Armed Forces Pension Scheme (Hansard, 19 February 1996)

The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe)
My Lords, the recommendations made by Sir Michael Bett on pensions were among a large number that he made in his report on personnel issues in the Armed Forces. We are studying his proposals carefully but have not yet reached any decisions on possible changes to the Armed Forces Pension Scheme.

§ Lord Chalfont
My Lords, I thank the Minister for that reply. Can he at least give us some assurance or comfort that when the Bett proposals come to be considered, if there are, as seems likely, substantial savings to be made in the pensions budget in the Ministry of Defence, some of the savings will be kept within the pension regime and put to good purpose such as, for example, extending the provision of war widows' pensions to recognised service before 1978?

Earl Howe
My Lords, I understand the point that the noble Lord makes. It chimes in with our debates on this 861 issue last month in response to a question from my noble friend Lord Campbell of Alloway. There is one point that I can make at this stage. As I have said, we have yet to reach conclusions about the final shape of the pension scheme. The difficulty with the idea that the noble Lord puts forward is that any new scheme will apply only to future service personnel. Therefore any savings would not start to accrue until about 20 years from the start. In other words, there would be no new money to fund retrospective improvements to the existing scheme. The Government are not treating this exercise as a way of creating savings, but at the end of the day there is unlikely to be a lot of spare money looking for a home.

§ Viscount Slim
My Lords, is it not a fact that the overall military pension system today is grossly unfair? The way that length of service, time of service and similar rank are treated is most inequitable. Whatever the Bett report decides, is it not time that the overall system of military pensions was completely revamped and modernised? Whether that can be done in retrospect is another matter. But does the noble Earl not agree that the present arrangements are probably the most old-fashioned of any that we have in this country and indeed when compared to any other country?

Earl Howe
My Lords, I agree with the noble Viscount that there are elements of the current scheme which could usefully be improved. We are looking at a number of recommendations, as he is aware, in the light of Sir Michael Bett's report. But I believe that the special nature of the commitment of service personnel is fully recognised by the Government and is reflected in their pension arrangements at the moment. Taken overall, the value of the benefits of the Armed Forces Pension Scheme is considerably greater than in most other public service schemes. In addition to that scheme, generous benefits are paid under the Department of Social Security war pensions scheme in cases of death or injury as a result of military service.

§ Lord Mayhew
My Lords, although it is easy to see the force of the noble Earl's argument that it is difficult to add to the new scheme the duty of removing injustices from the old scheme, would it not be equally unjust to start the new scheme while leaving the old injustices in the air and doing nothing to overcome them? Can the Minister say when the Government will be ready to make a decision on this matter and what consultations they are having with the forces?

Earl Howe
My Lords, we hope to make a definitive announcement in the summer. We aim to give a detailed account of our proposals and decisions on all Sir Michael's recommendations at that stage. We are consulting widely as we consider these matters. It is important to look at Sir Michael Bett's 862 proposals in the round rather than to single out one or other aspect for special treatment. At the end of the day it is the package which will matter to servicemen.

§ Lord Bramall
My Lords, Armed Forces pensions are of course a matter of infinite complexity, but can the noble Earl give the House some assurance that if a new, modern, contributory pension scheme is introduced—I agree that there would be advantages and although I do not agree with my noble friend that the present scheme is as bad as all that, there are certain anomalies in its application—it will be properly funded and independently administered in accordance with the best civilian practice, as well as using this opportunity, as the noble Lord, Lord Mayhew, suggested, to correct some of the anomalies of uneven application which have for so long brought the present scheme into disrepute?

Earl Howe
My Lords, I fully understand the points raised by the noble and gallant Lord and shall ensure that his remarks are brought to the attention of my right honourable friend. As I have said, we have reached no conclusions as yet, but it is important that we look at Sir Michael's proposals in the round. It is also important that at the end of the day we have a pension scheme which bears comparison with similar schemes in the public and private sectors.

§ Lord Campbell of Alloway
My Lords, may I ask my noble friend with respect whether Parliament will be in a position to consider the announcement to which he referred before any definitive decision is taken?

Earl Howe
My Lords, I am sure that if your Lordships would like a debate on the issue that is a matter for the usual channels. At present the Government are considering the proposals. We have no specific plans for a parliamentary debate.

§ Lord Williams of Elvel
My Lords, although I agree that the Bett proposals should be taken as a totality and should not be considered as a series of single items, does the noble Earl agree that in the light of the timetable that has been announced for implementing the proposals, this matter will stretch into next year and possibly beyond? Therefore, in order to keep the Armed Forces out of any party political debate, would it not be sensible to consult the Opposition parties before the Government arrive at any final decision on the proposals?

Earl Howe
My Lords, I am always ready to listen to the opinions of noble Lords opposite. I am grateful to the noble Lord for his suggestion.

§ Lord Chalfont
My Lords, does the noble Earl recall—he may be too young to do so—that in May 1980 the right honourable Member for Huntingdonshire said in another place on the subject of pensions: Service men, by virtue of their profession, are in a special position and should be treated accordingly".—[Official Report, Commons, 2/5/80; col. 1846.]?
863 Will the Government take that into account when they implement the Bett Report?