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6.56 pm

Mr. Jim Cunningham (Coventry, South): This debate is part of a larger debate, although I realise that we cannot talk about the wider issues. However, the general public tend to look at the value of pensions and ask what other assistance they might get in their old age with, for example, the funding of care. We should also bear it in mind that people in some parts of the country get free bus passes, but pensioners in others do not. There is a catalogue of such examples.

We must recognise that the Government have done a lot, particularly for poorer pensioners. It would be churlish to say that they have not done so. However, I think that the Government would accept from the Back Benches that we still have a long way to go in considering the welfare of future pensioners.

Kali Mountford: Has my hon. Friend seen the statement by the Institute for Fiscal Studies, which in congratulating the Government says that pension credit is the most progressive action that it has seen from a Government, and that the income of the poorest of the pensioner population will rise by 8.1 per cent., while the richest will gain only by 0.5 per cent? Is not that the sort of action on poverty that we need?

Mr. Cunningham: I am perfectly aware of the statement to which my hon. Friend is drawing my attention, but I will move on.

Most politicians in the 1970s and 1980s knew that we would have a problem in the 1990s and beyond because of an ageing population and early retirement. I remember the big desire of people many years ago to retire in their 50s because they wanted to enjoy leisure and pleasure having come through the war years. Therefore, the problem with funding pensions should be nothing new to the House. Politicians over the years, particularly in the 1980s, did not do very much about it. In fact, instead of helping the situation, they created an aggressive climate.

The hon. Member for Sutton Coldfield (Mr. Mitchell) said that he would not put his trust in state schemes. Considering recent events and the history of the private sector, I am not so sure that I would place too much trust in private schemes either. The issue is very much about striking a balance.

Some of my hon. Friends have said that, on the one hand, the Opposition have accused the Chancellor of taking £5 billion a year out of pension funds, but on the other hand have omitted to say that that was in taxes on dividends. Opposition Members should also remember that the public have a big grievance over privatisation of the water industry, for example. They have seen exorbitant profits made and previous Governments did nothing about it. The Chancellor used that money to fund a number of social schemes, including the fight against drugs, better education to get kids off the streets, and better social services, which were welcomed by many people outside the House. The money was therefore put to good use—it should have been spent in the 18 years in which the Tories were in power.

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Employers gained pensions holidays and the £18.5 billion that one of my hon. Friends mentioned earlier. We have not discussed this, but employers in the 1980s were virtually allowed to do what they liked with pension surpluses—contributors did not have much of a say. Some years ago, I introduced a private Member's Bill that would have given pensioner trustees a say in how such money was spent by companies. Indeed, in some areas, people did not receive a pension—they lost it because companies plundered pension schemes, then went bankrupt. I am sure that hon. Members remember some of those companies.

There was also what I call a big sell in the mid to late 80s, when some of the largest companies in the country encouraged the labour force to leave the state scheme and go into a private one. In the past two or three years, people have retired only to find that they have not got the pensions that they thought they would get. The Opposition may attack us, but I have not heard them propose anything—I may be interpreting them wrongly—except for privatising the state scheme. That may be why the hon. Member for Sutton Coldfield does not trust the state scheme—that is all part of the Opposition's psychology.

The Liberal Democrat spokesman drew attention to the fact, slipped in by the Conservative spokesman, that the Conservatives would reduce the number of benefits for pensioners from three to two. Which one will go? Will it be housing benefit? Will it be amalgamated with another benefit and then reduced? The Opposition owe the House an explanation of exactly what they intend to do. The Opposition agree with certain things that the Government are going to do, but they have not spelt out their policy to us or the country. It is no good them criticising us if all that they can say is, "Well, we are only two or three years away from a general election. We are just working up our policies." I am afraid that that does not wash.

In the west midlands, new employees at a number of companies—including the Caparo Group, which has already been mentioned, and Peugeot—are not allowed to enter the company scheme. Moreover, existing occupational schemes are being changed—I know that trade unions are involved in negotiations on that. We can see the trend that major companies are following—they want to ditch occupational pension schemes which, by the way, were a component of wage deals many years ago. When the Opposition talk about the proportion paid by the employer and the employee, they should remember that that calculation came into wage deals. Someone would ask for an increase of 7 or 8 per cent., but would settle for 4 or 5 per cent. On that basis, they would either get extra holiday or a decent occupational pension. The Opposition tend to forget that.

In conclusion, our debate has been worth while. It could have been part of a broader debate, but no doubt we shall return to these issues when we discuss the general welfare of pensioners and proper packages for them, which I touched on earlier. However, I welcome this Opposition debate. Usually, when someone calls for a debate, they have some policies that they would like to introduce but we have not heard anything apart from agreement, and minor disagreements, with the Government. All in all, the debate was long overdue and well worth while. I hope that the Government take note of what Back Benchers have said, although I do not expect them to introduce changes overnight. However, I hope that my colleagues

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realise that we can offer all sorts of pension schemes, whether private or state, but people want a decent pension to live on.

7.4 pm

Paul Holmes (Chesterfield): We have heard a great deal about the Government's overall pensions policy and its failings. By contrast, I want to focus on a specific aspect of pensions policy—what happens to company pension schemes when a company hits financial difficulties and perhaps goes into receivership? How transparent are those schemes and are they adequately regulated? I shall give two examples from my Chesterfield constituency, which are relevant to every individual who pays into a company pension scheme anywhere in the country. They are also relevant to Government policy, which aims to encourage greater reliance on private pensions while running down the inadequate basic state pension.

The Minister for Pensions, for example, told Parliament on 12 November:

The Minister said that that would be achieved with a package of measures, better information for current and future pensioners and better regulation of the pensions industry. The experience of United Engineering Forgings and Dema Glass in my constituency, however, shows that at the moment, company pension schemes are not transparent enough and are not adequately protected. If those examples are added to the scandalous mis-selling of pensions in place of SERPS, the mis-selling of endowment mortgages and the failures of Equitable Life, it is clear that people's private investments and savings for their retirement are not adequately protected. How can the Government expect private individuals to invest more and rely more on private schemes?

At UEF and Dema Glass in Chesterfield, the final salary pension schemes were initially in surplus—by 120 per cent. in UEF's case—and were used to fund early retirement with an enhanced pension as a way of streamlining the work force. When the companies began to experience economic difficulties, causing a shortfall in the pension funds, the work force were persuaded, through misleading information, to continue and even increase their payment into the funds, with assurances that that would safeguard the schemes for the future. When the companies closed or went into receivership, the funds were inadequate to pay pensioners the money that they were owed from pensions that they had paid into—in some cases, for nearly 40 years. To add insult to injury, the administrators of the respective schemes took their extensive fees and costs from the dwindling and inadequate pension funds.

I shall give some examples of the way in which people in Chesterfield were hurt by those scandals. On 11 September 2001, I visited a constituent on her 60th birthday. She was not celebrating, however, as she had discovered that far from retiring at 60 with a lump sum from the Dema Glass pension scheme, she would not be paid that money and would only be paid a reduced pension after she reached the age of 65. She told me:

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My constituent's daughter was also present at our meeting. She is in her early 20s—exactly the person, we are constantly told, who is being targeted by the Government to save for retirement. She was about to start paying into a company pension scheme run by the reputable international retail firm for which she worked in Chesterfield. However, she asked me what was the point—the company, which seemed successful, might not be able to pay out in 30 years' time, just as Dema Glass, once a major Chesterfield company, had seemed a safe bet for many years, but was now bankrupt and could not pay out from the pension funds. So much for the Government encouraging more private pension savings, especially among the young.

An employee at UEF Chesterfield Cylinders wrote to me:

Finally, another employee of UEF Chesterfield Cylinders branch—a Labour councillor, by the way, which shows that this is not a partisan issue—told me of his disillusionment at the fact that after nearly 40 years of paying into the company pension scheme to guarantee a secure retirement, he had effectively been robbed, when it was too late in his working life for him to do anything about it.

I have raised these matters in detail on a number of occasions. For example, I wrote at length to the Minister for Pensions on 26 November, and I asked him a question on the Floor of the House on 28 January. On those and other occasions, I have simply received assurances from the Government that measures already existed to protect such pension schemes.

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