Pensions Bill

moved Amendment No. 5: 5: After Clause 8, insert the following new Clause— ““Independent Pensions Commission The Secretary of State shall, no later than 1st January 2010, establish an Independent Pensions Commission which shall report to Parliament and Government every four years on— (a) the terms, benefits and affordability of public sector pensions, (b) the latest trends in private pension saving (and the impact of means-testing), and (c) the latest trends in life expectancy and average retirement ages.”” The noble Lord said: My Lords, the amendment is in my name and those of the noble Baroness, Lady Greengross, and the noble Lord, Lord Fowler. I shall speak also to Amendment No. 34, tabled by the Conservative Front Bench. This is a consensual, cross-party amendment. I do not propose to go in detail through our discussions in Committee but I have done my best to take on board the points made very well by the noble Lords, Lord Fowler and Lord Howarth, who tabled amendments on similar but not identical lines to my own. The noble Lord, Lord Fowler, made a good point when he said that we did not need to have two commissions, one for the public sector and one for the rest. This commission deals with both public sector pensions and trends in private pension saving, life expectancy and the average retirement age. The noble Lord, Lord Howarth, made a very good point when he said: "““If we had had a standing pensions commission 30 years ago, vast amounts of money and misery would have been saved””," and that we need one to, "““routinely assemble and publish information on the relevant issues for both the public and the private pension sectors””.—[Official Report, 11/6/07; col. 1568.]" Although the noble Lord has not added his name to this amendment, I hope that he will support the proposal in debate and in the Division Lobby. This amendment seeks not to prejudge the outcomes of the commission’s deliberations but to find a pensions consensus that is built to last. It is the unfinished business from the Turner commission—which has done so much to build the present consensus, so far as it goes, and to bring about the massive changes in our pension system that have done much in the short term. In our view, however, it is essential to have a long-term, independent and stable pensions commission. We are supported in that by the National Association of Pension Funds, which I thank for its support. Its idea is to create a permanent body to monitor the adequacy and sustainability of the UK pensions system. The association is, like us to some extent, talking of a board comprising a small number of expert appointees. I suggest that the commission should be larger than the Turner commission, which had only three people. I envisage a commission of six or eight people. It would be a small but expert commission and certainly include one representative from each of the three main parties to cement consensus in the long term. The Government Actuary or someone of equal standing would be a member to provide specific input on longevity, a critical issue in pension funding. The commission would certainly include someone with substantial public sector experience, in addition to a pensions expert from a body such as the PPI. Those are the sorts of ingredients that I would suggest. Looking around the House, I see in their places the sorts of people who I would envisage as commission members. I should hope that people with that sort of expertise will be available. A parallel with the Monetary Policy Committee of the Bank of England can be usefully drawn here. Of course you cannot take pensions policy entirely out of politics, any more than you can take economic policy out of politics; but just as the crucial decision to set interest rates is better done by experts, the analysis of trends in these key areas is best done by a commission with a substantial expert element. The Government say that they are in favour of consensus but they are not in favour of a consensus that they cannot control. It was noticeable that this was the one major recommendation of the Turner commission that the Government were not prepared to implement. Frankly, I thought that their reasons were pretty thin. We are asking for a body that reports every four years, as the Turner commission suggested—that is, once in a typical Parliament—which we think is about the right time to review the situation, particularly when one is talking about long-term changes in the state pension age. That must be the right way to do it. Age got completely stuck, as it were. When I became my party’s pensions spokesman a few years ago, the idea of raising the state pension age was thought to be almost too hot to touch. The noble Lord, Lord Turner, has done a great service in opening that up and getting a resolution. We must have a means whereby those figures can be looked at regularly and in an authoritative and independent way. The problems of the affordability of public sector pensions are well known. I look forward to the noble Lord, Lord Turnbull, discussing in more detail how that affects management in the public sector and other problems. I shall give one example of the imbalance between basic pay and the accrual of pension rights in the public sector. I have recently had the annual report of the Bank of England and I see for, I think, the third successive year—certainly for the past two years—that the increase in the transfer value of the Governor’s pension rights, at £379,000, is substantially more than his total pay and allowances for the year. We have a very unbalanced position. Funnily enough, I remember a few months ago having a discussion at dinner with one of the executive directors of the Bank of England, who said to me that he would, frankly, have a bit more salary now so that he could buy a house rather than the very generous pension pot in the indefinite future. We had a little chat to see if there was any way in which we could structure a deal but I am afraid that we could not. More generally, public sector workers would welcome a greater range of options, such as having more salary now as opposed to building up a very expensive pension scheme liability. That is the sort of thing that an independent commission could examine in a non-partisan, sensible, calm way. I turn to the amendment of the noble Lord, Lord Skelmersdale. Essentially, it calls for more regular reports on public sector pension liabilities. We support the amendment; it is a useful move so far as it goes but I do not believe that it is a satisfactory substitute for the much more independent, sustainable and long-term proposals that we are making. Facts and reports are useful, but they will come from the Government. Frankly, you do not put Ministers and civil servants in charge of reporting what their own gold-plated pensions will cost the taxpayer; that should be done, as a point of principle, independently. I ask noble Lords to support Amendment No. 5. The House is in quite an independent mood today and I invite independent-minded Peers on the Conservative Benches in particular to support this cross-party amendment. I beg to move.