Pensions Bill

moved Amendment No. 112: 112: Clause 20, page 23, line 27, at end insert— ““( ) The Authority shall carry out a gender impact assessment of relevant proposals regarding saving in personal accounts as specified in subsection (2).”” The noble Baroness said: In moving Amendment No. 112, I shall also speak to Amendment No. 115.I have some hesitation in speaking to these amendments now, because they should probably have been grouped with the previous two. I deliberately did not come in on that group, but there are some seriously overlapping issues. These amendments focus much more specifically on gender, but the broader issues are, on the one hand, the need to collate information and the question of whether that should be done by the department or the authority, and, on the other, how that should in turn feed through into advice and whether that should be generic or regulated. On the issue of advice, I declare that I am a board member of the Pensions Advisory Service, which gives pro bono advice in a very admirable way to people in need of some steer on their pension futures. I will not press the amendments, but first it is worth speaking to them briefly in order to emphasise some of the more distinctive aspects of the gender points. The arguments have already been made about banking. I want to speak about this because in 2002, when we issued the White Paper on pensions, some of us had to fight to have a chapter in there at all on women’s pensions. The Government have since accepted that concern and the issue has now been mainstreamed. On the back of the admirable report of the noble Lord, Lord Turner, the DWP rightly and properly responded to a request from my honourable and learned friend in the other place, Vera Baird, for a gender impact assessment of the Bill. For all of us, it has been fascinating bedside reading, interspersed with the regulatory impact assessment. It has been immensely valuable in collecting the statistics and trying to ““forward gaze”” to where certain assumptions can take us, if they are robust and prudent. As we move now into personal accounts, something similar is needed. I am genuinely open-minded about whether the delivery authority is the right body to produce that or whether the DWP should be doing it on the back of the delivery authority, but it needs to be done so that we can make intelligent recommendations, in the light of the Thoresen review, about how we can take forward generic or regulated financial advice. That is essential. It is worth emphasising that pensions do not sit comfortably in the narrative of most women’s lives. For most men, particularly once they come close to median earnings or above—provided that they do not have some of the problems mentioned by the noble Lord, Lord Oakeshott, such as major credit card debts—pensions are a no-brainer, particularly with an employer contribution. That is simply not true for women. Think of the underpinning that is going on. To have a decent pension pot, particularly a DC pot, you need to start saving early, at just the time when most women are likely to start a family. You need to save enough, with the percentage growing as your income grows, yet women’s income peaks at age 28 and then declines. You need to have an employer’s contribution to make it worth it, yet women are disproportionately either in small firms with no employer’s pension scheme or in schemes that are shell stakeholder pensions—outside the public sector, that is. You need to do that for 35 years or so and not touch the money, and yet, as Scottish Widows has shown, nearly half of all women stop saving into a pension when their first child is born. You need to lock it away for 35 years or so, yet divorce, illness and financial pressures all make it seem, to many women, selfish to save. Finally, as has been mentioned, you need to ensure that it is worth doing, which means floating free of deductions so far as the interlocking benefits system is concerned. Almost none of those considerations affects the judgment of most men over whether they will enter a pension scheme, but they will affect the judgment of most women over the same question, particularly if they are substantially below median earnings. Some of those risks are man-made—literally so—and some are God-given, but they impact differentially on women. Personal accounts, as constructed by the noble Lord, Lord Turner, have made a seriously gallant start to addressing the positions and problems that women find themselves in. The opt-out scenario, the greater portability and the limited vesting period all make continuous saving simpler, more attractive and carried by the power of inertia. Compulsory provision for employers suggests that the two-for-one scenario would help to encourage women into the scheme. I hope, incidentally, that we will take some action to ensure that women are not encouraged by employers to opt out. I also hope that, with a higher annual contribution ceiling of £5,000 rather than £3,000, small legacies and lump sums may be introduced to smooth the periods when women are not in the labour market. We may need to do more work on the seamlessness of pensions savings during job mobility. Then we come to the overlap with AmendmentNo. 115. A third of the target group for personal accounts are likely to be women earning between £5,000 and £15,000 a year—perhaps 3 million women. Let me give one example of why the risks are so gender-different for women in terms of personal accounts and why both a statistical overview and advice, as proposed in Amendments Nos. 112 and 115, are so necessary. Let us take a woman on half median earnings of £10k a year who comes back into full-time work at 45. She and her employer pay in 8 per cent. The question is: should she? Her pot 20 years down the line at retirement will probably be worth about £37,000, given prudent assumptions, or about £40 a week gross. But net, as was indicated in the previous debate, that £40 could be worth £40 net right down to £5 net more than she would otherwise get from the state. Would it be worth it? Not if she has an incomplete basic state pension, because for that bit that it is incomplete, she will lose it pound for pound; not if she rents, because she will probably lose 90p in the pound; and not if she is in pension credit potentially, when she will lose 40p in the pound. It would possibly not be worth it if she had no other savings and would therefore have got guarantee credit. It would possibly not be worth it if she were single and would not be floated off pension credit by a partner. It is certainly not worth it if she is likely to have caring responsibilities in the future that will reduce her hours and her pension payments. A lot of these risks cannot be predicted; she cannot foretell them. It will be very difficult to give appropriate advice, but some advice can be given. We need to ensure that we are continually auditing the situation in which women find themselves through annual reports. Whether such information is fromthe delivery authority or the DWP—I am genuinely open-minded—it should be transparent, available and in the public domain. On the back of that, we should try to constitute arrangements for financial advice so that, all things considered, she is making the most prudent judgment that she can about whether she opts out. I apologise to the Committee for repeating anything that was discussed in the previous group of amendments. However, there are specific issues facing women over and beyond what most men will face, which are worth drawing to the attention of the Committee. I beg to move.