My Lords, I thank the noble Lord for his brief introduction to this technical order. It addresses, as we have heard, the required uprating of GMPs by CPI. The period in question is the year ending 30 September 2016, which we have just discussed. That period largely precedes the spurt in inflation—imported inflation—driven by the post-referendum depreciation of sterling. At 1%, it is well within the 3% cap on the GMP uprating. We will obviously support this order but, although it is superficially
straightforward, uprating GMPs is a complicated area, as a recent NAO report identifies. It illustrates that, although GMPs were applicable for a relatively short period of time—1978 to 1997—there are ramifications well into the future. Some people with rights to GMPs would not reach state pension age until around 2050.
April 2016 saw the introduction of the new state pension, of course, which involved the end of contracting-out and of the additional state pension. Because the contracting- out position is incorporated in somebody’s starting amount, the Government no longer take account of inflation increases to GMP accruals between 1978 and 1988, nor for increases beyond 3%. I think that is correct, but perhaps the Minister might just confirm it. Can he also remind us what is happening to GMPs which are in payment?
The NAO also points out that, with changes to the state pension age, there is a growing time period between GMP age, which is 65 or 60, and the actual state pension age when payment begins. Other things being equal, this means a longer period during which the GMP is not fully uprated.
The scheme provider is now solely responsible for uprating, but only from 1988 and in excess of 3%, and for maintaining the records necessary to calculate each member’s GMP. The NAO advises that up to October 2018, scheme providers have to reconcile their records with HMRC. Individuals will be notified of the value of their GMPs as at April 2016 and will have to keep a record thereafter themselves, including when they transfer to another pension scheme. Can the Minister tell us how this is all going? What communications support these requirements, and what assessment have the Government made of compliance with these arrangements? How many individuals are involved in this process?
Finally, the Minister may be aware of the article on the front page of the money section of the Sunday Times last week, which seemingly involved contracted-out pensions and the provision of inaccurate data. Can the Minister please explain what is happening? What is the problem and its scale? Who is affected and how is it going to be fixed?