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9.9 pm
John Mann (Bassetlaw): I rise humbly after hearing some of the earlier speeches. I am among those new Members who have great problems in working out whether the transfer value of my previous occupational pension is such that I should move it into the parliamentary scheme. I suspect, even so, that my knowledge and instincts are somewhat greater than those of the vast majority of my constituents, particularly those who are 45 or younger.
The hon. Member for Bournemouth, West (Mr. Butterfill) made a thoughtful speech, but his final point perplexed me. He spoke about young people and buy-to-let schemes. I do not mean to question his remark, which I am sure was quite accurate, but it would be fairly safe to bet that no young people in my constituency will buy to let rather than take out a pension. I have received no correspondence on the notion of pension planning, and I suspect that my predecessor also received little. Pension planning is not much discussed at dinner or in pubs and clubs in my constituency.
The "live for today" mentality is not new to our society, but it has increased. That is not the fault of any political party, but it is a key problem that we need to address. Those who are expert in pensions and who give me their views in my surgeries are retired people. They can quote me the value of the BT shares that they expectantly bought some time ago. They can tell me about the windfall that they have not had and can tell me year by year—some of them, day by day—the value of their holdings. They are waiting for a change in fortune so that they can cash in on their windfalls, and they are precisely the people who will hold the Government to account.
Indeed, the mistaken policy of the 75p increase in pensions was repeatedly rammed down our throats on the doorstep during the election by a section of the population who spoke from an informed, not an ignorant, standpoint. We need a civic debate about pensions, and education that reaches younger people. Perhaps it could start in schools—I am not sure whether that occurs at present. Certainly, young workers or students in higher education need to know what it all means to help with their forward planning. If we expect them to take responsibility, we must realise that it will not happen unless they have knowledge.
Home ownership is preponderant, but less usual in the coalfields. A great phenomenon—pronounced as we move to the south coast, but existing in microcosm in the coalfields—is the way in which homeowners downsize their houses as they reach their chosen age of retirement. Usually, it happens once, though sometimes it is more frequent. Perhaps the most important thing that the Government could do for my constituents would be to safeguard retirement income by encouraging housing regeneration among former mine housing stock. Some homes are owned, but are in an appalling state of repair. Others are owned by private landlords, who bought them from the National Coal Board. Those homes ought to be occupied by private owners, giving them a legacy that they could cash in at some stage for their pensions. My point may strike the debate at something of a tangent, but it would help with forward planning.
My next point relates to the role of the trade unions. The case for occupational pensions has been made strongly several times during the debate. However, the whole ethos of such pensions goes hand in hand with strong and effective workplace representation where there is negotiation with employers. Pension contributions are deferred earnings that should be negotiated and safeguarded by workplace representatives. In coming years, we must as a priority increase the roles, responsibilities and powers of pension fund trustees to safeguard those funds.
In this country, we tend to take a little Englander—or rather a little United Kingdomer—view on pensions. We might look to Germany for examples of the assistance given to pension fund trustees or, more usefully, at the fundamental role played by trade unions in Denmark and Belgium in the provision of pensions. We need not adopt their programmes wholesale, but they can inform our debate on how unions can promote occupational pensions.
Indeed, I would go further in respect of the role of trade unions in stakeholder pensions. I am surprised that there was no criticism on that point from either of the Opposition Front Benchers. We have heard much from trade union leaders in the past 48 hours. Would that those leaders put the same passion and thought into the important issue of stakeholder pensions. By seizing that issue—by using stakeholder pensions in negotiations—unions could begin to recreate part of their traditional role in the workplace and in society. That role goes back more than a century and was itself part of the genesis of the occupational pension programme.
That is only a partial solution within a partial solution; nevertheless it is waiting to be grabbed. If the unions will not come to the Government, the Government should go to them and ask that they play their rightful historical role by promoting stakeholder pensions along with occupational pensions.
The problems of short-termism as regards the Government's record are somewhat mitigated by the fact that the Government are doing quite well, although the Opposition obviously do not want to admit it. The basic pension is up. The minimum income guarantee is up. The winter fuel allowance is popular.
I am all in favour of our continuing to please today's pensioners. Far be it from me to do anything other than applaud our Government and to expose the changes that would result from a tax cut should the Opposition come to power. However, I urge Ministers to take a longer view—beyond today's pensioners to those of 20, 30 or 40 years hence. That will require courage from the Government—as it would from any Government—but my plea is that we should have that courage.
The Government may be in power for a long period—naturally, I hope so. The last Government were in power for a long time—18 years—and they squandered the opportunity of giving us a long-term pensions policy that would benefit future generations. Let us ensure that our Government do not make the same mistake.
9.19 pm
Andrew Selous (South-West Bedfordshire): I very much welcome the Government's stated intention to increase from 40 to 60 per cent. the share of pensioners' incomes that will come from the private sector, not only because of the increase in independence and security that will be afforded to those pensioners, but because it will release more funds from the public purse to be spent on other public services, such as our schools and national health service. I also pay tribute to the attention that the Government have paid to less well-off pensioners; we have an important obligation to current pensioners.
The decline in funded pensions, however, is extremely worrying. The most recent family resources survey shows a reduction in the proportion of employees with occupational or personal pensions across all age groups. A new Government report tells us that by 2050, when 40 per cent. of pensioner incomes are supposed to come from the state, 65 per cent. of pensioners will, in fact, rely on the pension credit. Those are the current forecasts.
The Joseph Rowntree Foundation's latest report on poverty says that a substantial fall in the number of poor pensioners is unlikely
- "until and unless the Government's policies aimed at encouraging greater use of private pensions start having an effect in the longer term."
I am told that, whereas only two or three years ago a pension fund trustee would have to take a slim file of papers to meetings, he now probably needs to take a ring binder 4 in thick to carry the different documents needed to cope with the complexity of regulation. So is it any wonder that those schemes are in decline? The regrettable
outcome of the demise of those schemes is that benefits are no longer provided to dependants. Death-in-service pensions, rather than lump sums, used to be payable to surviving spouses and dependent children; they are not generally payable with money purchase schemes.The principles that underlie our pensions system should be those of simplicity, clarity and a strong incentive to get our young people to save. Those principles are lacking in the current rules that govern annuities. Pensioners tell us that the requirement to buy an annuity at 75 provides poor value. Contrary to what Ministers have told us, that is an issue for vast numbers of people—some 10.5 million workers in this country have contracted out, so half our work force are affected and have an interest in annuity matters.
The crux of the issue is inheritability, which has been touched on by several hon. Members. Under the current rules, an annuity is paid and if people die a few years into their pensions, that is it. People take a longer-term view with their savings and pensions. One of the reasons why interest has increased in the buy-to-let schemes is that the assets belong to people, just as their houses, cars or any other assets do. We should do well to remember that people aspire to that.
I should also like to raise the issue of what rights employees have to the surpluses on their pension funds. They have contributed to those funds, so it does not seem right that the company can simply take them back. That ownership issue needs to be explored further.
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