House of Commons
Monday 9 February 2004
The House met at half-past Two o'clock
PRAYERS
[Mr. Speaker in the Chair]
Oral Answers to Questions
WORK AND PENSIONS
The Secretary of State was asked—
Pensioners
1. Sir Teddy Taylor (Rochford and Southend, East) (Con): What estimate he has made of the number of retirement pensioners in the forthcoming year; and how many there were five years ago. [153170]
The Secretary of State for Work and Pensions (Mr. Andrew Smith): It is fitting that the hon. Gentleman is No. 1 in questions today, as I understand that last week he announced his prospective retirement from the House. I am sure that I speak on behalf of the whole House in paying tribute to his years of distinguished service and in wishing him all the very best for the future.
The number of people over state pension age in Great Britain is estimated to be 10.85 million, compared with 10.47 million five years ago. In the course of this year we expect 113,500 additional people to be above state pension age. Since we took office the number of pensioners has gone up by 4 per cent. The real value of spending on pensions and benefits for people over 60 has gone up by 24 per cent.
Sir Teddy Taylor : I thank the Secretary of State for his kind words, which I genuinely very much appreciate, but is he aware of the concern and alarm among 10 million pensioners about the pressure being put on them to give up their pension book and to use bank accounts instead, in anticipation of the abolition of pension books in 2005? Would he be willing to discuss with his Cabinet colleagues the fact that many pensioners enjoy having a pension book and are concerned about the linked effect, which will result in the closure of a huge number of post offices on which pensioners depend greatly for many services? I thank the Secretary of State for all that he has done, but will he discuss the issue with colleagues as it is genuinely serious and will affect a lot of elderly people—like me?
Mr. Smith: I certainly recognise the concerns of the hon. Gentleman and of those who have raised the matter with him. We should remember that the majority of pensioners choose to have their payments made
directly. Moreover, the order book is vulnerable to fraud and theft; many pensioners are attacked and their order book stolen from them. We are honouring our pledge that pensioners will be able to continue to receive their pension in cash at the post office. An exceptions service will be in place for those for whom the Post Office card account is not suitable, to ensure that their needs are met.
Mr. Lindsay Hoyle (Chorley) (Lab): Is my right hon. Friend aware of the growth in the number not only of pensioners but also of people who are penalised by the transport lottery—the postcode lottery whereby some pensioners have free off-peak travel while others do not? What can be done to ensure that all pensioners are treated the same? Can they have better help through the pension system?
Mr. Smith: To the best of my knowledge, there is a national commitment to a concessionary scheme. I admit that that will mean that some local authorities will provide help over and above the national minimum, but there is always tension between the responsiveness and democratic accountability that we want in localities and the avoidance of a postcode lottery. However, the enormous investment that we are making in our public transport system is a certain factor in ensuring that transport is available in rural as well as in urban areas to meet the needs of pensioners as well as others.
Andrew Selous (South-West Bedfordshire) (Con): May I press the Secretary of State further on the question about pension books asked by my hon. Friend the Member for Rochford and Southend, East (Sir Teddy Taylor)? Will the right hon. Gentleman say a little more about the concerns of pensioners who have several carers? When their pension books go, there may be problems with the PINs if several carers are involved.
Mr. Smith: As the hon. Gentleman will be aware, we have ensured that pensioners can nominate somebody to use a card on their behalf to collect their pension. Where they need to make arrangements involving a number of people, they can do so at present through the order book, but we shall have to ensure that the exceptions service also enables them to meet that need.
Mr. Brian Jenkins (Tamworth) (Lab): My right hon. Friend is perfectly aware of the fact that to use a book in a post office requires a post office, and that plans for the urban reconstruction—or destruction—of post offices in my part of the world mean that no post offices or cash outlets will be available. Pensioners could use a free bus pass if the proposed buses were actually on a bus route, but they are not even on a bus route. How will he get the money to those people?
Mr. Smith: As I am sure my hon. Friend will recognise, we have put £2 billion into supporting the post office network, including more than £400 million in rural areas. It makes sense to plan locally to ensure better co-ordination between accessibility, which includes his point about public transport routes, and the availability of points where pensioners can collect their cash, whether at the post office or through alternative facilities.
Defined Benefit Pension Schemes
2. Dr. Vincent Cable (Twickenham) (LD): What estimate he has made of the number of wind-ups of defined benefit pension schemes in solvent companies in 2003. [153171]
The Minister for Pensions (Malcolm Wicks): The pension schemes registry holds information on the number of final salary schemes that are currently winding up, or which have entered into and completed the winding-up process. It is not, however, designed or intended to provide a comprehensive or continuous statistical record of the status of schemes, and it does not provide information on the solvency position of companies whose schemes are winding up.
According to the registry, in the first half of 2003 approximately 100 of a total of some 15,000 defined benefit pension schemes had started the winding-up process, and approximately 260 such schemes had finished winding up. Owing to schemes having a 12-month notification period, these figures may be subject to change.
Dr. Cable : I thank the Minister for that informative reply. Is he aware of the recent warning from the Office of the Pensions Advisory Service that a massive loophole is opening up in the Government's pension protection plans, inasmuch as solvent companies with large deficits in their pension schemes on a minimum funding requirement basis can capitalise on those deficits, and then renege on their debts at the expense of their pensioners? Does he recognise OPAS's warning that there could be what it calls
- "a flood of solvent wind-ups before April 2005 at members' expense",
Malcolm Wicks: All our endeavours—including the pensions Bill, which will be published soon—are intended to get security back into social security in old age. We will listen very carefully to any concerns about loopholes, including those expressed by OPAS, in order to ensure that there are not ways in which people can avoid their responsibilities.
Mr. Frank Field (Birkenhead) (Lab): In the past four months, when asked when the House will see the pensions Bill, the Minister for Pensions has said—as he said this afternoon—that it will appear "soon". How soon is "soon", and when "soon" arrives will the Bill contain a clause that puts a levy on unclaimed assets, so that people who have already lost most of, if not all, their pension will be compensated at least to some extent?
Malcolm Wicks: I like to be consistent, but may I now revise "soon" to "very soon"? My right hon. Friend, who is occasionally a patient man, will not have to wait very much longer. The pensions Bill will be concerned with establishing a new pension protection fund and a new regulator with real teeth, to ensure that when pension promises are made, they are kept.
Mr. Michael Weir (Angus) (SNP): Is the Minister aware of the research of Dr. Ros Altmann, who
calculates that some 40,000 members of pension schemes are affected by these wind-ups, and that some £93 million will be needed to compensate them over many years? If he is not, will he look at that research and think again about compensation for those who have already lost out, because as I understand it the forthcoming Bill will not deal with retrospective claims?
Malcolm Wicks: Various matters are on the agenda. We are concerned that solvent companies that seek to wind up their schemes must now guarantee the full buy-out of pension rights for members. Secondly, the "pensions (very soon) Bill" will legislate for a pension protection fund to bring future security. Meanwhile, we are looking at the very serious circumstances that existing pensioners and members face in respect of schemes that have gone bankrupt, but it is important to repeat that we cannot provide any false hope in what is a very complex situation.
Mr. John McFall (Dumbarton) (Lab/Co-op): The Minister will know that some companies are using the flight from such schemes to reduce their contributions to employees, and that there is a long-term saving problem in this country. What are the Government doing to ensure that these employers face up to their responsibilities to employees in future?
Malcolm Wicks: It is very important that employers are able to offer proper company pension schemes. We have created an employers taskforce to look at this issue, and its purpose is to establish good practice. We are very conscious of the need for many people to save more than they are saving at the moment. Our recent strategy paper on informed choice is designed to introduce measures that will enable people to make better choices. In other ways, too, we are concerned to enable people to save more and to have decent pension schemes.
Mr. Nigel Waterson (Eastbourne) (Con): Has the Minister seen last week's calculation by Mercer that the total deficit in UK occupational pensions is now £330 billion? Does he agree that EU rules requiring companies to make up that deficit may render irrelevant much of the pensions Bill, even before it is published?
Malcolm Wicks: I certainly do not recognise the hon. Gentleman's last point. We have consulted on the EU directive, which is very much in line with our own ideas. The pensions Bill will promote the concept of scheme-specific funding, which the industry has widely welcomed. Estimates of pension liabilities vary a great deal. Other estimates suggest that recent increases in world share prices have made the deficit less than it was, but none of us is complacent about the issue.
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