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Pensions

Volume 453: debated on Thursday 30 November 2006

17. What estimate she has made of the number of women who will be eligible for a full basic state pension under the Government’s proposals. (106226)

Measures in the Pensions Bill published yesterday mean that about three quarters of women reaching state pension age in 2010 will be entitled to the full basic state pension, compared with 50 per cent. without reform. More than 90 per cent. of women reaching state pension age in 2025 will achieve the full basic state pension.

I am grateful to the Minister for her response. The Government’s pensions proposals make a serious and decent attempt to tackle the developing problems in that area. Will she ensure that policy takes fully into account the great value of the necessary home building and child care activities in which women are involved, and not just their national insurance record? Women should have fair access to the full basic state pension as soon as possible.

I welcome the hon. Gentleman’s support for the proposals, as cross-party support is important in ensuring that people are confident that we are making long-term changes that will make a difference. I agree entirely with him. The Equal Opportunities Commission said that the Bill

“is an important step towards ending the scandalous inequalities…The unpaid contribution to society made by millions of parents and carers will finally be recognised and rewarded on the same terms as paid employment.”

There is no doubt that there was inherent discrimination in the pensions system, given the unfairness of someone’s sex determining whether they qualified for a state pension. I am delighted that the Government have recognised the problem, and have taken action in the Pensions Bill, which was published yesterday. Can my hon. Friend give me an assurance that the Government will not renege on any of the promises they have made to women, and that they will continue to make sure that the gap between pension provision for women and men is closed as quickly as possible?

I am delighted to agree with my hon. Friend on the issue. The Bill aims to deliver equality. As she will know, we will introduce a gender equality duty in April, which will apply to all Government Departments and public sector organisations, bearing in mind the effect of their policies on men and women. I congratulate the Department for Work and Pensions on its gender impact assessment, as it is exactly what we need to ensure that our policies deliver what she asked for.

The Liberal Democrats welcome the fact that, whereas at present only 30 per cent. of women are entitled to a full state pension, by the Government’s estimates that will rise to 70 per cent. by 2010. Of the remaining 30 per cent. who will never qualify under the 30-year rule, will the Government re-examine the contribution regulations to enable women who are working on past their current retirement age of 60 to continue to make national insurance contributions, so that they can get a better pension when they eventually retire?

I thank the hon. Lady for her contribution to the debate. The Bill has just been published and there will be an opportunity to explore some of those issues in depth. Our policy has always been to try to make up the disadvantage that women feel and, as the hon. Lady knows, two thirds of the pension credit goes to women. We will welcome all constructive contributions to the debate.

Does my hon. Friend agree that pensions are often a complicated matter, and that full information and explanations are required at the earliest stage, especially to young women, about the pension consequences of actions that they take during their lifetime? Will the Government ensure that adequate publicity and information are provided?

I can give my hon. Friend that assurance. We are considering putting together some sort of guide that will answer precisely such questions. She is right. Simplicity will make it easier for women to be confident that they will get a pension, and that they can save and add to it. A great deal has been done to get rid of some of the complexities in the current pension system.

We remain committed to providing people with information to support retirement planning. Measures in the Pensions Bill set out our proposals to establish an organisation to deliver personal accounts and private saving. We estimate that around 2.2 million to 3.4 million women will open personal accounts. The Government will publish a White Paper on personal accounts shortly.

As the Minister is aware, under the Government’s proposals, women on low pay would be automatically enrolled into personal accounts, yet when it comes to retirement the level of income from that saving could be completely negated by means-tested pension credit. What discussions has she had with her colleagues in the Department for Work and Pensions to ensure that women on low earnings benefit from the new scheme?

The hon. Lady raises important points, which we are examining in detail. One of the benefits of our proposals is to link the pension again to earnings. That means there will be higher rates of basic state pension, which will lift more women out of that situation. We need to continue to examine the effects on all women as the proposals go through.

Private pension provision is often associated with self-employment. I recall from my years of acting as an accountant for small businesses in the textile industry that women in particular were less likely to make private pension provision. What does my hon. Friend think are the key barriers that prevent such take-up and what steps are being taken to surmount them?

My hon. Friend draws attention to an important matter. One of the key barriers is people’s understanding of the pensions system and of the implications for them in retirement, so providing clear information, along with a simpler system that enables more women to qualify for a full basic state pension, will assist the process.

As my hon. Friend the Member for Basingstoke (Mrs. Miller) points out, the Minister must be worried about the quality of advice that she is offering. If women are, as statistics show, on relatively low earnings, it cannot make financial sense for them to save towards a private pension when the minimum income guarantee that the Government offer goes up by earnings every year, and not by inflation. Is she not worried that many such women will be angry when they reach retirement? They will have saved for a private pension that is swallowed up in benefits forgone.

These are important issues, but we want women to understand what pension they will get when they retire. In addition, we are doing a great deal to tackle the gender pay gap, which is the reason that so many women are poorly paid now. We want better paid part-time jobs, which means that they will be better able to save for retirement.