Pensions Bill

It is a pleasure to have become involved at this late stage in such an important Bill. I have observed its progress closely, although my hon. Friend the Member for Yeovil (Mr. Laws) has been very much in the driving seat. Let me say a little about amendment No. 7. It dwells in detail on points that the hon. Member for Eastbourne (Mr. Waterson) made in his speech. It seeks to provide a mechanism for clarifying some of the issues he described about the likely extent of continued means-testing under the new arrangements proposed in the Bill and to offer objective analysis of that issue. It also seeks to offer analysis of the likely returns that different groups of people who will be auto-enrolled into personal accounts might expect to receive. The hon. Member for Eastbourne referred to a seminar that I and many other Members attended. It sought to clarify the difference between various assessments—principally the Government’s assessment and that of the Pensions Policy Institute—of the proportion of people who will be subject to means-testing under the Government’s proposed pension arrangements. It forecast that the proportion will probably be about 29 per cent.—that is still its central estimate—but the PPI has suggested that about 45 per cent. of pensioners are likely to be subject to means-testing. The seminar clarified the reasoning behind those different estimates. As someone who is not a pensions expert, the evidence seemed to me to leave a wide range of possibilities about the proportion of people who will be auto-enrolled into personal accounts and who will continue to be in receipt of means-tested pension benefits. That will have a substantial impact on how worth while it is for someone to save in a personal account and on other aspects of their personal circumstances. In particular, it will have a significant impact on the likely returns that people who are auto-enrolled into personal accounts can expect to receive. That is the subject of proposed new subsection (2A)(b), which requires the delivery authority to publish estimates of the proportion of people"““auto-enrolled into personal accounts who can be expected to secure returns of—""(i) £2 or more for every £1 saved,""(ii) £1 or more for every £1 saved,""(iii) less than £1 for every £1 saved?." Clearly, the range of possibilities is wide. My hon. Friend the Member for Yeovil (Mr. Laws) made it clear in Committee that there seems to have been a degree of uncertainty and confusion from the Government about the proportion of people likely to expect those differing levels of returns. On Second Reading, the Secretary of State said in response to a question from my hon. Friend that"““the vast majority of people will be able to look forward with some confidence to receiving £2 back for every £1 put in.?—[Official Report, 16 January 2007; Vol. 455, c. 665.]" Subsequently, the Department for Work and Pensions issued a paper entitled ““Financial incentives to save for retirement?, which stated that"““the system that we propose, in combination with the introduction of personal accounts, will see the large majority of people…expecting a payback well in excess of £1…for every £1?." There is a substantial difference between a payback of £1 for £1 and of £2 for £1. Looking forward, it might be difficult for Ministers and their officials to work out with any degree of certainty what the returns are likely to be. The purpose of amendment No. 7 is to require the delivery authority to do so. The timing suggested in our amendment is important. We want the estimates to be brought forward by the authority no later than 1 December 2007. That would ensure that the figures, analysis and information that the personal accounts delivery authority was able to provide through its expert analysis would be available to the House, before it completed its consideration of the Bill that will no doubt be introduced in relation to personal accounts, to inform its judgments about the proportion of those auto-enrolled who will be on means-tested benefits, and the likely returns that they can expect. That information should be in the public domain and before the House so that it can form a big part of the debate. If 45 per cent. of people are to be in receipt of means-tested benefits, they face some serious risks to saving in the personal accounts into which they will be auto-enrolled. It would be wrong for the House to consider a Bill that would set up such personal accounts without having that important information to hand. We also need to have information about the likely returns of such accounts. Such information is also critical to the marketing and promotion of personal accounts. The hon. Member for Eastbourne mentioned generic advice, but there are big questions about whether saving in personal accounts would be worth while for some people in that category, depending on the outcome in relation to means testing and the returns that they can expect. When the Minister responds, I hope that he will be able to reassure us about how he intends to ensure that accurate information, which is as near to definitive as possible—or at least based on as wide a consensus as possible—about those two aspects will be made available to the House. That is what we seek to achieve, and I look forward to the Minister’s response.