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Pensions Bill [HL]

Volume 725: debated on Tuesday 15 February 2011

Second Reading (Continued)

My Lords, I shall speak about Part 4. I do so with some hesitation after hearing the very interesting and informative speech of my noble friend Lord Brooke, who indicated that, as his brother was a distinguished judge, it might not be right for him to take part, albeit that the judge had retired. I am afraid that I am in exactly the same position as his brother, but, having looked at the Bill, I do not think that I need take that action, though the House may regret that I reached that decision and, equally, be pleased that the noble Lord, Lord Brooke, did not take the opposite view. Having heard his speech, I am quite satisfied that what he had to say was much more entertaining than what I shall say. However, what I have to say is very important in relation to the administration of justice in this country, though I emphasise that the views that I am expressing are entirely my own and not those of any section or number of the judiciary.

The matter that causes me to rise is partly the fact that it is not until a judge such as myself has made pension contributions for 20 years that he will have the protection which the Bill provides. I rise also because one of my former judicial colleagues who is a Member of the House, the noble and learned Baroness, Lady Butler-Sloss, drew my attention to the assumptions made for Part 4. Those assumptions fairly draw attention to the risks involved in what is proposed. They do so in the following terms:

“Key assumptions are … that this measure will result in no behavioural response by the judiciary (e.g. no negative impacts on judicial recruitment, retention or performance)”.

That is a statement that I wholly accept in relation to performance, but I am concerned about its claim that the measure will have no impact on judicial recruitment or retention. The impact assessment continues:

“Key Risks are: … that the actual impacts of this measure are as yet unknown, as are the cumulative effects of existing and future policy decisions about judges’ pay and pensions – such as the current pay freeze for judges … that the assumed behavioural response might not apply and the measures may lead to negative impacts on judicial recruitment, retention and performance”.

The assumption, if it were right, would be very reassuring, but, on the basis of my experience as Lord Chief Justice only a few years ago, I sincerely question the assumption about retention and recruitment. That is the matter on which I want to focus.

The noble Lord, Lord Freud, was absolutely right to stress the importance of fairness. There is an aspect of what is proposed which has a real degree of unfairness about it because of the particular situation of the judiciary. Perhaps I should preface what I am about to say by stressing just how important is the quality of our judiciary to the administration of justice in this country.

The quality of our judiciary puts this country in a very enviable position. I know that the noble Baroness, Lady Noakes, raised questions as to what I might say, but I shall say it notwithstanding her comments. We have a judiciary which is admired around the globe; its standard is such that this country is looked to to give a lead in judicial administration in many parts of the world. I referred earlier to Lord Justice Brooke, my former colleague and the noble Lord’s kinsman. He, for example, spends a great deal of his time in retirement helping the judiciary of many countries in the new democracies which find it difficult to adapt to the changed circumstances which now exist. In addition, in other jurisdictions, so valued is the judiciary of this country that it is invited to create courts. I was such a beneficiary and created a court in Qatar. This is a singular compliment to the judiciary of this jurisdiction.

It is very important—this cannot be stressed too strongly—that we do not unintentionally affect the standards of our judiciary. One of its unique qualities is that the senior judges on the High Court Bench—who are an important part of our system—are recruited from those who have been at the practising Bar. When they take an appointment they make a great financial sacrifice to do so, and there will come a stage when they cannot be satisfied that the sacrifice involved will be a safe one so far as their families are concerned. So far, any change in their conditions would not apply retrospectively, which is why the 20-year provision is mentioned in the Bill.

However, that is of no assistance to judges once they have taken an appointment. As the Minister will be aware, in this country, those taking judicial appointments are unable to go back to their former profession as barristers. That means that if the terms are changed after they have taken an appointment, they will not be able to regain the former high earnings that they admittedly had before they became a judge. I realise that members of the judiciary cannot expect sympathy for their position, but the judges are entitled to be treated fairly and to have confidence that, once they have taken an appointment, the rules of the game will not change adversely towards them.

The Government must give the greatest attention to this because, in parts of the jurisdiction, there are difficulties today in recruiting High Court judges which did not exist in the past. From my experience as Chief Justice, I can tell the House that the attraction of the Bench to certain sections of the Bar is nothing like it used to be. I am relieved that, so far, that has not affected the quality of those recruited to the Bench. I accept that our judges today are as good, if not better, than they have ever been during my legal career. It is important that we do not do anything that puts that situation at risk. If we continue to chip away at the position of the judiciary, there will come a tipping point—although it is very difficult to identify when it will arrive—so the Government should think very carefully whether it is wise not to take some appropriate and fair steps to protect the position of the judiciary.

As it happens, I read in the Times today of events in a celebrated case in Moscow, where there has been some question as to the propriety of what happened. The judge in the case was summoned to the senior court in Moscow, where a contributor quoted in the article reports her impression that he was going to get his orders for the conduct of a trial that was yet to take place. I am happy to say that no judge in this jurisdiction would respond to such an invitation, were they to get one. One of the difficulties if you are Lord Chief Justice is that you can give no orders to any judge as to what they do or how they do it in any individual case. The independence of the judiciary is absolutely critical—and it works because of the calibre of person who is recruited.

For those reasons, I urge the Government to look very carefully at what they are proposing to do and make sure that they are not taking a risk with our very fortunate position of being able to regard the judiciary as one that displays the proper degree of independence and of excellence.

My Lords, it is a privilege to follow the noble and learned Lord, Lord Woolf. I hope that your Lordships will listen to what he says. When I became Lord Chancellor, and he was Lord Chief Justice, I found that things went badly for me when I did not listen to him and that they went a lot better for me when I did. Like many noble Lords, I congratulate the noble Lord, Lord Freud, on the clarity and strength of his explanation. I also congratulate my noble friend Lady Drake. We are very lucky to have such an incredibly powerful team dealing with a Bill of this importance.

I should also like to express my profound regret that the noble Lord, Lord Brooke, who participated in our debates on a Bill which we debated over the past 450 years—namely, the Parliamentary Voting System and Constituencies Bill—did not deliver at approximately 3 am on one of those days when we were sitting late the same speech as he delivered about an hour ago. We would have enjoyed it immensely on that occasion.

Perhaps I may make two preliminary points. First, I declare an interest: I might have close relatives in the future who will become judges and be affected by the Bill. I was also Lord Chancellor and the Bill theoretically could affect entitlements that I have. But I do not think that it does, for the reasons which the noble and learned Lord, Lord Woolf, outlined. Secondly, the Bill has an effect on sitting judges. My remarks are entirely my own. They have not been suggested to me by sitting judges.

The issues that I want to talk about are judicial independence and the effect of Part 4—issues not touched upon by the noble Lord, Lord Freud, although they were touched upon by the noble Baroness, Lady Noakes, who said that she hoped the Government would not cave in as they did previously. I take pride in the fact that I was the caver-in on the previous occasion, and I believe that my caving in protected judicial independence and quality considerably.

The constitutional points at stake here are very significant. The Bill represents an identifiable departure from the stance that the state has previously taken. Our constitutional structure is based on democracy and the rule of law, which ensures that individual freedom is protected, in particular against oppression by the majority, and depends on there being an independent judiciary, free from any interference, including and in particular from the Executive in the making of judicial decisions. Part of that freedom involves the Executive not having the power directly or indirectly to influence a judge individually, or the judges collectively, as a whole, whether by pressure before a decision or extracting a price after a decision has been made by the courts. The protection of judges from both direct and indirect interference by the Executive has been reflected in a series of statutory and non-statutory steps taken by the legislature and the Executive over the past 30 years to enshrine those protections.

The obvious pressure point on the judiciary is judges’ salary. Although the Senior Salaries Review Body looks at their pay and makes recommendations, their salary is set by the Government. Section 12 of the Supreme Court Act 1981 specifies that judges' salaries shall be set by the Lord Chancellor in conjunction with the Minister for the Civil Service. Section 12(3) specifies that:

“Any salary payable under this section may be increased, but not reduced, by a determination … under this section”.

The purpose of the section is to avoid a Minister having the power to reduce the salary of the judges either because, in reality, the Government are annoyed with a decision that a judge or judges make or to give such an appearance.

It is plain from Section 12 of the 1981 Act that the same protection does not apply to judicial pensions. Depending on whether the individual judge was appointed before or after 1 April 1995, a judicial pension is payable under either the 1981 Act or the Judicial Pensions and Retirement Act 1993. Neither Act contains an express prohibition on alteration or reduction in the terms of the pension. The current position, which applies broadly to all judges, is that they each have a non-contributory pension for themselves and a scheme to which they have to contribute for their dependants' benefits.

The effect of Part 4 of the Bill is that the appropriate Minister can, by regulations made with the concurrence of the Treasury, require existing judges to make contributions to their own pensions. Crucially, as the noble Lord, Lord Freud, said, that allows for the imposition of contributions for the first time in respect of the judges’ personal pensions and, equally crucially, allows for their increase in those pensions from time to time. The effect of this, as the noble and learned Lord, Lord Woolf, said, is that judges who were employed and took up their office on the basis that they had to make no contributions for their own pension, on the basis of what the noble Lord, Lord Freud, said, will have to face some unspecified contribution. This is an obvious deterioration in their terms and conditions, made the more problematic for the individual judge for the reason given by the noble and learned Lord, Lord Woolf—namely, that while the Executive can change their position, the judge cannot change his or her position by returning to the profession that he or she left in order to become a judge. I should add that it is compulsory for a judge to be a member of the relevant judicial pension scheme, while the Bill specifies—under subsection (2)(c) of proposed new Clause 9A, which would be inserted into the Judicial Pensions and Retirement Act—that any contributions have to be made in,

“the form of deductions from the salary payable”,

to the judge.

The consequence of the Bill and the introduction of contributions from the judge to his or her personal pension is that there has to be a further deduction from the judge’s salary, meaning that there will be a reduced salary paid to the judge without any commensurate increase in the benefits obtained. On the face of it, this is at the very least a breach of the spirit of Section 12(3) of the Supreme Court Act 1981, which prohibits any reduction in salary. There will be such a reduction because, as the noble and learned Lord, Lord Woolf, has pointed out, there is at the moment a freeze in judicial pay. Even if that is not a breach of that spirit, it is certainly a breach of the basic principle that it should not be open to the Executive significantly to reduce a judge’s main remuneration.

From my own experience as Lord Chancellor, I believe that this is a matter that most emphatically should be dealt with by the legislature, not by the Executive. I believe that the Executive instinctively understands that they must not interfere with the decision in an individual case. In my experience, when I was among them, no member of the Executive—official or Minister—ever sought to interfere with an individual decision. However, throughout the period when I was Lord Chancellor I was aware that the Executive were occasionally irritated with decisions that were made. It never led to anything, but individual officials and Ministers occasionally expressed the view that the judges did not understand particular positions or were not sufficiently understanding of the Executive’s problems.

The potential for tension between judges and the Executive has inevitably increased over the past 30 years, for two reasons. First, there is a great increase in judicial review, which means that the judges are more frequently challenging, and sometimes striking down, decisions made by the Executive. Secondly, the effect of the Human Rights Act is that there are more direct challenges to the state by the courts—not by challenging their decisions but by having to make decisions in relation to them. That change can be seen from the fact that in the early 1970s the final Court of Appeal, which then sat in the House of Lords, dealt primarily with commercial and tax cases. If you look at the daily diet of the Supreme Court across the road now, you will see that it is made up of many more constitutional cases involving challenges to the Executive. The separation of the Executive from the legislature, and their different roles, has therefore become more important.

I say in parenthesis, picking up on a point made by the noble and learned Lord—and referring not to Russia but to the United Kingdom—that I read an article in the Daily Mail last week which said that Ministers were furious with the courts because of their striking down the cancellation of some or all of the Building Schools for the Future programme. I have no idea whether Ministers were furious, but, as I say, I know from my own experience that Ministers and officials sometimes could be upset, and I also know that this upset with the courts was always misplaced. In the context of future decisions by the courts that are unfavourable to the Government, it might be possible to say that a decision to exercise the power proposed in Clause 24 had been taken in response to that set of decisions. That would erode confidence in the Executive’s inability to interfere in judicial independence.

What is the solution to this problem? In my view, the solution is to put a provision into proposed new Section 9A of the Judicial Pensions and Retirement Act 1993 that says that nothing in this Bill will allow an existing judge’s pension entitlement to be reduced in any way, including by a right to impose or increase contributions where none are paid at the moment. The consequence of such a provision would be that existing judges’ entitlement would not be affected. It would mean, however, that the Government would be entitled to introduce a contract for new judges that had a provision for contributions. In relation to new judges who are subject to a provision for contributions, it would not be open to the Executive thereafter to increase the level of contributions. The position would be that no judge sitting at the moment could have his pension entitlement changed. In the future, it would be possible for a new judge to have contributions introduced, but those contributions would be fixed. They could be reduced but not increased.

That approach would exactly reflect the approach that the legislature has hitherto taken to salaries. It would take away from the state the ability to respond in any way to decisions that it did not like. I make it clear that I am not suggesting that this Government, or any future Government whom one can envisage, would do that. However, to give a Government that power in the future is to give them a classic tool with which to interfere with judicial independence. I agree with every word that the noble and learned Lord, Lord Woolf, said about the importance for our standing in the world not only of having judges of the high calibre that we have but of having judges who—not uniquely, but unusually—are regarded as completely free from influence by the Executive. For the state now to introduce a provision such as this, which we would deprecate if another country introduced it, would be a great mistake.

My Lords, the House has just heard, with great interest and respect, two most distinguished contributions by well known lawyers on the role of the judiciary and the Bill’s impact on it. We will shortly hear from a third distinguished lawyer on the matter. I am sure noble Lords will be relieved if I say that I have neither the competence nor the temerity to engage in this argument. We have also heard from my noble friend Lord Brooke of Sutton Mandeville, who was kind enough to support me on my introduction to this House last year. He lightened the tone in the most splendid manner. It made me think that in an effort to build consensus across the coalition, if not across the House, on what is essentially a rather consensual Bill, I should declare a past interest in that my father did know Lloyd George, although they were never of the same party.

Having said that, I was reviewing, as one should, my declarations of interests. The primary one, which I do not think I have heard from anyone else, is that I am a state pensioner. This means that my wife, who is in a similar position, and I are now immune to most of the measures in the Bill. We have passed the gateway. But perhaps more materially, I am also a trustee of the Conservative and Unionist Agents’ Superannuation Fund.

Beyond that, it might be of interest to the House if I throw in the fact that at one stage in another place I handled the Front Bench brief in relation to the initial pension credit legislation. However, I find it sobering—this is germane to the case—that with the complexity of the system which we now face, even given that measure of experience, when it came to the fine points of my own state retirement pension statement I was completely unable to interpret what it actually meant. I knew something about graduated contributions but it was only this week in connection with a new statement of my entitlement for next year, and with reference to Clause 2 of the Bill, that I discovered that I had a PUCODI that I never realised I had. I am delighted to say—it is a matter of a few pence—that it will continue in the future.

I welcome the Bill—strategically, if not in every respect—in that it addresses three needs. First, it addresses the need to control the deficit, although, significantly, it will not do so initially, and not even within the period of the commitment in the coalition agreement to control it. However, it will build up to effect very significant budget savings of the order of £30 billion directly, plus tax and national insurance contributions of a further £8.5 billion over a decade. Those savings are some way away but are very significant indeed. Secondly, it begins to respond to the inexorable demographic process of an ageing but increasingly viable population with a rapid increase in life expectancy which has shaken every actuarial calculation. Remarkably, at the beginning of my political career, there were about 8 million pensioners but we are starting to talk in terms of having 14 million or 15 million within the lifetime of many of us in this House. Thirdly—this is rather qualified praise—the Bill effects some simplification in what I have already indicated is an overcomplex and unintelligible system for the lay person.

As judicial pensions have just been touched on, I shall say no more about them. I do not intend to say a great deal about the arrangements for auto-enrolment although I am pleased that they have been widely welcomed. However, although we are nearly there, some aspects of the technical alignment of this—for example, some submissions I have seen from the British Chambers of Commerce—are entirely proper matters for discussion in Committee. Another area that concerns me—although I am not saying that we should reverse this into one of the functions of NEST, which has a great deal to do—is the whole question of small pots—which I find very vexing—which have been left behind for individuals, particularly but not exclusively for women. I am aware of one in my family worth £20 of pension per annum and another worth about £35 of pension per annum. They cannot be removed on the ground of triviality as that is being claimed somewhere else but they are very untidy and the administrative costs are unconscionable. We must hope that we will return to that issue in the future. What we are doing with NEST—though it will not always be easy and will introduce a burden for employers, including some smaller employers—is broadly sensible in view of the objectives of securing greater savings and availability which the Bill sets out.

I remember from my early days in the pension credit world, to which I have referred, the moral hazard of encouraging people of modest means to save when any benefit from their deferred gratification may be matched, or even overcome, by the opportunities available—these are not related to their own saving—through means-tested pension credit. That destroys the moral basis for their contribution and may give rise to legal challenge later on. That is why I am attracted by the ideas that have been touched on in the debate, particularly by the noble Lord, Lord German, and have certainly been sketched in the press, that something should be done to consolidate the state pension at a higher actual level. Moving to a higher minimum level would provide a platform on which people’s full NEST-directed or other-directed savings could build, rather than being subverted by a means-testing system.

However, the meat of the Bill in financial and policy terms lies in Part 1 on the state pension. We know that life expectancy is increasing even faster than the assumptions of the timetable of the 2007 Act. Even allowing for a completed move to 66 for everyone, within 20 years there may be another 2.5 million pensioners. Any Government would have to address this, even if the budgetary situation were better than it is today. I therefore support the principle of bringing forward changes to the state pension age. On fairness, we need to recognise the interests of those in the active labour market—taxpayers who have to fund these pensions when they are paid—and the overall gender balance effect. These issues have been touched on.

That is not to say that there are not concerns—I share those concerns—about problems, particularly for a number of women in this transitional phase. It is simply unrealistic to pretend that any move to accelerate the system could be painless. However, we need to recognise—many of us across parties have campaigned on this for years—that the position of women in the pension system has generally been difficult. In fact, we have only just achieved 30-year entitlement. One or two cases of particular stress have been referred to—for example, women who have attained the age of 60, or will have done, who then discover that their pension is moving from them, rather like the fruit in the old parable whereby you never quite get there. I hope that in Committee we can look at some of the most direct effects, particularly on people who are seriously ill, to see whether something can appropriately be done about them. I recognise that cost is a real constraint. Trying to say that we have a problem that we will meet in full would nullify the Bill.

Another constraint which has not much been touched on in the debate is the jurisdiction of the European Court in relation to potential discrimination. Although I would not wish it to do so, the court will look seriously at the issue of not aggravating a gender imbalance. However, I should like Ministers to consider whether they could meet at least part of the cost by transferring the balance from the female gender to the male gender and making an earlier start on moving the male pension age up towards 66 before 2018. In order not to destroy the principle in Europe, this could be done by ensuring that there was a progressive reduction in the differential between the male and female pension ages—that is, the female rate of withdrawal or of moving the contribution qualifying age would always be faster than that of males. That would be a reasonable package to put to the Europeans, saying, “We have a problem. It is an historic one. We also have an overall financial problem. Can we consider doing something slowly about the male approximation to 66, to which we know, as part of our programme, the female age would approximate in due course?”. Such a proposal would be reasonable if it helped to provide some resources for the burden sharing.

The overall message from this debate is that pension legislation is complex and potentially expensive and savings are not easy to get and have to be thought about well in advance. Somewhere along the way—although, as I have indicated, I am no lawyer—the words “reasonable expectations” chime in on this. However, I congratulate the Government on the concept behind their Bill and I look forward, because the devil is in the detail, to its detailed, objective and, on the whole, broadly consensual consideration.

My Lords, I want to contribute to this debate about the Pensions Bill from an entirely different angle. I have listened with fascination to, and taken note of, the forensic analysis of its clauses. I declare an interest; for almost two years, I was the government-appointed voice of older people. In that time I received hundreds of letters, and it is those voices that I bring with me to the Chamber. I regret to say that I did not have many letters of complaint from the judiciary.

The terrible news this morning from Health Service Ombudsman, Ann Abraham, which detailed the shocking treatment of old people in some national health hospitals, indicates the need for a total rethink of how we regard the old. We all know that populations are ageing. We should celebrate that fact as it is a major achievement in human development. Advances in medicine and hygiene, and the triumph of lifestyle changes such as the decline in smoking, have converged to make a major change in my life expectancy and that of everyone else. The human race is living longer. By 2050 the number of people around the planet over 65 will have doubled. This change is on a par with climate change, and will interact with climate change to shape the future of life on this planet.

Rather than see the phenomenon as a wretched burden on society, we should welcome the old as a major new resource: an extra generation fit enough to work longer and contribute to the economy that supports them, as well as a major market for new technologies and services that promote well-being, independence and social interaction. That is the good news.

The bad news, which today's report on old people's health endorses, is that we are far from seeing the old as valuable, often capable and willing to work, planning carefully for what they expect their retirement to bring, and deserving of the same dignity and respect as the rest of society. From now on, issues concerning the old—their employment, housing, social care and transport—will come for consideration before your Lordships again and again. The planning of pension provision is merely a very important and leading adjustment that all of us will have to make to these sensational changes.

It is important that we get the emphasis and the attitude right from the start. The default retirement age is already on the way out. If older people wish—and many do—they may stay in work for as long as they are able and needed. They will be needed. The economy cannot support a population most of whom spend one-third of their lives in state-supported retirement. Planning must be overarching. Let us consider the numbers. In May last year, nearly 12.5 million people were claiming state pensions. The UK spends 5 per cent of its GDP on pension benefits, which is less than most other countries in Europe.

The names of Lloyd George and Beveridge have bounced around the Chamber today. William Beveridge advised Lloyd George on the first old-age pensions. Your Lordships will remember that when later he advised on national insurance in 1942, he listed the then five great evils: want, disease, ignorance, squalor and idleness. Times have changed. If Beveridge were to come back and address issues facing the old, he might well suggest five new giant evils. I believe that they are poverty, isolation, discrimination, injustice and neglect. Three of those considerations converge in the provisions of this Bill: discrimination, poverty and injustice. We would do well to consider them closely, for they will occur again as we struggle to deal with the unprecedented social change that is upon us.

On discrimination, 25 years after the Equal Pay Act, whose intentions we now know have not been fully realised, I little thought to find women confronting a brand new form of discrimination. I thought that the public will had moved on and that the very suggestion that such a new discrimination could happen would be howled out of court. Yet such discrimination exists in accelerating the extended pension age to 66 by 2018 in the interests of righting another discrimination, which we acknowledge existed when women were allowed to retire at 60 and men had to wait until 65. That was discrimination and we are pleased to see it go, but not when another discrimination is brought in to make it possible.

We know why this arises, and it is very understandable. It arises because the trajectory of a woman’s life differs from that of a man’s. It almost cannot be otherwise. For the best of all possible reasons—reasons applauded by society—women who are now in their fifties took a break from their working/earning lives to bring up their children. Society applauds such a move. It required their making financial sacrifices at the time, but those sacrifices were made willingly and within their own capacity to plan and anticipate their family finances. The Bill penalises them for doing that. It confronts them with having to wait longer than they thought before they get their pension and with little time or resource to do so. It is not just women who recognise that as discriminatory.

The next great evil facing the old is poverty on a very wide scale. A higher proportion of women in the workforce have low-earning jobs. Pensioners from black and ethnic groups are more likely to be in poverty than white pensioners. Forty-nine per cent of Pakistani and Bangladeshi pensioners already live in poverty. Many women, as we have heard, struggle to do several jobs over the same schedule in order to provide for their families: their existing earnings are at a stretch. They may well be caring for both a younger generation—their own children—and an older one, their ageing parents. They are caught in a generational bind. Yet some of them—33,000, according to the Minister’s own figures—face the sudden prospect of needing to fund up to a two-year delay in their entitlement to a state pension. They must wonder how they are to do that and how that situation arose. There is no scope, no space, no time and no opportunity to earn a little more or to set even a little aside each week to ease that transition. They face the gentle but implacable squeeze of poverty. Up to 2.6 million women will be affected by the additional time they have to wait for their state pension.

The third evil is injustice. Many of the old are already seized by a fear of what lies ahead. They sense that they are getting a raw deal. I receive letters all the time in which the same phrases are used: “I have worked hard all my life. I have paid my taxes. I have cared for my family. I have taken hardly any holidays. And yet now I am to be hit by this pensions ruling. It just isn’t fair!”. There is widespread bitterness among many old people that the young have no idea and simply cannot imagine how anxious and distressed old people are at not being treated justly. There is alarm among them that many younger people think that the old have never had it so good and have lived lives of comfort and ease, while they struggle with changing financial pressures. But there are millions of older people who have led steady, responsible lives, caring for their families, honouring their communities, and they expect to be treated justly as society adjusts to the changing demographics.

As I said when I began, the old are increasing in number and they are alert, active, thoughtful and outspoken. They are looking to this Bill to help society to adjust to the changing demographics. They feel that they are in a van of social change and yet they are the victims of it. When making changes to the Bill, I ask the Minister to consider those injustices and discriminations against women and the poor.

My Lords, I have listened to many fine speeches on the Bill. I congratulate my noble friend on the way in which he opened for the Government and the noble Baroness, Lady Drake, on the way in which she opened for the Opposition—very clearly and very plainly. If anything is plain it is that this Bill faces huge difficulties. Some of these have been highlighted very clearly this evening. It is very good for us to have the opportunity of hearing these problems because the problems that confront the Government in this area are extremely great and very difficult to cope with. A suggestion, which occurs to me as attractive, is the one which would join a substantial increase in the state pension with these changes. That may or may not be easy. I must declare an interest in the Bill as a former Lord Chancellor, a former Lord of Appeal in Ordinary, a former judge of the Supreme Court of Scotland and a current state pensioner. As I understand the Bill, it does not affect me financially in any way whatever.

It is about 18 years since I introduced the Judicial Pensions and Retirement Bill to this House. The days between its introduction and its enactment were not the happiest of my life. The principle that a serving judge shall not have his terms of service adversely affected without his consent during his term of service is a fundamental principle, part of the rule of law and internationally recognised. It has been followed by Governments in this country, so far as I know, as far back as I can tell. When I came to introduce the Bill to which I have just referred, I made it plain that it did not affect serving judges. Those who were already serving judges were not affected by the Bill, which was introduced in 1992 and passed in 1993, except that they were given an option to enter the new scheme if they wished, and some did so.

However, serving judges were not affected in any way. The reason for that was not because the Government did not want to change things quickly—I remember one of my colleagues saying that we would have to wait a long time before the pension provisions in the Bill took effect. The Government wanted to see change immediately—there is a certain aspect of that in politics which perhaps we should try to resist—but the Bill did not affect any of the serving judges, many of whom were not old; it affected only those who were appointed after it became law. That is fundamental and requires to be observed in this Bill.

The truth is that the newly appointed judiciary has quite a high turnover. It does not take all that long—although longer than my colleague would have liked—for the new regime to come completely into effect. There are some, but very few, existing judges who are under the 1981 system.

The noble and learned Lord, Lord Falconer of Thoroton, referred to aspects of this provision which are enacted. I think that he referred to the Supreme Court Act. He himself changed the title of that Act to the Senior Courts Act, but the statutory reference is perfectly plain, because when we had a new Supreme Court we had, needless to say, to change the title of the old one.

As I said, that was the provision that we made, and I believe that it is the right one. The question about what happens to new judiciary is of course not trammelled in any way by that. The noble and learned Lords, Lord Woolf and Lord Falconer, referred to the considerations that apply to that. I cannot get into that, because that is the area where I suffered a lot in 1993, when I was told that if the new regime of 20 years instead of 15 was introduced, we would not get any judges at all, or the ones that we would get would be people who were not worth having. That is perhaps a slight exaggeration of the way it was put, but it was put very strongly, I can tell you, and lasted for quite a while. The fact is that it did not adversely affect recruitment—at least, not as much as was suggested; I think not at all, but that is my view of the matter.

If that fundamental principle is to be observed, as the noble and learned Lord, Lord Falconer of Thoroton, said, it is necessary to restrict the operation of Clause 24, which makes an insertion after Section 9 of the Act, to those who are appointed after the Bill comes into effect.

The second point made by the noble and learned Lord, Lord Falconer of Thoroton, was about the contributions to be required of the more recently appointed judges. I do not think that it would be right to allow the Executive to increase them by order, but we could well have a formula set out in the statute which increased them—for example, in relation to the indices presently in question which concern how pensions are uprated. Some such statutory formula would be open. As I said, there would be a question about the effect on recruitment, but that is an open question on which people could have very different views.

That is all I want to say; it is a very simple point and the only one I really want to make. I think that it is a sound point that the law—the constitution of our country—requires that, once a judge has become a serving judge, his terms of service cannot be altered adversely to him without his consent. To give effect to that in the Bill would require a minor amendment—a small amendment in its scope—but an important one.

My attention has been drawn to some other problems about additional voluntary contributions and so on, but those are very subsidiary. I want to stick on the principle, which I think is an extremely sound one. My noble friend Lady Noakes says that I should not listen to the lobbying of the judiciary and must not cave in to it. I am not listening to the lobbying of the judiciary; I am applying a principle which we applied when we put our Bill in place and which I believe should be respected today.

My Lords, we are reaching the end of the debate; I am conscious of the time and the ground covered. I will confine myself to one part of the Bill. In doing so, I associate myself with all the remarks made by my noble friend Lady Drake and congratulate her on her contribution.

I want to deal with the proposal to raise the salary level at which someone is automatically enrolled to £7,475 a year, with a future possibility of increasing that threshold. For 30 years, I represented low-paid workers. I was a member of the first Low Pay Commission and, as one of the European social partners, I was part of the team that led to the adoption of the part-time workers directive in the 1990s, so I want to focus on the threshold because of its impact on the low paid. Too often, we spend time here talking about people with careers; I want to talk about people with jobs.

I appreciate that the proposal is a result of a recommendation by the independent review which was published in October last year. The review team also considered whether the smallest employer or the older worker should be excluded, whether any changes to the proposed regulations, such as a three-month waiting period, would help, and whether simplification of the scheme, such as self-certification, would be advisable. My guess is that there was some negotiation within the review group on these areas and the lowest paid and casual workers lost out. I appreciate that the threshold of £15,000 was rejected by the review group, and I am grateful for that, but the proposed threshold of £7,475 this year, possibly rising to £10,000, might exclude those who have a series of jobs, some seasonal, some multi-site jobs with different employers. It might be neat and tidy, as some noble Lords have said, to fix on the income tax threshold, but that threshold is a political decision, not one based on need.

The CIPD, of which I am a fellow, conducted a survey last week indicating that 65 per cent of staff in the private sector are not saving in a company pension. This shows all too graphically the scale of the problem in future and surely argues for fewer exclusions, not more. Anything that is linked to an income tax threshold will mean that an individual’s pension future will be tied to the varying political whims of successive Governments. We need a plan that will last for 40, not four, years. If the threshold increases to £10,000, 1 million to 1.5 million people, mainly women, will be excluded.

When I first started work at the University of London in 1968, I was excluded from the occupational pension scheme, along with all my immediate workmates. In my case, it was because of a two-year eligibility requirement. In other cases, it was because they were part-time and, for the rest, it was because they were not earning sufficient to qualify for entry at that time. I was the lucky one because at least I got in eventually. Those who stayed and retired in the past few years did so on a reduced pension because of the obstacles placed in their way a lifetime ago. I sometimes feel as if this is where I came in.

We should not assume that low-paid people are stupid and do not want to plan for the future or make short-term sacrifices for long-term benefit. The lowest-paid men and women will be excluded from automatic enrolment not just for administrative convenience but because, I still believe, there is not sufficient appreciation in the UK of the impact of low pay on millions of people. When we talk about poverty, it is too often focused on benefits, tax credits and other forms of support. We should also be focusing on lower-paid workers and enabling them to plan for the future. I urge the Minister to reconsider his proposal to raise the threshold for eligibility and to put people on the right road to help themselves to secure their own future.

My Lords, it is clear that much of this Bill is about tidying up so the Bill should command cross-party support. I will make three points that have not been fully brought out in this debate.

The first point is the need for a national savings policy. For many of the rising generation, pension saving has become almost a dirty word. It might be no bad thing if they are saving for their retirement in other ways; as has been commented, ISA savings have increased dramatically in relation to personal pension saving. It is fine to clean up the legislation that we have, but there needs to be a framework so I hope that the Government will come forward with a national savings strategy in due course. Following on from that, the Government should not be surprised to find that both employers and employees have pretty strong motivations for opting out of auto-enrolment to the extent that that will be possible.

Another big point, which has been made in different ways by many others, is that the Bill merges retirement ages but does nothing about the planned date of 2046 when the retirement age will rise to 68. Many would share my view that the projected longevity argues for the retirement age to rise much in advance of that and, possibly, to rise to the age of 70. I have campaigned for some time for the neat quid pro quo of a much more generous state pension at 70 that would merge the two different main and secondary pensions that are now available but would be well above the minimum income support level of pension credit. That would be a fair way of balancing the two. I also feel that pension credit has demotivated pension savers. You could get rid of all forms of the obligation to buy an annuity as well if the state pension at 70 was adequate.

A third territory, which my noble friend Lord Boswell mentioned, is that the Bill tackles the obscure territory of GMPs and PUCODIs. I regret that I am not yet entitled to either. Apart from this being something like the Schleswig-Holstein question, there is quite an important point to be made about GMPs. I have a GMP and I know what it is and where it sits, but I have yet to find anyone who has one who even knows that they have one. As Members of the House will know, in essence a GMP is an entitlement when an individual ceases to be a member usually of a DB scheme that has contracted out. As far as I can see, pension schemes often do not keep up with the addresses of members who are entitled to GMPs and do not to write to people about them. I do not know precisely what legal requirements might be missing, but this is a practical issue and there ought to be, if there is not already, a clear legal obligation to keep people advised.

I congratulate my noble friend Lord Freud on his very clear presentation of a difficult Bill. The Bill should command support, and I think that we will have other issues to deal with when the Finance Bill comes before the House.

My Lords, this has been a powerful and exceptionally well informed debate that was enlightened yet further by the great sweep of history from the noble Lord, Lord Brooke of Sutton Mandeville, with his insights into actuarial practice in the EU. I, too, congratulate the noble Lord, Lord Freud, on the manner in which he introduced the Bill and the very clear way in which he set out its contents. He reminded us about the golden years under a Labour Government in 2006. I am especially pleased to have heard from the noble Lord, Lord Boswell, because he actually has a PUCODI. I have been seeking someone who has one for a long time, and what I thought was going to be a fairly sterile and short debate in Committee will, I think, be much more extensive, as I am sure the Minister will attest. Like many others, I also congratulate my noble friend Lady Drake not only on a very impressive first appearance at the Dispatch Box but on her incisive analysis of why we have concerns with this Bill.

The Bill seeks to address the right issues—increasing longevity and undersaving—but in a way which we cannot fully support. Fundamentally, we consider accelerating the equalisation of the state pension age for men and women to be unfair. Of course, we recognise that life expectancy has increased beyond the 2004 projection, as spelt out by the Minister, and we adhere to the Turner commission proposition that intergenerational fairness argues for the proportion of adult life spent in receipt of state pension to be broadly constant. That would be catered for as much by the approach we support as by the Government.

It is our view that the existing timetable for equalisation of the state pension age to 65 should be left unchanged and that the increase to 66 for men and women should take place between 2020 and 2022. We accept that it would also be necessary to review the subsequent timetable for increasing the state pension age to 67 and beyond. Perhaps we could make common cause on that with the noble Baroness, Lady Noakes, and the noble Lord, Lord Flight, although whether we would end up in the same position is another matter. The noble Lord, Lord Boswell, opposed the suggestion about accelerating the state pension age to 66 for men but not for women, but there are issues within the EU about that.

It is to our disappointment that we could not have consensus on this Bill. Had the coalition Government stuck to their commitment that the date at which the state pension age for women would not start sooner than 2020, we could be at one—a point pressed by the noble Baroness, Lady Greengross. Now, as we have heard, some 300,000 women will have to wait for between 18 months and two years longer to receive their state pension. This means that they will lose up to £10,000 in pension income, and more if they are eligible for pension credit.

The timeframe within which these changes are to take place will make it very difficult for women to mitigate their loss. Women are less likely than men to be in private pension saving and have fewer financial assets to bridge the gap. Some have caring responsibilities and will have left the labour market having anticipated their state pension at a certain date. Those women are now faced with the dilemma of seeking to rejoin the market when employment prospects are particularly weak. My noble friend Lady Bakewell referred to these issues as issues of discrimination, poverty and injustice.

However, dealing with these matters in terms of percentages, aggregates or cohorts belies the fact of the change on individual lives. We have heard the stories from my noble friend Lady Hayter about how individual women will be affected and we have heard powerful reasons why the Government should stick to the legislative timetable for equalisation. The noble Lord, Lord German, offered us some mitigation if the Government are not to change their position around pension credits and in addressing those who are seriously ill. Perhaps we can seek common cause in Committee on that, but that does not address the fundamental unfairness in the Bill.

None of this unfairness can be claimed to be in the cause of eliminating the deficit by 2015, as the savings from the Bill would not begin to accrue until 2016-17. We accept that holding to the existing equalisation timetable would reduce the savings, but fairness has implications. That would mean that more would be borne by the working age population, but it would still give rise to savings of some £20 billion, including additional tax receipts of about £8 billion.

We have heard from the Minister about the triple lock and the relinking of the basic state pension with earnings in 2011, which is earlier than required by legislation. However, on the basis of Treasury forecasts—a point made by my noble friend Lady Turner—it looks likely to be 2013 before earnings become the highest of the three components of the lock. With the switch to CPI, it is possible that pensioners will be no better off and that some may be worse off under the lock than they would have been had there been continuance of uprating in line with the RPI.

As many noble Lords have said—everyone who has spoken, I think—we strongly support the coalition Government’s decision to proceed with auto-enrolment and with NEST. Indeed, why would we not? The proposals were created on our watch: my noble friend Lady Drake was a member of the Turner commission and was later chair of PADA; my noble friend Lady Hayter served as a trustee of NEST; and my noble friend Lord Myners was chair of PADA. We are, as it were, up to our necks in it. The prospect of between 5 million and 8 million people newly saving, or saving more into a workplace pension, is a profound change that will allow millions of workers, who never had the chance previously, to build up their own pension and give them an opportunity to save.

Of course, auto-enrolment will not transform matters overnight, but it is part of a broader pensions settlement, grounded in the intellectual rigour of the Turner commission. That settlement proposed improvements to the basic state pension, especially improved access for women, accelerated the flat-rating and simplification of S2P and proposed the imperative to redress market failure through the creation of a national low-cost saving scheme, which is now NEST.

The Turner commission’s analysis holds good and is not fundamentally disturbed by the Bill. The noble Lord, Lord Stoneham, made that point. The practical ramifications of that analysis have been subject to compromise—for example, the cap on contributions, the contribution levels, the staging and phasing and the restrictions on transfer—and not everyone has been happy with the outcome. We may have a difference of view with the noble Baroness, Lady Noakes, for instance. However, the Bill disturbs that compromise and tilts the balance in favour of employers and against participation of the lower paid. The Government deserve our support for resisting the clamour to remove micro businesses from its scope and to exclude older workers. However, setting the trigger, as we have heard, at the personal allowance threshold for income tax denies 600,000 people—nearly half a million women—the opportunity of auto-enrolment. More worrying is the concern expressed by my noble friends Lady Drake, Lady Donaghy and others about the start of an upward movement of the personal allowance, which will be tracked by this trigger. Should the trigger reach £10,000, 1.4 million people will miss out on auto-enrolment. Linking the entry point for auto-enrolment to the primary threshold for national insurance is more appropriate.

Our further concern, voiced by several noble Lords, is the introduction of an optional waiting period of up to three months before employees are auto-enrolled. While we see the benefit of not having to enrol individuals who up and leave quickly and opt out of pension savings, there is another side of the coin: seasonal short-term working may be the pattern of somebody’s working life and they could miss out completely. Even if not, as we have heard, the number of job changes routinely undertaken during a lifetime will mean a significant period when an employee will have to opt in to gain continuity of saving.

We will explore these matters further in Committee and seek reassurance from the Minister that the application of the easement will be monitored. It is claimed that one of the benefits of a waiting period is fewer small pots, an issue which my noble friend Lady Hollis has rightly continued to pursue. To a certain extent, this is solved by the use of NEST, where employees automatically collect their pension pots from a range of different employers. However, that solution does not cater for circumstances where the providers chosen are other than NEST. We support my noble friend in her exploration of whether small pots might be collected together in NEST at the point of retirement, a matter pressed also by the noble Baroness, Lady Greengross. My noble friend rightly revisited the opportunities to amalgamate earnings from mini-jobs for the purposes of national insurance credits, qualifying earnings and, now, the trigger.

What is the Government’s position on changes to the rules on NEST which would allow transfers into the scheme? What is their position on removal of the cap on contributions into NEST? On a more general point, how will the rules which allow pension contributions to be deducted in computing tax credits be carried forward to the universal credit?

The issues around self-certification have proved intractable in the past. The challenge has been to facilitate sensible mechanisms to encourage employers to stay with existing good provision provided that it has delivered at least the equivalent of 8 per cent on qualifying earnings without employees who should be auto-enrolled dropping through the net in large numbers or systematically. Consultation on how this might work is being undertaken, but we are unfortunately unlikely to see it brought to a conclusion by the time that we have finished our deliberations. Unless these matters are clear, there are those who would seek to use the rules to circumvent the auto-enrolment requirement. Evidence, if it were needed, can be found in attempts to exploit the differences in trust-base and contract-base refund rules, although we are pleased to see that the Government are on this particular case.

On judicial pensions, a matter spoken to by the noble and learned Lords, Lord Woolf and Lord Mackay of Clashfern, and my noble and learned friend Lord Falconer of Thoroton, I am aware that there is sensitivity and history surrounding this issue. If I were not, I was woken up to it pretty quickly. When I raised the issue with a couple of colleagues and said that judicial pensions were on the agenda in the Bill, there was a sharp intake of breath and I was told, “You’re on your own”. We all agree that we are incredibly well served by the judiciary, although I cannot speak from personal experience on the matter. The issue of public service pensions has been most recently addressed by the noble Lord, Lord Hutton of Furness. His interim report was issued in October and we await his final report. The interim reports recited that the best way to make savings would be to increase member contributions but to protect those on lower earnings. Can the Minister let us know how the Government’s acceptance of the recommendation is to be implemented and within what time frame?

Clause 24 is an enabling measure and, in principle, has our support. It cannot be right to exempt judicial pensions from the financial discipline which is to be applied to other public service schemes. However, changes must, as for all public service schemes, respect accrued rights. It is important also, as the noble and learned Lords contend, that these matters proceed in a manner that does not impair the independence of the judiciary.

Time does not permit a review of all the other essentially technical changes in the Bill—we will pick up on these in Committee—but perhaps the Minister can help us on one point raised by several noble Lords. Paragraph 3 of Schedule 3 seeks to introduce some flexibility into the arrangements for consolidation of S2P. There seems to be nothing in the Bill to address the much heralded consolidation of the basic state pension and S2P on the way to a £140 basic pension. That was referred to by the noble Baroness, Lady Greengross, my noble friend Lady Hollis, and the noble Lord, Lord Stoneham, who said that he has had some engagement on this with the Pensions Minister. Can the Minister update us on this and say when we can expect firm proposals?

A further issue of significance, which the Bill addresses in part, is the consequences of the switch from RPI to CPI in determining the general level of prices for revaluation and indexation purposes. The major impact of this on occupational pensions will, as the Minister said, be delivered by order and not by the Bill. From the Government’s point of view, this seems to be yet another item of work in progress as their consultation is not due to close until the beginning of March. Can the Minister let us know when the responses will be shared with us? The impact assessment has also become a bit of a moveable feast by some £20 billion in the space of a few days.

We have generally signalled our acceptance of the switch to CPI for uprating benefits, not necessarily as a permanent change but for a period while the deficit is being addressed. We will continue to examine the appropriateness of CPI as currently configured as a suitable measure for inflation compensation purposes.

We have much to discuss in Committee but our efforts will be focused on seeking a reversal of the unfairness at the heart of the Bill. That unfairness goes against the grain of recent pension legislation, which has been to redress the historic discrimination that women have faced in the pension system. However, the Government will have our support—if not uncritical —in taking forward the auto-enrolment proposals.

: My Lords, I am not surprised that this has been a fascinating and very well-informed debate. I particularly congratulate the noble Baroness, Lady Drake, on her speech. The noble Baroness, Lady Hollis, said she was looking forward to seeing her noble friend on the Front Bench, and I have to say that that speech left us with the same view. The noble Baroness is very welcome over here—in fact she could do some of this for me. A huge number of points were raised and, to be honest, I have no chance of dealing with all of them in the time available to me. However, I know that we will be dealing with them in great depth in Committee.

Let me go back to the core issue around the acceleration in the pension age. We have been left with a record structural deficit and we need a sustainable system that works fairly for current and future pensioners. The argument comes down to simple financial discipline. Spending on state pensions in 10 years’ time will be nearly £26 billion higher if we leave the timetable unchanged. That reflects a mounting financial pressure on the working population. We cannot spend money we do not have. Just as we have been clear on our intention to restore the public finances in the short term, we are also determined to do so in the medium term. In 10 years’ time there will be nearly a quarter more individuals over the age of 65—what will we do for them then? “Sorry, there’s no money”, is not an option when it comes to dealing with people’s security in retirement.

As I said in opening, people are living longer, and rapidly. We are trying to deal with the bubble that my noble friend Lord German talked about—the beneficial bubble of living much longer. The new pension age will reduce pressure on public finances by around £30 billion between 2016 and 2026. Automatic enrolment will result in £9 billion a year in additional workplace pension savings by individuals. These are significant numbers and they represent real cash value for the individuals of this country.

Let me deal with the issue raised by a large number of noble Lords. The noble Baronesses, Lady Drake, Lady Greengross, Lady Hollis and Lady Bakewell, and my noble friends Lord German, Lady Noakes, Lord Stoneham and Lord Boswell, talked about women in their 50s facing longer in the workplace. The fundamental argument runs along these lines: those people who have enjoyed this dramatic increase in longevity should help to fund their pensions. As the Minister for Pensions said in another place yesterday, if we wait until 2020, when the current equalisation timetable is completed, overall savings will be reduced by £10 billion. That represents an extra £10 billion that the working-age population will have to find.

We have heard some figures relating to the women affected—300,000 facing another 18 months or more and 33,000, right at the edge, facing two years more before they get their state pension than they might have excepted. However, 70 per cent of these women are currently working and this measure encourages them to continue working. Some of them have retired early and have a pension enabling them to do so. Some of them have independent means. Clearly, some of them will need to be supported by the working-age benefit system, which is not as generous as a pension but nevertheless represents a support network. People are working beyond the age of 65. Some 900,000 people are doing, which is twice the number of a decade ago. Indeed, 60 per cent of people in their 50s say that they would like to continue working after the state pension age.

I come to what the noble Baroness, Lady Hollis, called Hamlet without the prince—what is happening with what has been called the single tier, which the noble Lord, Lord McKenzie, the noble Baroness, Lady Greengross, and my noble friend Lord Stoneham also raised. Last year, the Chancellor stated that the Treasury is working with the DWP on potential pension reform to simplify pensions and provide a boost for pensioners for many years to come. I am not in a position to update that statement, but it is still extant. I hope and expect that we will return to this topic in our debates, when I will be able to update noble Lords.

My noble friend Lady Noakes pressed me on further moves to raise the retirement age beyond 66 to 67 and 68. Once we have got the increase through to 66, we will start to consider further increases to state pension age to manage the ongoing challenge that we have, represented by increasing longevity. The idea of an automatic mechanism to raise it is attractive superficially but, in practice, some wider issues need to be looked at in this fiscal situation. With the level of healthy life expectancy, it is probably not the most obvious way to go.

A lot of issues have arisen on automatic enrolment. I deal first with the waiting periods, raised by my noble friend Lord German and the noble Baronesses, Lady Greengross and Lady Turner. The employer will be required to provide an individual notice to individual jobholders. It must inform the jobholder that the employer intends to use a waiting period, the jobholder’s new automatic enrolment date and, importantly, their right to opt in to the employer scheme during this waiting period. We are very conscious of the need to ensure that there is adequate information.

Many noble Lords raised the new threshold at £7,475, including the noble Baronesses, Lady Drake, Lady Hollis and Lady Hayter. We are setting that level after looking very closely at replacement rates, among other factors. We have not committed to chasing up the tax threshold figure with that rate. That is a decision that will be taken independently of that. Several noble Lords made the point about increasing exclusion if we were to raise that rate. Those are the issues that we will have to deal with when we take those decisions. We will discuss them in this forum, I suspect.

The noble Baroness, Lady Drake, raised a point on loopholes in certification. Simply put, we are not complacent about that. We will be watching it very closely and we will monitor the trends. If we see that certification is being abused, as the noble Baroness is concerned about, we will have the power to strengthen the requirements and ultimately to repeal the legislation.

Several noble Lords—I am thinking of my noble friend Lord German and the noble Baroness, Lady Hollis—raised concerns about small pots and orphaned assets. Clearly, those little bits of irritating money are a major issue when they are stuck all over the place and cost you more to get out than to enjoy. We are considering the long-term implications of automatic enrolment; that is one of the issues. The DWP is currently working with HM Treasury, HMRC, the FSA and TPR, as well as with pension providers, to identify what additional work may be needed to address small pension pots. Our call for evidence on regulatory differences, which we published at the end of last month, also seeks solutions to address that. It is a real issue.

The noble Baroness, Lady Hollis, raised a question about early access to pension funds when one has small amounts of savings. As she will be aware, the Treasury has been conducting a public call for evidence on this issue. I listened to her remarks on that area with interest. I am sure that my Treasury colleagues will, too. If they do not, I will pass on the issue.

Perhaps I might deal with the question that my noble friend Lord German asked about including housing costs in the CPI. There are actually some housing costs in the CPI. However, mortgage interest payments are not in that but in the RPI. That is the way that the RPI deals with housing costs. There is work going on currently to look at how and whether housing costs could be taken in a less distorting way into the CPI. It is likely that that work would come out to a movement in the actual price of houses going into that particular index. The ONS is looking at that; the work is still at a relatively early stage and we expect it to take about two years, but it is entirely possible that that criticism of the CPI—about it excluding too much on housing—could be eroded.

I tread with great trepidation on the matter of judicial pensions, seeing people with scars all around me here. I shudder to take some of the wounds that they must have suffered in the past but perhaps I might deal very neutrally with some of the issues raised. We do not believe that taking personal contributions from judges amounts to salary reduction. Gross levels of payment will remain unaffected. We accept the argument made by all three noble and learned Lords that the independence of the judiciary is at the heart of our constitutional arrangements. There are a number of ways in which this independence is maintained including, clearly, salary protection for judicial officeholders. Salary protection does not prevent the payment of income tax or contributions that judges already make to pensions for dependants’ benefit.

The point that the noble and learned Lord, Lord Woolf, raised about recruitment and retention is clearly one that we need to maintain a very sharp eye on. We will monitor the effects of this measure. I recognise the roles of the heads of the UK judiciary and the judicial appointments bodies in questions of morale and recruitment. However, there is a very basic point here. It is right that judges should face the same restraints as other public service pension scheme members. There is a clear reason for introducing member contributions—to ensure a fairer distribution of costs between taxpayers and members so that the schemes remain affordable.

The noble Baroness, Lady Drake, asked when regulations will be available. We recognise the need to provide certainty as soon as possible. We will formally consult on the regulations immediately following Royal Assent. We will also consult informally on draft regulations in late April and early May.

The noble Baroness, Lady Hollis, asked about mini-jobs. She made a very valuable suggestion when we had a conversation about whether we can use the universal credit in relation to smaller, part-time jobs that add up to earnings above the threshold. That is a very interesting idea. It applies only to around 50,000 people at the moment, mainly women. However, our universal credit plans will increase the number of part-time workers by around 250,000, so that figure could be raised by a lot.

I am hurrying because there is so much that I would like to deal with. I will deal with a couple of points raised by the noble Lord, Lord McKenzie. I am not enamoured of him at the moment because he raised the issue of PUCODIs. I had begged him to keep quiet about them because I do not want to have to understand them, although I will if he insists. The latest position on the NEST contribution cap is that while we welcome the recommendations of the review, it is not the right time to legislate or carry out a review of the annual contribution limit for NEST. We will look at that review, as the noble Lord knows, in 2017. Similarly, it is much more sensible to wait until 2017 to look at the position on transfers into NEST. Those two issues will be dealt with once NEST is working. It is, after all, the largest experiment in asymmetric paternalism that the world has ever seen. We can afford to find out what it is doing and make adjustments at that stage.

As previously mentioned, this is a Bill of many parts, some of which may not seem to fit naturally together. In a way, that is not surprising. Pensions span a person’s lifetime, from saving on entering the job market, through planning and preparing in middle age, to enjoying retirement in later life. All those are factors across the piece. There is no one place that pension provision does, or should, solely sit. Therefore, the Bill recognises that the pension system needs to reflect this. As the demography of the UK has shifted, we have had to reassess our current structure and amend existing legislation accordingly. This Bill puts sustainability and fiscal responsibility at the heart of its measures. I commend the Bill to the House.

Bill read a second time and committed to a Grand Committee.

House adjourned at 7.35 pm.