State Pension Changes: Women
Paul Maynard Excerpts(2 months, 2 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairmanship, Sir Gary. I thank the hon. Member for Strangford (Jim Shannon) for securing this debate and all Members who have contributed to it.
This has been a valuable and constructive debate focused on the issues of compensation for 1950s-born women affected by state pension age changes. I recognise that there is a huge strength of feeling among 1950s-born women about the increase to their state pension age and the way in which it was communicated. We have heard today about people who have had difficult personal circumstances to manage, and their struggles are regrettable in the extreme. I am grateful to all Members who have participated. It is important that Members on all sides are able to tell the stories of so many of their own constituents. Indeed, I pay tribute to many of my own constituents whom I have sat with and listened to on a number of occasions as they explained their circumstances. It is important that such testimony is uppermost not just in my mind as the Minister, but in the mind of Government more widely.
I note that the Member in charge of the debate, the hon. Member for Strangford, is a Northern Ireland MP. For the record, I will set out how Northern Ireland manages its own system for dealing with complaints such as this; as he will know, such matters are for the Northern Ireland Public Services Ombudsman to address. Any question relating to Northern Ireland must be directed to the relevant authorities in Northern Ireland. All DWP policy areas are transferred in Northern Ireland, including pensions. However, the equivalent Department in Northern Ireland, the Department for Communities, historically has maintained parity with the DWP on matters of social security, child maintenance and pensions.
As House is aware, the Parliamentary and Health Service Ombudsman’s investigation into state pension age communication is not complete. The date of publication is a matter for the ombudsman. As the investigation remains ongoing, I cannot comment on it, as the ombudsman’s investigations are confidential. The privacy rules extend to all parties involved in the investigation.
Alan Brown
The Minister is right about probity and the fact that the ombudsman’s investigations are to remain quiet. Does he accept that after stage 1 it is still in the Government’s hands to bring forward compensation? They do not have to wait until the conclusion of further stages.
Paul Maynard
I will come on to the sequencing and the importance of the different stages shortly, but I am reminded that the Parliamentary Commissioner Act 1967 states that ombudsman investigations that are not complete
“shall be conducted in private”.
The ombudsman has made some information about the investigation public via its website. It published the final version of stage 1 of its report on the website in July 2021. The report said that
“these women should have had at least 28 months’ more individual notice of the changes than they got.”
These findings relate to a specific window of time between August 2005 and December 2007. The report also found that
“between 1995 and 2004, DWP’s communication of changes to State Pension age reflected the standards we would expect it to meet.”
I know that there is frustration among Members of this House and their constituents about how long the investigation has been ongoing, and about the fact that the ombudsman has yet to publish his final report. It is a complex investigation that spans over 30 years, as equalisation of the state pension age was enacted in 1995. The ombudsman provides an independent complaint handling service for complaints that have not been resolved by UK Government Departments and the NHS in England. The ombudsman is managing the investigation in stages, and publication of the final report is entirely a matter for the ombudsman.
Paul Maynard
As I think I have already said, the timing of the report is a matter for the ombudsman to determine. I have received no indication from the ombudsman of the timescale to which he is working, much as we would all like to know the date when it is coming.
The Department for Work and Pensions has to be mindful of its independence, but we are co-operating fully with the investigation. We believe that it is important to let the independent process conclude, so that we can then carefully consider the findings and the recommendations that may arise from the final report.
Peter Gibson (Darlington) (Con)
For the record, can the Minister give us a cast-iron guarantee and reassurance that his Department is fully co-operating with the ombudsman?
Paul Maynard
I can indeed give that assurance. As I have just said, we are fully co-operating at every stage with the ombudsman’s investigations.
Ashley Dalton (West Lancashire) (Lab)
I understand the Minister’s position on the specifics and the dates. It is perfectly clear that we are not going to get any indication of a timeline, but does the Minister accept that the WASPI women paid their dues and did their part? We have already seen that maladministration has been found. Do the Government accept that a trust on which our entire democracy is built has been broken, and that WASPI women deserve justice as soon as they possibly can?
Paul Maynard
I very much hear what the hon. Lady says. The whole point of the ombudsman’s investigations is to determine the outcome of that process and how justice is to be delivered.
Patricia Gibson
As has happened with other judgments in a legal context, will the Minister commit his Government at the very minimum to implementing the judgment of the ombudsman? Or will they try to fight it, obfuscate and kick it into the long grass?
Paul Maynard
I am sure the hon. Lady will appreciate the principle that until a final report is published and until we know the contents of that report, I—as a Government Minister with a duty to manage public money properly—cannot make any such commitment as she describes.
Joanna Cherry
The Minister is hiding behind the need to wait until the final report is out, but at around the time of the stage 1 report, the PHSO said that Ministers could be proactive in finding a remedy for 1950s women. What does the Minister say to that?
Paul Maynard
I certainly do not believe that I am hiding behind anything. The ombudsman’s inquiry is going through the processes that the ombudsman itself has set out.
Paul Maynard
I have given way a number of times, and I have been very generous. I am conscious that I need to finish my contribution and allow the hon. Member for Strangford to comment. I am sorry, and if there is time towards the end I will try to give way, but I need to set out the factual information that Members have been asking me to deliver, so I will make some progress.
The announcement in 1993 of the decision to equalise the state pension age addressed a long-standing inequality between men and women. Changes to state pension age were made over a series of Acts by successive Governments, following public consultations and debates in both Houses of Parliament. All women after 5 April 1950 and all men born after 5 December 1953 are impacted by state pension age changes. The state pension age is currently 66, and is due to rise to the age of 67 between 2026 and 2028, as confirmed by the recent Government review of state pension age. The Government also committed in the last review to conduct a further review within two years of the next Government, to consider the age of 68. The further review will be able to consider the very latest evidence.
The reforms have focused on maintaining the right balance between the affordability and sustainability of the state pension, and fairness between generations. Women retiring today can still expect to receive the state pension, but over 21 years on average, which is over two years longer than men. If equalisation had not taken place, upon reaching the age of 60 women would be expected to spend on average over 40% of their adult lives in receipt of the state pension.
I will say a few words about the processes of the ombudsman’s investigation, for clarification and to place them on the record. The Parliamentary and Health Service Ombudsman published its stage 1 report on 20 July 2021. PHSO found maladministration in the steps that the Department took between 2005 and 2007 in relation to notifying the women affected. In December 2022, the PHSO submitted its stage 2 findings and the original stage 3 findings for comment, and published a high-level summary on its website, concluding that the maladministration had caused injustice.
Following the PHSO’s stage 2 findings in December 2022, the WASPI campaign initiated judicial review proceedings against the PHSO, arguing that the ombudsman’s approach to calculating when letters should have been sent ignored pauses in the DWP’s letter-writing campaign, which meant that women should have had notice far earlier than the ombudsman had assumed and could therefore have made different decisions to avoid some of the financial impact. Following an agreement between WASPI and the PHSO, the High Court granted a consent order quashing the PHSO’s final stage 2 report in May 2023. The consent order specifically requested that the PHSO revisited those sections of the stage 2 report dealing with the 28-month delay calculation. The stage 3 provisional view on remedy had not been finalised by the PHSO, so it did not require consideration by the court.
We responded to the provisional stage 3 report in early February 2023. The PHSO sent all parties to the complaint a revised provisional stage 2 report in November 2023. That is the report whose publication we await.
Paul Maynard
I have already given way, and I am running out of time. I do apologise.
I have listened carefully to the arguments that have been made today. I would like to set out further the range of support available both for those making provision for their retirement and for those who have reached state pension age.
In 2016, the state pension was reformed with the introduction of a new state pension to be simpler and more sustainable. It had the clear objective of providing the foundation for private saving. In this way, the state provides a base to which people can add to provide the pension they want through their retirement.
The new state pension improves outcomes for many women, carers and self-employed people, who often did less well in the past. State pension outcomes are projected to equalise for men and women more than a decade earlier than they would have under the old system. On average, women receiving the new state pension receive about £18 a week more than women under the pre-2016 system. Under the new state pension system, women currently receive an average of 97% of the amount that men receive, compared with 85% under the pre-2016 system.
Automatic enrolment has helped millions more women to save with a pension, many for the first time. Participation rates for women are catching up with those for men. Pensions participation among eligible women working in the private sector was at 86% in 2022, up from 40% in 2012.
Pension credit is extra money to help with daily living costs for people over state pension age and on a low income. It tops up a person’s other income to a minimum of £201.05 a week for single pensioners and £306.85 a week for couples. People with a severe disability, carers and those who are responsible for a child or young person who lives with them can get more. Pension credit can also include extra amounts for certain housing costs such as ground rent or service charges. The pension credit case load is just under 1.4 million people, of whom 66% are female; in fact, of the total case load, 63% are single women. People receiving pension credit may also get help with other costs, including rent, via housing benefit, and council tax.
The latest statistics show that by 2021-22, the poverty rate for pensioners had decreased by two percentage points since 2010. For both female and male pensioners, there was a decrease of two percentage points over the same period. In 2021-22, there were 200,000 fewer pensioners in absolute poverty, after housing costs, than in 2010. By 2024-25, working-age and extra-costs disability benefit rates will increase by 6.7%, and relevant state pension rates, including the standard minimum guarantee in pension credit, by 8.5%, following the 10.1% increase in April 2023.
Paul Maynard
I am about to conclude, because I have only a minute left before the hon. Member for Strangford needs to have his concluding say.
I thank the hon. Member for Strangford for raising such an important issue, which I know concerns very many people—thousands across each of our constituencies. I have the greatest sympathy for anyone who has found themselves in difficult circumstances, but I believe that the welfare state can be and is effective in providing support for those who need it. In particular, there is a range of established support that this Government provide for people either nearing or over state pension age. Additionally, we have made cost of living payments available to those who are most vulnerable.
As I have outlined, the Government take the matter of state pension age extremely seriously. The Department is committed to giving the best service it can, and we will very carefully consider the ombudsman’s final report.
Draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Amendment) Regulations 2023
Paul Maynard Excerpts(2 months, 4 weeks ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
I beg to move,
That the Committee has considered the draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Amendment) Regulations 2023.
It is a pleasure to serve under your chairmanship, Mrs Harris. The instrument clarifies requirements on trustees of authorised collective money purchase schemes, which are more commonly known as collective defined contribution or CDC schemes. The Government believe CDC schemes have an important role in the future of pensions in this country. CDC schemes offer members a seamless transition to the regular retirement income that we know many want, without the need for complex financial decisions that many are ill equipped to make.
The Government want to ensure that as many savers as possible can take advantage of the numerous benefits of CDC. By pooling longevity and investment risk across their membership, CDC schemes can shield savers from much of the uncertainty faced by members of DC schemes, which allows the CDC schemes to target higher investment returns. As part of our Mansion House reforms, that will help to unlock capital for our most promising industries and increase returns for savers, supporting growth across the wider economy.
The Pension Schemes Act 2021 provided the legislative framework for single or connected employer CDC schemes to be set up in the UK. Those regulations came into force on 1 August 2022, enabling such schemes to apply for authorisation from the Pensions Regulator. Throughout the development of our policy, the Government have engaged with stakeholders on how best to deliver CDC in the UK and invited challenge and scrutiny. In that vein, we have been helpfully advised that two areas of the current framework do not meet our published policy intent. CDC schemes can only succeed if there is confidence in this new type of provision. The technical changes made by this instrument ensure that prospective schemes are set up to work as we intend from the start.
Turning to the first amendment made by this instrument, the existing regulations make provision in relation to the annual actuarial valuation and benefit adjustment process for CDC schemes. That means that, each year, benefits are reviewed and adjusted where required, so that the value of assets held is in balance with the projected costs of benefits. It is important that a balance is maintained between the value of the available assets of the scheme and the amount needed to provide the target benefits to members on an ongoing basis.
The policy intention is to provide that, where a cut to benefits must be made due to an economic downturn, the trustees of the CDC scheme can smooth the impact of the benefits cuts on members over three years. That is called a multi-annual reduction. The mechanism helps to reduce volatility and to ensure that current and future benefits remain relatively stable, in contrast with individual DC schemes, which have no pension smoothing mechanism. Members of those schemes experience the full impact of falls in investments as they happen, which can lead to a significant reduction in the value of their retirement savings immediately. For savers closer to retirement, that may be unrecoverable.
The intention is that, where a market recovers during a multi-annual reduction, increases in benefits resulting from a subsequent annual valuation would first be offset, in whole or in part, against the remaining planned cuts under the multi-year adjustment before any remaining increase can be applied as an increase to future benefits in the normal way. If we did not do that, the benefits of the recovery would likely go to future pensioners. That would run against our principle that, as far as possible, all members—that is, current pensioners, those who are currently accruing benefits and those who are not contributing, but have rights to a future pension from the scheme—should all share in the upsides and downsides at the same time. The instrument also ensures that information about any multi-annual reduction and subsequent offsetting must be reported to the Pensions Regulator in the actuarial valuation to ensure proper oversight.
The second amendment ensures that, when a scheme winds up, a beneficiary’s accrued rights are transferred to suitable pension schemes or alternative payment arrangements. A key element of the wind-up process is calculating the share of the fund for each person who is a beneficiary at that time. The scheme rules may provide that that person be a member, but could include a spouse, a child or a person financially dependent on the deceased beneficiary. Our intention has always been that if that beneficiary dies during the winding-up period, the pot allocated to them will not be extinguished but be reallocated among their successors, where a scheme’s rules provide for that.
In conclusion, CDC schemes are an important addition to the UK pensions landscape. When well designed and well run, they have the potential to provide a good retirement outcome for members. The draft instrument will provide clarity for schemes moving forward by more accurately reflecting our intent.
Paul Maynard
I echo the hon. Lady’s comments on Royal Mail, the late Jack Dromey and the Communication Workers Union ushering the CDC initial vehicle almost to its delivery. I think it is coming very soon—in just a few weeks, if not months.
I can confirm that we have worked closely with the Treasury to ensure that we get in place all the wider regulations needed, particularly for multi-employer trusts, which are slightly more complex than Royal Mail, and indeed even those that might cover a whole profession with a range of similar characteristics. That work is ongoing with the Treasury, and I stress that the draft regulations are part of it. On that note, having answered that point, I commend the regulations to the Committee.
Question put and agreed to.
Child Maintenance Service
Paul Maynard Excerpts(2 months, 4 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
Provided that you cough strategically, Sir Charles, because my eyesight—
Sir Charles Walker (in the Chair)
I will—I actually have a cold, so I will be coughing and sniffling throughout.
Paul Maynard
My eyesight cannot quite determine the numbers on the clock any more—such is my venerable age. It is a pleasure to serve under your chairmanship, Sir Charles. I thank the right hon. Member for East Ham (Sir Stephen Timms) and my hon. Friend the Member for Stroud (Siobhan Baillie) for applying to the Backbench Business Committee to obtain this debate, and all hon. Members for their participation.
We have had a constructive, wide-ranging and, for my part, very interesting debate. We have discussed the original findings of the Select Committee report, which I very much enjoyed reading. Indeed, I always enjoy reading difficult, challenging reports when they are not in my brief, because I find them much more reassuring to read knowing that thinking is going on. We discussed the Government’s response at the time, the progress since that response, what is being done and how far that has got.
I will try to cover as many themes as have been raised today, but if I run out of time or there is insufficient detail, I will make sure that we write to all hon. Members. I know that Viscount Younger has already spoken to the right hon. Member for East Ham to have a further briefing. I am sure that all hon. Members here today will be interested in what Viscount Younger has to say, so I will try to ensure that all that information is properly communicated.
I do not normally do this, but I particularly thank the hon. Member for Wirral South (Alison McGovern) for speaking in such glowing terms about my letter to her. There were some helpful comments about the progress the Government have been making. That might give other hon. Members some optimism that things are moving in a more rapid direction than they might hitherto have realised.
The Child Maintenance Service makes a real difference to the life chances of many thousands of children. That is why we are reforming it for the long term on an ongoing basis to continually improve outcomes. The service plays a crucial role in securing financial support for children when parents have separated, mandating and, when necessary, enforcing arrangements so that money flows from paying parents to receiving parents, which can benefit children and help prevent them falling into poverty. Indeed, payments for both child maintenance and private arrangements delivered an estimated £2.6 billion annually to parents between 2020 and 2022, keeping around 160,000 children out of poverty.
The vast majority of parents strive each and every day to give their children the best possible start in life. Those who shirk the financial responsibilities they have for their children must be quickly held to account. That is why we continue to improve the Child Maintenance Service to ensure it works as effectively and efficiently as possible. However, it is currently still too easy for parents to avoid paying up if their income does not come through normal PAYE. That is why we are looking at changing the rules so that child maintenance calculations include a much broader range of earnings, such as property income.
We recognise that some parents will find it more difficult to afford their payments if they have built up substantial arrears. The Child Maintenance Service will continue to prioritise collection of ongoing maintenance, but we have committed to reviewing the calculation. We have begun the process of updating the underlying research to consider how we ensure the calculation reflects current and future societal trends. Any changes made to the child maintenance calculation will require amendments to both primary and secondary legislation. The calculation formula underpins every Child Maintenance Service case. Furthermore, those with private arrangements can also use the online calculator to get an estimate to inform their own arrangement, which is doubly crucial. It is essential, therefore, that we undertake a thorough and comprehensive review of the calculation formula and consider the potential impacts on all parents and children. That requires time to ensure we take an informed and co-ordinated approach, to ensure the calculation is fit for purpose and future-proofed.
Peter Grant
Clearly, there has been an error at set-up that the calculation needs primary legislation to be updated. Given that it is now 25 years out of date, is it not time to bring forward legislation to change it once and for all, so that future changes can be made through secondary legislation or by other means? There have been examples recently where other DWP payments were uprated through statutory instruments and it did not take nearly as much bureaucracy to get that done. We should be able to do that with the child maintenance system as well.
Paul Maynard
The hon. Member makes an interesting point that may risk becoming a digression. I note that the secondary legislation he refers to is regarding automatic uprating of particular indicators. This is a more fundamental change to how the entire structure of child maintenance is conducted, so is perhaps not suited to secondary legislation. We often hear criticism that too much goes through secondary legislation, unscrutinised by this place. As a Member rather than a Minister, I always think that I would rather such a fundamental change be scrutinised properly in the form of a Government Bill. That is an important point.
Sir Stephen Timms
I take the point entirely about the complexity of the review’s underlying formula, which the Minister has just been talking about. Can he give us any sense of how long he envisages that review will take to complete?
Paul Maynard
I have made a lot of comments today about the drumbeat of ongoing changes and how we implement some of the private Members’ Bills that have gone through, for example. I hear what the right hon. Gentleman says about the progress and the drumbeat, but I am not sufficiently close to the actual data and the information that he seeks. I will ensure that he is written to, along with other Members present today. I am sure that will be discussed when he meets Viscount Younger.
Alison McGovern
While I am pleased to have cheered the Minister up, I can assure him that I will certainly be giving the Government down the banks yet again. But that exact point is why I thought it would be helpful if we could have some sort of regular update out of this debate. Can the Minister feed that back to the Secretary of State, if necessary? I am sure it can be discussed whether that is a statement that the Government place in the Library or a regular update to the Select Committee, but for those reasons, Members need to know what is happening with the different streams of improvement to the service.
Paul Maynard
I have already heard that point, and in my preparation for the debate, I noted the complexity and the number of workstreams going on in this area. I will certainly take that point back to the Department. Another theme that we have heard today is the importance of not just having an enforcement process but having an efficient and effective one. That is done partly by deciding what actions are appropriate on a case-by-case basis and using the existing powers that have the greatest chance of ensuring that parents meet their obligations to pay for their children.
The CMS has made a number of improvements to processes, for example by making better use of deduction from earnings orders so that they can be set up faster. The CMS has also brought forward the point at which deductions from bank accounts are made, which not only has increased the volume of deductions from bank accounts but means getting money to children faster. Working alongside His Majesty’s Courts and Tribunals Service, the Child Maintenance Service has improved court processing times by introducing virtual court presenting and the electronic exchange of documentation.
Following the Child Support (Enforcement) Act 2023, the Government propose to bring into force a legislative change to accelerate the enforcement process. The change will introduce a simpler administrative process to obtain a liability order against those paying parents who actively avoid their responsibilities. That will enable the CMS to take faster enforcement action, affecting at least 10,000 cases a year. They will also publish a consultation shortly on how the Child Maintenance Service collects and transfers payments to support survivors of domestic abuse, following the Child Support Collection (Domestic Abuse) Act 2023 receiving Royal Assent.
In addition, operating a scheme where parents are not paying their maintenance liability and where the Government guarantee child maintenance payments is not the intent of the Child Maintenance Service’s policy, which is the philosophical issue that we are stressing. The role of the CMS is to encourage parents to take financial responsibility for their children. The scheme is designed to encourage parents to agree their own family-based arrangements wherever possible, and that tends to be in the best interests of children. The CMS must always work in the best interests of children. The statutory scheme exists as a fall-back if parents are unable to reach those voluntary arrangements. The Government do not believe that the state covering the shortfall of unpaid maintenance is the right way to target additional funding appropriately, given that there is no means test for receiving parents.
We are also bringing the Child Maintenance Service into the modern age, having made a number of improvements to ensure that it delivers to the highest standard with a more digital customer focus. In order to get help arranging child maintenance on the digital service, which is available 24 hours a day, seven days a week, we are making it more accessible for parents to decide what type of arrangement is most suitable for them and to make an application online. Those improvements have already seen new applications rise by 13% in the year to September 2023, and I look forward to seeing further progress in the future. That is a welcome increase that we expect to continue with the removal of the £20 application fee. The upgraded online service allows customers to access and maintain their CMS cases themselves. Twenty-six different changes of circumstances can now be reported online. The advantage of digital systems means the service is, as I have said, available 24 hours a day. Many customer requests are now fully automated, so it is much quicker for parents to manage their own arrangements.
We have also, as I have said, improved the speeding up of enforcement processes. In the quarter ending September 2023, around £23.5 million—more than half—of the child maintenance collected through collect and pay was from parents who had a deduction from earnings order in place at the end of the quarter. Those improvements deliver a modern and efficient service for customers while enabling caseworkers to focus on parents who have more complex issues.
I will try to deal with specific issues that were raised. I might not succeed in three minutes, but I will at least try. I can confirm that the £20 fee has been removed as of yesterday, along with the eradication of debts of £7 and under, which we achieved through delegated legislation—the draft Child Support (Management of Payments and Arrears and Fees) (Amendment) Regulations 2023.
I was equally as concerned as the right hon. Member for East Ham to hear of the case of Rachel Parkin regarding the continuity of the support that she received from that single nominated caseworker. The Department will write to the Chair of the Select Committee to make sure that we properly understand that case and what can be done about it. There will be more to come on that point.
I was asked for updates on the progress of various Acts. It might be unhelpful to confirm that consultations are ongoing, because we want the measures to be proportionate, robust and targeted appropriately. It is never easy to rush consultations through. We are often criticised should we rush a consultation. Equally, I understand, not least from when I was a Back Bencher, that when final reports have been issued by the Government, people like to see action, so that point has been heard. I do not wish to pre-empt any Government decisions on curfews—those are not mine to take—nor would I wish to pre-empt the meeting of the former Secretary of State, my right hon. Friend the Member for Suffolk Coastal (Dr Coffey), with Viscount Younger when that will be fully discussed, I have no doubt. I, like her, await the outcome with great interest on what is discussed.
I have been told I now have one minute left, not three minutes. I would love to talk about fraud, but one point I have observed from my own casework is that very often people know that something is not right. They have suspicions that fraud might be occurring, but when they engage with the CMS it is not always taken forward. One thing that we hope to be able to do by the end of this month, in order to avoid vexatious frauds, is to provide to those making claims an illustrative list of evidence that the financial investigations unit will require to take an investigation forward. That then avoids the disappointment when someone thinks that something is going on, but they cannot prove it. I think that will help the individual stuck in that situation and perhaps also our caseworkers who try to guide people who ring our offices on how to go about it.
Anything that I have not covered I will cover in a letter to Members. On that note, I will sit down.
Automatic Enrolment: Earnings Trigger and Qualifying Earnings Band Review 2024/25 and Alternative Qu
Paul Maynard Excerpts(3 months, 2 weeks ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
Automatic enrolment (AE) into workplace pensions has been a great success to date. Since 2012 over 11 million people have been enrolled into a pension and over 2.3 million employers have met their automatic enrolment duties. Since the introduction of AE, total annual pension saving by eligible employees has increased by nearly £29 billion in real terms. The Government remain committed to building on this achievement and to transforming retirement prospects for millions of workers.
The main focus of this year’s annual review of the AE earnings trigger and lower and upper earnings limits of the qualifying earnings band (the AE thresholds) has been to ensure the continued stability of the policy in light of prevailing economic factors. We want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions while ensuring affordability for employers and taxpayers. The review has concluded that all AE thresholds for 2024-25 will be maintained at their 2023-24 levels. This is consistent with our ambitions to build a stronger, more inclusive savings culture that enables people to have greater financial security in retirement.
The 2024-25 annual thresholds
The automatic enrolment earnings trigger will remain at £10,000.
The lower earnings limit of the qualifying earnings band will remain at £6,240.
The upper earnings limit of the qualifying earnings band will remain at £50,270.
The alternative quality requirement triennial review
In accordance with the statutory timetable, we have also conducted a review of the regulations that introduced the alternative quality requirements for pension schemes being used for automatic enrolment into workplace pensions.
This review concluded that the alternative quality requirements for UK defined-benefit schemes set out in regulations, made under section 23A(1) of the Pensions Act 2008, should continue to remain in place without changes at this time.
The review also concluded that the tests set out in section 28(2A) of the Pensions Act 2008 continue to be satisfied.
The analysis supporting the thresholds review and the Government response to the call for evidence for the alternative quality requirements reviews will be published and copies placed in the Library of the House. They will both be available on the www.gov.uk website, following publication.
[HCWS244]
Oral Answers to Questions
Paul Maynard Excerpts(3 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Helen Morgan (North Shropshire) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The Government are dedicated to ensuring that parents meet their obligations to children, and we take robust enforcement action against those who do not. Parents who paid some maintenance on the collect and pay service increased from 64% to 69% over the 12 months from September 2022.
Helen Morgan
My constituent’s daughter is a young lady who has missed out for more than a year on child maintenance payments, because her father changed jobs and the Child Maintenance Service lost track of him. My team have been involved, and despite lots of faffing, she still has not received a payment. She is one of around half of children in separated families who are not receiving the maintenance payments they deserve. Will the Minister explain what his Department is doing to ensure that the employers of these missing parents are properly chased up?
Paul Maynard
Where parents have certain categories of taxable income not being captured by the standard child maintenance calculation, they can make a request to the CMS to have the calculation varied. We have consulted on proposals to include more types of taxable income held by His Majesty’s Revenue and Customs in the standard maintenance calculation.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
The Department has a number of ways to try to get paying parents to cough up, and we must remember that this is cash for the children. In July 2022, the Government consulted on child maintenance and improving our enforcement powers through the commencement of curfew orders, and we still have not had a response to that consultation. I would be grateful to hear from the Government when they plan to respond, and I remind them of the other powers in place, such as depriving people of the ability to drive or of their passport. This is a simple thing, where people have the money and will not cough up the cash. I think we need to get on with curfew orders.
Paul Maynard
My right hon. Friend is quite right that the Government have consulted on the use of curfews, which are complex and interact with numerous Government services. Several enforcement initiatives aimed at improving compliance are currently in train, and we need to get those in place and assess their effects before we can best see how curfews might fit with them. I note her enthusiasm for curfews and might well put her in touch with Viscount Younger of Leckie, the Minister in the Lords, whose policy brief this is, so that he can update her on our latest thinking.
Peter Grant (Glenrothes) (SNP)
Mr Rob Roberts (Delyn) (Ind)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
According to the latest estimate, based on data from March 2022, uprating the state pension where we do not currently do so would cost about £0.9 billion a year if all UK state pensions in payment were increased to current UK levels.
Mr Roberts
Following our withdrawal from the EU, we are rightly able to move closer to our partners in the Commonwealth. One way in which we could do that would be to confirm that all British citizens who live in the Commonwealth should be entitled to the appropriate uprating of their state pensions as if they were still in the UK. That would seem to be a matter of simple fairness. Will the Minister meet me to discuss the practicalities of making it happen, and restoring some much-needed common sense to a needlessly complicated situation?
Paul Maynard
The UK Government continue to uprate state pensions when there is a legal requirement for that to be done, and have no plans to change their long-standing policy or enter into new reciprocal social security agreements.
Kerry McCarthy (Bristol East) (Lab)
David Linden (Glasgow East) (SNP)
Last month, a report by the pension provider Royal London showed that women lose, on average, £92,000 as a result of juggling part-time work and childcare. What are the Government going to do about that?
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
As the hon. Gentleman will have heard earlier, the proportion of women saving for their pensions has gone from 40% 10 years ago to 89% now.
Dr James Davies (Vale of Clwyd) (Con)
Peter Grant (Glenrothes) (SNP)
Paul Maynard
I can confirm to the hon. Gentleman that the Child Maintenance Service has a domestic abuse plan to ensure that parents are not placed in danger as a consequence of any suggestion of domestic violence; for example, it has a centralised sort code to limit the risk of parental involvement.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I wish to place on record my thanks to the Secretary of State for helping to guide my private Member’s Bill through Parliament. It lowers the pension auto-enrolment age from 22 to 18, and abolishes the lower earnings threshold. Briefly, has the Secretary of State received reassurances from the Chancellor that the necessary forms will be implemented in the spring Budget?
Marco Longhi (Dudley North) (Con)
Paul Maynard
The Department is co-operating with the Parliamentary and Health Service Ombudsman investigation, which is ongoing, and it would not be appropriate to comment on it or the outcome.
Jessica Morden (Newport East) (Lab)
Coastal and Rural Communities: Employment
Paul Maynard Excerpts(3 months, 3 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under you in the Chair, Dr Huq. Congratulations to my hon. Friend the Member for Ynys Môn (Virginia Crosbie) on securing the debate and to the Backbench Business Committee on allowing it to take place. The shadow Minister, the hon. Member for Lewisham, Deptford (Vicky Foxcroft), is right: I am an expert on this issue, not least as an MP for Blackpool—how much more seaside can you get than Blackpool?
My hon. Friend the Member for Ynys Môn and my hon. Friend the Member for Waveney (Peter Aldous) set out in great detail how the issue impacts every single Department. Not a single one was missed off their list, apart from, perhaps, the Attorney General’s Office. I am sure that if they had been that bit more creative, they could have found a way to connect the issue to it.
The word “employment” in the title of today’s debate perhaps explains why I am here, or rather, why the Department that I represent is here today through me. But as a Blackpool MP, I know full well that when we say “employment”, we are really talking about public health matters, transport, and housing above all else. The root of every social evil always seems to come back to housing in some way, shape or form, particularly in seaside towns, which have older, more dense populations. There is a heritage of mass tourism—that has now passed away, sadly—and often, that is about housing as well. As a Department, we are very aware that we have to spread opportunity, unlock the economic potential across every corner of the country and recognise the unique opportunities and challenges, including employment, that our rural and coastal areas experience.
As for Ynys Môn, in particular, my hon. Friend the Member for Ynys Môn set out in great detail all the different opportunities and concerns and the potential that is out there and that her district needs. Yet it is also clear that however picturesque or beautiful an area is, beauty alone does not pay the bills. We can gaze at the beautiful Lake district, the hills, from Blackpool. That does not fill the pockets of my local hotels or hospitality sector, which have gone through a very turbulent time in recent years.
The Department is working to support employment across the country, including our rural and coastal geographies. We want everyone who can work to be able to find a job, progress in work and thrive in the labour market. We know that transport can be a significant barrier to accessing work and training opportunities, and individuals on low incomes are especially affected by that. My hon. Friend the Member for Waveney was right; many coastal towns are indeed at the end of the line. I think there was a Conservative report entitled that when we were in opposition and a Labour report entitled that when it was in opposition—it is almost a cliché. But it is not true of Blackpool. We are the end of two lines—one line stops at Blackpool North and one at Blackpool South. But we are still the end of lines, and he is right to make that point.
Our rural and coastal communities also face more limited digital connectivity. Frequently, there is a high dependency on a single local industry for employment, and there are immense challenges around seasonal work. Rural and coastal populations are also disproportionately older, with implications for health and social care needs, and there are difficulties recruiting health professionals. It is always abundantly clear to me, when I speak to any public sector employers in my town, that they have a recruitment problem merely because of geography, because half of their hinterland is the sea and no one lives in the sea, to state the obvious. They immediately have a much harder task recruiting people.
Our rural and coastal areas are also rich in economic potential, home to strong communities and businesses, natural environment and heritage. Although productivity and earnings are, on average, lower in rural and coastal areas, rural areas also have a higher employment rate than urban areas. Employment rates in rural and coastal areas have increased since 2010.
The Department for Work and Pensions offers a national programme of welfare and employment support, with a strong place-based presence through our Jobcentre Plus network in 37 districts across Britain. The core jobcentre offer includes face-to-face meetings with work coaches and tailored support for different groups, including claimants aged 16 to 24, 50-plus claimants, disabled people and people with health conditions, and those in work and on low pay.
The Government are committed to supporting individuals who are in low-paid work to progress, increase their earnings and move into better-paid, quality jobs. For working universal credit claimants, we have introduced the in-work progression offer to give claimants additional Access to Work coaches focused on removing barriers to progression and considering skills gaps and training opportunities. However, we want to go further to see even more people fulfil their potential. We have made significant investments in the past year with an ambitious package of employment support, with more help for those over 50 and for disabled people and those with long-term ill health needs, including in rural and coastal areas.
Through jobcentres, we offer additional work coach time for eligible 50-plus jobseekers on universal credit to provide more intensive, tailored support during the first nine months of their claim. We have dedicated 50PLUS champions working out of every jobcentre across Great Britain. Those champions support and upskill work coaches and engage with employer-facing staff to tailor provision and recruitment, and to develop opportunities for those aged 50-plus to take up roles in key local sectors such as care and housing.
The Government have an ambitious programme of initiatives to support disabled people and people with health conditions to start, stay and succeed in work. The programme includes increased work coach support and disability employment advisers in jobcentres; the Work and Health programme and intensive personalised employment support; Access to Work grants; Disability Confident; the information and advice service; employment advice in NHS talking therapies—the list is endless.
We announced even more support targeted at that group at both the spring Budget and the autumn statement last year. That includes: expanding the existing additional work coach support programme; introducing universal support, a new supported employment programme for disabled people and people with long-term health conditions in England and Wales, matching participants with open-market jobs and funding support and training; launching WorkWell, which will bring together the NHS, local authorities and other partners in collaboration with jobcentres; expanding access to mental health services, increasing the number of people accessing NHS talking therapies and individual placement and support; and introducing employment advisers to musculoskeletal condition services in England.
Although individuals and businesses across rural and coastal geographies will benefit from all those measures, the DWP also offers a place-based, targeted approach to ensure that support is available and relevant to those who need it, wherever they live. The DWP has local teams that specialise in working in partnership with local authorities, creating links to local communities to understand their needs and tailor their provision to the local labour market.
For example, to mitigate the local transport challenges that we have heard mentioned, the Jobcentre Plus travel discount card is available to DWP customers, giving a 50% discount on the majority of train journeys. Many bus operators also accept the card for discounts.
Our flexible support fund can cover the first three months’ travel costs for claimants starting work to support them in the early stages of employment. The fund can also be used to purchase a pedal or electric bike where there are restricted levels of public transport available and the claimant does not drive. Of course, there is also the access to work grant, which is available to customers with a disability who are starting a job or are in employment. That can pay for help getting to and from work as well.
The Department is also working with colleagues across Government to further minimise transport barriers to labour market participation. Close collaboration between local jobcentres, DFT and local transport authorities ensured that the development of local bus service improvement plans was informed by DWP insights into which key employment opportunities are limited by transport barriers.
Jobcentres also run sector-based work academy programmes, working in partnership with local employers and training providers to offer people valuable training, work experience and a guaranteed interview for genuine vacancies. This place-based approach enables jobcentres to connect local people and businesses, providing a pipeline of skilled labour that is relevant to the needs of local sectors. We work closely with businesses across an array of different sectors, including traditional rural and coastal industries such as farming and tourism. For example, DWP is supporting DEFRA to develop and deliver a long-term recruitment strategy for the agricultural sector that will help domestic workers into both seasonal and long-term roles.
More widely, the Government have supported coastal communities to level up through dedicated funding under the coastal communities fund and the coastal revival fund, and additional funding under the welcome back fund. The levelling-up fund has provided around £1 billion to projects in coastal areas, and over £400 million has come through the UK shared prosperity fund to local authorities within or serving coastal areas of England. However, it is not just about the funds. Perhaps unsur-prisingly, 11 out of our 12 freeports are in coastal areas, but seven out of the 20 current levelling-up partnerships are also in coastal areas, demonstrating our deep commitment to unlocking the economic potential of coastal communities.
The Government are committed to levelling up employment across all parts of the country, including our vital rural and coastal areas. We want everyone to access opportunities to better their lives, wherever they live. We will continue to deliver extensive employment support that we know works in supporting people to enter and progress in the labour market, including tailored help from jobcentres to meet the needs of individuals and businesses in each area.
I look forward to working with all colleagues across the House—as does the Minister for Employment, my hon. Friend the Member for Bury St Edmunds (Jo Churchill)—to continue to support people across our communities so that they can prosper. I want to thank again my hon. Friend the Member for Ynys Môn for securing this debate, and I thank all those who have participated.
Social Security
Paul Maynard Excerpts(3 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
I beg to move,
That the draft Social Security Benefits Up-rating Order 2024, which was laid before this House on 15 January, be approved.
The draft order will increase relevant state pension rates by 8.5%, in line with the growth in average earnings in the year to July 2023. It will also increase most other benefit rates by 6.7%, in line with the rise in the consumer prices index in the year to September 2023. Subject to parliamentary approval, the changes will take effect from 8 April and will apply for the tax year 2024-25. [Interruption.]
Madam Deputy Speaker (Dame Rosie Winterton)
Order. May I ask those not participating in the debate to leave quietly? It is difficult to hear the Minister.
Madam Deputy Speaker
Order. Minister, I have just been asked to clarify that you are moving motion 3 on social security.
Paul Maynard
For the information of the House, this order covers state pensions. Motion 4 covers the guaranteed minimum pension, which is a sub-element of the pensions issue. As I will explain, the different elements—
David Linden (Glasgow East) (SNP)
On a point of order, Madam Deputy Speaker. Can I clarify whether we are taking motion 3 on social security and motion 4 in one debate, or will we scrutinise the orders separately? It would be helpful for the House to have clarity on exactly what is happening.
Paul Maynard
Indeed, a few days ago I was asking those questions about whether to take the motions separately or together. They are being taken separately.
Sir Stephen Timms (East Ham) (Lab)
I am very relieved that we are getting a proper uprating this year, but the current headline rate of benefits is the lowest it has been in real terms for 40 years. Why have Ministers set benefits at a level so much lower in real terms than was chosen by Margaret Thatcher, Peter Lilley, John Major or Norman Fowler? Why is it so much lower?
Paul Maynard
There is always a lively debate about the adequacy of the overall benefits system. I think Beveridge had the debate under the Labour Government in 1945 on how to understand the concept of adequacy within the benefit system. What we are doing is ensuring that the purchasing power of benefits is maintained and that we are adhering to the triple lock. The right hon. Gentleman’s intervention allows me to restate, I think for the fifth time, the Government’s commitment to the triple lock, meaning that the basic and state pension will be uprated by the highest of growth in earnings or in prices, or by 2.5%.
This year that will mean an 8.5% rise from 2024-25, taking the basic state pension from £156.20 to £169.50 a week, and the full rate of the new state pension from £203.85 to £221.20 a week. Additional state pensions, such as the state earnings-related pension schemes and protected payments of the new state pension, will rise by 6.7%. The Government are committed to supporting pensioners on the lowest incomes, and accordingly the safety net provided by the pension credit standard minimum guarantee will increase by 8.5%. For single pensioners it will increase by £201.05 to £218.15, and for couples it will increase from £306.85 to £332.95 per week.
When it comes to support for those in the labour market, such as universal credit and the means-tested benefits it replaces, there is always a need to take into account work incentives as well as financial support for those in low-paid work, who are looking for work or who are unable to work. The Government announced a range of employment and conditionality measures at the autumn statement to maintain and improve work incentives. However, in striking a balance it is also right to increase the rate of those benefits by 6.7%, in line with the increase in CPI in the year to September 2023. That 6.7% increase means that universal credit will retain its purchasing power in the broader context of the Prime Minister’s delivered commitment to halving the rate of inflation.
The Government remain mindful of work incentives in the benefit system, and accordingly this order also increases the universal credit work allowance by 6.7%. They will increase from £379 to £404 per month for those also receiving support with housing costs, and from £631 to £673 per month for those not receiving support with housing costs. That 6.7% increase will also apply to the rates for contributory jobseeker’s allowance, contributory employment and support allowance, additional needs disability benefits such as the personal independence payment, carer’s allowance and statutory payments such as statutory maternity pay, statutory paternity pay and statutory sick pay.
The draft order, if Parliament approves it, commits the Government to increased expenditure of £19 billion in 2024-25. We believe it is right to make such a commitment because it maintains the triple lock, which benefits both pensioners already in receipt of the basic and new state pensions and younger people who are building up future entitlements as a foundation for private saving. It raises the level of the safety net in pension credit beyond the increase in prices and is part of a package of support for those in the labour market, which protects the value of benefits at a time of high, if falling, inflation while maintaining and increasing work incentives.
The draft order maintains the purchasing power of benefits to help with additional costs arising from disability. It also provides protection against inflation for people who are currently unable to participate in the labour market, such as full-time carers, who provide such an essential service to those they care for. On that basis, I commend this order to the House.
Paul Maynard
I thank everyone who has participated in this debate. I am very disappointed in the hon. Member for Glasgow East (David Linden), who seems to think that I do not write my own material. He should know that my private office staff are sitting in trepidation, as I write across every speech they give me in blue and red ink. They never know what will emerge from my mouth. I can assure him that it is all my own work, and he can criticise it all the more for that reason.
I am also disappointed that people think this order is just a technical necessity. I do not call £19 billion of Government spending a technical necessity. It is one of the largest amounts of extra spending in which the Government engage in any particular year, and it will make a considerable difference to the lives of people across the country.
Paul Maynard
No, I certainly do not, but I would want to think that those of us in this Chamber did not dismiss the order as a technical measure.
My hon. Friend the Member for Amber Valley (Nigel Mills) repeated a point that I think he made this time last year—I also made this point when I was sitting in the far corner of the Chamber as a Back Bencher—on the timely application of these measures and whether we ought to make them more promptly after inflation is measured. As a member of the Work and Pensions Committee, he will know that this issue is often discussed, with the discussion often revolving around the robustness of universal credit’s IT system compared with the IT systems for legacy benefits. I am told the hopefully promising news that state pension benefits, in particular, will be moving to a more modern IT platform by 2025, followed by disability benefits, contributory benefits and carer’s allowance, so there is a pathway towards getting all our benefits on to modern IT systems that are more agile in responding to economic situations. I hear his point, and work is under way.
The hon. Members for Glasgow East and for Oldham East and Saddleworth (Debbie Abrahams) both talked about the Joseph Rowntree Foundation, and I am a great admirer of its work. As a Back Bencher, I sat on many Zoom meetings and Teams meetings to listen to its briefings. The hon. Member for North East Fife (Wendy Chamberlain) and I have discussed the essentials guarantee many times, so I take a personal interest in what the Joseph Rowntree Foundation says. Since the period covered by its report, the Government have provided over £104 billion of extra support to help households with the high cost of living. Although I understand that the Joseph Rowntree Foundation will stick to the broad themes of its argument, we need to recognise that Government support has moved on.
I do not want to pre-empt the meeting of the hon. Member for North East Fife with the Chief Secretary to the Treasury, which I hope will bring better news than I am able to deliver from the Dispatch Box. I have heard about her letter. My favourite episode of “Fawlty Towers” is “Communication Problems”, which is a comic classic, and the tale she tells is such an example. I am sure my officials have made a note, and we will hopefully follow up with a clarifying letter.
Finally, I turn to the right hon. Member for Islington North (Jeremy Corbyn). Not being the Minister in charge of local housing allowance, I am a little cautious about giving him a more definitive answer at this stage—[Interruption.] Nothing annoys me more than when other Ministers intrude on my brief without telling me, so it is a courtesy to them, nothing more.
The draft Social Security Benefits Up-rating Order will increase the state pension by 8.5%, in line with the rise in average earnings, and it will increase most other benefit rates by 6.7%, in line with the rise in consumer prices. These changes commit the Government to increased expenditure of £19 billion in 2024-25. They maintain the triple lock, protect pensioners on the lowest incomes and support those in the labour market, while maintaining work incentives and protecting the value of benefits for those who cannot work and who have additional disability needs.
I commend this statutory instrument to the House.
Question put and agreed to.
Resolved,
That the draft Social Security Benefits Up-rating Order 2024, which was laid before this House on 15 January, be approved.
Pensions
Paul Maynard Excerpts(3 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
I beg to move,
That the draft Guaranteed Minimum Pensions Increase Order 2024, which was laid before this House on 15 January, be approved.
I feel almost like a Netflix series, in that people can now binge-watch two episodes of me in a row. I hope none the less that this matter is worth equal consideration.
The Guaranteed Minimum Pensions Increase Order sets out the yearly amount by which a guaranteed minimum pension pot of an individual’s contracted-out occupational pension earned between April 1988 and April 1997 must be increased. Occupational pension schemes are required to increase GMPs that were earned during that period and are in payment by 3% for the 2024-25 financial year.
As this is quite a technical matter, I will provide a little background information on GMPs, and what they are and are not. GMPs were created to help make occupational pension provision more affordable and more secure. As many Members present will be aware, the state pension used to be made up of two parts: the flat-rate basic state pension and the earnings-related additional state pension. The flat-rate state pension was funded through the national insurance scheme, and paid the full rate to those with sufficient qualifying years of NI contributions, or pro rata to those with a partial record. The second part of the state pension, the earnings-related additional state pension, was linked to a person’s earnings. The national insurance contributions paid by both the employee and their employer gave the employee the right to an additional earnings-related state pension. That was designed to ensure that as many workers as possible were able to save for their retirement through a work-based pension.
However, many employers already offered their workers a company pension through their own scheme, so many people were already building up an occupational pension, and an earnings-related additional state pension in effect replicated that provision. That was considered onerous and potentially unaffordable for both employers and employees. It was seen as double provision and over-complicated. In order to simplify the situation, the Government of the day introduced in 1978 the system of contracting out, and the provision of guaranteed minimum pensions, which are the subject of this order.
Between April 1978 and April 1997, employers sponsoring a salary-related occupational pensions scheme could “contract out” their occupational pension schemes from the earnings-related additional state pension. People who were members of a contracted-out scheme were taken out of the additional state pension, so as a result both the employer and the pension scheme member paid lower-rate national insurance contributions. In return, salary-related contracted-out occupational pension schemes were required to take on the responsibility for paying their members a guaranteed minimum pension as a part of their occupational pension from the scheme.
The guaranteed minimum pension that the member built up in the scheme would be broadly equivalent in value to the additional state pension that they would have received had they stayed in the state system. The majority of employees would also have built up an occupational pension over and above the guaranteed minimum pension amount, but the scheme pension could never be lower than that guaranteed minimum. The crux of the idea was that, rather than paying additional national insurance to the state in order to build up an additional state pension, people could build up a similar amount of occupational pension through a workplace pension scheme. The system ran in that way from 1978 to 1997. Having set out the detail, which I accept is complicated, let me turn to the order before us.
The order provides a measure of inflation protection for the guaranteed minimum pension part of an occasional pension built up between April 1988 and April 1997. Legislation stipulates that, when there has been an increase in the annual level of prices as measured the previous September, the order must increase the guaranteed minimum pension part of the occupational pension by that percentage or 3%, whichever is lower. As the September 2023 figure was 6.7%, the increase for the financial year 2024-25 will be 3%. The cap of 3% aims to achieve a balance between providing some measure of protection against inflation for members and, crucially, not increasing schemes’ costs beyond what they can generally afford, in order to avoid undermining the viability of some schemes and seeing them go into the Pension Protection Fund.
An obvious question comes to mind: what happens when inflation is above 3%, as it is currently? Most members who reached the state pension age before 2016 will still get the same inflation protection for their post-1988 guaranteed minimum pensions as if they had never been contracted out. That is achieved through an uplift that they receive in their additional state pension. For those reaching state pension age after April 2016, who are therefore receiving the new state pension, there are transitional arrangements in place, which are particularly beneficial for people who are contracted out. These members will therefore still get the 3% increase from their occupational pension schemes.
I recognise that this is perhaps a very complex and technical area, but I am satisfied that the order ensures that the burden placed upon schemes is an appropriate one, but also one that ensures that recipients get an increase in their pensions that gives them some measure of protection against inflation. I therefore commend it to the House.
Paul Maynard
With the leave of the House, let me thank those who have responded to this debate. There has been a bit of speculation about uprating, but does that start from those on the Government Benches and come from nowhere else? It does not; it starts on the Opposition Benches and it is sheer political opportunism, nothing more. It will happen year after year, just as the sun shines and the rain falls.
The shadow Minister made some interesting points that I want to try to respond to, particularly on pension credit, where I know there is a shared desire to make sure that we always maximise take-up. Through the things we have been trying to do lately, besides the television campaign we have been running involving footballers such as Harry Redknapp and so on, every time we write to people about state pension uprating—we are still legally obliged to do so, to 11 million pensioners—they get a piece of paper about pension credit as well. We are trialling writing to pensioners on housing benefit to ask them to apply, to see whether they also are eligible. We have not seen the outcome of that work yet. I am really interested to see it, because it will be a good indicator of whether we can use other datasets to get more people involved. We are seeing much higher claims levels—80% higher than a year ago—so a lot of what we are doing is generating more interest. That does not always feed through to a successful claim, but it is showing that there is more interest.
David Linden
There is no disagreement on this point about pension credit. I just gently ask the Minister to go back to his officials and re-examine the paper form for pension credit, which runs to some 232 questions. Given the nature of the demographic dealing with pension credit forms, there must be a way of trying to simplify them. Does he agree that it might be possible to slim down 232 questions, so as to get more people their pension credit?
Paul Maynard
I very much take the point. I was sitting down today with people from a range of charities to discuss that very point: how do we get access to those who are least inclined to apply at the moment and what groups in society are we missing? The discussion was very much about how an overreliance on IT can often be a barrier and so this is very much part of our thinking.
The shadow Minister also asked about the 2017 reforms, and the extension of auto-enrolment, investing from the first £1 of income and so on. Those things are a personal priority to me. I would love to give her a date for when she will see that; “in due course” is never a good answer to give at the Dispatch Box, but I am afraid that it is the answer at this stage. However, I am pursuing this within the Department, so she has my personal pledge that I am pushing it is as hard as I can. I am also enthusiastic about CDCs, as I know she is. She will be aware that Royal Mail already has a scheme “ready cooked”, and I am keen to see how it progresses, but I want to make sure that other businesses that are also showing an interest can input into the formulation of the more sustainable regulations.
Finally, I come to the point about BP made by the hon. Member for North East Fife (Wendy Chamberlain). Unfortunately, commitments given in the Chamber do not always align with ministerial diaries as to when I am due to meet people, so on all the things I promised I would raise, I have yet to have a chance to meet the pensions regulator to have that fuller discussion. This is still a case of “watch this space”, but I stand by everything I said in Westminster Hall and it is still on the agenda. On that note, I commend this order to the House.
Question put and agreed to.
Work and Pensions
Paul Maynard Excerpts(4 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Paul Maynard
On the points that were made about collect and pay and the calculation more generally, we are consulting on how we can improve both those things. I believe that the consultation on collect and pay is yet to start, but we announced in October that we would be consulting on how to collect and transfer maintenance payments. I understand that the consultation on the calculation side of things will also be launched shortly.
[Official Report, Fifth Delegated Legislation Committee, 16 January 2024, Vol. 743, c. 8.]
Letter of correction from the Under-Secretary of State for Work and Pensions, the hon. Member for Blackpool North and Cleveleys (Paul Maynard):
Errors have been identified in my response to the debate on the draft Child Support (Management of Payments and Arrears and Fees) (Amendment) Regulations 2023. The correct information is as follows:
Paul Maynard
On the points that were made about collect and pay and the calculation more generally, we are working on how we can improve both those things. I believe that the consultation on Direct Pay is yet to start, but we announced in October that we would be consulting on how to collect and transfer maintenance payments. I understand that a review of the calculation is ongoing.
Defined-Benefit Pension Schemes
Paul Maynard Excerpts(4 months, 1 week ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful to the right hon. Member for Orkney and Shetland (Mr Carmichael) for securing this debate. We had a good discussion on this matter yesterday, but I hope I can say a bit more today.
First and foremost, I am very pleased that people are showing more interest in pension schemes more generally and the pensions they receive. I always think that we, as a nation, do not show enough interest in our pensions at the right time in our lives. I have heard very clearly the points made about individual schemes. Today I will not talk about specific schemes but will comment in more general terms about how these pension schemes are supposed to work. I recognise that many people depend on these schemes for their retirement income, but let me talk about the issues more broadly.
I understand the upset caused by schemes when pension scheme members no longer receive the discretionary increases that they had received previously. It is important to stress that legislation does not seek to set out exactly what every scheme must do in every conceivable circumstance; rather, legislation sets out minimum standards for indexation. That does not prevent more generous arrangements, which may be brought into a scheme through its rules or provided on a discretionary basis.
It is quite right that there should be some minimum standards—statutory requirements for DB indexation that all schemes must follow. These requirements are in place for all schemes, and they try to achieve a balance between providing members with some measure of protection against inflation without increasing a scheme’s costs beyond what most schemes can generally afford. That is a critical balance to strike.
It is important to provide a measure of protection for members, but we also need to have an eye to the future viability of a scheme, which could be compromised by creating significant additional liabilities. We also have to consider employer affordability. The best possible protection for the members’ future benefits is a strong and profitable employer, and we must remember that not all DB schemes are sponsored by monolithic employers with deep pockets. The setting of a statutory minimum is therefore a delicate balance to strike.
Some pension schemes go beyond the legal requirements and do indeed provide more generous indexation. Of course, if higher levels of indexation are set out in scheme rules, those levels of indexation must be paid. The scheme rules set out the pension package that the members have the right to receive.
Mr Carmichael
I agree with most of what the Minister is saying, but there is something more that comes into play here, which is the question of light-touch regulation. Light-touch regulation only works if it is possible to proceed on the basis of good-faith acting by both parties, particularly the companies. Where there is evidence of the lack of good-faith acting, as we have with BP and Shell, is it not necessary to adjust the system to ensure that at the end of the day the beneficiaries are not suffering as a consequence?
Paul Maynard
I note the right hon. Gentleman’s point. I am also conscious of time, so I do not think that I will be able to make my entire legal presentation. He very kindly said in his speech that I was alive to the issues, which I hope I can demonstrate towards the end of my speech by setting out where my thinking is moving to.
As the right hon. Gentleman rightly said, the Government’s role is to ensure that the fundamental promise of a DB scheme, as set out in its rules, is met. Whether discretionary payments are made must be a matter for the trustees and the sponsoring employer. The Government have no power to intervene to require a scheme to pay an annual increase above that required by the law or to go beyond the rules of the scheme.
It is up to trustees and sponsors to agree how their specific scheme should be run in the best long-term interests of all parties. It would not be appropriate for the Government to interfere in decisions made by individual schemes, beyond setting clear and reasonable minimum standards that apply to all schemes, including through regulation.
Justin Madders
I am grateful to the Minister for giving way; I will just pick up on the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael). This issue is about good faith and promises being kept. If we look not just at the schemes that have been mentioned today but at others—I am thinking of the FOSPEN, the Midland Bank clawback issue, and of course the WASPI women—we see that there is a whole generation of pensioners out there who feel that they have not been delivered what they were entitled to. What kind of message does that send to the pensioners of tomorrow? We really need to toughen up on this, don’t we?
Paul Maynard
I agree entirely. Since coming into this job, I met representatives of the Pensions Action Group— an organisation that covers employees of a number of companies that went into liquidation many years ago. Differing rules around indexation have caused very different outcomes for those individuals, so I am very conscious of the issue. I made a point of meeting them because I believe predecessors have not met them; I wanted to make sure that I heard their case and could reflect on it, and I have commissioned further work from officials. They are aware that that is ongoing, and I look forward to hearing what my officials have to say.
Key to the points I have heard in this debate is the role of trustees. No matter whether they are employer-nominated or member-nominated, they have first to comply with the rules of the scheme and, secondly and crucially, to act in what they regard as the best interests of their members now and in the future. That includes investment decisions that they may choose to make. It also includes decisions on indexation. The trustees will sometimes need to make difficult decisions; that is the nature of trusteeship. The needs of different parties, today and in the future, have to be balanced. They have to ensure that funding problems do not emerge in the future. Trustees and sponsors must work together to seek the best way forward, taking account of a whole range of issues including the long-term health of the scheme.
Depending on the circumstances of the scheme, different models of trusteeship may be more or less appropriate. The type of trustee best for appointment to a scheme will depend upon the characteristics of the scheme. The governance and trusteeship of a scheme is best handled by the scheme and its sponsors. They will know better than anyone else what the scheme’s long-term future looks like and how best to get there, but trustees, regardless of whether they are appointed by members or by sponsors, do not and cannot act to represent any particular group. There are safeguards, however. The Pensions Regulator has powers to remove and replace trustees with an independent trustee or add an independent trustee to a trustee board should it have concerns about the capability or behaviour of a trustee.
A defined-benefit pension is a promise to pay the person concerned a certain amount of pension income every month in retirement for the rest of their life. That means that while the sponsor remains solvent, a person’s retirement income cannot decline below a set amount, regardless of the value of the pension fund or the wider economic situation. In addition, a proportion of the DB pension may also be inherited by a spouse after the pension holder’s death—again, guaranteed in value for life.
Rights in a defined-benefit pension scheme are extremely valuable and we should be rightly proud that such schemes exist for the bulk of today’s pensioners, but ensuring that these rights are protected for all scheme members involves many different parties: trustees, employers, and current and future individual scheme members. The governance of defined-benefit pension schemes must therefore balance the needs of all those different parties. It has to work for today, and in the short and long term. Our priority is to ensure that schemes pay out the full value of the promised pension to each member when it falls due, as set out in the scheme and in line with the relevant legislation. When it comes to indexation, legislation sets out the minimum standard that tries to ensure there is a measure of protection against inflation.
Having listened to the debate today, as well as to other individuals I have met in recent days, it is difficult not to have sympathy with pensioners who have planned on the assumption of receiving certain increases, no matter how discretionary they may be, but then find that their income is not increasing as they had expected or planned on. As much as I can do, I will look closely again at the situation regarding the scheme that I have heard about in this debate—and others that I am sure other Members might have covered had they been able to attend—and try to understand fully what has happened and whether the arrangements currently in place in regulation are working as intended. I will do this by discussing it with the Pensions Regulator in particular.
I will also look at the proposals we made in the autumn statement on improving the quality of trustees. I am not saying that all trustees are awful or anything like that; we have excellent trustees in many pension schemes, but we also have to bear in mind that, as I and the hon. Member for North East Fife (Wendy Chamberlain) said, many large and monolithic employers have a different ability to absorb rapid changes in the pensions landscape compared with much smaller schemes. I do not want smaller schemes pushed into administration under the Pension Protection Fund, which would then lead to reduced pensions for those scheme members. Both must be kept in balance.
I thank the right hon. Member for Orkney and Shetland.
Philip Davies (in the Chair)
Order.
Motion lapsed (Standing Order No. 10(6)).