Pensions Bill

My Lords, the speeches that we have heard so far show what a high level of pension literacy there is in the Chamber, packed as it is with ex-pensions Ministers and other experts in the field. I shall buck that trend and demonstrate that I am almost illiterate in this area. However, I fear that I perhaps reflect the widespread ignorance there is in this country more accurately than those who have already spoken. The pensions system is extremely complex—our Governments seem to be addicted to complexity in this field—and I have discovered that even clever people bury their head in the sand when the word ““pension”” is mentioned. This is particularly, but not exclusively, true of young people and falls into much the same category as the making of wills. The language of pensions is not user-friendly with its use of words and phrases such as ““accruals””, ““annuities””, ““deemed this and that””, ““opting out of defined benefits””, and so on. Therefore, it is not surprising that it is a language few ordinary people speak. My first question to the Minister is therefore about this level of ignorance and what the Government plan to do about it. How will women, in particular, who are at home caring for children, the elderly and those with mental or physical disabilities, find out about their entitlements? People who are at home caring for others are often below the radar of central and local government. They can be isolated from the communities in which they live and cannot get out to join the WI, say, or the throng at the school gates. They do not pick up information from colleagues at work and many simply do not have a social life. It will need an imaginative and specifically targeted campaign to reach this group of carers. If government money can be spent on informing the public about the new smoking laws, surely it can be spent on something as vital as informing our citizens of the new laws on carers’ credits and retirement options. This is particularly important when we cannot be sure that government computers have been talking to each other, as we heard at the weekend regarding the boost to their state pension that women should have received automatically when home responsibilities protection was introduced in 1978. The Resolution Foundation has highlighted the importance of the availability of free generic financial advice to support pension reform, as the noble Baroness, Lady Greengross, said. This view has been endorsed by both the Treasury and the Work and Pensions Committees in another place. In fact, the Government themselves have acknowledged that high-quality information will be critical to the success of their reforms, but it is not clear whether they have any plans in this area. The Pensions Minister is reported to have stated in terms last year that simple generic advice to people about whether they should remain in a personal account should be given, but I wonder whether the Government believe that wider retirement income advice should be available, as in New Zealand. Such advice is particularly important for women, as they are the most likely group to be receiving only low to moderate incomes. The Government should act straight away to begin planning for the provision of such free and independent advice and I urge them to look atthe experience of the New Zealand Retirement Commission—an entirely independent body which has over a decade of experience in informing and educating New Zealanders about their pensions options. Initially, such advice here could be available from the network of citizens advice bureaux. If more direct funding were available for those admirable organisations, they could give specific training to advisers on retirement provision. That would ensure easy access for carers and women to get help with the complexities of carers’ credits and second pensions. Government estimates show that approximately 7 million people are currently undersaving for their retirement—a very worrying figure. Money put into providing such a scheme of advice centres would reap dividends as, in the long term, there should be reduced expenditure on welfare benefits such as pension credit. Having got that off my chest, I shall concentrate the rest of my remarks on the needs of women and carers. The reduction in the number of contributing years needed to qualify for the basic state pension from39 to 30 is welcome. That will particularly help women. Currently, as we have heard, only 30 per cent of women reaching state pension age receive the full amount of basic state pension compared with 85 per cent of men. However, it should also be remembered that, even with the reforms in the Bill, one in10 women may still not receive the full amount of basic state pension by 2025. Some people who will not benefit are those who are now over 45, particularly women, who may have an incomplete basic state pension and state second pension record by the time they reach state pension age. Why should it not be possible for those people to be able to continue to make national insurance contributions after reaching state pension age in order to complete their basic state pension contribution record up to 30 years and increase their state second pension? The latter still needs a minimum national insurance record of 43 years. Women are particularly disadvantaged because credits for caring or parenting commitments were introduced only when SERPS was changed into the state second pension in 2002. Therefore, there must be many thousands of women who have spent years in a caring role who will end up in poverty in retirement. It is vital that people are given every opportunity to build up their state second pension record, so I hope that the Government will consider that proposition. Another change that would particularly benefit women would be to link the second state pension to earnings in payment as well as in accrual so that its value does not decline during retirement. The declining value of the state second pension after retirement means that older pensioners could slip below the poverty threshold. Another important concern which particularly affects women is the nature of much of the work that they do. This is likely to be part time and low paid, which makes it very difficult for them to build up their entitlement to a basic state pension. Four out of five part-time workers are women. Their earnings are not likely to be above the lower earnings limit, which means that they will not pay national insurance contributions and thus gain eligibility. We are talking about someone who might work as a dinner lady at a local school and then do a shift at the pub or village shop. As the Bill stands, the earnings from only one job can be taken into account. If those earnings could be combined, they might count towards the lower earnings limit. Turning to the position of carers, it is welcome that, from 2010, the hours that carers must work in order to receive the credit for the basic state pension and accrual entitlement for the second state pension will be cut from 35 to 20 week. There was something of an outcry that the only carers who will qualify for the benefit were those caring for someone receiving attendance allowance, constant attendance allowance or the middle or highest rate of the care component of disability living allowance. I declare an interest as a recipient of that benefit. There could have been up to 40,000 carers ineligible for carers’ credits, as they care for people who have not applied for any of those benefits. I very much welcome the news, which I heard only this afternoon, that it is now assured that our old friend from the Welfare Reform Bill—a healthcare or social care professional—will be able to certify that someone is a genuine and vital carer for 20 hours a week. How will the proposal be taken forward? Will it be by regulation only or will the Bill be amended? Perhaps the Minister can tell us in his winding-up speech? After all, with an ageing population, the number of carers is going to increase and most will be women. They care for relatives at great cost to their social lives and often their health. They save the state an enormous amount of money by taking on the role. I am very pleased that the Government are to be more flexible about who should qualify for carers’ credits. That brings me to my final remark, about flexibility, which I believe is key to a workforce eventually having to work until 68. The right to request flexible working has recently been extended to more carers, but it might sweeten the pill of a longer working life if those reaching their final decade, say, had the right to request flexible working too.