State Pension Credit Bill [Lords]

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Maria Eagle: The difficulty is that, at a certain stage, women cannot accrue more rights. If a man can receive money under an arrangement that allows him to accrue more rights, that inequality would be open to challenge under the equal treatment directive or the Human Rights Act 1998. It would not be responsible for any Government—I am sure the hon. Gentleman would say the same if he was a Minister—to implement legislation that was open to such a challenge.

Mr. Webb: I appreciate that; I suspect that it boils down to a matter of legal opinion, and I am not qualified to adjudicate on that. However, in principle, we have not built in a structural inequality; we are treating men and women in the same way based on their accrued pension rights to date. The Under-Secretary is saying that women cannot accrue any more, but that is about the future. The critical point for me about the amendment is that, when filling out the forms, one would not need to know a person's gender to work out their savings benefit entitlement. Whether male or female, the sums would be done in the same way; the form would ask what was the applicant's accrued state pension right to date. However, I shall not pursue that point; I accept that the hon. Lady will have received legal advice that even that is somehow discriminatory.

I am grateful for the estimate of £200 million provided by the Under-Secretary. Is that money only for women aged between 60 and 64 with savings, or is it also for men, as proposed in amendment No. 2?

Maria Eagle: It is for both.

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Mr. Webb: It would be helpful to know, not necessarily immediately, the breakdown of that £200 million. I am thinking of the 300,000 people who are women aged between 60 and 64, who will have heard the Secretary of State, who think that they will be rewarded but who will be disappointed. Perhaps she can clarify how many of those 300,000 are women who fall into that category. That would help us to assess how important the amendment is. If most of those people are women who think that they are getting something when they are not, that would add weight to the argument; if only a few of them are, the argument would be much weaker.

The Department is fond of emphasising that many people stop work well before 65. Many men between the ages of 60 and 64, who are not earning or well off, may have saved, but they will get no reward. Many people retire early, stop work due to ill health or whatever, and we must support them and encourage them to save.

Maria Eagle: About one third of people between 50 and retirement age are not economically active. They are, however, on benefit, and the Government support them. They do not get pension credit because they are not old enough.

Mr. Webb: The point is that 60 to 64-year-old men get pension credit, but not the savings credit element. The system says that we should support them, but that we should not reward them for saving. The thrust of the Government's argument is that we should now reward people for saving, but that seems out of kilter with the message that we should not reward those who do so, including women pensioners.

I shall not pursue the point further. The Under-Secretary has given careful responses to the points that we have raised. I may seek legal opinion on whether the provision could be open to challenge, because this is a fundamental question. At this stage, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Clappison: I beg to move amendment No. 21, in page 3, line 7, at end insert—

    '(2A) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each year thereafter lay before Parliament a report setting out—

    (a) the number of persons with a withdrawal rate of 100 per cent. in respect of income beneath the savings credit threshold, and

    (b) the total value of the income concerned.'.

The Chairman: With this we may discuss amendment No. 5, in page 3, line 26, at end insert—

    '(6A) Such regulations shall provide that, in the calculation of qualifying income, a claimant may substitute for his actual rate of retirement pension an amount equal to the rate of retirement pension that the claimant would have been entitled to if the provisions of paragraph 5(7) of Schedule 3 to the Contributions and Benefits Act (home responsibilities protection) had been in force since the claimant attained the age of 16.'.

Mr. Clappison: It is a great pleasure to serve under your chairmanship again, Mr. Griffiths. I begin by craving your indulgence for a moment. I should be able to deal with my amendment in short order, but it is grouped with an interesting amendment in the name

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of the hon. Member for Northavon. Given the speed of our proceedings this morning, I am not sure whether we shall complete our consideration of the amendments by the time we adjourn. I do not want to hurry the Committee in any way, but I must leave the Committee at 11.30 am to speak in a debate in another part of the House. My hon. Friend the Member for Daventry has agreed to deal with the amendments after that, if we are still debating them.

Amendment No. 21 is straightforward and deals with the issue, on which we have touched, of those with a 100 per cent. withdrawal rate in respect of income beneath the savings credit threshold. We know that a number of people fall into that category, and it would be useful to know just how many do. The Government might be as interested in that as we are, because part of the justification for introducing the savings credit is to remedy the disincentive created by the operation of the minimum income guarantee on its own on anyone with savings that take them up from the basic state pension of £77 to the minimum income guarantee of £100. That is anyone with savings of £23. Under the minimum income guarantee, such a person would receive no benefit at all from their savings if there was no savings credit. I think that the Government were adverting to that in their consultation paper, when they said:

    ''The third—and crucial—stage of the Government's reforms is the introduction of the Pension Credit. There is inevitably a tension between the need to ensure there is a level below which pensioner incomes do not fall, and the need to ensure that today's workers have a clear incentive to save.''

A 100 per cent. rate of withdrawal for that £23 of savings does not, however, offer any or even an adequate incentive to save: it offers no incentive, because the money is taken off at the rate of 100 per cent.

Even after the savings credit has been introduced, some people will still face the 100 per cent. rate of withdrawal. We have covered this issue already, and I do not want to go over old ground, but I should remind the Committee of the facts. The people who fall into this category will include women between the ages of 60 and 65 who have savings and are entitled to the guarantee element of the pension credit, but who receive no benefit for their savings, and people of either sex who have a less than full entitlement to the basic state pension. We have been over that ground, and I need not repeat the point as I am sure that the Committee has it in mind. The point of the amendment is that we need to know how many such people there are.

Mr. Webb: Our amendment No. 5 has been grouped with amendment No. 21, which was moved by the hon. Member for Hertsmere (Mr. Clappison). Amendment No. 5 would tackle a group of people who would be covered by amendment No. 21—women with incomplete contribution records.

I should welcome the information that is asked for in amendment No. 21, which would be helpful. Amendment No. 5 would do something slightly different. I mentioned on Tuesday that I am concerned about women pensioners. All Committee members would agree that, both in the past and

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present, women pensioners have had a raw deal. When considering poverty and pensioners, one first considers elderly women and widows. I am always looking out for the effect that measures will have on women. All too often, Parliament has failed to think through the effect of pension measures for women.

One group that society has historically not valued is women with caring responsibilities. The Government are fond of saying that measures such as the state second pension show their future recognition of the value of caring, and that that recognition will be reflected in the pension scheme in decades to come. Such changes take decades to work through, and women who are coming up to pension age now have the historical baggage of the past 40 years of our society bound up in their pension entitlement.

A core example is that of a woman who will hit 60 just as the state pension credit is introduced in October 2003. We must consider when she had her child-bearing years, for want of a better phrase. Home responsibilities protection came in 25 years ago when she was 35, so it is a reasonable assumption that many women now hitting 60 would have had most, if not all, of their children before home responsibilities protection came in. In other words, the state pension entitlement of any woman hitting 60 who has had children is likely to be depressed by years of caring.

The system compensates such women to some extent, because if they are single, the means test, or guarantee credit, will top up the pension. Obviously, if they are married, they can get income protection from their husbands' contributions. Even so, many women are reaching pension age with an incomplete contribution record. How should that be treated for the purpose of the savings credit? That is what our amendment is about. We cannot re-write history; these women took time out of the labour market to bring up children at a time when social security did not value that. They brought up children probably in the 60s and early 70s, and they were wrecking their pension rights when they were doing so.

Some women opted for the married woman's reduced stamp and saved themselves money when they were contributing. Some of them will have understood that by doing so they were foregoing a future state pension entitlement, but I have clear evidence that many of them did not understand that. I could give many examples, chapter and verse—although I shall not detain the Committee by doing so—from hundreds of women from around the country who have written to me and said, ''I came back after my honeymoon, and the payroll said, 'You're married, love, so you go on the married woman's stamp.'''

I am told by the Department that those women had to sign a form, but let us face it, we all sign forms, particularly when we are not very experienced in the workings of the tax benefits system. In many cases, the women signed because the payroll told them that they had to, and many of them did not appreciate what they were doing to their future pension entitlement. Those women are now approaching pension age and write to say that they are astonished when they send off for the pension forecast that we have been talking

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about, and find that it comes back with pension entitlements worth pennies, literally. I have copies of such pension forecasts. Those women had no idea that that was coming down the track.

How will such women be treated under the savings credit? They must supplement their basic pension entitlement with any savings that they have in order to bring them up to the pension level before they are rewarded for their savings. I gave an extreme example of a woman who is entitled to only pennies when she reaches the age of 60, and I have documentary evidence that such women exist.

 
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