State Pension Reform

Paul Flynn Excerpts

Monday 14th January 2013 Commons Chamber

[Steve Webb]

Where a mother spends time out of the labour market and then returns to work, her pension rights at the £144 rate will be fully protected. If those women are not in an auto-enrolment scheme, they are not contributing, the employer is not contributing and they are not building up rights under that scheme, but we are ensuring that there is a firmer foundation. If those women carry on receiving, for example, maternity pay during maternity leave, then pension contributions can be taken from maternity pay, which can keep their pension contributions going.

[Paul Flynn (Newport West) (Lab)]

Will the Minister emulate the splendid example of Barbara Castle in 1975, who secured all-party support for the introduction of SERPS? Will he also consider a reform whereby retirees who are fortunate enough still to be in work while receiving the basic pension should continue to pay national insurance? That would be fair, affordable and acceptable and would bring in between £2 billion and £3 billion a year.

[Steve Webb]

I would certainly warmly welcome all-party support. I have tried to approach the issue in as constructive a way as I can, because we want an element of stability in the pension system. I am not convinced that levying national insurance contribution on working pensioners is the way forward. Clearly, what we want is some flexibility in retirement. We want to get away from this cliff edge where people are either working or retired. We are interested in a model of phased retirement, partial drawing of pensions, deferring retirement and part-time work. As soon as we say, “You are either working or retired; you pay national insurance or you do not”, we get back to the cliff-edge model that we are trying to move away from.