My Lords, this is a rather complicated matter. We are on to the area of people who are contracted in and those who are contracted out. Under the Government’s proposal, an employee who by April 2016 has already built up a state pension entitlement equal to or in excess of the single state pension cannot add further to it. This means that a large number of long-term contracted-in employees will face the prospect of a reduced state pension. These employees, by definition, have not had access to quality company DB pensions during their career, and SERPS and the second-tier pension were originally designed to assist them. By contrast, an employee who has been long-term contracted-out will have an established right to the basic state pension only. Under the transitional terms, they would have the ability to add to their single pension benefit and could increase it from the prospective £107 of the basic state pension level to £144 in approximately nine years.
The amendment is designed to be helpful. We realise, of course, that the transition may be difficult. Some people may feel that they are losing out as a result, and we want to ensure that as few as possible feel that way. The idea of the amendment is to limit the loss of future rights to accrue for the contracted-in employees and to put them on an equal footing with contracted-out employees. Under the new scheme, both groups will in future be paying the same amount of national insurance contribution. The idea of the amendment was therefore to ensure that the transition that is taking place will be as smooth as possible, and that people who think that they have been left out or that their conditions are undermined will feel that every effort is being made by the Government—if they accept our amendment or something rather similar—to make the transition as painless as possible. I beg to move.