I thank the noble Lord, Lord McKenzie, for this amendment. I hope that I shall be able to offer some reassurances about the current arrangements and those within the context of the work that we are planning. The existing arrangements provide for national insurance credits to cover a wide variety of contingencies and activities, as he acknowledged. They are generally available to people who are unable to work and pay contributions. This could be because they are unemployed, incapacitated or caring for others, but credits are also available to cover a range of other circumstances—for example, jury service or if an individual is employed but is in receipt of working tax credit.
Credits protect a person’s national insurance record and their future entitlement to benefits. Under the current system, all classes of credits protect the basic state pension, and in certain circumstances an earnings factor credit can be awarded to protect state second pension entitlement, mainly for caring responsibilities and long-term incapacity. I can confirm that the crediting arrangements will be brought forward to the new system and that people will still be able to get credits to protect their single-tier pension position.
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For the vast majority of people, the take-up of credits is not an issue. They are awarded automatically to a person in receipt of certain benefits, such as child benefit for a child under 12, or carer’s allowance.
Many working-age benefits also provide automatic entitlement to credits, and under universal credit the crediting coverage will be extended further still as, in the case of a joint claim, both members of the couple will automatically receive credits.
On the noble Lord’s question about the difference between those that are automatic and those for which people have to apply, we are planning a review of the recording and operating systems to identify any improvements to be put in place to maximise take-up, and ensure that messages about applying are simple to understand. We are also working on a customer-focused communications strategy for the new pension system, which would include crediting arrangements.
On the fact raised by the noble Lord that it will be harder to get 35 qualifying years than 30 years, the figures I can provide are that around 85% of people will have 35 qualifying years by 2020 and that the gender split will be 90% for men and 80% for women. Where a benefit is not in payment, an application is required. The carer’s credit, for example, is available to those caring for at least 20 hours a week and the most recently introduced credit, often referred to as the grandparent’s credit but which is also available to other adults, is for a family member providing childcare.
For these credits, which require an application, we want people to know what is available and to be getting all the credits they are entitled to in order to safeguard their future entitlement to the single-tier pension. Information is available in our departmental leaflets, and the gov.uk website clearly sets out the circumstances in which credits are available, as well as whether an application is required. But we are not complacent and we know that there are a number of different reasons why people do not take up credits. This is why we made it clear in the White Paper that the implementation of single tier provides us with an opportunity to simplify our recording and operating systems.
With that in mind, we intend to review these systems to identify what efficiencies can be put in place to make the system of national insurance credits as simple as possible. We are also developing a comprehensive communications strategy for the new pension system and, as part of this, we are exploring with HMRC how we could seamlessly link information about state pension to information about national insurance through online services.
The deficiency notices raised by the noble Lord inform people about gaps in their national insurance records and are not being sent out to those who reach state pension age on or after 6 April 2016. We cannot currently provide state pension statements that give accurate estimates of single-tier pension until the single-tier proposals are enacted, making it difficult for a contributor to decide whether to pay voluntary contributions. HMRC has publicised the fact that deficiency notices will not be issued for the time being. In the mean time, we are exploring with HMRC whether there are alternative ways in which we can provide customers with information about gaps in their record, including possible online alternatives.
I reassure noble Lords that the overall strategy for communications will include information in respect of crediting arrangements and that we will continue to
do all that we can to ensure that people receive the appropriate credits that they need to ensure that their state pension provision is protected. I therefore ask the noble Lord to withdraw his amendment.