Examination of Witnesses (Questions 20-39)
MR IVOR
CAPLIN AND
MR JONATHAN
IREMONGER
5 NOVEMBER 2003
Q20 Rachel Squire: On the new scheme,
even those who serve on to the early departure point aged 40,
very few will have the chance to accrue the full career pension
within the Armed forces. Will that be the case?[5]
Mr Caplin: With one caveat. We
are still working on some interesting models that I would like
to share with the Committee at some stage. That work is not complete
at the present time. That may help.
Mr Iremonger: It is true that
most people who get to 40 at the moment do not go on to serve
a full career to 55, but most of those do not serve a full career
because they choose not to. There are very few people in that
gap who are made redundant, so it is their choice rather than
our choice. One of the problems we have is the immediate pension
as it currently is so attractive for people in that interim period
that more people than we would like are leaving, which is why
we see an interest in making it slightly less attractive.
Q21 Rachel Squire: Which links into
the fact that under the new scheme the benefits provided to those
leaving the scheme before the age of 40 will be less generous
than they are under the present scheme.
Mr Iremonger: No. The benefits
for people leaving before 40 at the moment in the new scheme will
be fundamentally the same, though it does depend a bit where you
are in the sense that a final salary pension may be to the advantage
of some people and not to others. Beyond that, the only other
major difference is we have brought forward the age at which you
can earn a pension. At the moment, you have to be 18 as another
rank or 21 as an officer. You can come in at 16 or 17 in the future
scheme and earn from that date. I do not think it is true that
for people below 40 the new scheme is less attractive. It does
depend on your circumstances a bit but in a significant number
of cases it will be more attractive.
Q22 Rachel Squire: Overall you think
it will assist retention?
Mr Iremonger: Definitely.
Mr Caplin: We would not be doing
this if we did not think it would assist recruitment. We will
obviously look at the demographics for the years ahead and that
is a very important part of the work we have been doing. It will,
secondly, aid our retention. I have already on two occasions made
clear this afternoon how important retention of members of the
Armed forces is, particularly during those years that you have
raised.
Q23 Mr Jones: Can I turn to the issue
of unmarried partners? We were surprised that it was not included
in the original review, even though across Whitehall and in the
industry the issue has been addressed. I understand that the Iraq
war has forced the government's hand in now accepting that unmarried
partners where death is attributed in service will take immediate
effect. I wonder if I could turn to the issue of cost? You have
talked about the scheme being cost neutral. First of all, what
is going to be the cost of extending to unmarried partners and
is it going to be an added cost to the MoD?
Mr Caplin: The unmarried partners
provisions that we are proposing in the new pension scheme is
nothing to do with any short term issues that may or may not have
arisen. This has been part of the planning process that we have
been undertaking—
Q24 Mr Jones: It was not even in
the original review.
Mr Caplin: Forgive me; I am just
going to come to that. It was not in the original consultation
document but since the consultation process, which has now been
going on since 2001, has been underway, talking to both current
members of the Armed forces and ex-service groups, I have come
to the conclusion that we should extend the scheme to include
unmarried partners, in particular relation to the government's
excellent equality agenda. I think it is very important that the
Armed forces pension scheme should fit in with that equality agenda.
Q25 Mr Jones: How do you explain
that the original review did not have it in; yet I think I negotiated
in industry the first unmarried partners' pension something like
ten years ago? I also understand that the Civil Service scheme
also addressed this issue. Why did it not get included in the
first place if we are committed as a government, as the MoD is,
to equality?
Mr Caplin: You will forgive me
but I have been in post since 13 June and—
Q26 Mr Hancock: Since when has that
been an excuse?
Mr Caplin: I have picked up this
ball as the Chairman, before he rushed to New York, made clear.
Of course I have had the chance to look at some of the papers,
to consider the consultation processes that have been undergone,
to discuss with officials how we should go forward and of course
to discuss with other parts of government. I am quite happy to
tell you that I came to the conclusion that it would be absolutely
incompatible with the government's wider equality agenda not to
include unmarried partners. On the cost issue, it is difficult
to judge. You will understand that I am having to caveat some
of these answers because we genuinely do not know, but we think
in the region of £16 million.[6]
Q27 Mr Viggers: Borne by whom?
Mr Caplin: That is borne by the
scheme as a whole. There are changes to all the arrangements here.
There are benefits that are improved like widows, 25% higher or
four times death in service and unmarried partners. As I explained
earlier, that is borne by other changes we have made to the scheme—in
particular, the early departure scheme.
Q28 Mr Jones: Could you explain the
criteria to define unmarried partners in terms of a registered
partnership or substantial relationship because this was an issue
which, last time we took evidence, the MoD were quite vague about.
You must have a clear definition if you have been able to put
a cost on it.
Mr Caplin: I can reassure you
that probably we do not have a clear definition, but I am very
clear about the fact that we will, in terms of pension policy,
be following best practice in the Civil Service scheme and the
private sector schemes, inviting people to nominate the partner
they wish to gain the benefits. That is a standard practice in
the private sector.[7]
Q29 Mr Jones: It is but in this case
I find it remarkable that you can tell us it will cost £16
million but you cannot tell us what the definition is going to
be. Surely you have to define what is a partnership first before
you can estimate what the numbers will be?
Mr Caplin: We know that only around
50% of our Armed forces are married. That is a figure given to
me by the Families Association. We do have some idea of numbers
in the 205,000 people in the Armed forces today. We are talking
about the future. The relationship issue has come out on occasions
during recent conflicts and we have had to take decisions on recent
cases in relation to that. We have looked at that relationship
issue. As we go through the legislative process, I have no doubt
that we will come back to this issue and we will need to deal
with it. There are ways of dealing with it in terms of pension
policy that we need to look at—in particular in the private
sector.
Q30 Mr Jones: That does not answer
my question. I still do not see how you can make an estimate of
what it is going to cost if you have not defined what it is going
to be. You say 50% are married but what about the other 50%? You
could have people who are cohabiting who are heterosexual, homosexual,
widows, individuals on their own, people who are in relationships
for short periods of time. Surely it is going to be important
to define the criteria before you can give me the figure of £16
million or, secondly, say that it is going to be met within the
budget. The thing that strikes me is, if it is going to be met
from the budget and you come up with a definition which makes
it more expensive, surely you have to cut benefits somewhere else
in the scheme?
Mr Caplin: No. When I used the
figure, I added the caveat that we are still at the planning stage
in some respects. We have not published the Bill yet. We have
given you a lot of information as a select committee. We will
come to some of these issues during the process but in terms of
partners and relationships we have already used a substantial
relationship test when we have had to prior to this scheme. We
will be looking at best practice in the public and private sector,
including dare I say it our own parliamentary scheme. We will
look at the best way to ensure that this policy is taken forward.
I do not think it is going to be that much more expensive than
I indicated.
Q31 Mr Jones: You do not know. What
I still find remarkable, even at this late stage, is that you
have not looked at the Australian defence forces scheme which
defines registered partners. This policy seems to have the gestation
period of an African elephant. It seems to be longer and longer.
The MoD seems to be trying to reinvent the wheel rather than look
at best practice that is happening elsewhere—for example,
in the Civil Service scheme. It is an issue which would be of
concern to existing pensioners if this is going to be costing
more than the £16 million. If the cost is not going to be
borne by extra money from the MoD, it is going to be borne by
people in the scheme which will mean that at some time benefits
will have to be taken elsewhere. You have already said that because
you are in this cost neutral straitjacket you are having to rob
Peter to pay Paul at different times throughout the scheme.
Mr Caplin: We have looked at some
of the schemes you have raised there. We are not doing this in
isolation; we are not reinventing the wheel. We are also aware
that there are discussions across government about civil registration
which could also play a part in these particular issues. It is
in our interests in terms of the Armed forces to make sure that
we reflect a modern armed force which reflects both the culture
and nature of the United Kingdom. That is one of the responsibilities
that I and ministerial colleagues have. We are determined to do
that. The issue of relationships is not about the gestation of
an African elephant.
Q32 Mr Jones: I was talking about
the time and method which the MoD has taken to develop this policy.
Mr Caplin: In the classic TV series,
I am saved by the bell. I can only come to you today and reflect
on the work that has been undergone since I took post. I am pretty
clear in my own mind that we have to have an Armed Forces pension
scheme which reflects Britain today. That includes unmarried partners.
I take your point about all the possible unmarried partners that
covers. Let me reassure you and the Committee that I am including
everyone in that category.
The Committee suspended from 3.48pm to 4pm for
a division in the House
Q33 Mr Hancock: Could I ask a supplementary
on the unmarried, if I may? I was curious that you took a lot
of credit for saying that you have responded to the magnificent
government initiative, but this Committee had a pretty effective
initiative when we were pushing for this 18 months, two years
ago. We were unanimous in our feeling that you had to address
this issue. I ask you, Minister, whether you have read the MoD
response to our Committee's report, which was in May of last year?
The MoD said this in the reply to us: ". . . understands
the importance of defining clear, unambiguous entitlement criteria",
and here we are, 18 months on, (and that was specifically on the
topic of unmarried partner benefits) and you have not even followed
the response that you have given the Committee.
Mr Caplin: Chairman, I disagree
with that.
Q34 Mr Hancock: What, with your response?
Mr Caplin: No, I disagree with
your assessment of it. We have actually moved on quite significantly
from there. We have moved on in terms of unmarried partners generally,
we are now moving on in terms of the pension scheme significantly
and we are making significant progress. I think it was paragraph
140 of your 9 May report where you actually raised this, and I
accept that that was the unanimous issue that was raised over
a year ago. That has formed an important part of the consultation
process. I do come back to the fact that there has been roughly
a two-year consultation process. We are now at a point where I
very much hope we will be able to seek the legislative time for
this Bill in the next session, and at that stage we will be able
to deal with many of these issues. I am well aware of what the
Select Committee has said, but I think we have made significant
progress on unmarried partners in the Ministry of Defence.
Q35 Mr Hancock: Minister, this was
what the MoD said. You said, the MoD, not since June but since
May last year, that you understand the importance of defining
clear, unambiguous entitlement criteria for unmarried partners
benefit. That was as a direct response to the request that we
made for this to be dealt with and for the potential beneficiaries
and the members of the pension fund to be told, as early as possible,
if you were going to accept this, what those criteria would be.
Today you cannot even say whether it was a week, a month, six
months, or whether or not it was to registered next-of-kin.
Mr Caplin: We are looking at all
of those issues and we continue to do so, because in that intervening
period that you have raised, the 18 months, this is also a matter
that is across government in terms of civil registrations, and
we are looking very carefully at how we might make sure that this
pension scheme and the relationships that we are referring to
actually fits in across the whole of government.
Mr Hancock: Armed Forces pensions have
never fitted in across government.
Rachel Squire: I know Mr Viggers and
Mr Howarth want to come in very briefly on this issue, and then
I am anxious we move on to try and address some other areas as
well.
Q36 Mr Viggers: Minister, you have
just said that about half the members of the Armed Forces are
married, the actual numbers being: Army, 46%; RAF 53%; Navy 44%.
So roughly half are married. The scheme is intended to be cost-neutral
and you are extending the benefits of the scheme to a whole new
range of people, the unmarried—same sex or different sex.
It therefore follows, as night follows day, that if a new group
of people are being advantaged then married people must be disadvantaged.
That is irrefutable. Would it not be fair for the Government itself
to fund this whole new range of benefits rather than expect married
service personnel to fund it?
Mr Caplin: The issue is pretty
clear to me. We are talking about the pension scheme from 2005.
That is the scheme that we are discussing and debating legislating.
The current scheme will continue to operate and it is the new
scheme that I have been talking about this afternoon.
Mr Howarth: Can I say, Minister, that
Mr Jones, I think, made some very pertinent points and I think
it is amazing that the Department—and I do not blame you,
you have only just come in post—has not come up with a definition
yet. I am afraid I am frightfully old-fashioned and hugely politically
incorrect, but as far as I am concerned evidence of an enduring
relationship is on your finger and mine, Minister, and it is called
a wedding ring. It seems to me that is the best test of all and
it is a shame we cannot stick to that. Can I put to you some concerns
which have been expressed by the Forces Pension Society, because
they draw attention to the anomaly which will arise as far as
widows are concerned? They have suggested to us that the unmarried
partner, possibly of the same sex—and you might like to
comment on that—in the new scheme will retain their pension
for life regardless of how many subsequent partnerships they may
care to form. As the Society says, this is clearly bizarre and
is a case of reverse discrimination. Do you have a view on that?
Rachel Squire: Just before you come in
on that, I know Mr Crausby is keen to come in on the area of widows.
Is there anything you want to add before the Minister answers
that question?
Mr Crausby: I think it has been pretty
well covered by Mr Howarth's question.
Q37 Rachel Squire: There is a clear
consensus here and a real concern about the less generous benefits
that some widows, in particular, are entitled to, in comparison
to these new proposed arrangements for unmarried partners.
Mr Caplin: I understand what you
are saying, Chairman. Maybe I could come to that in a moment.
Let me, if Mr Howarth will allow me, deal with the two points
that he has raised. Firstly, in terms of relationship, I have
been quite clear this afternoon about the issue. We are talking
about substantial relationships; we need to work out exactly what
that means but we have already used criteria that we have had
to use because this particular matter in relation to death-in-service
has already been used on occasions in terms of compensation. We
have started to use some of that and we are still working that
out, and I think that is what you would expect us to do, based
on circumstance, and I think that is very important. The second
point you raised seemed to me to be rather bizarre, actually.
I do not accept that at all. I do not think that we will be in
that position. Members of the Armed Forces who join this scheme
from 6 April 2005, whether or not they are new recruits or people
transferring to the scheme, will be well aware of the rules of
the scheme and we will make sure that is properly communicated
to them. The rules will be there and they will be abided by. That
does not mean that we should not follow the agenda which I know
you do not share, Mr Howarth, and we have discussed this many
times in other places; you do not share that equality agenda,
you do not share those same views and I readily acknowledge that,
but those are the views that I share and the Government shares,
and we intend to pursue that agenda.
Q38 Mr Howarth: May I just refer
to one other point in this connection made by the Forces Pension
Society? They say that the announcement that unmarried partners
under the new scheme will in future receive the same benefits
as married couples has provoked a backlash amongst the victims
of traditional legacy issues. I do not want to go into the legacy
issues but you know what they are—the pre-1973 retirees
and the pension drop, and all that sort of issue. There clearly
is an issue here that you are looking favourably at unmarried
partners and that those who have had a long-standing concern are
being ignored in favour of extended benefits to unmarried partners.
Mr Caplin: Again, we are talking
about the future here and the future way it looks, in terms of
Armed forces. I should just say that we have tested this; this
consultation process has not just been about the Select Committee,
much as we value the role that Select Committees play; we have
actually spoken to members of the Armed Forces about this, we
have spoken to the ex-service community, and in the end you have
to come to an overall decision and decision package, which is
what we are trying to now pursue.
Q39 Mr Howarth: You have sent out
5,000 questionnaires on the unmarried partners business. Admittedly
the document has been—
Mr Caplin: You can consult in
many ways. Since 15 September, whenever I have been out and about
with members of the Armed Forces we have discussed the pension
and compensation arrangements I have announced and they have been
pretty much welcomed, and that is without them knowing the full
details.
Mr Howarth: I do accept that there are
many provisions in this which are good news. We all agree on that.
5 Ev 39 Back
6
Ev 39 Back
7
Ev 40 Back
| 
