---

Pensions (Means-testing)

10. Mr. Peter Lilley (Hitchin and Harpenden) (Con): What assessment he has made of the impact of means-testing on people's willingness to save for pensions. [190400]

The Minister for Pensions (Malcolm Wicks): Eligibility for income-related benefits is one of many factors which may influence willingness to save. The issue of incentives, and the role of taxes and benefits within it, is a complex one. We have established the independent Pensions Commission, which will be publishing its interim report tomorrow, providing a thorough analysis of the UK pensions system, including a review of long-term savings. Meanwhile, we have already taken action to tackle poverty and reward savings for today's pensioners through pension credit.

Mr. Lilley: May I, through the Minister, congratulate the Secretary of State on taking on one of the most important jobs in government, and wish him well?

The Minister will know that many financial advisers are worried that they will be guilty of mis-selling if they advise people on average or below average earnings to save, because their savings will not just bear the pensions tax, but result in their losing 40p in every pound of extra pension that they get through the loss of means-tested benefits? Will he, either now or in writing subsequently, give me an unequivocal assurance that no financial adviser who advises people to save will be guilty of mis-selling if those people lose means-tested benefits?

Malcolm Wicks: I am not responsible for financial advisers, and I am very grateful that that is the case. As a previous Secretary of State for Social Security, the right hon. Gentleman presided over a system that knocked off any savings, pound for pound, against income support. We are the Administration who recognise the importance of savings and have introduced a savings credit. Moreover, under income support in those days, someone was expected to live on £69 a week. The minimum income for a single person is now £105 a week. I am proud of our record.

Mr. Robin Cook (Livingston) (Lab): Will my hon. Friend accept that those of us who have spoken with pensioners in receipt of the pension credit found it the most positive and encouraging conversation that we had over the past year? These people typically receive £42 a week, which is the difference between living with dignity or living with poverty. Does he accept that the Government should be praised, not criticised, for providing additional help to those who previously got none? Whatever arguments are produced by Mr. Adair Turner tomorrow to encourage the working population to save, this Government should not accept that that will be encouraged by denying help to the current generation of pensioners who need help now and who are entitled to get it.

Malcolm Wicks: I thank my right hon. Friend for those remarks, not least because many of our elders who are the most hard pressed and the poorest, and who are often women, do not have an organisation to speak for them, and we need to listen to those silent voices. It is no
 
11 Oct 2004 : Column 18
 
coincidence that of the 3 million-plus individuals who receive pension credit, 2 million are women. Why? Because, as the Secretary of State said, they do not have full national insurance contribution records and have not had the opportunity, because of caring for their children, to have occupational pensions. This is an important gender issue. Pension credit is a success in tackling pensioner poverty.

Mr. Nigel Waterson (Eastbourne) (Con): I wonder whether the Minister has seen the recent Association of British Insurers survey, which shows that 50 per cent. of people who responded said that they would increase their saving for retirement if means-testing were reduced. Can he really defend a system under which more than half of pensioners are subject to means-testing—that proportion is set to rise inexorably—and 1.7 million of the poorest pensioners are not even claiming pension credit a year after its introduction?

Malcolm Wicks: It will be a curious message to send out in the springtime, or whenever, that the Conservative party will take away from 3 million-plus individuals—more by then—their pension credit, which is so important to the hard-pressed and particularly to women. We are determined that more and more people should receive pension credit, because it is a success. It has an important role to play in the development of a state pension system—a system which I hope, with the development of occupational pensions and in other ways, will see more people retiring on incomes above income-tested levels.

Mr. Waterson: May I assure the Minister that we have no intention of scrapping pension credit, and no pensioner will be worse off under our policy. I congratulate him on at least flirting with the growing consensus, of which my hon. Friend the Member for Havant (Mr. Willetts) spoke, that means-testing is undermining pension provision. Does he recall saying to a fringe meeting at the Labour party conference that pension credit was a

"short-to-medium-term policy only"?

Does he stick by that view? Has he changed it in the light of what his new Secretary of State has just said? If he still takes that view, has he broken the unpalatable news to the Chancellor?

Malcolm Wicks: I am grateful to the hon. Gentleman for following the Brighton fringe carefully—even if occasionally he goes beyond the fringe. I repeat that, with the development of occupational pensions, savings and the development of the state pension scheme, we would like more and more people to retire on incomes above income-tested levels. There are currently groups of elderly people—often those in their 70s, 80s and 90s, and mainly women—who are without savings and occupational pensions and with only a partial national insurance pension. That is why we have brought in pension credit. I repeat that we are proud of it.

Ms Sally Keeble (Northampton, North) (Lab): Does my hon. Friend agree that one of the main reasons why people cannot save for pensions is that they simply do not earn enough? That particularly affects women, as he
 
11 Oct 2004 : Column 19
 
has pointed out. When will he bring forward the report on women's pensions, so that we can see exactly the inequalities and how the Government will tackle them?

Malcolm Wicks: I have mentioned the importance of gender. I was pleased to accept in Committee on the Pensions Bill the suggestion of my hon. and learned Friend the Member for Redcar (Vera Baird) that we should publish a report on women and pensions, and we shall do so next year. That is a very important dimension. Our ambition is that in different ways more women as well as men should be able to build up occupational pension rights during their careers. There are a number of ways in which that is happening and we need to maintain that progress.

Pensions Payment

11. Mr. Adrian Flook (Taunton) (Con): What steps he has taken to find out why pensioners were not able to access their pensions through the Post Office immediately before the August bank holiday. [190401]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): It was quite unacceptable that so many pensioners should have been left without access to their pensions, even for a few hours, owing to an error by a supplier to the Post Office on 23 August, for which the Post Office has publicly apologised. I have discussed the incident with the chief executive and senior managers of Post Office Ltd., and
 
11 Oct 2004 : Column 20
 
they have assured me that the appropriate management controls are now in place, so that pensioners are not inconvenienced in such a way again.

Mr. Flook: Many of my pensioners were indeed inconvenienced on 23 August, and for more than just a number of hours. That would not have happened prior to their being forced to accept a system that relies on computers. Although I hear what the Minister says about the assurances that have been given to him, surely if the delivery mechanism has faults, there should be a back-up system to ensure that such events do not happen again?

Mr. Pond: This had nothing to do with a computer failure; it was a management error. The computer system for the Post Office card account remains robust, and I have received assurances that it will continue to be so. Some 3.5 million people have already opted for the Post Office card account, and 12 million have moved across to direct payment. Ninety per cent. of those who have moved across tell us that they are very satisfied with the way the process is working. It gives them more flexibility and choice. I suggest that the hon. Gentleman speak to pensioners in his constituency who have made the transfer before suggesting in the House that there are widespread problems.

NEW MEMBER

The following Member took and subscribed the Oath:

Iain David Wright Esq., for Hartlepool

 
11 Oct 2004 : Column 19
 

 
11 Oct 2004 : Column 21
 

---