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Lord Higgins: I wonder if I may press the Minister on one or two matters. Several of her remarks threw a new light on the present situation as opposed to what we previously believed to be the case. What she has not done is to explain why the Government cannot bring forward in this Bill the state second pension. As I understand the situation from previous statements, it has been previously anticipated that the state second pension would not come into operation for some five years after the stakeholder pension. Can she say whether that is so or not?

The other point the noble Baroness made which is of considerable interest relates to the fate of the people in SERPS. The noble Baroness is now suggesting that some 2 million people who are now in SERPS will move into stakeholder pensions. Perhaps she will elaborate on that a little given the different structure of the two measures. As regards the others who are in SERPS, will they be able to remain in a SERPS system or will they be compelled to move to the state second pension?

Are the Government delaying implementation of the state second pension because of the manifesto commitment, or is that being done for some other reason? The comments that the noble Baroness has just made seem inconsistent with that manifesto commitment; namely, that the Government propose to legislate in the next Session of Parliament--not the next Parliament--to introduce the state second pension. I hope that the noble Baroness will clarify those points.

Baroness Hollis of Heigham: I said that we have no intention of affecting accrued SERPS rights. They will continue to exist and they will be protected. However, as the state second pension and/or the stakeholder pension come into play--particularly the state second pension--those rights will be carried over into the new pension format. In other words, SERPS will not continue to run in parallel; it was never intended that it should. The introduction of the state second pension is planned for April 2002. However, that is subject to time being made available to introduce the primary legislation. Should all go well--I have no reason to doubt that it will not--and subject to legislative time being available, I hope that we shall move as quickly as possible from consideration in this Session of the stakeholder pension to the introduction of the state second pension.

Lord Higgins: Would that mean that people on an earnings-related pension--namely, SERPS--would go into the state second pension which is not earnings related?

5.15 p.m.

Baroness Hollis of Heigham: They would do so only if that would be to their financial advantage. In other

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words, the choice is available to go into a stakeholder scheme. Someone who at the moment earns £3,500 or £4,000 a year frankly receives pennies out of SERPS. Under the state second pension the return for someone who currently earns about £3,000 or £4,000 a year would be four times what they would currently receive under SERPS. Under SERPS someone on £3,000 or £4,000 a year might receive only £11. However, he or she would receive about £40 under the state second pension. The state second pension is infinitely more generous than SERPS every step of the way. We are not talking about a reduction of rights but rather a huge increase in returns.

Lord Peston; Before my noble friend sits down, I hope I may ask her one other question which I forgot to ask earlier. I forgot to ask about the element of compulsion with respect to the stakeholder pension. I think of someone who is starting work rather than someone who is already in work. Is it the Government's view that everyone who is in work must now compulsorily have a stakeholder pension? According to my reading of the Bill, that matter is slightly ambiguous.

Baroness Hollis of Heigham: If the straight question is whether everyone in work will be compelled to be a member of a pension scheme, the answer is no. We do not propose that at the moment. We have consulted on this matter and there has been quite a lot of support for that proposal. However, I want to qualify that by adding a few more points. First, anyone who is in employment--that is, an employee--is, by virtue of the current SERPS arrangements or the occupational scheme arrangements, already effectively compelled to belong to a pension scheme. My noble friend Lady Turner who knows so much about pensions nods in affirmation. If employees do not have access to an occupational scheme, they enter SERPS. Therefore any employee is already in a pension scheme and our proposal will not reduce that provision.

Secondly, as my noble friend Lady Crawley rightly said, by virtue of the minimum wage, many more women who hitherto have not been over the lower earnings limit, and therefore have been unable to enter contributory pension schemes, will be able to do so. About 85 per cent of married women in work and 88 per cent of unmarried women in full-time work will pass the lower earnings limit. Between 60 and 70 per cent of those in part-time work will pass the lower earnings limit. They will come into a contributory scheme and therefore into a compulsory pension scheme, if you like, in so far as they are employees. As I believe we all recognise, the difficulty concerns whether compulsion should apply to those below the lower earnings limit; that is, those low earners who are perhaps working six or eight hours a week and earning, say, £2,000 a year. One could end up guaranteeing them a pension which is more generous than their earnings. There is a real dilemma there.

The second problem concerns how best to help those who are self-employed. If we were to make pension membership compulsory, I suspect that the group on

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which that would bite most would be the self-employed. Many self-employed people regard their business as their pension. They believe that to "top slice" money which they consider could be more appropriately invested in their business and put that into a pension scheme would not be in their best interest. We have consulted on this matter. As I say, at the moment we do not propose to go down that route, but we are not closing the door on it. We hope that the new stakeholder scheme will be sufficiently attractive to encourage the self-employed to take out pension provision to an extent that has not been the case in the past. If we find that we are unsuccessful in that aim and that other avenues need to be explored, I promise the Committee that we shall reconsider the matter. We want to ensure comprehensive pension coverage. I believe that all Members of the Committee will understand the dilemmas that this Government and the previous administration--I refer to the Pensions Act 1995--have faced.

Lord Peston: Some of these matters will be discussed when we discuss the next amendment which I gather my noble friend Lady Turner will put before the Committee. However, I have to say that in my judgment young people are incapable of taking a rational decision that will affect them 40 years ahead. Some time ago I remarked in this Chamber that I was incapable of taking such a rational decision in my youth. I am delighted that I had no choice in the matter and that I was forced to have a pension, the result of which is that I am not on the breadline now. I believe that we cannot let this issue of compulsion drift. It is hopelessly naive to assume that people can take the right decisions with regard to provision 40 years in the future. That is the only reason I have intervened, but further points can be raised when the noble Baroness, Lady Turner, moves the next amendment.

Baroness Castle of Blackburn: Has the noble Baroness finished her comments? One never knows; it goes on, does it not?

Baroness Hollis of Heigham: If the Committee has finished with me, then I have finished.

Baroness Castle of Blackburn: We have had the initial run of a worthwhile debate, not least because it enabled the noble Lord, Lord Peston, to get many of his repressions off his chest! I believe that the discussion has revealed the unsatisfactory position in which we find ourselves in that we are having to discuss on the basis of a narrow piece of specific legislation, a wide range of rather generalised promises. My amendment does not seek to say that the enforcement of the different aspects of pension policy must all take place at the same time, but that we must have the Government's whole proposition in front of us in legislative form. It is only when we come to draft the measure in statute that some of the vagueness disappears and we find that we do not like what we see.

I stand by the claim I made that we ought not to have been asked to deal with one tiny slice of legislation. The position is also unsatisfactory because it enabled

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the noble Baroness, Lady Hollis, to give a wonderfully eloquent tirade about the wonders that are to come in the light of the Green Paper, when I had narrowed my contribution to the question of timing and the context of the measure. I do not want to filibuster because I am anxious not to give the Government justification for keeping us all here until the early hours on the grounds that we were all trying to wreck the Bill. If it comes to wrecking the Bill because of filibustering, I think the noble Baroness had better measure the length of her own speeches and compare them with mine!

I think it was worth while to have this preliminary run. The whole issue of pensions--as, God knows, I know--is extremely complex. I do not intend to press my amendment for one very specific reason: it has been pointed out by the noble Lord, Lord Higgins, and the Minister that my amendment is wrongly drafted. They seemed puzzled as to why I had chosen the earlier document to quote in the amendment. Frankly, I was a bit puzzled when someone read it to me. There is a simple explanation. The Committee will be tired of hearing me say that I now suffer from very low vision and that everything has to be read to me. When I detailed the job I said, "I am talking about the Green Paper; look at the title", and the wrong one was looked at. I am not trying to push the blame on to anybody else. It was intended to be a reference to the Green Paper, so perhaps I will not be accused of inconsistency.

Of course I have read the Green Paper; of course it is full of noble sentiments--but the Committee will forgive me if I am a bit cynical. The glossies with which we have been inundated are no substitute for the hard statutory force of policy. I am not surprised that people have difficulty in finding their way through the glossies that come from the Government. After all, the manifesto glossy had a reference to SERPS which is now being interpreted in rather different ways than seemed to be intended.

With the permission of the Committee, I will withdraw the amendment with a view to living to fight another day.

Amendment, by leave, withdrawn.

Clause 1 [Meaning of "stakeholder pension scheme"]:

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