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Pensions: National Insurance Contributions

Volume 697: debated on Monday 17 December 2007

asked Her Majesty’s Government:

When they will report on their commitment, made during the passage of the Pensions Act 2007 through Parliament, to help women to buy back additional national insurance years.

My Lords, the Government committed to look at a range of options to help individuals who have gaps in their national insurance contribution records to purchase additional voluntary contributions. This work is now complete. The options were analysed in terms of fairness, affordability and simplicity. The Government have concluded that none of the options considered passes these assessment criteria and none is particularly well targeted, and therefore have decided to make no changes to the current rules to allow individuals to buy additional national insurance contributions.

My Lords, I am profoundly dismayed by that Answer. In my view, it will not do. Does my noble friend accept that there are coming before the Commons, and therefore to your Lordships’ House in due course, the National Insurance Contributions Bill and the personal accounts Pensions Bill and that, if this House agrees, we will continue to fight to ensure that women who have been carers do not find themselves penalised by going into retirement with an incomplete, poor pension?

My Lords, I well understand the disappointment of my noble friend and others in the House, particularly as she has campaigned so effectively on this issue, but the position is as I have outlined. We should not lose sight of what has happened under this Government in improvements to pensions, particularly for women. For example, the reduction in the number of qualifying years needed for a full basic state pension is 30—a key measure—and, for the first time, paid and credited contributions for caring will be recognised equally for basic state pension and state second pension. Those are important developments, but I am well aware that this debate is quite likely to continue with those two pieces of legislation.

My Lords, does the Minister not remember that when the proposal of the noble Baroness, Lady Hollis, was put to this House it was agreed to by a margin of 179 votes to 86? Surely it is a sensible measure; it gives flexibility and it particularly helps women in retirement. Frankly, the sooner it is done, the better.

My Lords, I am not sure that we on this side should take any lessons from the pensions record of the Conservatives. The challenge for the measures was to reach those people whom my noble friend most wanted to reach but not to have to bear the cost of the others. That has been the difficulty. For example, if this is a policy commitment that the Opposition want to take on, let me explain that the option of an extra nine years pre-2010 and six years post-2010 would cost in cash terms a bit short of £5 billion to 2050—net present value, in prices terms, £1.3 billion. That is the analysis and that is the issue before us.

My Lords, is my noble friend aware that, when I became general-secretary of my trade union in 1986, I inherited a situation in which part-time women workers were ineligible for the pension scheme? I not only provided for them to become members of the scheme but I backdated the years of service to ensure that they were paid money for those years that they had already completed. I hope that the Government do the same with the national insurance contributions.

My Lords, pensioners have been well served by this Government. Let us look at the facts of what has happened since 1997. Currently, only around 35 per cent of women reaching state pension age are entitled to a full basic state pension. When the 2010 changes come in, that figure will be three-quarters and, in 2025, 90 per cent, which will be equality with men. Because of the changes that we have made to the state second pension, 2.1 million carers, more than 90 per cent of them women, and 6.1 million low earners, almost 60 per cent of them women, are included in the scheme, which did not provide for them before.

My Lords, does the Minister accept that, today of all days, when the Government have finally run up the white flag after their appalling treatment of the 125,000 robbed pensioners, this is the last day to try to defend the indefensible on this issue? I give notice that, along with the noble Baroness, Lady Hollis, we on these Benches will be fighting as hard as we can during consideration of the upcoming Pensions Bill to ensure that people get justice. Does the Minister not accept that what is happening here is a Labour Government spending billions to help rich people by giving them top-rate tax relief and preventing poor women, with broken work records, from saving for a modest pension?

My Lords, it must be easy being a Liberal Democrat: you are responsible for nothing and it does not matter what spending commitments you make, as we see far too often. If one looks at who would not benefit from the proposals, one sees that it would be the poorest women, because the poorest women headed for pension credit would lose pound for pound if they were asked to cough up for additional class 3 contributions. The proposals would not help those women who could not get beyond 60 per cent of their spouse’s pension; they would simply be paying in money to no avail. It is not right to characterise it as the noble Lord has done.

My Lords, the Government are developing a strategy for carers across the board and I am pleased to be part of that work, but surely it is beyond belief that a group of carers and people who have had caring responsibilities are going to be discriminated against in recouping the pensions that they could have been entitled to if they had not taken on that role. Will the Government please reconsider, because this is extremely unfortunate?

My Lords, I stress again that the challenge has been to reach the very people whom the noble Baroness describes. That is not possible without great intricacies and complications, which is one of the criteria that we set our face against when we discuss these things in this House. The reality is that the role of carers going forward is significantly improved for the reasons that we gave when we debated the Pensions Bill earlier this year.