HC Deb 09 June 2003 vol 406 cc395-8
8. Mr. Peter Viggers (Gosport)

What steps the Government are taking to promote financial independence in retirement. [117290]

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle)

We must renew the pensions partnership between Government, employers, employees and the industry to ensure that individuals feel that saving for their retirement is worth while and safe. The recent Green Paper sets out our proposals for greater security, simplicity and better information to promote pensions saving.

Mr. Viggers

The Government have presided over a crisis in pensions provision. The savings ratio has halved and 40 per cent. of final salary schemes are closed to new members. Some schemes have collapsed completely, resulting in millions of 30 to 40-year-olds no longer looking forward to independence in retirement. Those are matters of fact. My question is this: is this the result of incompetence on an epic scale, or does it suit the Chancellor's tendencies towards socialism to have a rising two thirds of all pensioners on means-tested benefits?

Maria Eagle

The hon. Gentleman's original comments gave too bleak an assessment. What he calls "means-testing", we call giving current pensioners some decency in retirement. The pension credit will end the weekly means test, while giving an extra £400 a year on average to half of all pensioner households, tackling pensioner poverty. His party is committed to keeping means-testing by abolishing the pension credit. He is committed to a weekly means test, pound-for-pound withdrawal of benefit and impoverishing today's pensioners as some kind of incentive to today's working-age people to save. After all, that was the policy of his party when it was in government.

David Winnick (Walsall, North)

May I tell my hon. Friend about a 57-year-old constituent who, along with all the other employees of the company mentioned earlier by my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase), Chart Heat Exchangers, lost his job, after 23 years, and his pension? Can my hon. Friend understand the feelings of my constituent, who faces a retirement of absolute poverty because the company did not defend or pay into the pension scheme, as it promised? How would we as Members of Parliament like it if we were treated with such contempt when it came to our retirement?

Maria Eagle

My hon. Friend is right to reflect the feelings of his constituents, and I should be happy to meet him and other right hon. and hon. Members with constituents affected by this closure. If we are unable to renew our pensions partnership in order to have simpler pensions, to balance simplification and clarity, to help employers to deliver their pensions promises, to improve security and to ensure that members receive the benefits they have paid in for, our system of voluntary provision will not survive. That is why the Green Paper outlines our proposals. If we are not able to do that, we will have to be more radical and, as many hon. Members think, look to compulsion. The Pensions Commission is there to look at that if necessary.

Mr. David Willetts (Havant)

May I explain to the Minister that our policy is that pensioners should be less dependent on means-tested benefits and should enjoy greater financial independence through more funded savings? That is very simple and it is what pensioners want. On the statement that we will hear from the Chancellor later today, 11 million pensioners who care about their independence will be worried that he is going to change the index used for uprating their benefits from the retail prices index to the new index: the harmonised index of consumer prices, known as HICP. Will the Minister give us and those millions of pensioners an assurance that there will be no reduction in the value of the uprating of their benefits if the index for measuring price inflation is changed?

Maria Eagle

Pensions and benefits are linked to the retail prices index, which is a slightly different measure from the one that the Chancellor is considering changing in respect of these other matters. We have already committed ourselves to increasing pensions by more than the RPI for the rest of this Parliament, as the hon. Gentleman knows. There is no question of any of the changes that my right hon. Friend the Chancellor might deal with later, to which the hon. Gentleman refers, having an impact on that.

Mr. Tony McWalter (Hemel Hempstead)

Can my hon. Friend give any help or succour to Mr. Humphrey, a constituent of mine whom The Guardian named on Saturday, and who was part of a delegation that marched to Downing street yesterday? Having worked for a company called Dexion in my constituency, he was looking forward, at the age of 58, to a pension of £150 a week. That pension has been slashed by 80 per cent. to £30 a week. Does my hon. Friend accept that, if she cannot give any comfort to people in that position, surely those who are responsible for such dreadful administration of a pension scheme should be brought to book somehow?

Maria Eagle

Cases such as this, which Members have come across in various situations in their own constituencies, have ensured that we have had to look at how to renew the pensions partnership. Unless we can have better safety and security, people simply will not save into pensions products in future. Of course, in such a situation everybody would be worse off. The Green Paper will introduce our proposals shortly, in response to the question of how to renew that partnership. If we do not do so, there will be problems in the future in respect of everybody.

Mr. Paul Goodman (Wycombe)

Since the Government's assumed take-up of the pension credit for next year is 67 per cent.—an assumption that they themselves describe as ambitious—does it not follow that they expect non-take-up to be 33 per cent.? In other words, more than a third of our vulnerable pensioners will gain nothing at all next year from the pension credit.

Maria Eagle

We want everybody who is entitled to pension credit to take it up as soon as they can get on the telephone and put in their applications. It is simply not the case that we want to place some form of ceiling or cap on those who are entitled to claim. Of course, we have working assumptions about what we want to get done within a certain time, but those are targets, not ceilings. We hope to outstrip them, and we want everybody who is eligible for the pension credit to claim it. If hon. Members would get behind the Government, stop calling the provision means testing and urge their constituents to claim their entitlement, perhaps more might claim rather sooner.