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Lord Higgins: I thank the noble Lord for allowing me to intervene. It would seem that the ombudsman is of the view that the burden of proof is reversed both as regards whether people were misled and whether they lost out as a result of that. Again, perhaps I may quote from the letter which I believe is not out of context:
Lord Goodhart: I am grateful to the noble Lord, Lord Higgins. I would strongly support his proposals, as I support the proposals of the amendments to which I have added my name. I hope that the Government will move further on this, at least in the sense of telling us what will be laid down in the regulations and that those regulations will recognise that the burden of proof on either issue cannot fairly rest on those who wish to claim.
Baroness Hollis of Heigham: All these amendments refer to the proposals made by the Government to address the problems of inherited SERPS, both for widows and widowers, and of course a problem that has also been inherited by the Government. We have debated this subject before and, once the regulations have been drafted, no doubt we shall debate it again.
Perhaps I may deal first with Amendment No. 124 which seeks to overturn completely the change that would halve the amount of SERPS that can be inherited. We believe the policy to be essentially sound, bringing state provision more closely into line with that required of private pension schemes. Our clearly stated aim for pensions is to reverse the current position where 60 per cent of expenditure is provided by the state and 40 per cent by the private sector. It would not be in keeping with that aim to create incentives to stay in the state scheme.
The cost of not implementing the change is estimated to be £23 billion over a 50-year period. The sums are enormous. That would represent a huge burden for future contributors on expenditure that is not well targeted as the poorest widowed pensioners would see no gain at all.
Lord Higgins: The figure mentioned by the noble Baroness is almost exactly the same as that for the proceeds from the mobile phone licences, only that receipt was instantaneous rather than spread over 50 years.
Baroness Hollis of Heigham: It is also almost the same, although not quite the same, as the sum spent on retirement pensions and SERPS put together, which runs at a little over £32 billion. In terms of proportion, over 50 years this amendment would almost double the sum of money spent on pensions. That puts into proportion what it will cost to rectify a mistake that we inherited.
Baroness Hollis of Heigham: I believe that happened on the last occasion that I made a speech on this subject. However, whether that speech was made on this Bill or on a Statement, I should not like to say.
The inherited SERPS figures are discounted over 50 years; namely, they return to today's prices. However, the effect over 50 years seemed to be the most helpful way of passing the information to noble Lords. It is a huge burden for future contributors and it is not well targeted.
Furthermore, those people who did receive the correct information and have spent money buying alternative arrangements would rightly feel aggrieved if it turned out that they need not have done so. As we have said on previous occasions, the change to 50 per cent inheritance will happen, but not until October 2002. People who have been mis-advised will be able to apply to the inherited SERPS scheme for further protection. Those who have not been mis-advised will have two and a half years in which to reconsider their financial arrangements. We think that the scheme we have proposed represents a fair balance between the interests of pensioners and contributors.
Lord Rix: I am grateful to the noble Baroness for giving way. Can she explain the position for those who are retired and unable to make what is considered to be a legitimate claim, who have received no information and who have made no alternative arrangements? How can they do so between now and October 2002 if they are already retired? Obviously, the majority of them will have no capital available with which to buy extra insurance.
We repeated in March the Government's Statement about inherited SERPS. In the subsequent debate, the noble Lord, Lord Higgins, was quick to highlight the issue of where the burden of proof should lie in a person's application for redress under the scheme. Along with the ombudsman, he urged that it should lie with the department. The noble Lord, Lord Goodhart, then followed, quoting from the ombudsman's report and urging the Government to accept that people who took no action and who would have difficulty in demonstrating that they would have acted differently if correctly advised, should be catered for under the scheme.
The amendments reflect both those points but I hope Members of the Committee will agree with me that they are largely unnecessary. Let me refer the Committee to words used both in another place and by myself in the Statement to this House:
The noble Lord, Lord Higgins, said that the ombudsman said that the department must prove that the individual was misled. Not quite. The ombudsman said that the burden of proof on the department would mean that, where an individual maintained that he had been misled, it would be for the department to produce proof to the contrary. I suggest it would be wrong not to expect people to answer any questions about the nature of the advice they received. However, I repeat that the Government accept that the burden of proof lies with the department.
Amendment No. 135 would require us to presume that all applicants under the scheme received incorrect or incomplete information. It does not allow for the situation which I have already bounced to and fro with the noble Lord, Lord Rix; that is, a situation in which a person neither received nor requested any information.
Amendment No. 138 takes a similar line, but only in respect of certain groups of people--those who are already pensioners or incapable of work when the change is due to take effect in October 2002, and those
It is the Government's wish to provide redress to those who were misinformed. In other words, the protected rights scheme rights the wrong that was done to people from 1988 onwards. It does not right a different wrong; that people would like to have 100 per cent pensions even though in fact all private schemes are 50 per cent. It does not right the wrong that they were in ignorance of the law because in all areas of life people may be in ignorance of the law and that is no excuse. It rights the wrong that people were given misleading advice and as a result either did, or might have, acted to their detriment or failed to act to correct that problem.
We simply cannot accept that those who were not misinformed because they never asked for any information should be included. That is tantamount to saying that any citizen claiming ignorance of any new law should be given exemption from it. That clearly cannot be right, whether it is about the law on seatbelts, which are now compulsory, including rear seat belts, TV licences or the like. We have to make the assumption for all of us that ignorance is no excuse in terms of an apology for failing to observe the law. We expect that to be a general convention in our behaviour.
I take the point that we want people to be aware of policy changes, particularly on pensions because it is a long-term investment. And at some point in the future we hope to be able to send people a regular statement of their likely state pension entitlement on retirement, and we could look at the possibility of including information about future policy changes with such statements. We have no wish to withhold information from people, but we are not liable if, in that sense, people have not familiarised themselves with it.
I have already repeated the Government's acceptance of the recommendations made by the NAO and the ombudsman. In addition, I can reassure noble Lords that the department will be consulting widely on how to bring them into effect. We have already begun that process and, through that, I am aware of the proposals made by the noble Baroness, Lady Greengross, and the noble Lord, Lord Rix, concerning people who will be unable to pursue a claim to the scheme because of mental disability. We intend that the appointee procedures that apply to benefit claims where a person cannot act for himself or herself will be a feature of the scheme. However, in this situation, I can appreciate that a successful claim will turn on past events and so appointee action may be limited.
The inherited SERPS scheme must and will provide redress to individuals who have received incorrect or incomplete information and relied upon it. The regulations which establish it will be extensively consulted on and debated. But the kernel of the problems of the inherited SERPS scheme was misinformation by the department: for that, the department is to blame. That is why our solution addresses that problem. Those who were misinformed and who suffered, or might have suffered, a loss will have their former rights fully protected. On that basis, I urge noble Lords to withdraw their amendments.
Lord Rix: Perhaps I may ask the Minister to explain what she means by "incomplete information". I am not quite sure what it means. For example, does it mean that the phone went dead in the middle of the conversation? Alternatively, does it mean that the typewriter ribbon ran out? I am not quite certain as to the meaning of the phrase "incomplete information".
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