Clause 223 - Claims for certain benefits following

Pensions Bill – in a Public Bill Committee at 4:15 pm on 16th March 2004.

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Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions 4:15 pm, 16th March 2004

I beg to move amendment No. 230, in

clause 223, page 148, line 33, at end insert—

'( ) This section also applies to claims for retirement pension or widow's benefit made before 1st March 2001 if the claimant only became entitled to the pension or benefit on or after that date.'.

Photo of Mr James Cran Mr James Cran Conservative, Beverley and Holderness

With this it will be convenient to discuss Government amendments Nos. 231 and 232.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

As this is the first time I have been called to speak under your guidance, Mr. Cran, may I say what a privilege it is to do so? We have had a wide-ranging and stimulating debate, and I will now take the Committee down under for a few moments.

Clause 223, to which the amendments relate, is needed to regularise the extra statutory payments we

are making to people now living permanently in the UK who have had previous periods of residence in Australia. When Australia ended the social security agreement in March 2001, we had to take steps to protect the national insurance contribution records of the people affected. We did so initially by making extra-statutory payments, and this protection applies to those who are entitled to the payments of state pension, widow's benefits and bereavement benefits, and puts payments on a proper legislative footing. If we declined to legislate, extra-statutory payments would have to come to an end, thereby reducing the benefits of about 3,000 people.

Government amendment No. 230 will ensure that the clause applies to claims made on or before 28 February 2001, but where entitlement begins on or after 1 March 2001, giving any payments made under such claims proper legislative backing. It is not likely that there will be many such claims, but they may arise where, for instance, a claim for retirement pension is made in advance of the person's state pension age. We had thought that the agreement covered those cases, but I am advised that it does not.

Government amendments Nos. 231 and 232 are minor clarifications. Amendment No. 231 makes it clear that the apparently petulant reference to ''that agreement'' in subsection (2) is to the Australian agreement. Subsection (8) provides that this clause does not affect certain transitional provisions that followed the end of the agreement. Amendment No. 232 clarifies exactly what those provisions applied to, so as to dovetail with the revised scope of the clause.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

The Under-Secretary said that the Australian Government's decision to end the social security agreement with the United Kingdom underlay the group of amendments and the clause. For the benefit of Committee members who, like me, do not follow these things very closely, can the Minister tell us what went on? Why did a friendly Government break an agreement with us? Why are the clause and the amendments necessary? I sense that the answer is partly about politics, the British Government and Australian pensioners, and so forth. Will the Under-Secretary fill us in on all that?

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I will happily do so. The reason that the Australians gave was the refusal of successive Governments to uprate UK retirement pensions paid to recipients living in Australia. The Australian Government felt that that was a basis on which to withdraw from an agreement that had been operating for some time.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

What is the position of Australian citizens who come to live in this country? Are their pension payments frozen, or do they continue to rise as in the Australian legislation?

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

My understanding is that the agreement was reciprocal. My assumption is that uprating was arranged for Australian citizens who were living in the UK. If I find on further inspiration that that assumption was incorrect, I will drop Committee members a line to inform them.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

It would be helpful to have that information before Thursday, because reciprocity and

frozen pensions are relevant to the broad debate on one of the new clauses. For some reason I did not receive the last briefing note, so perhaps extra-special efforts will be made to ensure that I get this one.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

I can certainly give a commitment that they will.

The clause is focused on trying to ensure that we protect the contribution record of people who have previously operated under an assumption—for much of the time it was a reality—that contributions would be credited to them when they were resident in Australia, to entitle them to the benefits that I have listed when they came to reside in the UK. Although there is an issue to do with reciprocity, it is not essential to this clause.

Amendment agreed to.

Amendments made: No. 231, in

clause 223, page 148, line 35, leave out 'that agreement' and insert

'the reciprocal agreement with Australia'.

No. 232, in

clause 223, page 150, line 4, leave out 'had made a claim' and insert

'had claimed a benefit to which he was entitled'.—[Mr. Pond.]

Clause 223, as amended, ordered to stand part of the Bill.