Fairness in Pension Provision

Part of the debate – in Westminster Hall at 4:15 pm on 8th April 2014.

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Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions 4:15 pm, 8th April 2014

They have paid for it, but they have also saved by paying less national insurance. I take the hon. Gentleman’s point about people who have not worked, and I will come on to them. In a world of contracting out, if person A pays less national insurance but still gets the same pension as their neighbour who was not contracted out, that would not be fair either. Fairness has a number of dimensions. The fact that someone has a £16 SERPS pension does not tell us anything in isolation; it depends on whether they paid less national insurance than their neighbour for years and years, which is why they have got a lower SERPS pension, but they have got something else instead. That is part of the system.

The hon. Gentleman asked about the position of people who have done nothing, and I often hear from pensioners who say, “Why did I bother saving? If I had done nothing, I would have got everything.” Part of the point of the single-tier pension is to set the value of the state pension above the basic means test, not 30-odd quid below, where it is now. Automatic enrolment then takes people further above that figure. As a result, because they have saved, they are clear of the means test and they are better off than someone who has done nothing. That is a new feature of the new system, because we are trying to address that point.

The hon. Gentleman has said that people who do nothing get stuff for free. He is not saying that poor people should not get stuff for free, but we cannot have it both ways. He is not saying that poor people should not get stuff for free, but we cannot have it both ways. If we think we have to look after people who have got nothing, and they get free prescriptions because they have no money to pay for them, we cannot then say, “But that is not fair to people who work, because they do not get them for free.”