My Lords, I shall speak to Amendment 23, which is in my name and that of my noble friend Lord Browne, and to Amendment 12 in the name of my noble friend Lady Hollis, who has outlined the basic issue at stake here. I need not repeat that. As we know, the single-tier pension will be based solely on an individual’s contribution or credit record. Everyone will get out depending on what they put in; as they sow, so shall they reap. But we are concerned in this group with people who chose to sow as a couple, expecting to reap in like fashion, when from now on it will be every reaper for himself or herself.
Changes in labour market participation rates and social structures mean that we recognise that, in future, a system built on individual contributions is the right way forward. This year, 75% of those retiring will have complete contribution records of 30 years. It will be interesting to know what happens when that moves up. However, it is obviously important that the appropriate protections remain in place for those who have caring responsibilities or childcare responsibilities and that adequate information is put out. Subject to those caveats, we accept the direction of travel.
However, we are concerned to understand fully the impact of this provision in the short term on those who will lose entitlements derived from a partner’s NI contribution record on which they may have done their retirement planning. It is crucial, for the reasons that my noble friend outlined, that the transitional arrangements are fair and seen to be fair. We have had representations from groups working with older people, particularly older women, highlighting a range of circumstances in which women did not build up any entitlement. There are women who were entitled to credits but did not bother to claim them as they were
planning to piggyback off their husbands’ records and there was no advantage in doing so. Then there were women who worked part-time around caring commitments, as my noble friend described here and in the last amendment. There were women who chose to do voluntary work, knowing that their husband’s pension would support them and who were often the pillars of their local community. I see a lot of them in Durham, who helped to support their neighbours and really were the backbone of the local community.
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There were couples, as my noble friend has touched on, who made the decision that one partner—usually, given the generation, the wife—would not work in order to support her husband in his work. We have heard about service personnel. I know vicars’ wives in those circumstances. They did not work themselves but ran the vicarage and supported their husbands in the expectation that his pension would support them in due course. Then there were women who decided, when they needed a bit of extra money, that it made more sense for the husband to take overtime or extra shifts because it paid better than they would be—and they would not, of course, have had the sort of help with childcare in those days that women can expect now or going forward.
When discussing derived rights, we need to be very careful that we consider the decisions women made at the time. There is always the danger that the modern lens distorts when looking too far backwards in time.
I welcome the fact that the Government plan to extend the period over which people can buy back voluntary NI contributions. However, there is still the point raised by my noble friend Lady Hollis about the period pre-2006-07. I do not know whether the Government can offer anything further on that but, obviously, one will listen keenly. The key thing is that some of the people contacting organisations such as Age UK have made representations that, if they had known what changes the Government were planning, they might have made different decisions at the time. The wives could have registered as unemployed, disabled or carers. Will the Minister address the question of whether there is any way to put these things back in retrospect and if there is not say how else they can be addressed?
I suspect that the Minister will respond that many of those in the circumstances I have described will be able to benefit from pension credit if they find that their income falls below the minimum guaranteed level. Some will, but is that not simply to push them on to the very means-tested benefits from which the Bill is supposed to be rescuing them? I accept, however, that that has been thrown in doubt by the forensic work of my noble friend Lord McKenzie.
What of those who find themselves in the position of having less pension income than they expected but having too much in savings to qualify because of the capital bar? Are we at risk of creating a squeezed middle of pensioners who did what successive Governments have urged them to do—namely, saved for the future and for a rainy day—only to find that they might as well not have bothered because they will not be any better off?
I would be interested to hear the Minister help to clarify the numbers of people involved. I have been struggling to get my head around the figures. The Government’s response to the Select Committee said that by 2020 there could be up to 30,000 women in Great Britain whose entitlement under the STP will be less than under the derived entitlement in the current system. That figure was also used by the Minister at Second Reading. However, modelling done by the DWP and published in a paper given to Peers in briefing on this Bill suggests that by 2020 there could be 80,000 people, half of them women, projected to receive less in state pension—that is in the 2016-20 cohort, I think—and that that would rise to a cumulative total to 2030 of 290,000. I am sure I am simply misreading these figures, but I would be grateful if the Minister could clarify them for me.
The Select Committee made a great deal of this issue and welcomed the protection when it said, referring to the reduced rate election that:
“We believe that it should also be possible to find a solution for another small group of women: those who did not build up their own NI record because they had a legitimate expectation that they would be able to rely on their husband’s contributions to give them entitlement to a Basic State Pension”.
Its solution was to protect those within 15 years of retirement age.
The Government’s response to the Select Committee was rather taciturn on this point; I hope that the Minister can be more expansive. The Government’s response simply referred to the need for a modern system and stressed the fact that this facility was used extensively by married men overseas, although they did not offer comparable figures for married women. Have the Government responded to the Select Committee’s recommendation that they assess and publish the cost of offering transitional protection to those women within 15 years of state pension age? If not, perhaps the Minister might smile upon our amendment which invites the Government to conduct precisely such a review.
The crucial issue here is whether those who have anticipated being able to benefit from the contributions of their spouse have enough time to plan for this adjustment. I look forward to the Minister’s reply.