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Madam Deputy Speaker: Order. The intervention is going on for a rather long time.
Mr. Dismore: Thank you, Madam Deputy Speaker. I was going to come to that point. My hon. Friend the Member for Brent, North makes the point in his usual eloquent way. If the contract is an individual—
Mr. Curry: Will the hon. Gentleman give way?
Mr. Dismore: Let me deal with the previous intervention and then I will be happy to let the right hon. Gentleman intervene.
If the contract is an individual contract, it is inevitable that the benefits that flow from it must attach to the individual concerned. My hon. Friend the Member for Brent, North is right: insurance companies do make those distinctions. Several years ago, there was a big argument about whether insurance companies should know whether someone had HIV and the impact that that would have on the assessment of life expectancy and annuities. These things are a fact of life. Some people live longer than others. If I were to take out a particular insurance policy, being somewhat overweight and under-exercised—I think far too many of us in the House are—then compared with someone of the same age who is in the SAS, although that is a hazardous profession, I would probably have to pay more.
That is a fact of life in the provision of pensions in the private sector. We are all different; we all have to face different risks. We all have different life expectancies. Each individual pension product is tailored to our individual requirements, whether we be men or women.
Mr. Curry: If the hon. Gentleman were to die young, would he agree with his hon. Friend the Member for Brent, North that that was an advantage to him because, in his brief span of life when he was receiving his private pension, he got more?
Mr. Dismore: I am not sure how to follow that intervention, but it does not detract from my basic bull point—from which I have been drawn away by the various interventions I have taken—concerning the Human Rights Act.
Even though Equitable Life seems to be doing its best to take my pension fund away from me, the requirement under human rights legislation is that no one should be deprived of their possessions except in the public interest. That requirement cannot be met by the proposals of the right hon. Member for Skipton and Ripon. I agree that we should adopt that approach in relation to matters that are entirely under the control of the state, such as national insurance contributions, taxation, benefits and the equalisation of wages to make sure that everyone gets a fair crack of the whip at work. However, that is not the case with pension provision.
I wish to refer to retrospectivity, on which the right hon. Gentleman's proposals are silent. I have been with Equitable Life for 20 years, and others have been in pension funds for longer. Everybody would have entered into these arrangements on the basis of the projections as they then were. Are we now to say that all those people who entered into contracts on that basis will find that those numbers have to be unscrambled and rescrambled to meet the requirements of the proposed provision? Or is the provision intended only to apply to new insurance contracts that take effect 40, 50 or 60 years in the future?
My concern is that the right hon. Gentleman has perhaps not thought through the implications of that measure. The proposal will have major implications for people's lifestyle projections. Most people approaching their mid-forties will start to think about the age at which they can afford to retire and what their annuity will be. They will have been making their contributions through their lives on that basis.
If the right hon. Gentleman is going to say that a person's insurance provider now has to recalculate the figures and share the money out to equalise between the sexes, that person may find that the projections on which he has been living his life, in terms of his future provision, are drastically wrong, while a women in the same position might find herself rather better off. The proposals do not deal with retrospectivity in sorting out decisions that were taken decades ago in some cases.
Mrs. Browning: Is not that exactly the situation people with pensions at the moment find themselves in now, following the imposition of advance corporation tax by the Chancellor to the tune of £5 billion a year on pension funds? People who took out a pension with a specific premium and a projection of what they might receive are now not going to receive that amount purely because of the actions of the Chancellor of the Exchequer.
Mr. Dismore: I will not get drawn down that byway, but I say to the hon. Lady that the effect is the same for men and women. That takes me back to my original point about the role of the state as opposed to the role of the private sector. So far as I can see—I will happily take an intervention on this—the proposals do not deal with retrospectivity.
I wish to refer to disincentives to save. The Select Committee on Work and Pensions has been doing a detailed study of the pension credit. We have heard a lot of interesting arguments from the experts who have given evidence, and from the Minister, regarding incentives and disincentives to save. Professor Dilnott gave us a detailed analysis of why some bits of the pension credit were an incentive and others might be a disincentive. It got extremely complicated and I became lost in the figures; however, he did not convince me on that issue.
I can be sure that if we say to a man that he can put a pound into his pension fund but will get back only 80p of it when he retires, with the other 20p going to the pension of a woman he may not even have met to make sure that she has the same pension—which she will have for a lot
longer than him—that will be a real disincentive to save; a far worse disincentive than anything raised by the Conservatives in terms of the pension credit.
Mr. Gardiner: This is an extremely important element of my hon. Friend's remarks. Is he aware of a report prepared for the Association of British Insurers by Oliver, Wyman and Company, entitled "The future regulation of UK savings and investment—targeting the savings gap"? It points out that a pension provision savings gap of £27 billion is building up, and that it cannot be curtailed simply through financial education and tax incentives. The most important element to which it draws attention is the need to increase effective advice to savers by providing exactly the information that my hon. Friend alludes to. A differential rate for men and women per pound invested in savings would have entirely the opposite effect, and would probably increase the £27 billion gap still further.
Mr. Dismore: My hon. Friend the Member for Brent, North cannot take an intervention, but I will be happy to do so in a moment. My hon. Friend makes an important point, which reinforces the basic policy issue that I am trying to address. It is in all our interests that people save for their future, and that is the entire thrust of Government policy. A prime objective of the pension credit is to reward people who have saved. I am sure that the right hon. Gentleman is aware of the arguments advanced by his own party in relation to stakeholder pensions and—perhaps more importantly—to the state second pension: that they contain in-built disincentives because of an equalisation factor between rich and poor. For him to argue that his proposal will not prove a disincentive is therefore like the pot calling the kettle black.
Mr. Flight: Is there not a contradiction between the hon. Gentleman's comment about wanting people to save more for retirement, and the previous comment about the £27 billion gap? The Minister said that one of her main objections to the Bill is that, by encouraging people to save more for retirement, it will lead them to incur tax costs.
Mr. Dismore: That is not the Government's policy objective—at least, I hope it is not. The objective of our discussions with the Secretary of State for Work and Pensions is to hammer home the need for people to provide for their future. If one consequence of their making such provision is that some of it will be taken away—a breach of human rights legislation—they simply will not do it. That would be a disincentive, and they would find ways around the problem by, for example, putting the money into other products if necessary. For all I know, a lot more people might even join the Plymouth Brethren, to whom reference was made in our earlier discussion.
The fact remains that the right hon. Gentleman's proposal would create a serious disincentive to men providing for their future. In the end, the breadwinner—even in this day and age, it is generally the man of the family—must make such provision. If there is a disincentive to save, he simply will not do it. A terrible credit gap exists, and it is already extremely difficult to
convince people that they should not live on credit, and should put money aside for their retirement. It is very difficult to persuade them that they should be putting away far more, yet the right hon. Gentleman's proposal would achieve entirely the opposite objective.Frankly, I have heard nothing from the Opposition that answers those key points. If we accept the proposal, we will deprive people of their existing property rights. The Opposition have also failed to deal with the two extremely important points concerning retrospectivity and the disincentive to save. For those reasons, much as I agree with the principle of abolishing sex discrimination, I cannot support the proposal. Perhaps the right hon. Gentleman will deal with those points in his reply, but I doubt whether he can.
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