HC Deb 16 November 1962 vol 667 cc777-81

The following Amendment stood upon the Notice Paper: In page 6, line 17, leave out "2" and insert "3".

3.45 p.m.

Mr. Houghton

With your permission, Sir Robert, and that of the Committee, I do not wish to move this Amendment, for the perfectly good reason that it does not do what I want it to do.

Question proposed, That the Clause stand part of the Bill.

Mr. Houghton

I apologise to the Committee for inflicting upon it a problem which baffled us when we were deal- ing with the 1959 Act and on which there was a good deal of discussion on the Recommittal of the 1959 Bill on 26th June, 1959. However, I have received so many letters from retired civil servants on this point that I feel that it is desirable once more to refer to it and to get this difficulty on the record.

The problem has arisen as a result of the provisions of the Superannuation Act, 1949. That Act enables a civil servant reaching retirement age to enter a new status in his official life called "disestablishment". That is to say, on reaching the age of 60, he can cease to hold his normal established position and enter a new status for which special provision was made in the 1949 Act, that of becoming disestablished.

The advantage to a civil servant in that position of becoming disestablished is that he may draw his lump sum gratuity and have the benefit of that without postponing receiving it until his eventual retirement, because disestablishment implies that he is to continue his service, and he may therefore continue his service for another five years. In some cases, the officer who becomes disestablished continues to serve in the grade in which he was previously established, but some officers, on their own desire or at the request of their Departments, give up the grade they hold as established civil servants and continue their service in a lower grade.

The difficulty with which I now deal arises when an officer gives up his previous grade and continues to serve in a disestablished capacity in a lower grade. What happens is that his pension is computed as at the date of his retirement from an established position. He then continues to serve in a lower grade and is placed under the restrictions of the 1834 Act regarding the maximum remuneration which he may receive in pension and pay.

But, when he eventually retires, his pension and gratuity are recalculated to take account of the extension of his service, and the rate of pay upon which the additional pension is calculated is the rate of pay he was drawing at the time he became disestablished. Section 5 (1, c) of the 1959 Act determined that in such a case the pension would be regarded as beginning on his final retirement and not at the date of his becoming disestablished. The Clause renews that condition of the 1959 Act.

The complaint of those who are affected by this provision is the effect of being given a choice of taking either the pension calculated at the time of becoming disestablished, plus any pension increase applicable to it, or, the total pension for which they eventually qualify at the final date of retirement, which may be five years later, plus any pension increase applicable to that, if any. Sometimes there will be a pension increase applicable to the pension when they finally retire, but it will be a smaller pension increase than that applicable to the date on which they became disestablished.

The complaint is that this nullifies, wholly or in part, the advantage which they gain in pension for extending their service. In other words, they may be no better off in total pension after having extended their service than had they retired at the original date. This is the grievance, and I hope that I have made it plain.

I moved an Amendment to the 1959 Act, and I thought that I was doing something similar in the Amendment which I have just not moved, which would eliminate that condition and substitute something else which would be a fair compromise, but I failed in my purpose then, and I have failed now, and in between this problem has been under consideration by the Treasury, by the Staff Side of the Civil Service Whitley Council, and by the Civil Service Pensioners' Alliance, and none of them has found a satisfactory solution to this problem.

The Treasury has held that it would be unfair to top up the pension finally awarded by reference to the percentage increase which is applicable to the date of the computation of the original pension, that a person cannot have the benefit of both, and that the pension increase must be applied to the amount calculated at the earlier date and it cannot be transferred to the pension calculated at a later date which contains the benefit of extended service.

I am, therefore, not asking the Minister to do anything, but I want to get it on the record that a solution has not been found. Hon. Members who keep receiving letters on this subject will find a good deal about it in the OFFICIAL REPORT of 26th June, 1959, beginning at column 1584. After the debate took place on that date the Minister was kind enough, in reply to a memorandum which I sent him, to set out in a letter dated 11 th July, 1959 the various considerations and complexities in this matter.

I have a bundle of letters expressing considerable indignation with the way in which these people have been treated. The grievance is accentuated by the increasing generosity of the pension increases given for the earlier dates, although some of them will now benefit from the smaller increase at the later dates. I do not know how one draws the attention of those concerned to our discussions in Committee on a matter of this kind. It is very disheartening when one spends a good deal of time on this matter, both in the Committee and in the House, and then receives a stream of letters from those concerned just as though nothing had happened.

I hope, therefore, that some means will be found of conveying to those who feel this grievance the enormous amount of time which has been sent on this problem and the disappointment which we all feel that we have failed to find any solution for it at least in the Pensions (Increase) Acts, and there is no alternative, I fully acknowledge, to the continuance in this Clause of the provisions of Sections 5 of the 1959 Act.

If there is any remedy to be found, it would be in an Amendment of the Superannuation Act, 1949, which is an entirely different matter from the pensions increased legislation. It may be that in the light of pension increases since it was a misfortune that this process of disestablishment was accepted alongside continuance of service without a formal break in that way, but that is not OUT concern this afternoon. I hope that I have explained it reasonably clearly and if the Minister, in the few minutes available to him before we leave the business for today, can say a word about this I am sure that it will be helpful.

Sir Lionel Heald (Chertsey)

I support what the hon. Member for Sowerby (Mr. Houghton) has said. I can confirm that this is a point which causes heartburning, and I feel that it would be very desirable to make it clear that this has not just been laid aside, but that it is a difficult problem, which will be looked into.

Mr. Barber

I want to say only three things. First, the hon. Member for Sowerhy (Mr. Houghton) has done a service in raising this matter and getting on the record the fact that great difficulties are involved. Secondly, I acquainted myself with what had transpired in the debates on the 1949 Act. I have looked into the matter again. Thirdly, quite apart from the merits of the issue with which the hon. Member has been dealing, no practical solution has been found. What is more, as I understand it, it is still open to the Staff Side to approach the Joint Superannuation Committee if it can find any solution to this difficulty.

In the past we have not been able to do so, and, quite frankly, I see no prospect at the moment of finding a solution.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 9 ordered to stand part of the Bill.