which is currently around £12,500 per year. Some of the groups that have been deemed to be included are carers and low earners and, as a result, they accrue additional pension and have double the state earnings-related pension scheme rate, typically 40 per cent.
With clause 9, we want to take the reforms that we made in 2002 a step, or indeed a couple of steps, further. We want to allow more people to be deemed to be earning at the low earnings threshold, thus meeting our objective of modernising the contributory principle by making work in care count equally for state pension purposes. This would include those awarded child benefit for children up to the age of 12, approved foster carers and those caring for one or more severely disabled people for at least 20 hours a week.
The recognition of carers ensures that equal recognition for caring is made for both basic state pension and S2P. These carers, in addition to those already covered by the original S2P provisions, will accrue state second pensions because they will have the necessary qualifying earnings factor, either through earnings alone or through credits alone, as before.
Clause 9—this is quite important—will also help those who currently just missed out on accruing S2P in a particular year because they worked for only part of that year and had caring responsibilities for the remainder of the year. It will allow people to combine their credits from caring, for example, with their earnings to bring them into S2P.
I am sure that the Committee will welcome the steps that we took in 2002 and the significant improvements that this Bill makes.
My technical amendment No.88 does not change what we intend to do; it simply corrects a minor drafting error. It makes clear the obvious. It does not require someone who has earned enough to qualify for S2P also to have a credit in a particular year—for instance, if they are a carer—to make that year count for S2P.