Pensions Bill

I am very gratified by the Minister’s response; there could otherwise have been a lot of wastage of effort and expertise. I have some concerns about the reforms to the second state pension. The earnings-related element is set to disappear. It was said earlier that that will not be unfair to above-average earners because they will get the same as everybody else, but they will surely be paying more, so at the end of the day they will be paying more for less; I do not see how that can be avoided. I am also concerned about the effect on defined-benefit schemes, which will suffer from the lower contracted-out rebate. They are already in some difficulty, and not everything that the Government have done to date has encouraged the companies that provide such schemes. The reforms will make life rather more difficult for them, which I would have thought was the last thing that the Government wished to do. At the same time, the take-home pay of their employees will be reduced. Those two things make that particular element of the second state pension reforms rather difficult to understand. On guaranteed minimum pensions, I am delighted that the Government are getting rid of this extraordinarily complex and contentious regime. Employers have made many mistakes with GMP, and the advice given by lawyers has often been contradictory. I am sorry to say that the advice given by the National Insurance Contributions Office has also sometimes been wrong and contradictory. That even happened with the House of Commons scheme, which I have the honour of chairing, so anything that reforms GMP will be a good thing. However, the initial reform proposals look extremely complicated, and I hope that they can be made as streamlined as possible. If we can in some way get rid of the whole thing in one fell swoop and remove the burden from employers, that would be welcomed by everybody I know in the pensions world. The situation on the abolition of contracting out for defined contribution schemes is different and, on balance, will probably be a good thing. It is the defined benefit schemes that I am worried about. All the hon. Members who have spoken today have welcomed the return of the link to earnings of the state pension. It must be a good thing, but there is still some suspicion about when it will occur. As others have said, the promise is rather vague. Will it be 2012 or might it be 2015, or will it just disappear into the ether and never occur? The Bill does not contain a firm commitment to the establishment of the link. We also need to know how average earnings will be calculated. We are told that it will be done by the Secretary of State, but how will he do that? Will a detailed system of calculation be laid down in some annex to the Bill? After all, calculations of average earnings by different experts all come out different.