Pensions Bill

Noble Lords will be delighted to hear that I support the general principle of the amendment, which is that trends in longevity need to be kept under review. We are not lacking in reports on longevity trends already. As the noble Lord is no doubt aware, the Government Actuary currently has a statutory responsibility to produce a report, every five years, on the long-term health of the National Insurance Fund. Demographic projections are the starting point of that report. The next quinquennial review is due by 2008. At the beginning of last year, the Office for National Statistics took over responsibility for producing national demographic projections from the GAD. The ONS regularly produces reports on longevity trends, not only at the national level but in relation to matters such as trends in healthy life expectancy, and life expectancy by different regions of the UK. I have no doubt that this work, which is of crucial importance not just for pensions policy but for a wide range of public provision, will continue under the auspicesof the independent Statistics Board set up by virtue of the Statistics and Registration Service Bill, which is currently before this House. I must question, therefore, why we need to place another statutory requirement on the Government Actuary to produce a report that will replicate much, if not all, of the material that is already in the public domain. The amendment would effectively require Parliament to consider the timetable for increasing the state pension age every five years in the light of such longevity data. As we all know, past projections on longevity have been shown to be fallible, as the noble Lord, Lord Skelmersdale, suggested. The trend in recent years has been for projections to be too pessimistic. But more recently, some commentators have questioned whether, in contrast, the current projections might be over-optimistic by not taking account of rising levels of conditions such as obesity. We recognise that the projections of life expectancy on which the timetable for increasing the state pension age is based may change in the future. As we set out in the White Paper, it is our intention to commission periodic reviews which will examine, among other things, trends in longevity. Following such a review, it would then be for the Government of the day to decide what, if any, action to take. That could include bringing forward new legislation to amend the timetable. I suspect that one of the objectives of the amendment is to precipitate a statement on precisely how and when we intend to carry out those reviews, but I will not do that today and I will explain why. We believe that the first priority should be to ensure that any such review has at its disposal a first-class evidence base that it can draw on. As I have said, a significant amount of data relating to life expectancy already exists, but as the Pensions Commission’s analysis made clear, there are a number of gaps, not least in relation to trends in life expectancy of different groups in society, which we have just discussed. The ONS longitudinal study provides useful data, but it has its limitations. As your Lordships may be aware, there are at present no published projections of life expectancy by social class, nor by local authority area. We will be consulting a range of stakeholders on what evidence needs to be monitored, including where there may be gaps or deficiencies in the existing data. This consultation is imminent; the first of three workshops will take place this week on 7 June. We will then set out our strategy for how we intend to build and maintain that evidence base. We will need to define the terms and timing of the periodic reviews in due course, but a review in 2014, as envisaged by this amendment, would be premature. Changes in life expectancy trends take time to feed through into the projections. Furthermore, it would be sensible to make sure an emerging trend was just that, rather than just a blip. It is undoubtedly true that certainty around the projections decreases the further ahead we look; but it is fair to say that it would take a fairly major event to cause a significant shift in the projections for the 2020s. That brings me to my third point. It is important that people know when to expect to get their state pension, so that they are able to plan for their retirement. Re-opening the question of the state pension age every five years would undermine confidence and create widespread uncertainty about any future Government's intentions. I hope that the information I have provided regarding the development of a strategy for evidence gathering can offer reassurance to the noble Lord and that he will consider withdrawing the amendment.