Lynne Jones (Birmingham, Selly Oak): The hon. Gentleman seems to share the aspiration to increase the proportion of private pension provision, and I am surprised by that. Nobody has yet said how that is to be achieved. Does he agree that the only way to achieve it would be to make pension provision compulsory? If so, does that not raise the question of which provides better value for money, a compulsory private pension or increased spending by the state?
Mr. Webb: The hon. Lady raises a series of important and relevant points. I shall come to the compulsion issue in a second. I would like good-quality occupational provision to be expanded rather than cut as part of the process. For example, the Government should look at why people who would previously have had a final salary scheme are now no longer allowed entry to such schemes, and they should try to reverse that trend so that more people for whom it is appropriate can get good-quality occupational provision.
The hon. Lady is right to suggest that there will be people who do not have access to such provision. In that case, in old age there needs to be a good foundation of both state and private provision for as many people as possiblebecause both have risks. State provision, as history has shown us, is liable to be ripped up by successive Governments and does not provide any real guarantee, while private provision is subject to the vagaries of the capital market and various other uncertainties. Both are uncertain; neither provides a guarantee, and that is why we want a foundation for both for as many people as possible.
One group of women have done quite well out of the Government's pension policy: the wives of rich men. I have nothing against the wives of rich men. I have no problem with husbands buying them pensions, given that they may not still be married when they retire. However, if that is the main group that has benefited from the Government's policies, something is missing.
Let us consider the stakeholder pension. When people take out a stakeholder pension, they have to buy an annuity with it. Although some small part of the pension buys a unisex annuity, most of that pension will be smaller for women. So, although women are living longer and therefore receiving a comparable amount over their lives, the amount that they have to live on each week will be smaller.
We have heard nothing from the Government on how or whether they intend to address that. The stakeholder pension is intended particularly for people on modest incomes, so not a lot will be going into it in the first place. If it is then lower for women, they will lose out. Do the Government have any strategy for women's pensions in that respect?
Mr. Butterfill: Has the hon. Gentleman seen the recent report by the Association of Consulting Actuaries on the position of women in occupational pension schemes? It says that whereas 21 per cent. of full-time working women did not have occupational schemes in 1989, the figure is now 26 per cent. So, 5 per cent. more women do not have an occupational scheme now compared with 1989.
Mr. Webb: I am grateful for that intervention. The hon. Gentleman is very knowledgeable about these matters and highlights the problem. The Government say that reliance on the private sector is a key part of their strategy, but they do not seem to know or care about what is going on, even if things are going backwards for women and other groups.
Women are vulnerable not just in private sector provision. The Government have trumpeted their measures on state provision. Increases in the minimum income guarantee will go predominantly to poorer pensioners, many of whom are women, and that is to be welcomed, but what about those who do not take up their entitlement, who are also predominantly women? The Government's obsessive emphasis on the means-tested strand, at the great expense of the universal strand, is prejudiced against women, because they will take up their pension but will not necessarily take up their minimum income guarantee. That is why our party remains
I am surprised that the Government have not mentioned much about the state second pension, which is another element of their strategy. Again, it is claimed as a great thing for women, with credits and all the rest of it. In 40 or 50 years' time, if the policy survives that long, it might be such a great thing. However, for anybody already at pension age, it is irrelevant, and for those who are 10 or 20 years below pension age, it will make precious little difference. Therefore, we are talking really only about 30 or 40 years down the track. Such changes are likely to be ripped up and restructured many times during that period. So, women cannot be sure of an enhanced pension through that scheme. It is too complicated and bound to be revised again and again. I should like to give one example in that regard.
When the state second pension was introduced, we said that it was not enough and that it would not bring pensioners, together with the basic pension, above the means test. The Government said, "Nonsense; it is adequate," yet they have now introduced a pension credit. Therefore, someone who has made no voluntary saving and has only the basic state pension and the state second pension will receive a top-up through the pension credit to bring their combined income to a better level because the scheme that the Government have introduced was not good enough. If the Government have to rewrite the rules just two years after they have introduced them, what hope is there that such a scheme will be in place in 40 years' time? Women are missing out because of the Government's pension strategy.
Women are not the only ones who lose out from the Government's proposals. Those who want to retire in a phased way, instead of going over the current cliff edge of retirement, also miss out because of the Government's policy. In the same article, the Secretary of State expresses all the usual platitudes about early retirement or flexible retirement. He writes:
What can be done? Bizarrely, one can spend one's life working for one firm, Tesco, then retire from Tesco, draw a private occupational pension and go to work for Sainsburythat is allowed; but one cannot retire from a life working for Tesco and then go to work part-time for Tesco, as that is not allowed. In the latter case, the Inland Revenue says that one has not really retired, so one cannot have one's pension with its tax privileges. That is absolutely barmy.
If, as the Secretary of Stateor whoever wrote the articleclaims, the Government want people to go on working longer, perhaps past state pension age, should not the Government be helping people to phase their retirement? Should not people be able to draw their pension while doing some part-time work? Should they not have flexibility and choice? Nothe Inland Revenue rules the roost. On flexible retirement, the Government sound great, but there is no sign of action.
If anything, retirement is happening earlier, not later. Far too many people who would like to continue working and phase in their retirement are forced to stop work. Despite reports and reviews, the Government have nothing to say on the issue.