Occupational Pensions: Survivor Benefits — Question

– in the House of Lords at 2:38 pm on 13th July 2015.

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Photo of Lord Naseby Lord Naseby Conservative 2:38 pm, 13th July 2015

To ask Her Majesty’s Government when they propose to act to address the restriction of survivor benefit payments to widowers and same-sex partners highlighted in their June 2014 Review of Survivor Benefits in Occupational Pension Schemes.

Photo of Lord Naseby Lord Naseby Conservative

My Lords, in asking the Question standing in my name on the Order Paper, I declare an interest as a trustee of the parliamentary pension fund, and that my wife is a retired full-time NHS GP.

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

My Lords, the Government are absolutely committed to equality. Current legislation requires all couples to be treated equally and survivor benefits are built up on an equal basis going forward. The review covers complex issues of legislation and entitlements built up in the past. Any changes could have significant implications, including costs, for private and public sector pension schemes so we must consider the review’s findings thoroughly and understand those implications fully before making a decision about whether retrospective changes should be made.

Photo of Lord Naseby Lord Naseby Conservative

I am most grateful to the Minister for that Answer but I would like to focus on the situation of female GPs, many of whom retired around the beginning of this century. They contributed an identical amount to that of their male counterparts. The widows of the male doctors get a 50% pension. Is my noble friend aware that current widowers, and possibly those in the future, get only about 18%? Can she rectify this anomaly, bearing in mind that both parties, male and female, have contributed an equal amount of money to the pension?

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

My noble friend will know that the specific differences in treatment between male and female scheme members for the purpose of survivor benefits in public service pension schemes for service prior to 1988 were held to be lawful in 2011. This judgment was made in the Cockburn case, which specifically discussed a widower whose partner was a member of the National Health Service Pension Scheme. The judgment effectively said that there was in that case,

“an objective and reasonable justification”, not to make retrospective changes in relation to new policy being introduced.

Benefits for widows were introduced much earlier than for widowers. The Social Security Act 1975 first imposed obligations on contracted-out schemes to provide a surviving female with a survivor pension. In those days it was usual for the man to be the partner who was working, with a dependent female partner. A female worker with a dependent husband was not the social norm. The scheme funding would have been based on the expectation that a female member would not have a dependent survivor, whereas the male would have a dependent survivor.

Photo of Lord Cashman Lord Cashman Labour

My Lords, does the Minister agree that this issue of equality should have been dealt with prior to the Civil Partnership Act and the same-sex marriage Act? People who survive their partners are having to cope at the time of death with appalling inequality, which should be unacceptable. Will the Minister act with expertise and expedite this matter urgently?

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

My Lords, the Government are very sympathetic to the principles of equality and if we were confident that equalising these benefits is straightforward, affordable and sustainable we would be happy to support more equalisation. But we have to think carefully before imposing on schemes retrospective costs which could not have been taken into account in past funding assumptions. We are absolutely committed to tackling discrimination in all its forms and creating a fairer society for everyone, regardless of sexual orientation or gender identity, but the benefits people receive—

Noble Lords:

Too long!

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

The benefits people receive from a pension scheme are based on their personal circumstances rather than the contributions they have paid. The overall contributions are assessed on the basis of assumptions relating to the entire membership and there is a degree of cost-sharing between members. In order to equalise—

Noble Lords:

Order.

Photo of Lord German Lord German Liberal Democrat Lords Spokesperson (Work and Pensions)

My Lords, equalisation is a very important issue to many people in same-sex partnerships and it therefore has to be dealt with rapidly. Indeed, when this House passed the Act, we expected a rapid answer to it. Of course, costs will be involved but they will rise if they are not dealt with now, and we know they will diminish over time to a very small amount. When will the Minister commit to taking a decision on this matter?

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

My Lords, these issues are complex, involving significant sums of money. They would potentially impose significant retrospective costs on pension schemes that are already struggling with large deficits and, if closed, would not have a means of recouping the costs from members in future. It would be very difficult to make newly retrospective changes and difficult to make changes to some schemes but not others. That is why the Government must consider these issues most carefully.

Photo of Baroness Symons of Vernham Dean Baroness Symons of Vernham Dean Labour

My Lords, in her initial Answer the Minister said that the Government were absolutely committed to equality. Everything she has said subsequently has mitigated that absolute statement. Will she please reiterate: are the Government absolutely committed on this issue, or are they going to equivocate in the ways that her answers have so far done?

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

My Lords, the Government are absolutely committed to equality, and all accruals from now are on an absolutely equal basis. However, past funding of pension schemes would not have built in the cost estimates for equality. That is why we have to be careful and consider the issue most carefully before imposing a cost of £3.3 billion on these pension schemes. The cost for public sector pension schemes would be £2.9 billion, which has not been funded, and the cost for private sector schemes would be £400 million, which has also not been funded. Finding that kind of money when employers are already struggling is not straightforward.

Photo of Lord Bradley Lord Bradley Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Health)

My Lords, the Minister said in the Sunday Times last November:

“There has been so much unfairness in pensions over the years. Sadly, this is another unfairness, and should not be permitted these days”.

In the light of that, are the Government going to bring forward proposals quickly to match those words? What provision have they now made to meet the costs of addressing restrictions on survivor benefit payments if that decision is lifted?

Photo of Baroness Altmann Baroness Altmann The Minister of State, Department for Work and Pensions

The current treatment has been challenged in the courts and been found to be lawful. If the Government had a ready source of funding, the issue would have been dealt with by now. These issues are complex and are still being considered. We will issue our response in due course.