Pension Schemes Bill [Lords]

Debate between Ian Blackford and Mhairi Black

Wednesday 22nd March 2017 Commons Chamber

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

Does my hon. Friend agree that it is because of such examples as he has touched on of unincorporated businesses at risk of losing personal assets that it is so pertinent that the Government bring forward the solution right now rather than wait for the opportunity to pass?

[Ian Blackford]

I am grateful to my hon. Friend, who is absolutely right. These are complex issues. That is why we make the suggestion that we are willing to work with the Government on this. We have to find a solution to this because at the end of the day ordinary people who have done the right thing could now be faced with losing their house, and that cannot be right. This issue has to be resolved.

There are a number of options for the UK Government to consider but each one has complications for the pension schemes, employers and scheme members. We urge the Government to weigh up the interests of employers with the need to protect benefits for pension scheme members. The former Pensions Minister in the other place, Baroness Altmann, indicated that she would look closely at how a solution could be reached to this complex issue. We need the same assurances from the Minister that he will work to find a solution for the industry and use this Bill to bring forward a solution.

SNIPEF’s four objectives are to achieve an amendment to section 75 debt legislation, as its main concern is for those involved in the unincorporated businesses that my hon. Friend mentioned who are at risk of losing their personal assets including their homes. It wants the Government to conduct a review of the actuarial methods used to value pension scheme liabilities, as it believes that the calculation of section 75 employer debt on a full annuity buyout basis is inappropriate and detrimental to non-associated multi-employer schemes given current economic conditions. It argues that orphan debt in any non-associated multi-employer scheme should be excluded from the calculation of section 75 employer debt. It suggests that provided the scheme is deemed to be prudently funded, the PPF acts as guarantor of last resort for orphan liabilities. It also believes that any changes in legislation should apply retrospectively to all employers from 2005. It would be helpful to get the Government’s view on this request. SNIPEF recently met the Minister, and it has advised SNP MPs that he confirmed that the objectives may have been incorporated within the Green Paper. We are now interested to hear the Government’s view as to whether they have identified a solution.

I want briefly to make passing reference to my two new clauses that have not been selected for debate, and signal my disappointment about that. New clause 10 would require the Secretary of State to identify support for women affected by the changes to the timetable for state pension age equalisation. We are disappointed that a pensions Bill has not been brought forward to deal with the pressing injustices within the pensions system.

[Mhairi Black]

Does my hon. Friend agree that by missing this opportunity the Government are wilfully ignoring it, much like they are ignoring the WASPI women themselves?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We do not discuss new clauses that have not been selected. We have to deal with what is before us and that is the new clauses on the selection list. I know that the hon. Gentleman wants to stay in order by dealing with those, not those that have been omitted.

State Pension Age: Women

Debate between Ian Blackford and Mhairi Black

Wednesday 30th November 2016 Commons Chamber

[Ian Blackford]

I hope that the Government are beginning to get the picture. For each month that passes, women’s pensionable age is increasing by as much as three months. We should just dwell on that—a three-month addition to pensionable age for each month that someone was born later than their neighbour, friend or colleague.

I spoke about a woman born in March 1953 who retired this year at age 63, but a woman born a year later, in March 1954, will not retire until September 2019, when she will be aged 65 and a half. [Interruption.] Conservative Members seem to think that this is funny, but we are talking about women who are being significantly disadvantaged over too sharp an increase in women’s pensionable age. Those Members might find that acceptable, but I am afraid that I, my colleagues and many millions of other people in the country certainly do not. A woman born six months later, in September 1954, will have to wait until she is 66 in September 2020. Over an 18-month period, a woman’s pensionable age will have increased by three years.

As we keep saying, we are not against equalisation of the state pension age—[Interruption.] My colleagues and I have said that in every speech we have given in this House. We have made it crystal clear, as have the WASPI women, that we agree with equalisation. It is the pace of change that is the problem, and Conservative Members are burying their heads in the sand over it and are refusing to face the reality.

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I must echo the very clear position that my hon. Friend has outlined. Does he agree that anybody who believes that, purely because someone is a woman and happens to have been born at a certain time they should lose out, is advocating a very warped and strange definition of equality?

[Ian Blackford]

Absolutely. Of course we have to face the gender inequality that has been with us, with women paid less for such a long time and women gaining less access to occupational pension schemes, but Government Members just seem to want to make things worse. As we keep saying, we are not against equalisation of the state pension age; it is the pace of change and the lack of appropriate notice that are the real issues.

Guaranteed Income for Retirees

Debate between Ian Blackford and Mhairi Black

Tuesday 17th November 2015 Westminster Hall

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) on securing a debate on such an important issue. It is fair to say that I am a fair bit further away from this issue than most of my colleagues; nevertheless, I appreciate this opportunity to speak.

I am sure that most Members present will agree that the current Government—any Government, for that matter—have a responsibility to ensure that all members of our elderly population have a secure form of income upon retirement to enable them to live comfortable, healthy and fulfilling lives, as well as a responsibility to continue efforts to end pensioner poverty. Any move by the Government to encourage and enhance the prospects of people saving for retirement and to ensure that all our citizens maintain a decent standard of income must be welcomed. It is for that reason that, in the context of pension freedoms, the Scottish National party supports auto-enrolment. We look forward to taking part in the debate on how it can be strengthened, based on the inclusion of the individual and the employer and Government incentives to engage in pension saving.

With that in mind, we must pay close attention to the scrutiny and constructive criticisms that have been made of the pension freedom reforms. First, there clearly needs to be an increase in data collection. The Work and Pensions Committee inquiry into the changes asked whether people are adequately supported in making good and informed decisions, and concluded that appropriate information and monitoring arrangements are not in place to provide the answers. Criticising the Government’s failure to publish adequate statistics on the pension freedom policy, the report said:

“The Government’s reticence in publishing statistics on the effects of its pension freedom policy, a full six months after the reforms, is unacceptable. The scarcity of information regarding Pension Wise in particular is not conducive to effective scrutiny. It is also not conducive to effective policy: it would be fortunate in the extreme if such radical change operated as hoped without any need for adjustment.”

Many bodies in the pensions policy area have made similar observations. If we are to be able to make informed decisions and adequately respond to the changes the reforms are making to people’s lives and the decisions they make, we must be watching closely and at least attempting to collate in-depth and satisfactory data. That way, we will be able to form a real-life picture and idea of what is going on and to respond appropriately.

Secondly, more effort needs to be put into educating people so that they are equipped with the information and knowledge to make informed decisions. The potential for negative consumer outcomes arising from disengagement, low awareness of retirement risks and poor financial capability is likely to be compounded by supply-side failures. The FCA thematic review and retirement income market study identified continued failures: 60% of defined-contribution pension customers did not switch providers when they bought an annuity, despite the fact that 80% could get a higher—in many cases, significantly higher—income on the open market. The FCA found that 91% of those purchasing enhanced annuities could have got a better deal by shopping around. It also found that consumers are highly sensitive to how options are presented to them. Savers reaching retirement face a much more complex landscape than previous generations, and they will need support to make sense of their options and to make sensible choices that match their needs and preferences.

Even before the announcement of the pension reforms, the pensions industry was still working through many issues, despite seven years of heightened scrutiny and regulatory oversight. As many will know, lack of information has been a problem for some time. Given the lack of data on how pensions are being affected now, it is important to look at some of the few statistics that we do have.

[Ian Blackford]

Does my hon. Friend agree that one issue consumers face in the landscape of choices she eloquently describes is that they often do not consider their own life expectancy—that they might live for another 30 or 40 years or even longer? When people look at their experience of annuities, that is often part of the problem: they might consider they are getting a poor deal from their annuity, but that is because they are not taking into account how long they might live and how long they might have to fund their lifestyle for.

[Mhairi Black]

I thank my hon. Friend for that intervention—I was actually about to get on to that point.

In terms of the few statistics we do have, the Social Market Foundation has looked at the lessons the UK can learn from overseas experiences. My hon. Friend spoke about the different stereotypes in terms of how people engage with their pensions—the cautious Australian, the quick-spending Australian and the typical American. One of the report’s key findings was that UK retirees are at risk of pension pot exhaustion specifically because they underestimate how long they will live. In fact, those who follow the typical American path or the quick-spending Australian path would, on average, exhaust their entire pot by retirement years 17 and 10 respectively.

Retirees are at risk of low replacement rates. Retirees who over-consume in the early years of retirement might well enjoy a decent income for a good few years, but if they live a lot longer than they predicted, they find themselves on much lower rates later on in life and may completely exhaust their pension, putting the responsibility on to the state to fill the gap.

We should also consider the fact that the number of income drawdown contracts sold by ABI members during 2015 increased by 64% over the previous year, from 6,700 to 11,500. The number of annuities sold has continued to fall, with 20,600 sold during that quarter, compared with 28,700 the previous quarter and 74,100 in the same quarter in 2014. There was an 80% increase in provider call volumes during the first six months, compared with the same period in 2014. As has been mentioned, £2.5 billion was paid out as cash to customers in that period. Some 60% of all cash lump sums have been paid out to people younger than 60—those who have a considerable time left to live, given that life expectancy is now 80-plus. In 80% of cases, those who have taken out cash lump sums were under 65. In 95% of cases where cash lump sums have been accessed, the entire fund was withdrawn. As for evidence that people have engaged with Pension Wise, whether face to face, over the phone or by email, the reality is that fewer than one in 10 of those accessing their pension pots have used the service. It is clear that more can be done to educate people adequately.

My last point relates to the Government’s position. Concerns about rates of exhaustion of pension savings and the subsequent impact on retirement income led the Australian Government, which we look to for at least some idea of where pensions are going, to commission an independent review of their retirement system. The resulting Murray inquiry published a range of recommendations for the Australian financial system, including that schemes set in place a default comprehensive income product for retirement. On 20 October, the Australian Government announced their intention to implement the inquiry’s retirement income default recommendation, and a consultation is expected later this year.

It seems only reasonable and responsible, therefore, for the Government to tell people, “Look, the choices are there for you. It is not for us to tell you how to spend your money, but we recommend that you use your pension for the exact purpose it was created for and that you consider how long you will live for and how much money you will have, so that you engage with your pension appropriately.”

I welcome the debate, and I hope the Government take heed of some of the concerns that have been raised by myself, my colleagues and the relevant independent bodies.