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Category: Pensions

  • David Willetts – 2002 Speech on the Pickering Review

    David Willetts – 2002 Speech on the Pickering Review

    The speech made by David Willetts, the then Shadow Secretary of State for Work and Pensions, in the House of Commons on 4 July 2002.

    I declare my interests that appear in the Register of Members’ Interests and thank the Secretary of State for an advance copy of this very important report.

    Let me make it clear that we welcome the report, just as we welcomed Alan Pickering’s review when it was established. I join the Secretary of State in expressing our respect for the expertise and wisdom that Alan Pickering brought to the exercise. He has produced a valuable report.
    Conservative Members respond to the Secretary of State’s comments by saying that we understand that the regulatory regime for pensions must be stable to ensure long-term planning, and we will contribute constructively to the debate about the best ways of cutting the burden of regulations on pension funds. That is an obligation on all hon. Members on both sides of the House.

    The starting point of the debate has to be a frank recognition of the scale of the problem that faces funded pensions. For years, Ministers have been shockingly complacent, saying that everything was all right when it clearly was not, and citing statistics that they have since admitted were seriously misleading. The Secretary of State should accept the stark warning in Alan Pickering’s report that

    “without change, the current trajectory suggests less private pension provision in the future.”

    That warning lies at the heart of his report.

    We shall obviously want to study the proposals in the Pickering report very carefully, but I can tell the Secretary of State that we welcome the themes that are expounded in it. For example, we support the call for a proportionate regulatory environment, and we welcome Alan Pickering’s vivid expression that a pension is a pension is a pension. There are too many different forms of pension, and it is right to try to simplify them. It is also true that too much pension provision has become a form of archaeology, with pension providers delving deep into the past to identify the date on which a pension was first set up in order to understand the tax and regulatory regime around it. That needs to be tackled

    Can I press the Secretary of State for more information about the timetable to which he is working? The recommendations will be pointless unless the Government act quickly. As Alan Pickering said in his report

    “Time is not on our side.”

    Yet the Secretary of State offered us a second Green Paper on pensions. I have here the Government’s previous pensions Green Paper, which was published nearly four years ago. That contained the Prime Minister’s promise that his Government would increase the proportion of pensioners’ incomes that comes from private savings from 40 to 60 per cent. Since then, the Government have made no progress whatsoever towards achieving that objective. Instead, they introduced stakeholder pensions that were supposed to go to the 5 million people in their target group, although they reached only about 100,000, and scheme after scheme has closed. Why should the second Green Paper make any progress, given the comprehensive failure of the first?

    If we do not get legislation until 2004, as has been suggested, the changes will not be implemented until 2005 at the earliest. Yet, if pension scheme closures carry on at their current rate, there will not be any pension schemes open to new members by the time that the Government finally get round to implementing the proposals in Alan Pickering’s report. Will the Secretary of State take this opportunity to inform the House of the likely timetable of any legislation to implement proposals for reform?

    May I also press the Secretary of State for more information about the burden of regulation, which is still increasing? Since the Pickering review was established in September 2001, we have had 251 pages of new regulations. We are still waiting for the final results of the Myners review. It is good to see a Treasury Minister on the Front Bench because the Treasury, in its commitment to implementing Myners, has been threatening pension schemes with yet more regulation. There is a useful warning in Mr. Pickering’s report: he hopes that the people taking forward Myners—he might be thinking of the Financial Secretary—will

    “keep in mind our arguments for simplification.”

    Can we have an assurance from the Secretary of State, as the minimum to show his good will on this exercise, that more regulation will not be imposed on pension schemes while we wait for his supposedly deregulatory legislation? Without such an assurance, it will be difficult to take the Government’s commitment to deregulation seriously.

    The terms of reference for Alan Pickering’s report were very narrow and excluded some of the main factors that have been driving the crisis in funded pension provision. Why was Alan Pickering unable to comment on the structure of state pensions, including the state second pension, which left-wing think tanks such as the IPPR are now saying should be abolished before it has even begun?

    What about the burden of ever more means-testing of pensioners? Why could not Pickering comment on the spread of means-testing, which will soon result in more than 50 per cent. of all pensioners finding themselves on a means test? If so many pensioners are to face means tests, which will mean that they are not fully rewarded for their saving, does the Secretary of State recognise the serious danger that the main beneficiaries of the review could be the richer half of the population? They will not be trapped by the means test that he is imposing on the less affluent 50 per cent. of pensioners.

    What about the financial burdens that the Government have placed on pension funds which are their direct responsibility? What about the £5 billion a year tax on pension funds, and the £1.5 billion a year cost of the insufficient value for the contracted-out rebate? Does the Secretary of State recognise that that adds up to £6.5 billion a year being taken from our pension funds? That is the real reason why our pension funds are closing, and nothing that he said today showed any willingness to recognise the scale of that problem and what needs to be done to tackle it.

  • Andrew Smith – 2002 Statement on the Pickering Review

    Andrew Smith – 2002 Statement on the Pickering Review

    The statement made by Andrew Smith, the Secretary of State for Work and Pensions, in the House of Commons on 4 July 2002.

    With permission, Mr. Speaker, I should like to make a statement on the Pickering report that was published this morning.

    The report is the culmination of nine months of hard work by Alan Pickering and his team. I should like to thank him and also everyone who took the time and effort to submit their views—some of whom are here today.

    In his report, Alan Pickering acknowledges the encouragement that he received not only from my right hon. Friends the Secretary of State for Transport and the Minister for Pensions, but also from the right hon. Member for Hitchin and Harpenden (Mr. Lilley) and the hon. Members for Havant (Mr. Willetts) and for Northavon (Mr. Webb).

    Pensions simplification has to be at the heart of any strategy to encourage greater pension provision. We need to deal with the complexities built up over the years by successive Governments.

    Alan’s report makes 52 recommendations. The key ones include: a new pensions Act to consolidate all existing pensions legislation; a new more proactive regulator; a better, more targeted approach for communicating with pension scheme members; more flexibility to modify schemes; allowing employers to make membership of their occupational pension scheme a condition of employment; and the ending of compulsory indexation for defined benefit pensions, and compulsory survivors benefits.

    The report, together with Ron Sandler’s proposals, announced by my hon. Friend the Financial Secretary on Tuesday, represents the first stage of a comprehensive review of occupational and personal pension provision.

    The Government will take a radical look at the issues, together with the results of the Inland Revenue review of tax simplification, when that is completed. In the autumn we will come forward with our proposals in a Green Paper.

    That will initiate a wide-ranging consultation. It will look at private pensions policy in the round, including the opportunities open to people around retirement, and will set out the Government’s proposals to enable people to build up more pension savings.

    Alan Pickering’s report covers complex issues and includes some tough choices—the inevitable dilemmas faced by all simplifiers. The report presents challenges to us all: employees and their unions, employers and commercial pension providers, the Government and the Opposition. I believe that we will need to be guided by the following principles and objectives, grounded in a long-term approach: fairness; security in retirement; informed choice for consumers; simple and proportionate regulation; ensuring that incentives are effective and well understood; promoting employment among older workers; and flexibility to give individuals more choice about the pace at which they retire from the labour market. I hope that we can secure all-party agreement on those matters.

    The Government believe that pension provision should be based on partnership, which can secure lasting buy-in from all key players. We must strike the right balances between sometimes competing goals. We want the simplicity that enables people to make informed choices without stifling product innovation and competition. We want a proportionate regulatory framework that provides sufficient security for savers while making it worth while for employers and commercial providers to make available good pension products. We need to ensure that we remove unnecessary barriers to employer provision and employer contributions. We also need to make it easier for people to save and make it easier to sell pension products, as Ron Sandler’s report proposed on Tuesday. We need to achieve all that and more against the remorseless arithmetic that tells us that, because we are living longer and want to maintain a good standard of living in retirement, we need to save more or work longer, or a combination of both.

    We wanted Alan Pickering to present a strong challenge to the degree of regulation around private pensions. He has done that—he has made some valuable proposals for simplifying pensions legislation and reducing administrative burdens on both schemes and employers, cutting costs and simplifying choices for individuals. His recommendations also present some tough choices. Take, for example, his recommendation that employers should have the choice to make joining a company pension a condition of employment. Some 16 per cent. of people who could benefit from a company pension scheme currently choose not to do so. Compelling people to join would restrict their choice, but against that consideration, we need to balance the beneficial effects for schemes and the overall effect on extending pension coverage.

    Alan has also made a number of specific recommendations on easements of legislation—in particular, repeal of section 67 of the Pensions Act 1995. Again, that throws up a tough choice. The recommendation would mean that, if employers faced funding constraints on their scheme, they could have an option to reduce future funding costs rather than close the scheme. Of course, that would remove an absolute guarantee against the consequences of change, but might well secure a better outcome for members and the future of the scheme, set against the alternative of its closure.

    Alan also recommends an end to compulsory indexation of pensions and removal of compulsory survivors’ benefits as a condition of contracting out. On first reading, those proposals are not attractive. They go against the drive of the past 30 years to price protect pensions and to enhance survivors’ benefits, but again, in the light of the report, we will need to look carefully at all the consequences.

    As well as the big themes and recommendations to which I have referred, a number of more modest issues are addressed to my Department and others. For example, they include improving the way in which contracting out is administered; streamlining procedures and reducing general administrative burdens; looking at ways better to provide advice through the workplace; and improving information going to pension scheme members. Those recommendations have considerable merit, and subject to the responses that we receive to the report, I intend to take them forward.

    In conclusion, I believe that Alan Pickering’s report offers clear options for simplification and makes a valuable contribution to the debate that we need to have on the next stage of pension reform. We need to face up to the tough choices that he sets out. In seeking to simplify the future we must also face up to the—in many ways harder—challenge of simplifying the past, in that we need to simplify the different regulations that have built up over the years. Otherwise, we will end up adding yet another layer to the existing layer cake of regulation and complexity.

    Alan Pickering’s proposals are radical, ambitious and pragmatic. I urge hon. Members, the public, employers, trade unions and pension providers—all those whose partnership is essential for effective pension reform—to give them full and constructive consideration. The Government certainly will. The acid tests for the Green Paper must be increasing the level of savings for retirement and making a secure occupational pension accessible to as many people as possible.

  • David Willetts – 2002 Speech on Pensions

    David Willetts – 2002 Speech on Pensions

    The speech made by David Willetts, the then Conservative MP for Havant, in the House of Commons on 2 July 2002.

    I beg to move,

    That this House agrees with the Government’s stated aim of increasing from 40 per cent. to 60 per cent. the proportion of pensioners’ incomes that comes from the private sector, but condemns the Government for failing to pursue policies which would achieve this objective and instead imposing a massive £5 billion annual tax on pension funds, and for presiding over the lowest savings ratio since records began; notes that fewer than four in ten final salary schemes are now open to new members and is shocked by the Government’s complacency in the face of widespread concern about the future of funded pensions: and therefore calls on the Government to cut the burden of regulation on pension funds, reverse the spread of means testing among pensioners, reform annuities and provide better incentives for people to save, so that they can enjoy a prosperous retirement.

    I declare my interests, which appear in the Register of Members’ Interests.

    I welcome the Secretary of State for Work and Pensions to his first debate in his new post. I approach his appointment in a spirit of optimism, and hope that he will use this afternoon’s debate as an opportunity to signal a radical shift in the Government’s approach to the crisis facing funded pensions.

    The time has come for the Government to abandon their complacent denial of a problem. For too long, Ministers have had their heads in the sand: now is the time for the new Secretary of State to admit that there is a problem. I am sure that he has now been made aware of the evidence, which is compelling. The latest figures from the Association of Consulting Actuaries show that fewer than four in 10 final salary pension schemes are still open to new members, and that half of those are contemplating closure.

    A wide range of well-known companies have closed their final salary schemes to new members—Barclays, British Airways, British Telecom, ICI, Lloyds TSB, Marks and Spencer, and Sainsbury. We know from the Government’s own statistics that 59 per cent. of recently retired pensioners now have an income from an occupational pension, against 67 per cent. of recently retired pensioners when Labour came into office. Fewer pensioners are now retiring with an income from an occupational pension. The number of employees without a funded pension arrangement has grown from 40 per cent. to 44 per cent in the past two years alone. No wonder the latest policy document from the Trades Union Congress on the subject begins with a stark statement:

    “The UK’s pension system is in crisis.”

    Ministers used to ignore that evidence by citing statistics that purported to show how much we were saving. I hope that after his salutary experience in the past 24 hours the Secretary of State will not make that mistake this afternoon. I welcome his announcement that he will review the Government’s statistics on pensions contributions, but I hope that he will give the House a full account of what has gone wrong in his Department, not once, but twice. First, it got the assets in our pensions funds wrong, and more recently it got the annual flow of savings into our pension funds wrong as well. One mistake might be regarded as a misfortune, but two from the same Department on the same subject looks like carelessness.

    Mr. John Greenway (Ryedale)

    Is my hon. Friend aware that the Association of British Insurers informed the all-party group on insurance and financial services this morning that it calculates that the savings gap is now £27 billion, most of which relates to pensions? Will he look carefully at proposals to encourage employers to operate better schemes?

    Mr. Willetts

    I am grateful to my hon. Friend for that intervention. He is correct about the scale of the savings gap that we face.

    I wish to press the Secretary of State for more information on the two serious errors made by his Department in the past few months. The first mistake was in respect of the assets in our pension funds. Originally, the Government said that at the end of 1999 we had £784 billion in our pension funds—quite a lot of money. Then, without any explanation or prior notice, they produced a revised set of figures that showed that at the same date—at the end of 1999—they had reduced their estimate of the assets in our pension funds to £679 billion. That is a reduction of £104 billion—probably the biggest single change in the history of British economic statistics.

    The sum that the Government managed to lose is equivalent to the entire national output of Portugal, but, fortunately, three and a half months later we discovered that the money had only been mislaid, and it popped up again. The Government put out a new set of figures, announcing that they had discovered, after all, that in 1999 our pension fund assets were worth £812 billion. So the figure for the value of the assets at one date in time had moved around by £150 billion. Then the Government carried forward the series, to show that having been £812 billion in 1999, the figure was down to £765 billion in 2000 and, on the latest estimates from UBS in the City, £684 billion in 2001.

    That would mean that the assets in our pension funds peaked in 1999 and have been in decline ever since. It might be that 1999 was the peak year of our funded pension assets, not to be seen again. That was the first mistake: the Department revealed a £104 billion reduction in the value of the assets in our pension funds, with no explanation whatsoever. That surely should have set the alarm bells ringing about how unreliable the Government’s statistics were, but no.

    We investigated the figures that the Government were producing for the annual flows into our pension funds. Ministers were saying, “Don’t worry. Everybody else might say that there is a crisis in our funded pensions, but we know that everything is all right, because we are saving £86 billion a year in our pension funds.” If that figure were true, if the Government had stood back and thought about it for a moment, it would have meant that almost 9 per cent. of the entire national output of our country was going in savings in our pension funds—enough to buy for every worker in Britain a two thirds final salary pension, index-linked with inflation. The Government were saying, “Don’t worry, £86 billion a year is being saved.”

    We warned the Government, and we were not alone, that those figures were not credible. Let me quote from the chairman of the Association of Consulting Actuaries, who said:

    “We are extremely worried that the impact of the changes that are taking place in terms of future pensioner incomes is being under-estimated by the Government and, as a result, there has been an inadequate policy response.”

    The Secretary of State was quoted in the papers this morning as saying that within 72 hours of being told that there was a mistake in the statistics, he acted. Let me tell the Secretary of State that I wrote to his predecessor on 8 March 2002, telling him about the mistake and setting out in considerable detail exactly how I believed the mistake had arisen. It is not the case that the Department acted within 72 hours; it took 72 days for it to address the fundamental points that I made in the letter to the right hon. Gentleman’s predecessor.

    There is now an unseemly row going on between the Secretary of State and his own officials. The Secretary of State, in a way that is all too typical of Ministers nowadays, is happy to blame everybody but himself. Referring to statistics on pension contributions, he said yesterday in the House:

    “We have now been informed by the Office for National Statistics that there are problems with the series from which they have been estimated in the past”.

    He was blaming the Office for National Statistics, but in this morning’s Financial Times the Office for National Statistics states:

    “The national statistician is not known for his apologies, and there won’t be one here.”

    The ONS is busy briefing that it is Ministers’ fault and telling the press that it warned Ministers that the information was unreliable, but that they nevertheless kept on producing the figures.

    I hope that the Secretary of State will today give us an end to that briefing and counter-briefing between him and his officials and a clear explanation of when they were first warned by the ONS about the mistakes in the figures, what steps they took to correct them as soon as they heard about them and what advice he was given by the ONS when the Department received my letter of 8 March.

    Mr. Patrick McLoughlin (West Derbyshire)

    My hon. Friend referred to the letter that he sent on 8 March. Presumably, a letter sent by the shadow Secretary of State for Work and Pensions containing such serious accusations would have had an immediate reply from the Secretary of State. Can he tell me when he received the reply and what it said?

    Mr. Willetts

    I received a reply that was prompt, but brief and uninformative—exactly the sort of reply with which we are all too familiar.

    Of course, this is not just a matter of whether Ministers have confidence in the advice of their statisticians and whether statisticians have confidence that Ministers will take heed of their warnings. It ranges beyond that, as it also raises the question whether the structure of pensions in our country is right. Many Ministers were trotting out amazing statistics showing how much we were saving in our pension funds and cited them as evidence that the “structure of pensions” in Britain is “right”. If the evidence is wrong, is the conclusion that they drew from that false evidence wrong as well? I hope that the Secretary of State will also refer to that issue.

    Mr. Douglas Hogg (Sleaford and North Hykeham)

    My hon. Friend is coming to the question of the structure of pensions. Will he confirm that a pensioner would have to accumulate a fund of about £100,000 to be better off than he or she would be having saved nothing at all? That is the case because of the deprivation of top-up payments on the basis of the fund.

    Mr. Willetts

    My right hon. and learned Friend makes a very important point on which we have regularly pressed Ministers. The least that people who are considering taking out a stakeholder pension, for example, are entitled to expect is information from Ministers about how much they believe that they need to build up in that pension during their working lives to float them off means-tested benefits. That is the $64,000 question; indeed, the answer might be $64,000, but we have never had any answer from Ministers. The level could be £100,000, but they have never been willing to address the important point that he makes. Again, I hope that we will hear about that from the Secretary of State.

    The real question is not just misleading statistics—something with which we are all too familiar from this Government—but what is going on with the pension funds and pension savings of the people of this country. That is the central question that the House is debating. Before the Secretary of State points it out, I accept that there are many reasons for the decline of final salary pension schemes in this country. I understand that there is a range of factors, some of which are not in the Government’s control. We are seeing improvements in longevity, and I am sure that hon. Members in all parts of the House will welcome that as good news. The fact that people are living longer is a success that we can celebrate. There have also been changes in the labour market that will change the pattern of pension provision.

    We understand that not everything can be controlled by Ministers, but that very fact makes it even more important that the things that they do control are got right; and that, in so far as the Government control the environment in which people plan for their retirement, they get that right. Our central criticism of the Government is that Ministers have got the things that they control—above all, the burden of tax on occupational pensions—catastrophically wrong.

    Mr. Michael Connarty (Falkirk, East)

    While the hon. Gentleman was recounting some of the things that might have had an effect and which Ministers controlled, did he not think that the Conservative Government’s decision to encourage and allow withdrawal of contributions and the taking of holidays by pension fundholders might have caused the massive deficit in the pension funds on which people are now looking to draw for their retirement?

    Mr. Willetts

    I undertake to cover that point later in my speech, but I want to set it in the context of the other changes. If the hon. Gentleman then thinks that I have still not addressed his question, he can come back to me.

    I want to set out the background to the tax decisions that the Chancellor has taken. At the time of the 1997 Budget, when he introduced his notorious stealth tax on our pension funds, he said:

    “Many pension funds are in substantial surplus and at present many companies are enjoying pension holidays,”—

    he was celebrating the very thing that the hon. Member for Falkirk, East (Mr. Connarty) just mentioned—

    “so this is the right time to undertake a long-needed reform.”—[Official Report, 2 July 1997; Vol. 297, c. 306.]

    The Chancellor explicitly linked the tax imposition on pension funds to the fact that those funds were in surplus.

    Last year, when the Prime Minister was challenged on this matter, he told the House of Commons:

    “The value of pension funds has gone up dramatically as a result of the success of the economy. The abolition of payable tax credits was done for the reasons that we stated at the time. It is the right reform, and as a result of the buoyancy of the stock market the value of people’s pension funds has gone up.”—[Official Report, 7 March 2001; Vol. 364, c. 285.]

    The Government justify their tax increase by saying, “Don’t worry, the stock market is going up and share prices are rising; it’s all okay.” But the value of the stock market has now fallen below the level that it was at when the Chancellor originally made that tax announcement in 1997; it has fallen almost to the level that it was at at the 1997 election. Since the justification for the tax has gone, will the Secretary of State tell us what possible reason he can have for imposing this tax on our pension funds?

    Mr. Steve Webb (Northavon)

    The hon. Gentleman has criticised the £5 billion tax on pension funds. Will he tell us how much of that £5 billion would have been put back under the manifesto on which he stood at the last election?

    Mr. Willetts

    Our manifesto made it clear that we wanted to encourage people to save for their retirement. [HON. MEMBERS: “Aah!”] I would very much like to be able to reverse the tax, but the fact is that that money is now being spent. That is why we cannot pledge to reverse it.

    Mr. Chris Pond (Gravesham)

    Conservative Members continually repeat the figure of £5 billion. Will the hon. Gentleman confirm that the Conservative Government took £10 billion out of the state pension scheme while they were in office?

    Mr. Willetts

    I am coming to this important point: we are not talking about a one-off £5 billion. It is £5 billion a year—year after year, ad infinitum. The figure is now £25 billion and rising every year. That is the point.

    Mr. Frank Field (Birkenhead)

    Will the hon. Gentleman give way?

    Mr. Willetts

    I will give way to the right hon. Gentleman because I greatly respect his expertise in this area, but then I would like to make some progress.

    Mr. Field

    Given that the country is worried about its future pension provision, may I make a plea that, once the hon. Gentleman has made these points, he quickly moves on to what the Opposition will contribute to the evolving debate? It is understandable that he will point out the effect of changes in advance corporation tax on the prosperity of occupational pension funds, but does he agree that that was the second blow, and that the first blow was delivered when the Conservative Government changed the tax laws so that funds that were in surplus had to run their surpluses down to 105 per cent. of their liabilities or face penal rates of tax for not doing so?

    Mr. Willetts

    The fact is that all the other changes that have affected pension funds are dwarfed by the scale of the tax increase that the Chancellor imposed in 1997.

    Mr. Field rose—

    Mr. Willetts

    I would like to make some progress now.

    Mr. Field rose—

    Mr. Willetts

    I will give way to the right hon. Gentleman in a moment, but I want to give him one more figure. I respect his expertise and, as he knows, I am very happy to contribute in a constructive spirit to debates on his own imaginative ideas on pension reform.

    I want to make two points. First, it is incorrect to compare the capital value of the loss of the value of shares—the capital effect—which may be hundreds of billions of pounds, with the flow of £5 billion as a tax hit. We have to realise that this is not just a one-off tax hit; it is £5 billion a year. That is why it is so significant. If we calculate the current cost of a £5 billion-a-year tax, we get a very large sum indeed.
    My second point is that Labour Members regularly mention enormous figures for the total fall in the value of the stock exchange. They now seem keen to tell us how much value shares have lost under their management—that is the point that they like to make. They talk as if those shares all belong to pension funds. Pension funds own only about 18 per cent. of British equities, so it is not correct to compare the £5 billion, which is merely the annual effect of the tax, with the £450 billion, which is the total loss in value of all shares, of which only a small proportion are held by pension funds. That is why the tax impact was so great.

    Mr. Field rose—

    Mr. Willetts

    I shall give way to the right hon. Gentleman one more time, then I shall make some progress.

    Mr. Field

    I am doubly grateful to the hon. Gentleman. Is not it true that ACT has had the effect that it has because the Conservative Government forced pension funds to run down their surpluses? Had they not been forced so to do, many more funds would have had greater buoyancy to enable them to withstand the ACT changes. The running down of surpluses pushed more pensions nearer to the precipice. Most people would say that both sides have made mistakes, but the country wants to hear what constructive proposals the Opposition have.

    Mr. Willetts

    I should now like to make some progress, during which I hope to answer the right hon. Gentleman’s specific question about what proposals we would make.

    I shall move from abstract statistics to something vivid and direct. I cite a Member of the other place, who is well known to Labour Members because he is a Labour supporter, a Labour donor and a Labour peer: Lord Paul of Caparo Industries. I shall quote what he said about the decisions that his steel company is making in its attempt to close its final salary pension scheme. When asked why he was closing his final salary scheme, he said:

    “You see the main reason is we had this so-called final salary scheme…but in view of the tax on dividends”—
    that is the first point he mentions—

    “and also the stock market going all over the place there is no way one can really guarantee a final salary scheme”.

    At the end of his list, he refers to

    “government action like the dividend tax”.

    That is what a Labour peer who runs a business says. He is trying to use a Labour tax to close a final salary pension scheme, and instead put his workers into the Government’s pet pension scheme, the stakeholder pension. He wants them to have one of the Government’s stakeholder pensions.

    What do members of the Labour-supporting steelworkers’ union do in response to a Labour peer trying to impose a Labour pensions policy as a result of a Labour tax? The Labour-supporting trade union goes out on strike. That is what its members are threatening to do as a result of the measures that the Government have taken.

    That is not the end of the story, because there is another stealth tax, perhaps even stealthier than the £5 billion a year tax on dividends, and that is the miserly uprating of the contracted-out rebates that was announced in April. The actuaries William Mercer estimates that those rebates are now about 15 per cent. below the level necessary to provide the contracted-out benefits that companies are obliged to provide as a condition for contracting out.

    With rebates for pensions running at about £11 billion a year, the actuaries are saying that the contracted-out rebate is £1.5 billion a year short. It is not just the £5 billion a year tax on its own, but the £5 billion a year tax plus another £1.5 billion, because the value of the contracted-out rebate does not match the cost of providing the pension that has to be provided in return.

    The Government have taken the two main forms of financial support that Governments have historically given to occupational pensions—the tax relief and the contracted-out rebates—and imposed an extra £6.5 billion a year burden on our pension funds.

    I can now answer the question put by the hon. Member for Falkirk, East. The entire value of the contribution holidays taken by companies between 1987 and 2000, which has exercised Labour Members, works out at £1.4 billion a year. That has a far smaller impact on the value of company pension schemes than the tax and rebate changes made by the Government. I hope that the hon. Gentleman therefore accepts that it is no good turning to employers and blaming them for the effect of their contribution holidays.

    Mr. Connarty

    As an economist, I know that £1.4 billion invested in 1979 would be worth a lot of money now. Because it was not earning money, it is not in the fund. I have just done a little calculation. Some £81 billion has been lost in the value of pension funds if they hold 18 per cent. of the shares that have lost £450 billion in value, as the hon. Gentleman just told us.

    Mr. Willetts

    The hon. Gentleman is in a hole, and he should stop digging. I am comparing a £6.5 billion imposition by the Government with the £1.4 billion a year impact that is the maximum that can be calculated to be the effect of pension contribution holidays.

    Several hon. Members rose—

    Mr. Willetts

    No, I shall not give way. I want to make progress, because many hon. Members wish to speak.

    The effect of the changes—the tax increases and the reduction in the value of contracting-out rebates—is to drive pensioners, now and in future, on to means-tested benefits. That is where they will end up; there will be lower pension saving and more dependency on welfare. In the early 1990s, the Chancellor famously told the Labour party conference:

    “I want the next Labour Government to achieve what in 50 years of the Welfare State has never been achieved. The end of the means test for our elderly people”.

    Well, that is not what the Government are doing. In fact, they will have more than half the entire pensioner population dependent on means-tested benefits. Our vision is very different—it is of a country in which more and more people build up funded savings so that they can enjoy a prosperous retirement that is not dependent on state benefits or means testing, but a source of pride in that they have built up their own savings during their lifetimes

    That is what we believe in, and that is what is being damaged and destroyed by the Government—although the Prime Minister pledged, in one of their first documents after coming into office, that his aim was to change the balance of pensioners’ dependence on benefits and funded pensions. He said that he wanted to reverse the situation whereby pensioners get 40 per cent. of their income from funded savings and 60 per cent. from the state, so that they get 40 per cent. of their income from state benefits and 60 per cent. from funded pension savings. That is an objective that we completely endorse. However, typically of this Prime Minister, despite having that grandiose objective, he has done absolutely nothing to implement it. If one asked him to do the washing up, he would announce that he had a 20-year plan for a cleaner kitchen on which he would undertake widespread consultation—but a pile of dirty crockery would be left at the end of the day. That is what he is like. He has a grandiose objective and no means of implementing it.

    Conservative Members, by contrast, know how that vision should be delivered. We are committed to the reform of annuities. My right hon. Friend the Member for Skipton and Ripon (Mr. Curry) has introduced a private Member’s Bill that would do so. We have voted for such a provision time and again, but the Government tried to stop it every time. We have called for reform of the accounting standard FRS17. I was pleased to hear about today’s announcement whereby, in line with our requests, there will be a delay in implementing it until we know what the European standard will be.

    We have called for less means-testing of pensioners. We worked with the right hon. Member for Birkenhead (Mr. Field) and with the Liberal Democrats to propose an alternative to the pension credit, suggesting that that money could instead have been put into a higher pension for older pensioners, who tend to he poorer, to offer more help to poorer pensioners without more means testing.

    Mr. Barry Gardiner (Brent, North)

    Will the hon. Gentleman give way?

    Mr. Willetts

    No, I want to make more progress in dealing with the perfectly reasonable challenge issued by the right hon. Member for Birkenhead as to what our policies are.

    Another policy is based on our view that the burden of regulation on pension funds is too high and needs to be radically cut back. We strongly support the Pickering review, which I am sure that the Secretary of State will talk about in his speech. However, since the announcement of the Pickering review, which was supposed to reduce the burden of regulation on pension funds, we have had, in the past nine months, another 251 pages of regulations, including 67 pages of statutory instruments and 81 pages from the Inland Revenue. Those have been churned out while the Government have boasted of their review to cut the burden of red tape on pension funds. That is the reality of what they do, despite their claims.

    Over the past five years, the Government have, in a display of hyperactivity, comprehensively messed up the provision of funded pensions in our country. The Government have taxed them more heavily, cut the value of the contracted-out rebates to which they are entitled and abolished SERPS. The Government have brought in more means-testing and introduced a stakeholder pension whose take up by the eligible target group has been pitiful.

    We now face a Labour environment for pension provision, which means less saving, low funded pensions and a poorer retirement for millions of British people. Labour Members should be ashamed of themselves.

  • Simon Kirby – 2016 Speech on the Pensions Dashboard

    Simon Kirby – 2016 Speech on the Pensions Dashboard

    The speech made by Simon Kirby, the then Economic Secretary to the Treasury, at Aviva Digital Garage in London on 12 September 2016.

    Spirit of innovation

    Thanks Andrew (Brem – Aviva Chief Digital Officer) for that introduction, and even more so for hosting us in such a perfect example of Shoreditch cool!

    I like to think, as a Brighton MP, that I’m used to seeing some pretty trendy establishments, but this ‘Digital Garage’ is a whole new level.

    And as someone who has started various businesses myself, I have to say I’m very envious of all the cutting edge start-ups which are getting to make the most of this space to develop their ideas.

    So an enormous well done to Aviva for backing them.

    Because I’ve long been a huge believer that it’s our creativity, our passion for innovation, that is one of the main factors in this country’s success in business. It’s our new ideas, our new ways of thinking, our new products that really help create new jobs and get our economy growing.

    Success Post-Referendum

    Now I know some of you have concerns about how the vote to leave the EU might affect our businesses.

    And, of course, our access to the single market has been important, for the financial sector in particular.

    But it’s not the only foundation of our prosperity.

    It’s not our only route to success.

    We have a lot to be positive about.

    Our economy is fundamentally strong.

    We have sensible regulation.

    We have talent and skills in abundance.

    And we have creativity and cutting edge technology.

    So in the Treasury, just as across government, we’ve spent the summer looking at the consequences, and of course opportunities, associated with our exit.

    And I’ll be playing my own part in making Brexit a success for the UK’s vital financial services industry – which gives jobs to over 1 million people across the country – not to mention 10% of tax revenues.

    Informed choices through technology and information

    And in the meantime, the regular work of government is continuing at pace.

    And it’s great to be here today to talk about the pensions dashboard – which I think is a hugely important step forward.

    Because financial decisions are complicated at the best of times.

    They probably always will be – these are decisions that really matter to people’s lives.

    But what we can do to help is to make sure that people have the right information, in the right format, at the right time.

    Technology has unlocked so many more possibilities for doing that.

    Just look at how revolutionary things like mobile banking and comparison sites have already been.

    It’s time for pensions to catch up.

    Because for most people, it’s their pension which is their largest financial asset.

    And if we have better information available, we can make much more effective decisions. From choosing how much we save, to what products we use to do so.

    And what the dashboard can do, is unlock a huge amount of information to inform the choices people make.

    How different would people’s engagement with pensions be if you could review your pension balances as part of your online banking?

    Or if you could change how you save into a pension at the click of a button?

    Or if personalised pension forecasts could be run on a mobile app?

    Design of the dashboard

    So that’s why we need a pensions dashboard to unleash this kind of potential.

    And for it to really be effective, I think there are three main principles that must underpin its whole design.

    Firstly, it will need to be open.

    No single dashboard can meet the needs of millions of people who all have very different individual circumstances.

    There is definitely no government website that could do that either.

    There is no monopoly of wisdom.

    The dashboard needs to be an infrastructure of open standards – like a common language and system for finding, collating, and sharing pension information.

    And it should be open to a range of companies who can meet basic standards of security and data protection – including banks and fintechs, not just pension providers.

    They should be able to access its information to deliver the products or advice their customers ask for.

    Secondly, the dashboard needs to be flexible.

    It is unrealistic to expect every provider to be ready to contribute the same data to the dashboard at the same time.

    It is probably impossible to present all the different types of pensions in exactly the same way.

    And who knows how technology or other changes might transform pensions in the future?

    The infrastructure therefore needs to be built in such a way that it can adapt and expand over time

    It cannot be a single, monolithic IT platform set in stone forever.

    Finally, the dashboard needs to be reliable.

    Because if we want to encourage people to save more, then they need to be able to trust in pensions. That starts with people being able to access basic information, across all their pension pots, without having to pay to do so.

    There’s nothing wrong with charging for useful services – be it advice, savings plans, consolidation services or other possibilities that don’t yet exist.

    But we need to get the free provision of the basic information right, and make sure it’s consistent across different types of pensions.

    The State Pension will be a part of that.

    And I’m keen to see the whole industry work together to set the minimum standards for how data is shared.

    We want that process to happen through the excellent voluntary collaboration we’ve seen to date.

    But if there are difficulties getting everyone on board, then we’ll certainly look at legislation or regulation instead.

    So I would encourage everyone to start on this as soon as possible.

    Making it happen

    So how do we get this flexible, and reliable dashboard off the ground?

    Because we’ve said very clearly that we want this up and running and ready for consumers to use by 2019.

    Well, I’m very pleased to be able to announce today that eleven organisations have made a fantastic new commitment to make the dashboard a reality.

    Aviva, Aon, B&CE, HSBC, LV, Nest, Now:Pensions, Royal London, Standard Life, Willis Towers Watson, and Zurich have agreed to work together to build a first working prototype of the dashboard by March 2017.

    And particular thanks must also go to the Association of British Insurers for agreeing to project manage the whole process. Together, these organisations will be leading the way forward in making the dashboard a reality.

    They’ll be looking at how to develop open, common standards.

    How to get the right governance structures.

    And how to overcome some of the tricky technical challenges.

    So I want to congratulate all these companies on taking on the challenge of setting up this first pilot.

    And I have no doubt that they will reap the rewards of their efforts.

    Innovation is a race and rewards those who press ahead.

    So if you are a pension provider who wants to participate in the pilot, you still have time to sign up to the same commitments as these companies and help develop this dashboard.

    Conclusion

    So this is an important milestone, and one which in my new role as the Economic Secretary to the Treasury I’m excited to get behind.

    In the Treasury, we’ll be supporting the pilot all the way.

    Not only by seeking views across organisations about the best ways to go about it.

    But by providing top-level guidance and independent challenge.

    So I’m confident this project will be a success.

    Because we’re already seeing great collaboration across organisations to make it happen.

    And we know how much creativity and innovation this sector has to offer.

    So I’m confident that when it comes to 2019, people in this country will have a much better service when it comes to making the right decisions about their pensions.

    And together we’ll be able to move on from the discussions we’re having today, to get on with designing, building and making the dashboard a reality.

    So I wish everyone involved every success in doing so.

    Thank you.

  • Simon Kirby – 2016 Comments on the Pensions Dashboard

    Simon Kirby – 2016 Comments on the Pensions Dashboard

    The comments made by Simon Kirby, the then Economic Secretary to the Treasury, on 11 September 2016.

    Pensions and savings decisions are some of the most important a person will make during their lifetime. The government is determined to make sure people can access the information they need to plan effectively for their future.

    Technology, like mobile phone apps, has made day to day banking easier than it’s ever been and it is time for pensions to catch up. Think of a future where you can compare your pension pots with the touch of a button.

    The Pensions Dashboard will unlock a huge amount of information that will help people make the best choices for them and I am delighted that eleven of the largest pension providers have agreed to work together to build a working prototype by March 2017.

  • Guy Opperman – 2022 Statement on the Mid-Life MOT Offer

    Guy Opperman – 2022 Statement on the Mid-Life MOT Offer

    The statement made by Guy Opperman, the Parliamentary Under-Secretary of State for Work and Pensions, in the House of Commons on 6 July 2022.

    The mid-life MOT is a policy intervention designed to assist participants’ wealth, work and wellbeing. It provides access to tailored information to allow older people to return to or remain in work.

    Through the face-to-face programme, the mid-life MOT will provide a holistic assessment of an individual’s health, by making sure they are able to access the necessary services; skills, by helping older people access upskilling and retraining opportunities; and finance, by empowering individuals to take control of their retirement planning.

    In the winter 2021 budget, the DWP secured more than £5 million to develop and deliver more extensive pilots and development of the mid-life MOT. This follows private sector success led by the likes of Aviva, and the developing of an online version and 10 local enterprise partnership small pilots in 2021. I believe the mid-life MOT will improve participants’ wealth, work and wellbeing.

    The DWP has been committed to growing the mid-life MOT since its introduction in 2019. In 2021, 10 local enterprise partnerships received grants of up to £40,000 to develop and deliver local mid-life MOTs in partnership with local business. In these tests, the local enterprise partnerships worked with MOT content delivery partners, voluntary organisations, and community-based organisations to deliver support on health, skills and finances tailored to the needs of each region.

    We will build on this work to develop and deliver mid-life MOTs for people aged 45 to 55 across three new workstreams. This forms part of the wider autumn Budget and spending review 2021 announcement to develop a new, enhanced offer for older people to ensure they receive the support they need to return to or remain in work:

    The Department will develop and enhance the Government’s digital MOT offering. We are working in partnership with the Money and Pensions Service to deliver an online digital mid-life MOT over the course of the spending review period. This is match funded by both organisations and building on previous online iterations.

    We will deliver mid-life MOTs through our UK network of Jobcentre Plus offices, utilising the expertise and networks of our 50-plus champions to help older jobseekers address barriers to work associated with common challenges related to health, skills, and finance. Delivery in jobcentres will start in the summer and run across Great Britain.

    The Department has launched a market engagement exercise to identify providers for a holistic, face-to-face mid-life MOT programme delivered through employers and direct to employees in three pilot areas—the North East of England; Cornwall and Devon; and East Anglia. Providers will be identified via a commercial tender process. More information can be obtained by emailing: 50PLUS.Choices@dwp.gov.uk.

    These new measures are part of DWP’s £22 million package to help over-50s find new careers and earn more money, including by boosting time with work coaches and bringing in specialist support.

    This increased support will be furthered by 37 50-plus champions covering every district across England, Wales and Scotland who will work with local employers to help them fully utilise the talent of older workers.

  • George Banton – 1922 Speech on Old Age Pensions

    George Banton – 1922 Speech on Old Age Pensions

    The speech made by George Banton, the then Labour MP for Leicester East, in the House of Commons on 4 April 1922.

    I hope that the House will allow me the indulgence which is usually accorded to a Member who addresses it for the first time. I take the opportunity of speaking upon this particular Resolution, because I have within the past few weeks had some experience in dealing with old people employed in a large concern with which I am connected. These old people number between 20 and 30, and range in age from 84 down to 70 years. The firm were anxious to give these old veterans of labour a rest, and they were willing to make their latter years as comfortable as possible. They investigated the cases, and they were willing to be generous, but they found that the standard of life at which these men had been living would be diminished seriously if the allowance given to them did not exceed £1 per week. They would have been willing to grant more than 10s., but it was argued that every shilling granted above the 10s. would be subsidising the Government. They did not feel disposed to take the money of that particular firm to subsidise the Government. They were put in this dilemma—to maintain these old men at an economic loss, or reduce their standard of living, which was a necessity they did not wish to face, or let them go to the guardians, and by going to the guardians they, as ratepayers, would have had to bear the cost, and it would have been a greater cost to the community than if they had been allowed the old age pension without these restrictions which are at present imposed. The question is whether it is possible for the Labour Benches to indicate some means by which they could economise so as to recompense in some way for the extra amount that would be called for.

    If hon. Members who talk upon this subject were acquainted with some of the great number of people who cannot maintain themselves upon the meagre allowance granted to them, and who have therefore to call upon the Poor Law for aid, they would realise that if these people were kept from the Poor Law a great economy to the State would result. That is one consideration, quite apart from any humanitarian feeling. It is said that all Members of the House are sympathetic towards the claims of the poor. We do not claim to have the monopoly of sympathy, but on public bodies I have heard of sympathy so many times that I am rather chary of giving credence to what is expressed. We want to extend our sympathies to those who need it most. Our old people need it most. The seconder of the Amendment reminded us that there were injunctions laid down that we should clothe the naked and feed the hungry, but that there was no injunction that we should grant old age pensions. One of the earliest injunctions laid upon mankind was that we should honour our fathers and our mothers. The State would show appreciation of that very old injunction by conceding the request of the Labour party, and allowing the old age pension to all, irrespective of their incomes. It has been suggested that that would not be wise, because millionaires might participate. I should not be surprised if millionaires, composed as they are to-day, did participate. They are of that particular kind which will take what is available from whatever source it comes, and they would most likely go for their 10s. a week, or they might make arrangements to have the money forwarded quarterly by the Chancellor of the Exchequer. At any rate, I would not penalise the needy old people because of the few millionaires.

    It is also suggested that we might make changes in the law more beneficial than this proposal to the poor. I have just been returned by an electorate which is not small, and I have made much of a point regarding the old people employed by the best employers of labour. There are many good employers of labour who are willing and anxious to help their old workpeople, but they do not feel justified in subsidising the Government. We are often charged with fighting for class legislation. We repudiate that charge. We find that in the granting of pensions there is class legislation at present in operation. When I read the list of pensions that this House has granted, I find there are some people participating in the generosity of the public to the extent of many thousands a year, but I have never read that there have been any inquiry into any recipient’s income, or any investigation as to whether the income would maintain them. The pensions seem to be granted “for services rendered.” I submit that the old people for whom I am pleading have rendered services to the State.

    Mr. JAMESON

    Why!

    Mr. BANTON

    They have rendered services to the State. An old writer has told us that there are; the soldiers of the ploughshare as well as soldiers of the sword. These poor old people have served their country. I notice that one hon. Member opposite shakes his head. I do not desire to raise any class antipathy, but I would appeal to the kindly sympathies of the House to realise that in the lower walks of life there are men and women who have served the State to the best of their ability.

    Mr. HAILWOOD

    On a point of Order. May I ask whether—

    Mr. DEPUTY-SPEAKER (Sir E. Cornwall)

    It is usual when a new Member makes his first speech, to allow him to do so without interruption.

    Mr. BANTON

    I appeal to the best that is in the House. I do not wish to arouse the worst. I claim that hon. Members should extend their sympathy to many of the best of our people. There are thousands and tens of thousands in the ranks of the middle class whom this comparatively small dole would enable to end their last years in decent comfort. A poor woman came to me within the past fortnight. She was 74 years of age, and had been at work. In ignorance of the law she had been drawing 12s. to 14s. a week in addition to the 10s. a week from the State. The State discovered what she had done, and sent notice to her of the crime she had committed. The threat was held over her of punishment and she feared coming before the magistrates. On her behalf I interposed with the pensions officer, and here I may say that the officials in the Pensions Department I have always found sympathetic. But there the law stood. This woman received a demand made for the restoration of over £17. Her pension has been stopped, and the old lady is now in the workhouse. That is only one case that has come under my observation in the past few days. If hon. Members were only made more directly acquainted with the poverty of many of the most deserving of our people I am sure there would not be so much difficulty about changing the law. At the beginning of my speech I referred to 20 men. They are at work to-day. There are out of work strong, able-bodied men who are walking the streets. From the economic point of view it would be far more desirable to let the old men take their well-earned rest and to allow the strong and able-bodied to take their places. From the point of view of political economy it would mean a great saving to the public purse. I support the Resolution and I hope the House will realise that the old people deserve better treatment. We do not want to wait until the dreamed-of time when everything will be flourishing.

  • Tom Myers – 1922 Speech on Old Age Pensions

    Tom Myers – 1922 Speech on Old Age Pensions

    The speech made by Tom Myers, the then Labour MP for Spen Valley, on 4 April 1922.

    I beg to move

    “That, in the opinion of this House, the recommendation of the departmental committee on old age pensions in favour of the repeal of the provisions in the Old Age Pensions Acts as to calculation of means should be adopted and the Old Age Pensions Acts amended accordingly, thereby enabling applicants for and recipients of the old age pension to derive the full benefit of their thrift and personal provision for old age, and to receive assistance from friends, employers, and organisations, without reduction of or disqualification for the full pension.”

    In submitting to the House this Motion on behalf of the party with whom I am associated in this House, I would ask permission to make one personal reference, and one only. From the date of the inception of the Old Age Pensions Act to becoming a Member of this House, I served continuously as a member of an old age pensions committee. Perhaps what is more to the point, I was a member of a small sub-committee which was entrusted with the responsibility of adjudicating upon the appeals that were made by old age pensioners against the decision of the Committee. From that experience one could justify every syllable of the proposal before us. Fortunately we are strengthened in our attitude by the Report of the Departmental Committee, which has gone into the whole question of old age pensions. We upon this side of the House, and particularly the party with whom I am associated, have long held the view that an advance in the amount given for old age pensions, and a reduction in the age at which these pensions are made available, could both be justified having regard to existing circumstances.

    The proposal, however, which we make on this occasion does not make any suggestion in the direction either of reducing the age or increasing the amount. What we do most emphatically say is that the method of administration of the present Act of Parliament and the hardship it imposes upon many a recipient of the old age pension is of such a nature that some very drastic alteration is essential. In a word, we would make the birth certificate of the applicant for an old age pension the sole test upon which the decision is made. Anyone who comes and presents evidence of the fact that he is of the stipulated age to receive an old age pension, that, I say, should be and could be, the sole test imposed. The evils of the existing system are legion. The first one is the irritation which is caused to a large number of old age pensioners. Most old people look forward for a considerable period to the time when they will be entitled to their pension, which will go to relieve their family, frequently, from a responsibility which they have voluntarily undertaken. No sooner is their application presented, and they are looking forward to its being honoured, than they have a visit from a strange individual. This individual enters the household of these old people—I believe he looks upon this duty as a very unpleasant one, but he has to carry out the law—with a view of ascertaining what are the means of income of these would-be pensioners. But the annoyance and irritation, and even worse, that is caused to many of these old people is well known to those who have been entrusted with the responsibility of administering the Act.

    Questions are directed to these old people to ascertain their income and they cover a wide field. I could give instances where the old people have been primed before the visit of the official so that they may prevent disclosures being made as to their income. Any system or any method which drives old people to that expedient in order to protect their livelihood stands condemned from that point of view alone. Questions are asked about any extra meal they may be given by some friend. I have also heard of instances where inquiries have been made from the old people as to how many fowls they had, what their upkeep cost, and what was the egg-producing capacity per week, and then an average was struck between the cost of the upkeep and the market value of the produce, the amount being put down as part of the income of the old people. Then inquiries are made as to what they made out of their allotments, what they are receiving from friends, what voluntary assistance they get from relatives—these and similar inquiries are made by officials who have the backing of the law. Here and there are people who have at least some small accumulation. Even then the thing is inequitable, for it is very difficult to defend a system which permits cases like this. One person, say, has £400 in the bank, and there is 5 per cent interest calculated, or £20 per year, to be included in the income. Another person has £100, the interest on which is £5, but in this case he draws upon his little capital to augment the £5, so as to keep body and soul together. Every penny of that which is taken from the capital is included as income against that person. This is not so in the other case. This is one of the factors in the interpretation of the Act which cannot be justified.

    But the principal objection to the administration of this Act is the penalty which it imposes upon thrift. We have had during this past fortnight voluminous correspondence and communications from all sorts of voluntary organisations in the country—those organisations that we have been taught in days gone by to support and to be associated with—trade unions, friendly societies, and the like, where life-long contributions have been made by men and women in the hope and belief that at the back-end of their days they would reap the advantage of those contributions of a lifetime. But when the old age pensioner goes round he is informed that if he has a few shillings per week superannuation allowance from a trade union, or a few shillings a week from a friendly society, or some allowance from a benevolent employer after long service at a factory or from a colliery company—if such a person happens to have free coal allocated after a long life at the colliery, or a free house—all those considerations are at once seized upon by the Pensions Department and a penalty is imposed upon the Old Age Pension arising therefrom. These are factors which are objectionable to all self-respecting people, and they are having the effect of stopping those avenues of generosity which in the past have been so much in evidence.

    There is another point. Is an old age pension a test of poverty, or is it a reward for service? Do we grant it because people at the age of 70 are poor, or because they have rendered service to the community? The present administration of the law makes an old age pension a poverty test. The Report of the Departmental Committee is very definite upon this point. It says:

    “The existence of the means limit really introduces the old pauper taint and brands the Old Age Pension as a compassionate grant.”

    That ought not to be so, and we say very emphatically that if the birth certificate was made the claim for an old age pension being granted, great economies would be effected. If the birth certificate were made the test we could dispense with the Old Age Pension Committee, and all that would be necessary would be merely to check the age of the applicant, and we could effect all those economies which now involve so much expense by the employment of an army of officials, who at present do little more than impose a sort of inquisition upon these poor old people.

    With regard to our Motion, the principal argument which will probably be urged against it will be that there is no money to be had, and the country cannot afford it. We heard that story in the past, when old age pensions were advocated in the first instance. We heard it then at the street corner, and it was only when the pressure of public opinion made the claims as the old people irresistible that old age pensions were granted. There is just as strong a feeling to-day for the removal of those limitations as there was in the old days for the institution of the principle of old age pensions. We shall be told by the Government that there is any amount of sympathy for this proposal, but that there is no money to back it. We cannot accept sympathy without something practical behind it. Sympathy is useless unless backed by something of a substantial character.

    I am not going to accept any argument advanced from the point of view that we cannot find the money while we are able to point to avenues of expenditure of a much less desirable kind. If we seek such avenues of expenditure they are legion. While we are expending large sums upon the fighting forces which are very largely futile and all of them wicked, while we are expending the national substance on wicked and futile objects and upon our fighting forces, I decline to listen to any argument which is supported only by the statement that no money can be found for this purpose. We have to look at this question from the point of view of every old person in the country, whether they have a little accumulation of wealth or none at all, because when they reach the age of 70 they have made a definite contribution towards the well-being of the State. Even if they are wealthy people who can meet the test we are entitled to assume that people who do not want the old age pension will not apply for it.

    On the Old Age Pension Committees we have plenty of experience in regard to men waiting until they were 72, 73, and even 76 years of age before applying for an old age pension. We are entitled to assume that that state of things will prevail even if our proposal is put into effect. I appeal to the House, having regard to the tremendous volume of opinion in the country in favour of this proposal, to take a broad view and declare an old age pension to be a reward for service to the State, and not a poverty test. Let us encourage those who have served their country well to believe that the country is going to stand by them in their old age.

  • Alok Sharma – 2021 Speech on Green Investments for Pension Funds

    Alok Sharma – 2021 Speech on Green Investments for Pension Funds

    The speech made by Alok Sharma, the President of COP26, on 1 June 2021.

    Good afternoon. It is a pleasure to join you to close this vital summit.

    I want to thank Richard Curtis and Make My Money Matter for hosting it.

    As well as my friends and colleagues Mark Carney, and Nigel Topping for all the work they have done to get private finance going green.

    The challenge the world faces today is critical and it is urgent.

    When the countries of the world signed the Paris Agreement in 2015, they committed to limit global temperature rises to well below 2 degrees, aiming for 1.5 degrees, because the science showed that this would avert the very worst effects of climate change.

    But since that Agreement was signed the world has not done enough.

    And today, we find ourselves at a crunch point.

    To keep the 1.5 degree target within reach, we must halve global emissions by 2030.

    And we must reach net zero emissions by the middle of this century.

    That requires action now.

    We cannot kick the can down the road any further.

    If we do not take this chance to keep 1.5 degrees alive, it will slip from our grasp.

    And so will our best hope of building the future we want to see.

    So COP26, the United Nations climate conference that will be held in Glasgow in November, must be the moment that every country, and every part of society, embraces their responsibility, to protect our precious planet.

    And, very importantly, that includes finance.

    Because without it, the task ahead is near impossible.

    That is why one of my key aims for COP26 is to get finance flowing to climate action – both public and private.

    And with $47trillion in pension funds globally, this sector plays a major role.

    We need to get our savings for the future, shaping the future.

    The good news is that there is not a choice to be made between private profit, and protecting the planet.

    One needn’t be sacrificed for the other.

    Because the economics have changed.

    Today, green investments are smart investments.

    In the majority of the world, renewables are cheaper than new coal and gas.

    Putting your money in fossil fuels creates the very real risk of stranded assets.

    And a recent report from Imperial College London found that, over the past five years and, indeed, the past ten years, renewable investments generated higher returns than fossil fuels in both advanced economies and emerging markets.

    New global markets are also emerging to help people and nature adapt to the effects of our changing climate.

    From drought resilient seed technologies, to energy efficient cooling.

    Creating new investment opportunities for investors.

    So it is not surprising that we are seeing progress.

    One hundred and sixty financial firms have signed up to the Glasgow Financial Alliance for Net Zero, committing to reach net zero by 2050 at the latest, and to robust targets, based on the science, to get there.

    This includes banks with balance sheets of nearly $30trillion.

    Asset owners worth $6trillion.

    Including major pension schemes, such as Aviva, BT Pension Scheme and the Church Commissioners of England.

    And asset managers responsible for $37trillion worth of assets, which represents around 40 percent of the industry.

    Ahead of COP26, I am urging all financial institutions to join them.

    And commit to a net zero future.

    As well as to taking four other key steps to protect our planet:

    First, commit to exit coal finance.

    So that, together, we make COP26 the moment we consign coal power to the past where it belongs.

    Second, increase investments in climate action in developing and emerging markets.

    Thirdly, protect nature.

    By 2025 ensure none of your investments contribute to deforestation.

    And by 2030 ensure your investments are contributing to the restoration of the natural world.

    Finally, disclose your climate risk in line with the Taskforce on Climate Related Financial Disclosures, or TCFD.

    This will become mandatory across most of the UK economy in 2023.

    And the government will shortly introduce regulations on what this means for pensions, to ensure trustees take account of climate change risk in each and every decision.

    There is a real advantage in getting your house in order. And early.

    Awareness of the climate crisis is growing all the time, and consumers and shareholders increasingly want their investments to align with their values.

    So, when they start to look at whether they should be moving their pension, give them the best possible reason to stay with you.

    Show them that you have understood the urgency of the situation.

    That you stepped up to the plate.

    And that in this vital year for climate action, the year of COP26, you are playing your part in keeping 1.5 degrees alive.

    Show them, in short, that by investing with you, they are investing in the clean, green and prosperous future we all want to see.

    Thank you.

  • Guy Opperman – 2021 Speech on Pension Schemes Act

    Guy Opperman – 2021 Speech on Pension Schemes Act

    The speech made by Guy Opperman, the Parliamentary Under-Secretary of State for Work and Pensions, in the House of Commons on 2 March 2021.

    The Pension Schemes Act 2021 received Royal Assent on 11 February. We are now setting out next steps, delivering on the commitment made during the passage of the Pension Schemes Bill and following extensive engagement since report stage in the House of Commons. The Act will introduce:

    Three new criminal offences, including a sentence of up to seven years in jail for bosses who plunder or run pension schemes into the ground.

    The legislative framework needed to usher in pensions dashboards that will give savers greater control over, and awareness of, their pensions.

    The legislative framework to allow collective money purchase pension schemes to operate.

    Powers to require pension schemes to take the Paris agreement temperature goal into account, and other climate change goals set by the Government.

    Strengthened rules around pension transfers to prevent members being misled in relation to transferring their pensions pots.

    Measures to support trustees and employers to improve the way they plan and manage scheme funding over the longer term and enable the Pensions Regulator to take action more effectively to protect members’ pensions.

    We are now progressing the secondary legislation to ensure the UK’s pension system is safer, better and greener. The sequencing of the subsequent legislation will allow for proper consultation, engagement with key stakeholders and further parliamentary debate, through affirmative procedure where required.

    Following our consultation in January 2021 on climate change, we will lay these world-leading regulations this summer to come into force ahead of COP26. This will make the UK the first major economy in the world to legislate for, and bring into practice, the recommendations of the Taskforce on Climate-related Financial Disclosures, ensuring climate change is at the heart of the pensions system.

    On the Pensions Regulator’s powers, we will consult on the majority of draft regulations this spring, and will commence these powers and the criminal offences measures in the autumn. For the duty to give notices and statements to the regulator in respect of certain events, we will consult on the draft regulations later this year, for commencement as soon as practical thereafter.

    In early summer we plan to consult on draft regulations for scams and collective defined contribution schemes, with commencement on the scams measures from early autumn 2021.

    We aim to consult on proposed regulations for the pensions dashboard later this year and lay draft regulations before Parliament for debate in 2022. Delivery remains on track for 2023 in line with the plans published by the pensions dashboards programme.

    On defined benefit scheme funding, later this year we will consult on draft regulations, following promised engagement with key interested parties, working closely with colleagues at the Pensions Regulator as they develop the revised funding code, which will also be subject to a full public consultation.

    Both Ministers and regulators will continue to engage with both Houses of Parliament as these measures progress.