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State Second Pension

Volume 458: debated on Thursday 22 March 2007

18. How many more women will receive entitlements to the second state pension as a result of the Government’s pension proposals. (128967)

As a result of our pension reform proposals outlined in the Pensions Bill, which include extending credits to those caring for children up to the age of 12 and the new carers credits, about 1 million extra people will accrue state second pension entitlement, of whom approximately 90 per cent. will be women.

That is indeed welcome news, but does the Minister agree that women are overwhelmingly the poorest pensioners because of their caring responsibilities, so it is absolutely imperative that the Government act quickly? Will she reassure me that that will happen, and that her proposals will make a big difference? Will she consider including in the proposals women who retire before 2010?

My hon. Friend is absolutely right to draw the attention of the House to the impact of caring on women’s ability to build up pension entitlements for the future. One of the key aspects of the Pensions Bill that is going through Parliament is the fact that it puts as much emphasis on caring as it does on paid work. By 2010, as a result of that Bill, about 70 per cent. of all women will be able to build up a full basic state pension, compared with 30 per cent. now. Of course, more will be able to save as well, through the new personal accounts. Although I am, of course, attracted by her proposal of introducing this earlier—I hesitate, perhaps, to say—I think that we have a package that is both affordable and sustainable in the long term. We will bring in the proposals as soon as is practically possible.

Order. May I say that Ministers seem to have the habit today of courteously turning round to speak to their colleagues on the Back Benches, but they then go off microphone, which is a great disadvantage to those who are trying to record our proceedings?

Will the right hon. Lady explain what the Government are doing about the cohort of women who might have paid too much in pension contributions? Will the matter be resolved in this tax year?

The hon. Lady makes the important point that it is right that we try to resolve and address these issues. The matter is under discussion in the Department for Work and Pensions, and as soon as it is possible to make progress, we will, of course, do so.

At the moment, about 2 million carers, 90 per cent. of whom are women, are accruing entitlement to state second pension. Will the Minister tell us what effect the proposals to extend pension credits to carers will have on that group?

My hon. Friend rightly draws our attention to the impact of the reforms that are going through Parliament on not only the basic state pension, but the state second pension. As a result of the new carers credit, about another 80,000 women will be drawn into the system. They will thus be able to build up state second pension rights, as well as their basic state pension entitlement. It is right that as we do that and reduce from 39 to 30 the number of years’ contributions for women, we provide a system that is fair and, most importantly, that values care not only for young children up to the age of 12, but for the severely disabled, because many of such people’s carers do not have the opportunity to work and pay the national insurance contributions that others do.

I very much welcome what the Minister has said so far about help for women pensioners under the new proposals. However, is she aware that some 600,000 women in the UK today are low-paid, part-time workers, often with more than one job, who will not benefit because they fall below the threshold in each of their jobs? The Government say that that cannot be tackled because it is administratively difficult. Does the Minister agree that that, like so many of the hidden messages in the Chancellor’s Budget yesterday, is simply unfair? In the end, because of that administrative difficulty, it is the poorest, lowest-paid workers in our society who suffer the most under the Chancellor’s policies.

Of course the House will realise that it is the poorest, lowest-paid pensioners who gain the most from the Budget proposals announced in the House yesterday, and from the successive measures that we Labour Members have taken to boost pensioners’ incomes, to tackle pensioner poverty and to make sure that women who care and who have dependent relatives are able to build up pension entitlements. The hon. Lady draws attention to an important point: what about those women who earn less than the lower earnings limit? It is right that we think about them, too, but our pension proposals are a package, and many of those women will benefit from other reforms in the system. For example, if they are spending only a short time outside the labour market on a low income, and have perhaps one or two jobs that leave them below the earnings limit, they will benefit significantly from the reduction in the number of years that they have to contribute. They will also benefit from other measures that take them out of having to pay tax in retirement. Overall, the pension deal clearly benefits women, particularly low-paid women.