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Lord Pearson of Rannoch: My Lords, I am grateful to my noble friend. In considering the other burdens on the British Exchequer, would my noble friend put the

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recent contribution to the European Community in the same sort of category as these eminently deserving war widows? Where would he stand on that comparison?

Lord Mackay of Ardbrecknish: I thought that only the noble Lord, Lord Bruce of Donington, had an original mind on those matters but it seems to have been left, for the moment, in the capable hands of my noble friend. Governments have to look at all their obligations. As a member of the European Union we have an obligation to make payments. I am sure that my noble friend knows that those payments are considerably lower than those that we should have had to make were it not for the endeavours of my noble friend Lady Thatcher, and also those of my right honourable friend the Prime Minister at the Edinburgh summit.

I return to some of the subjects raised in the debate. The question of pensions on divorce is an extremely difficult issue. In England and Wales, the courts are to have regard to the value to each of the parties of any benefit, which includes pension benefit, which the parties to the divorce will lose the opportunity to acquire. In Scotland, pension rights are specifically provided for as part of matrimonial property to be divided between the parties to the divorce. But it is still not possible actually to divide the pension rights as such. I believe that that is probably what many noble Lords were asking me to do.

The Pension Law Review Committee looked at the issue and underlined the fact that it was difficult. I know that some noble Lords will say that it is always the refuge of a Minister who is not very keen to do something to say that it is very difficult. However, it is very difficult. We have set up a project conducted by the Social and Community Research Planning Organisation, an independent research institute. It will interview a sample of 2,750 women with a booster sample of 500 recent divorcees. It will interview the husbands of married women in a sample of 400 and about 900 solicitors to obtain information on a representative sample of recent divorce cases.

From that research, we shall be able to draw conclusions about the size of the problem and, indeed, how it is resolved at present. There are ways of resolving it; for example, by moving capital about in lieu of the pension loss to the wife, and it is usually the wife. I can assure noble Lords—I shall, perhaps, go into the matter in more detail in Committee—that we take the issue very seriously. Indeed, I do not have to be persuaded as I know someone who is caught in one of the various scenarios painted by noble Lords.

I turn now to that portion of the Bill which equalises the state pension retirement age to 65 for men and women in the year 2020 and which starts in the year 2010. There was some discussion—indeed the noble Baroness, Lady Hollis, started it—as to why we needed to do so. I must point out to the noble Baroness that most countries are facing a reduction in what is called the "support ratio" (the ratio of the number of people retired to the number of people in the workforce) because people are living longer and also because birth rates are falling.

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We already have a higher proportion of elderly people than most other countries. Currently, we have the second worst support ratio in the European Union. There are differences in the size and the timing of the increases and the proportion of elderly people in different countries. Before the noble Baroness rushes to find the piece of paper on which she based her observation, as she pointed out by the middle of the next century the UK will be relatively better placed. However, it seems fairly certain that, by then, all the OECD countries will be in a similar position and will all be making changes. Certainly, Japan, Germany and the United States have already taken action to raise their state pension ages. All those countries are wealthier in GDP per-head terms than the United Kingdom. At the risk of boring your Lordships, I must say that I believe that the figures involved are the key to the whole issue because they underpin the Government's argument.

The number of people over state pension age in 1991 totalled 10.4 million. In the year 2010 the figure will be 11.7 million; in 2020, 13.5 million; in 2030, 15.8 million; in 2040, 16.3 million; and in 2050, 15.8 million—a steady increase in the number of retired people. The population of working age does the reverse and declines. The figure in 1991 was 34.4 million. In 2010 it will be 36.2 million. After that the decline sets in. By the year 2030 we have a figure of 33.7 million and by 2050 we are down to 32 million. As a result, the important support ratio, which was 3.3 million in 1991, reduces to 3.1 million in the year 2010, to 2.7 million in 2020, to 2.1 million in 2030 and to 2 million in 2050. The steps that we are taking will mean that, instead of being 2.7 million in 2020, the last figure will be 3.2 million, and instead of being 2.1 million in 2030 the figure will be 2.6 million. Finally, instead of being 2 million in 2050 the figure will be 2.4 million.

We believe that it is very sensible to look ahead, albeit a long way ahead. I suspect that one of the few noble Lords who will be around to see if we are right will be the noble Lord, Lord Freyberg. By my calculations I do not think that that will be possible for most of us. However, we have a responsibility to people in the next century to ensure that we do not pretend that we can run a pay-as-you-go system which is affordable. I mentioned other countries and we are moving in that direction. I see that the noble Baroness wishes to intervene. I give way.

Baroness Hollis of Heigham: My Lords, I am much obliged. The Minister challenged the figures, which I happen to have with me. Does the Minister agree with the following figures for the numbers of pensioners aged over 65 per 100 workers—that, effectively, is the support ratio: 15 to 64—for the years 2025 to 2030? For example, France has a ratio of 36, Germany has a ratio of 43, Italy and Belgium have a ratio of over 35, Denmark has a ratio of 37, and the UK has a ratio of 31. In other words, we will have, as at 2025 to 2030, one

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of the best support ratios in Europe and in the OECD. I would be happy to give your Lordships the benefit of the full range of figures if they have the patience for them.

Lord Mackay of Ardbrecknish: My Lords, I believe I said before the noble Baroness interrupted me that I freely admitted that the UK would be relatively better placed by the middle of the next century. That is the point and it presumes that there will be no movement in those other countries. In any case, while I accept that looking at other countries is important—and, indeed, I am about to do so—one also has to look at the support ratios inside one's own country because it is to one's own future taxpayers that the pensioners of those decades will have to look for their pension.

The argument has led Australia, for example, to raise the retirement age for women to 65 and it has done so much sooner than the UK. The same position applies to Austria. The retirement age in Canada is already set at 65. Denmark has a retirement age of 67, whereas Finland is at 65, and France has a retirement age of 60 and does not seem to have any intention of moving. Germany has a retirement age of 65 as, indeed, has Greece. Iceland has a retirement age of 67, with Ireland having a retirement age of 65 and Italy with retirement ages of 61 and 56 and intending to move to 65 and 60—that is, if a government ever lasts long enough to bring it about.

Luxembourg has a retirement age of 65, New Zealand has a retirement age of 62 going to 65. In Portugal, the female retirement age is 62½ and will be increased to 65, while Spain and Sweden have retirement ages of 65 with Switzerland having retirement ages of 65 and 62. Finally, Turkey has retirement ages of 60 and 55, but I am not sure whether we want our pension provision to be compared to that of Turkey. We are moving to 65. Therefore, I do not believe that we are in very bad company in doing so.

The noble Baroness also argued that perhaps we should allow for GDP growth and that we do not actually have to do this. However, all the calculations suggest that to go to the age of 60 would be expensive. I am very uncertain as to whether or not that is Labour Party policy. I listened very carefully to what their Commission on Social Justice said:

    "We do not think it is a priority for present or future public expenditure to reduce the age at which men can claim the basic pension".

That tends to suggest, although it is perhaps somewhat convoluted, that they do not propose to go to the age of 60. However, if we go to 60, it will cost the taxpayer £7 billion. But I freely admit that if we go to 65 it will not cost the Treasury anything because the Treasury only exists as a collecting agency. It will actually save taxpayers £5 billion. Therefore, there are some considerable savings to be gained by moving to the age of 65.

I should like to go into further detail on the matter, but I cannot do so because I want to turn to other parts of the Bill. I should like to address the very good points made by the noble Baroness, Lady Lockwood, about the position of women. I would not argue at all with the statistical picture that the noble Baroness painted.

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However, for a number of reasons—for example, because the reduced rate option phases out, because SERPS matures, because of the effect of home responsibility protection on women's situations, and because an increasing proportion of women will be able to take up and develop occupational pension schemes, when we come all that way forward the position will be considerably better for women than it is today. I am sure that everyone is absolutely in favour of that prospect.

Some of my noble friends asked about the home responsibility payment. Perhaps I may underline the fact that it is already available to protect the basic retirement pensions of people who have caring responsibilities. Most commonly, it is the wife who stays at home to look after the children or the woman who stays at home to look after an elderly relative. That entitles them to a pension.

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