Pensions Bill

moved Amendment No. 2: 2: Clause 1, page 2, line 32, at end insert— ““(5) Should the contributor have reached the state pension age and not made the necessary National Insurance contributions or accrued the necessary credits for entitlement to the full Basic State Pension, the contributor may defer claiming the Basic State Pension and may continue to pay National Insurance contributions until the entitlement to a full Basic State Pension has been accrued.”” The noble Baroness said: Amendment No. 2 would allow people who are still working and have reached the state pension age but have not made enough national insurance contributions or accrued enough credits to entitle them to a full basic state pension to defer claiming the basic state pension and to continue to make NI contributions until entitlement to a full basic state pension has been accrued. At present, a person who is still working and who has reached the state pension age cannot opt to pay NICs in order to increase their state pension. Giving someone who wished to continue to work after reaching the state pension age the entitlement to continue to pay national insurance contributions would mean not only that they would accrue credits towards the basic state pension, but that they would also accrue vital credits for the state second pension, a particularly important entitlement for women. The Pensions Minister in the other place indicated that bringing in a system such as the one proposed in the amendment would create great complexity both for employers and employees. He also said that the system would inevitably lead to overpaying and the issue of refunds, which has a familiar ring to it. However, would it really be too complex for businesses to cope with? After all, many payroll schemes cope with additional voluntary contributions to private pension schemes. More and more employees want to work beyond state pension age, and to deny them the right to make national insurance contributions in order to build up an entitlement to the full basic state pension and the state second pension does not acknowledge this developing trend in employment. Obviously the reduction in qualifying years for the basic state pension from 39 for women and 44 for men to 30 years for both is extremely welcome; it will certainly increase women’s entitlement to the basic state pension. However, to accrue the Government’s income target of £135 a week, which is a combination of both state pensions, a minimum of 43 years’ national insurance records for the second state pension will still be necessary, which will particularly disadvantage women aged 45 and over, who are less likely to have accrued a significant amount of S2P, or its predecessor SERPS. We on these Benches also fully support Amendment No. 3 in the group, which would build up S2P. I beg to move.