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The 1973 changes relate to the Bill. Following a Government plan to introduce occupational pensions for all employees, the half-rate benefit for widows was also introduced for the public service. Before that, there was no defined right to a pension. For many people in many jobs who worked for quite a while and left before accruing the necessary number of years there were no preserved pension rights.
There were three main benefits to the changes to pensions for servicemen and their widows. For half-rate pensions, for all service after 1 April 1973, an opportunity was afforded for all personnel serving at that rate to buy in a pension at half rate instead of a third of the rate for pensionable service completed before that date, a point made by the right hon. Member for East Hampshire. A number of individuals took up the offer to pay the increased buy-in. A consequence of the Bill would be to discriminate against those who made that choice.
The second benefit was that the rate of pension paid by the MOD for the first 91 days of widowhood was to be the basic daily rate of the RAF pay or, for those already retired or discharged, a rate of payment at the date of death where it exceeded a half or a third of the entitlement.
The third change was a reduction of the qualifying period for a pension in cases of death to five years from the age of 18 for both officers and other ranks. The widow’s pension was to be calculated as a proportion of a man’s invalidity entitlement at that time. The invalidity pension rates were also enhanced.
A special rate—an attributed pension related to rank—not dependent on a minimum period of service could be paid where death in service was found to be attributable to service. The death gratuity was also changed. It was formerly payable only to widows of those who died in service. It became payable in all cases. The amount was to be equal either to the terminal grant or twice the maximum rate of retired pay for whichever rank had the higher award. That was another alteration, but the rules on marriage remain unaltered in the new legislation. Again, those benefits did not apply retrospectively; they applied only to widows of men who gave service after 30 March 1978, and they were additional to any entitlements under Department of Health and Social Security regulations.
Under the state scheme at this time, the Ministry of Defence was required to provide a pension payable from age 60 for those who had completed not less than five years of service. Prior to 1975, there was no right to preserved pensions in any public or private pension schemes, and most schemes had very restrictive criteria for awarding pensions. That was not just the case for the Ministry of Defence. The qualification for a pension under civil service arrangements was that an individual had to be over the age of 50 and to have served for 10 or more years. Those who left voluntarily before meeting those criteria lost rights to pensions. Armed forces occupational pensions were awarded only if a member had completed at least 16 years of reckonable service as an officer or 22 years of reckonable service in other ranks, and reckonable service was paid after the age of 21 for officers and 18 for other ranks. Engagements for shorter periods were not permissible.
I am aware that there has been a campaign on behalf of individuals who served during this period but did not get any pension. Last Saturday, I had the honour of
meeting almost 300 veterans in Clumber park in the constituency of my hon. Friend the Member for Bassetlaw (John Mann). Several people raised the preserved pension issue, and we have to feel very sorry for some of these individuals who served their country. One person had been in the Navy for 12 years and had got no pension for that. Again, the changes were not retrospective in this case, and the argument put forward was—as it is again today—that retrospection would make that scheme unaffordable.
A group representing those who did national service has also been campaigning on this issue. Prior to 1975, there was no statutory provision requiring employers to allow a national serviceman’s period of compulsory service to count towards an occupational pension. However, the notion of its contributing towards a state pension was made on behalf of those on national service terms, and the changes brought about by the 1973 legislation and the subsequent social security Act did not apply to those national servicemen.
I make the point about preserved pensions because although the right hon. Member for East Hampshire rightly raises the injustice that war widows feel, if he were to meet the individuals who did not get preserved pensions, he would find that they feel equally hard done by. Although it is hard to explain, I sometimes have to say to people that changing the legislation and retrospectively paying would be unaffordable. My hon. Friend the Member for Morley and Rothwell (Colin Challen) has tabled early-day motion 46, and he has campaigned very hard to get recognition for this group.
On 31 January 2007, the then armed forces Minister set out the background to this legislation and the changes that took place in 1975, saying that there was no conceivable prospect that this or any other future Government would pay out to those individuals.
Mr. Mates: The Minister is dealing with the Bill fairly, but it is very hard to explain these anomalies to certain people who are suffering from them. The scheme he talked about would clearly be unaffordable, so that is a pragmatic reason for not implementing it. But providing for this particular group of people is not unaffordable—or is it? We do not know because he has not yet given us any figures.
Mr. Jones: I hope that the right hon. Gentleman will wait with anticipation for my figures. What we cannot do, both with this group of widows and with others, is treat people in isolation, because there will be consequences, and not just for other Departments. All I am trying to demonstrate is that there is a group of pensioners, some of whom served their country with great distinction, who, through no fault of their own, have no pension entitlement, even though they have served for a number of years. I agree with him that it is difficult to explain all this. The gentleman whom I met last week at the Bassetlaw event had served for 12 years, and some of his service had been in Korea. He had been in some dangerous situations, and he is clearly somebody who we should thank for his contribution to the security of this country. Again, I am trying to demonstrate that if the Bill were to go through today as it stands, other groups would have strong cases to say that we should deal with them, too.
I am trying to demonstrate that all changes have unintended consequences and things can be hard for the individuals in question. Other changes that were
introduced, with some exceptions in respect of short service, and air crew and others, meant that widows of men with preserved benefits entitlements would automatically qualify for a widow’s pension, provided only that the marriage took place before discharge. Where their husband’s death occurred before the age of 60 the terminal grant is payable to the entitled widow. Again, it is difficult to explain to some widows why those changes affected them. The appropriate benefits are increased across all measures from the date of discharge.
Some changes came in on 6 April 1978, with effect from the introduction of the state scheme, which provided the widow’s pension based on the husband’s working entitlement. The date of marriage provision as it applied to service awards needed amendment. Where marriage or remarriage is after discharge or retirement, a pension may be awarded, but only relating to the pension or retirement pay earned after 6 April 1979. A number of other benefits were paid under the scheme.
Another scheme that changed and had consequences in different ways was the children’s pension. Such pensions were payable to widows or whoever had care of an eligible child. The benefits were provided at a flat rate until 1958; they were at a third of the rate payable to widows in respect of each eligible child, with no limit on the number of children who might benefit from that award. From 1 April 1973, the amount payable for each child was equal to a quarter of the father’s retirement pay or invalid pension, subject to a restriction in respect of a maximum of children. That again demonstrates that changes were introduced that would affect people, either in the future or retrospectively. The attributable rates were flat rates by rank; these were subject to there being a maximum of four children.
Benefits for motherless children—a horrible term—were at a higher rate of two thirds of the widows benefit from 1958, and a third of the father’s pension from 1 April 1973. Death gratuities, payable to the eligible widow at a flat rate, were introduced in 1950. These were increased to 90 per cent. of the husband’s terminal grant from 1958 and to 100 per cent. from April 1970, but no retrospection applied to that increase. The alternative, if financially beneficial, from 1 April 1973 was twice the top rate of retired pay for husbands, and those payments were tax free at the time. All service pensions are taxed as earned income. The war award pension paid by the old DHSS was 50 per cent. tax free from 1 April 1976, and tax free from 1 April 1979.
The right hon. Gentleman referred to some of the recent enhancements, which continue the trend of successive Governments trying to improve the lot of our servicemen and women and of widows. He gave the example of the changes in 2000. Since then, benefits for widows and widowers where death was attributable to service have been continued on remarriage. Since March 2003, pensions and compensation have been made available to eligible unmarried partners for service deaths relating to conflict. I was pleased to be involved in the Bill that brought that in. It was clearly an anomaly that individuals who were not married did not receive a pension. I recall the case of a major who was killed and whose partner was not automatically entitled to a pension, so an exception had to be made. In September 2000, the concession was extended to deaths attributable to service, and since
April 2005 death in service lump sums have risen to three or four times pensionable salary, depending on the individual scheme.
The introduction of the new pension compensation scheme in April 2005 was a considerable achievement at the time, when other schemes in other areas were under pressure to move away from defined benefits. That debate is still going on, and I know that Conservative Front Benchers are keen to advocate examining whether cuts or changes need to be made to public sector schemes. The benefits provided under the 2005 scheme compare favourably with public sector schemes and those in the private sector. That reflected modern practice and the increase in family benefits. However, the new benefits, like all the other changes that I have outlined, were not retrospective, continuing the position taken by this Government and others on changes to improve the lot of our armed forces.
May I turn to some of the more recent improvements for war widows? A number of improvements have been made to pensions provision for war widows in recent years, including, as I have already mentioned, the April 2000 changes that introduced the payment of a pension for life for those pre-1973 widows who were in receipt of a pension at the time. The change was not made retrospectively, as with other changes that had been brought in.
Additionally, the war widows’ special allowance, which is now known as a supplementary pension, was introduced in April 1990 and is payable to widows who receive a war widows’ pension in respect of the death of a serviceman who died or left the services before 31 March 1973. Again, being the inquisitive soul that I am, I asked why we came up with such a precise date. The person in the MOD who came up with it, however, is obviously in civil service heaven or its equivalent.
A war widow’s pension is paid only when death is due to service. It is not normally a survivor’s benefit. The purpose of the measure was to bring the overall pension provision for war widows more into line with the provision for those widows whose late spouses’ death were due to service on that infamous date of 31 March 1973 and who were receiving an attributable pension under the armed forces pension scheme.
For instance, prior to the allowance, world war two widows whose husbands’ deaths were due to service received only a war widow’s pension while a Falklands widow received both the pension and an attributable pension under the armed forces pension scheme of 1975. As at December 2008, more than 90 per cent. of all war widows were in receipt of the supplementary pension.
May I turn to the changes that have been made that apply to current members of the armed forces? There are two main pension schemes for current members of the armed forces. One is the armed forces pension scheme of 1975, known to the Department, which loves its acronyms, as AFPS 75—anyone who deals with the MOD knows that people need a dictionary of acronyms when they become a Minister. I am still trying. I was speaking to Lord Robertson the other day, who said that he failed in his time to get the Department to stop talking in acronyms.
The armed forces pension scheme of 1975 was closed to new entrants on 6 April 2005. The armed forces pension scheme 2005 was then introduced on 6 April 2005.
It is important, seeing as I am an anorak about dates, to remember that whenever a pension scheme or benefit is changed, there has to be a date. People will always fall on one side of that line or on the other.
The reserve forces pension scheme—the RFPS, as it is known in the MOD—was also introduced on 6 April 2005. I was pleased to be on the Committee on the Bill that introduced that measure, and we also changed the compensation that we paid to injured service personnel. The Government also provide compensation for individuals who are injured or disabled as a result of service. The current scheme for injuries received due to service on or after 6 April 2005 is the armed forces compensation scheme, or AFCS for those in the MOD. The war pensions scheme, the WPS, provides no-fault compensation to any former member of the UK armed forces who was injured or disabled as a result of service before 6 April 2005.
I am pleased that the armed forces compensation scheme provides a tax-free sum for pain and suffering according to tariffs for injury, ranging over 15 sums from £1,155 to £570,000. Hon. Members may say that that is not pension, but it demonstrates that we, like other Governments, have made a change in how we compensate members of the armed forces. Again, that compensation scheme is not retrospective. The right hon. Member for East Hampshire and I have received representations from many individuals who were injured before the scheme was introduced. People might ask why their case cannot be considered under the scheme. That comes back to the point that whenever one makes a change, there will be a cut-off date. That is seen as unfair for the individual who is not eligible. It is a hard issue for any politician. I know that both he and I would like to do the maximum possible for our servicemen and women, who have fought on behalf of this country. It is not easy to explain about the arbitrary date that is introduced.
I have mentioned the legacy issue concerning preserved pensions. As I have said, my hon. Friend the Member for Morley and Rothwell tabled early-day motion 46, which has secured quite a lot of support. It, too, is about the retrospection of a scheme. It is important that we do not build false hopes. We should not say that a scheme will be changed when it is clear that the change will not be introduced if it is not affordable for this or any future Government.
I met Major-General Moore-Bick of the Forces Pension Society and my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster) on 10 December last year to discuss the issue raised by the Bill and the remarriage issue—that is, whether we should change the provision that, when people remarry or cohabit, they can keep their pension. It was interesting that the one thing that they emphasised—I have sympathy with the individuals concerned—was that they did not feel that the scheme could be retrospective. I am a cynic at times, as many in the Department know. I wonder whether we sometimes try to look for solutions that are more difficult than the problems that are presented to us. If we were to make a change to allow people who remarried or cohabited to retain their widow’s pension from today, would not a large group of individuals who had lost that pension in the past come forward and ask why today’s date was chosen? That shows the difficulty with the arbitrary
dates chosen. I will talk again to Major-General Moore-Bick, because he is a great champion of widows and armed forces pensioners in general.
The right hon. Member for East Hampshire raised the issue of the one-third and one-half rates, which I have already touched on a little. Until 1973, widows of retired servicemen were entitled to a pension equal to a third of the pension of their late husband. As a result of the major changes made under the Social Security Act 1973, which improved not just armed forces pensions but other public sector pensions, and pensions more generally, the rate increased to one half from April 1973, but only for the widows of those in service from that date. As I have said, service personnel were given an opportunity to make a direct contribution and to buy in former service at the half rate. It is predicted that it would cost up to £30 million a year to change all pre-1973 armed forces widows’ pensions to the half rate. The implications of such a change across Government would be considerable, because other public service schemes would look into the change.
I sympathise with the right hon. Gentleman. I find it frustrating that what we do in one Department has an impact on another. We might wish to introduce changes independently for our special group of servicemen and women, but those who advise me and others must consider the implications across Government.
Mr. Mates: I am grateful to the Minister. I am sure he needs to get off his feet for a minute in the middle of this marathon. The figure of £30 million that he quotes is the same figure as we were quoted last year, and it was quoted eight years ago. It must have varied because there are fewer widows. Where does he get it from? How many widows are there? How much would the proposed change cost per widow? If we knew that, we could better judge the Minister’s allegation that it is not affordable or that it is not right.
Mr. Jones: I agree, but the issue of retrospection arises. I am happy to speak to him after the debate, to see what we can do to establish the number of widows. I met some actuaries last year. I foolishly asked to meet them, strange as they are. They come equipped with charts and so on. Actuarial figures are not an exact science, but they are based on the rate of people going to meet their maker and other demographic changes. If the right hon. Gentleman would like to talk to me afterwards, I will be happy to meet him.
Mr. Mates: The Minister destroys his own argument. If the figure is based on the course of nature, and we know that there are far fewer widows—they are all in their 80s—how has it remained at £30 million for the past six years? It has been plucked out of the air by an official who thinks that he will get his Minister to quote it and get away with it, but it is not satisfactory, is it?
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