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Lord Mackay of Ardbrecknish: I am enjoying myself. Am I not allowed to? I read out a table at Second Reading which showed that many of our competitor countries were moving to 65. It showed Denmark already at 67; Iceland at 67; and Norway at 67. It was quite interesting. That is the third reason: the international trend means that we have to guard against damaging our ability to compete internationally.
Part II of the schedule provides equality for men and women in certain pensions and other benefits. It also introduces other changes which will improve the retirement income of many people. I have already mentioned some of them, but they are worth putting on the record. I fully accept that some of them are important. It will equalise the treatment of married couples, irrespective of whether the man or woman is the older partner. For example, the older spouse, be it man or woman, will, on reaching 65, be able to claim an increase in respect of a dependent spouse who has not yet reached pension age. Similarly, where both partners are of pension age, either the husband or the wife may be able to claim a pension of their own based on their partner's contribution where their own record is incomplete.
Secondly, it will increase the amount of basic state pension payable by deferring a claim from 7½ per cent. a year now to approximately 10 per cent. from 2020. The present ceiling of five years' deferral will be abolished. These changes will make postponing a pension claim worth more, and will enhance flexibility
Both in the introductory clause to this schedule and in the schedule itself, we accept that it is wise and sensible from the point of view of the taxpayer, of the economy and of pensioners themselves in the years to come to make this decision now in the interests of all those people, and that we should go for a common pension age for men and women of 65. That is what the clause that leads into Schedule 4 does, and that is what Schedule 4 does. I heartily commend the schedule to the House.
Baroness Hollis of Heigham: Before my noble friend decides what he wants to do about his proposition, could I ask the Minister how many of our competitors who are moving to a higher retirement age also allow flexible retirement from a younger age? I understand that it is rather a lot.
Lord Mackay of Ardbrecknish: I am looking at a table. I see just one proposal to make pension age flexible from 61 to 70 in Sweden. But I do not see any other proposal in the other countries. Of course, I never believe that I am totally the fount of all knowledge, and I may be missing something. Yes, I see that currently Belgium has a flexible arrangement, from 60 to 65; it is considering equalisation, which I do not think helps. That is what I am advised. Then there is mighty Luxembourg, in which the age is 65 currently and which is considering flexibility, but I am not sure to what extent. Those are the two countries (along with a proposal from Sweden) that propose to move from 65 to a flexible age. But our major competitors are certainly not considering that.
Baroness Seear: Perhaps I might drop one point into the discussion over the flexible retirement age. The Minister quite rightly made the point that people who took the earliest possible retirement age under a flexible decade would have a much lower pension, and that that lower pension would continue. I think he was implying that that would cause considerable disadvantage and hardship as people got very much older. My party at one point put forward an idea in favour of a flexible retirement age but recognised the difficulty of having it actuarily adjusted and the problems as people grow older. The suggestion was that those who survived to a ripe old ageI think we said 80, but that could be fixed at whatever was appropriateshould then be brought up to full pension. By that time their numbers would be greatly reduced. People still die during that period so the cost would also be considerably reduced. However, there would be security when people reached the age of 80, which is normally thought of as being so old that there is very little that they can usefully do.
Lord Mackay of Ardbrecknish: Even at this time of night and with limited attendance in your Lordships' Chamber I make no observations about 80 being a great age or not a great age. It sounds as though the noble
Lord Monkswell: I thank all those who contributed to the debate. The speeches ranged somewhat and I was concerned that the Minister did not see fit to comment on my suggestion regarding the value of the contribution made to society and our economy particularly by women through the work that they do at home, either caring for young children or elderly disabled relatives. Perhaps the Minister will take that matter away and consider it.
Lord Mackay of Ardbrecknish: I do not want the noble Lord to think that I have not noticed it. I responded earlier in relation to home responsibility protection to protect people who take time off work to look after children or elderly parents. However, the Opposition seem to be so little bothered by that that we rolled over that amendment by it not being moved. I am deeply sorry about that because I wanted to debate the issue.
Lord Monkswell: I shall not rise to that comment. One of the difficulties with which the Government are faced is the practical realities of their policies rather than the theory of their numbers. In that regard I recognise the contribution made by the noble Baroness, Lady Lockwood, when she pointed out that civil servants are being compulsorily retired at 60, yet the Government are effectively saying that they will not be able to collect their state pension until they are 65. Even though some civil servants are well paid and have inflation-proof pension provisions and so forth, a number of peopleparticularly womenare low paid and will effectively have a gap in their provision. The Government effectively made no response to that.
One of the other practical aspects of the Government's policies concerns me. The Minister mentioned various figures and what would happen to the state pension bill if we had a common retirement age of 60. He was indicating that there would be a 30 per cent. increase in one year2040 or 2050which in absolute numbers sounded enormous. In fact the reality is that there would have to be contributions to pay for that, and the Minister did not mention that side of the equation.
The Minister went through a whole list of figures in relation to the number of people it was computed would be in the retired or the working population. But he did not say what proportion of that computed working population would be productively employed in the economy. If we look at the situation now compared with what it was 20 years ago, we can see that the Government have an abysmal record when it comes to ensuring that people of working age in our country are productively employed.
Obviously, we shall face problems if we reduce the retirement age for both sexes and at the same time do not harness the productive potential of those of working age. But it does not need to be like that. We could have a government who say, "We shall make use of all the people. We shall productively employ them; and where they are not productively employed in the market economy we shall recognise the contribution that they can make to the benefit of society and the economy by working at home in an unpaid capacity." But the Government have not sought to address any of those practical realities. What they have done is to decide on a figure for a common retirement age which will be the cheapest option they can get away with and sell politically and then call in aid to suggest how responsible their decision is a whole set of figures which are suppositions about the future and which do not reflect what could be the reality or what would be the reality if the Government stayed in power until that point in time.
I recognise that we still need to tease out a few more elements in this whole debate. Given that the amendment which was passed prior to this debate changed Schedule 4, it would be unfortunate if we did not agree to Schedule 4 as it is amended. I shall therefore withdraw my opposition to the schedule being agreed to.