My Lords, I support Amendment 11. It is always a great pleasure to follow my noble friend Lady Hollis. The disadvantage is that she mobilises the argument so compellingly that one feels rather depleted before one even starts to come in to support her. I will try, in a slightly depleted way, to give support on the very important issue which she has identified.
In the numerous iterative debates on the UK pension system in recent times certain criteria key to the design of that system and appraising outcomes have held constant. One of these has been that it must work for women. We cannot wholeheartedly say yes to that, notwithstanding the reforms that we have seen in the Bill. Clearly there is still room for improvement, and two weaknesses are frequently referred to. First, the level of the earnings trigger set for auto-enrolment is too high and excludes too many part-time workers, mainly women. Secondly, women who undertake mini-jobs—each of which delivers earnings below the lower earnings limit of £5,668, the access point for the national insurance system, but which if added together
would put them above that level—do not have access to the state pension system under the contributory system because there is no provision for people with mini-jobs to aggregate their earnings in a way that would allow them to enter the NI system.
If we strip that back to its essentials, a woman with two part-time jobs, earning £100 per week from each job, will not be accruing pension rights unless she is covered by some alternative credit arrangement. Someone who may be working fewer hours but earning £110 per week from one job would accrue pension rights. However, £100 equals about 16 hours on the national minimum wage, so if one was doing more than one mini-job, one would be doing a lot more than 16 hours. Yet in the way that the system operates, they are not allowed access to the NI system.
As my noble friend Lady Hollis so clearly explained, this amendment would allow women and men to aggregate income from two or more mini-jobs and opt to have a year treated as a qualifying year for state pension purposes, and to pay national insurance as though they were self-employed. Having said that, I note from the Peers’ briefing pack that the rate of national insurance payable by the self-employed will be a matter for the Government to decide closer to implementation. If the Minister is able to give us indications of the Government’s thinking on that, which would go to the efficiency of the solution, that would be helpful.
As my noble friend confirmed, the DWP analysis found in 2012-13 that 50,000 people—40,000 women and 10,000 men—had two jobs with a combined income above the lower earnings limit, but were not accruing qualifying years towards their pension. Those may be relatively modest numbers—although the real figure may be higher, given that these things are difficult to measure. However, fairness is not simply a function of the number of people affected, because the disadvantage for these people is very real. As my noble friend Lady Hollis pointed out, the changes in the contemporary nature of the labour market may indeed increase the incidence of what the noble Baroness refers to as a “portfolio of mini-jobs”. We are increasingly seeing an intensity of flexibility requirements within contracts when it comes to the hours of work that employers want in any one week. Certainly, therefore, we need an NI system and a state system able to reflect the developments in the labour market so that it stays fair for people who are working.
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Fairness is a real issue, because it is predominantly women who are affected; they are often working hard to provide for themselves and their families. My noble friend instances compelling examples of such women. She also pointed out—powerfully, I thought—that, currently, someone who is working but through mini-jobs could be treated less favourably than someone who is on JSA, unemployed and accruing qualifying years towards their pension.
The single-tier reforms provided new opportunities; for example, the improvements in the arrangements for many self-employed people who will now be able
to build up state pension entitlement up to the level of the single tier rather than the lower level at the basic state pension. Again, however, the opportunity has not been taken to improve the position of those with mini-jobs. Indeed, the current reforms can compound the disadvantage some of those in mini-jobs face; I will come to that. These people are also unlikely to be building up private pension savings because of their income level and what that means for auto-enrolment.
Those caught by this disadvantage should be able, at least, to opt in to the national insurance system and pay an appropriate level of national insurance contributions that would allow them to accrue qualifying years towards their state pension.
The treatment of those with mini-jobs under the current and proposed systems means that we are still operating a pensions system that views low-paid women with low-paid jobs as producing trivial incomes, which continues to exclude them from both pension systems, private and state. For many women, it is an intensely irritating concept, when we still hear Ministers—although I accept that I have not heard the noble Lord use that argument—say that because they produce trivial incomes, they do not matter and therefore the inefficiencies of the state system to cater for them is not to be dwelt on. My noble friend and I want to assert that they are not trivial and they do need to be addressed. There are thousands of women working hard to cater for their families who are entitled to have these issues addressed.
Women traditionally have had lower state pensions because the state system features in the past entailed most women gaining pension income through their husband or reflected assumptions about family structure that have ceased to be valid. Quite rightly, reforms have focused on enabling the vast majority of women in the future to accrue pension entitlements in their own right. Secondly, the contributory state system had only partial mechanisms to compensate for caring responsibilities and the accrual profile had a number of cliff edges within it, which meant that women who fell below particular earnings levels not only accrued less pension but disproportionately less.
The current and previous government reforms have addressed many of those weaknesses but not the issue that is the focus of this amendment. Ironically, the impact of the cliff edges, if you cannot get the earnings from one of your many jobs to £5,668, is even greater now that the pension system is designed to provide for women to accrue pensions in their own right. In future, many women caught in that mini-job trap will no longer be able to gain state pension entitlement through their husband’s state pension entitlement, so they could be locked out for two reasons. Women in mini-jobs are disadvantaged, and they may become doubly disadvantaged, because they cannot build up entitlement through their husbands nor access the NI system in their own right. I am not arguing against women accruing benefits in their own right; I am just pointing out what I suspect is an unintended consequence if we do not address the position of people in mini-jobs—that they now face a double disadvantage. At the very least, they should be given the opportunity to opt in to the national insurance system. We should remind ourselves, remembering the debates that have
taken place in other places, that these are people who are working and are contributing to their families and the country’s GDP. It is not a group of people to whom we should still be denying access or the level of state pension that they could accrue if they could reach the lower earnings limit when they get to their old age.