Pensions Reform (Hansard, 23 February 1994)

§ Mr. Robert B. Jones (Hertfordshire, West)

I beg to move, That leave be given to bring in a Bill to make provision for employers' and employees' pension contributions to be paid into personally owned funds registered for the purpose of future pension payment. A lot of attention in the House and elsewhere has rightly been paid to the problems that are caused when pension funds are embezzled and illegal action takes place.

I pay tribute to the work being done by the Select Committee on Social Security, which is trying to bring a public focus to bear on the issues that are raised. There has also been a lot of focus on the mismanagement of pension funds. Out of respect to my right hon. Friend the Member Selby (Mr. Alison), who I see present, I shall not say too much about the Church Commissioners.

What has not received enough attention is the perfectly legal disadvantage suffered by many pensioners as a result of their decision to move jobs for one reason for another, or because they have been made redundant.

The problem of early leavers is particularly acute, and that is what I want to address by means of the Bill. As a society, we increasingly expect mobility. The age when my grandfather left school at 14 and worked for the same employer for the whole of his working life has long since passed. Most contemporary workers would expect to work for more than one company and perhaps in more than one industry in the course of their working lives. If the provisions of private pensions disadvantage those people in moving from job to job or from industry to industry, the matter needs to be addressed and set right.

Hon. Members have said many times that civil servants should be able to move backwards and forwards from the civil service to industry, local government and academia, and even to consultancies. Everybody would benefit from that, but the constant block is the consequence for pensions, and only secondment is possible. People are unwilling to move from job to job because of the loss of pension entitlement that would result.

The matter concerns many hon. Members and also worries many people who come to my surgery, especially during a time of recession, when people may be made redundant and have to change careers. I expect that almost every hon. Member has had such experiences in his surgery.

The present pensions system seems to be entirely based on those who always work for the same company, those who are fortunate enough to work in an industry that has 282 a common pensions system so that when they change companies they are not disadvantaged, or those who are powerful enough to negotiate, as part of their package for changing jobs, an enhancement of pension rights so that they do not suffer.

Those who are particularly disadvantaged are people whose occupations have high job mobility and for which there is no common scheme. The disadvantaged also include women who may stop working to have a family or because they wish to have experience in other professions, whether related to their own or in an entirely different field, or perhaps in voluntary work. Others return to part-time work in later life. As a result of redundancy, especially in later years, many people are forced to draw an early pension and do not receive the benefit they might otherwise expect.

Present pension fund arrangements mean that people can draw the pension when they reach pension age, and perhaps their wives and husbands can draw it when the person dies, but there are restrictive rules about accumulated pension rights being passed to families or charities or to any other beneficiary that the pension holder had in mind.

The Bill sets out to ensure that employers' contributions, like those of employees, are set aside and accumulated with profits, so that if someone wishes to change his job, he can simply take them to the next job. The effect is cumulative, in that the employers' and employees' contributions and profits are added throughout the career of the worker. The Bill also provides an opportunity for additional contributions, which will result in more benefits later in life.

The issue will come to the House again and again because, as society changes, more and more people will undoubtedly find themselves caught out by the present arrangements. I have no hesitation in commending the Bill to the House.