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Lord Campbell of Croy: I wonder whether the Minister could clarify whether the group we are discussing--war widows--covers those widows whose husbands were servicemen on duty when they died, but who were not involved in a war. For example, if a husband fell off a ladder on duty in barracks in Britain in peacetime, his widow rightly deserves a generous pension. As I understand it, she is automatically classified as a "war widow".

The issue is important because, fortunately, we have not had a major war involving many battle casualties since Korea, nearly 50 years ago. Therefore, there are far more service widows whose husbands have died during peacetime activities. They are the ones whose numbers matter now and are more likely to be of an age to remarry.

Earl Russell: Before the Minister replies to the noble Lord, Lord Campbell, will she bear in mind in defining "peacetime" the declining frequency of the declaration of war and the increasing use of the Army, as we saw the day before yesterday, in circumstances involving civil disturbance?

Baroness Hollis of Heigham: The noble Lord and the noble Earl are both right. It is true that most war pensions are received not because of service in the Falklands or in Northern Ireland, but because of injuries incurred in training, ranging from sports injuries to noise-induced hearing loss, associated with not having protective clothing during weapons training. Pensions may also be paid as a result of accidents, such as those involving jeeps.

In so far as a war injury has occurred for a serviceman or a war pension has been paid to a service widow, if the injury occurred because the serviceman was in service at the time, the pension is paid. The noble Lord, Lord Campbell, is right.

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The noble Earl, Lord Russell, is also right. It is not easy to make a clean distinction between war and peace when so many of the demands made on today's Army relate to peacekeeping. Much of the Army's activities involve keeping the peace, and any injury or death incurred is properly covered by the arrangements.

Baroness Fookes: I am grateful to the Minister for the generous tribute she paid to my noble friend Lady Strange and to the work of the War Widows Association. I am sure that my noble friend will be delighted to learn about the review that is to take place within the Ministry of Defence, and no doubt she will wish to give her trenchant views to that body.

I would not dare to second-guess what my noble friend might do subsequently in the Bill, but for the time being, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 42 to 44 had been withdrawn from the Marshalled List.]

4 p.m.

Baroness Castle of Blackburn moved Amendment No. 44A:

After Clause 18, insert the following new clause--


(" .--(1) Contributors or prospective contributors to a pension scheme, whether an occupational pension scheme or stakeholder pension or a personal pension shall be given the option of contributing to the State Earnings Related Pension Scheme as enacted in the Social Security Pensions Act 1975 or to such modification of it as may be prescribed.
(2) To enable prospective contributors in exercising this option the Secretary of State shall publish comparative tables of the contributions required to produce specified benefits in each case including the charges levied on the contributions or on the accumulated fund in each case and the portability of each pension.")

The noble Baroness said: The purpose of the amendment is clear: it is to give all people a genuine choice between the various options of pension provision that are open to them and will be open to them under the Government's policies. In seeking to give people that choice, I include the provision of SERPS, with which the Committee is by now familiar.

The Government's policy is to phase out SERPS gradually as an option and in the mean time to encourage contributors to adopt other forms of pension. The Minister has made it clear in previous discussions that she considers SERPS provision inferior to the Government's state second pension, for example, for certain categories of income groups. I urge the Committee to accept that the merits of SERPS have been sufficiently recorded by a wide range of people, including Members of the Government, for it to be wrong to remove it as an option for those who wish to choose it. We need to give people a genuine choice.

The merits of SERPS have frequently been pointed out. It is a defined pension, so people know what they will get when they have contributed. It is a pension that is paid as of right and it is inflation proofed, which does

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not apply to every scheme offered as an alternative. SERPS is also completely portable. We have a highly flexible labour market, but SERPS can be moved with no difficulty at all from one job to another because employees are still members of the same fund--the National Insurance Fund. It has also been acknowledged on all sides that the administrative expenses of SERPS are lower than those of any other pension scheme. So why phase it out?

The Minister has advanced two arguments against the continuation of SERPS. The first is that it is earnings related. I was surprised to hear the Government use that argument. Has it suddenly become a crime for a pension scheme to be earnings related? If so, what are the Government doing introducing a stakeholder pension scheme, which will be earnings related? Why suddenly applaud the merits of flat-rate pensions?

The second argument that the Minister has advanced is that SERPS does least for those who earn the least. Of course, that is true of any earnings-related scheme, although the scale of income involved may be different. One cannot have an earnings-related scheme that equally benefits people regardless of their income. The Government must make up their mind. If relating pensions to earnings is a crime, they should drop that from the stakeholder pension scheme or from the state second pension. Of course, the Minister will tell me that that is exactly what the Government will do with the second state pension. As the stakeholder pension emerges more strongly into the limelight, the Government will make the SSP a flat rate. That, they say, will do far more for those on the lowest incomes.

I am the first to admit that one of the best bits in the Government's policy provision which they have set out is the decision to "credit in" some of the lowest income groups as though they were earning £9,000 a year. So those on £3,000 or £4,000 a year will be treated as though they are earning £9,000 a year. Wonderful! I welcome that. After all, £3,000 or £4,000 a year is about a quarter of the average national earnings. So they will be credited into half average national earnings. It is not exactly the dawn of a great affluent millennium, but it is an improvement on the present situation.

I ask the Government this question. If that is their concern, why do they not inject that provision into SERPS to add to its many other qualities which I have enumerated and which the Government have time and again accepted? I tell noble Lords why. It is because, without a word of explanation to any of us, the Government have gone overboard for funded pension schemes--pay-as-you-go schemes--although it is by definition impossible to have a defined pension if one has a funded scheme. That is a choice that people should be given.

All I ask is for choice. I do not ask for the abolition of any of the Government's proposed alternatives. I am suspending my judgment with bated breath until we know more about the stakeholder pension, the details of which at present are blissfully obscure. I am a fair minded woman. I am willing to hold back any bombshell of destruction on the stakeholder pension until I know what it involves.

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All I ask the Government to do is to allow people to choose. I thought that this Government believed in choice. Let it remain among the range of options. But of course if people are to make a real choice, they must have the information to enable them to do so. We are all being made dizzy by the Minister's brilliant spin statistics. She is brilliant at it, is she not? But penetrate the glossy magazines and try to find verification of the claims that are made. I shall expand on that point on the next amendment.

In this amendment we ask the Government to have the courage not to put before the people of this country glossy generalisations but precise information to enable the people of this country to make a free choice. Is that not what democracy is about? They need to know. There must be a comparison. No doubt you are much cleverer than I am on this, but I do not know whether any of you can tell me in precise terms to what degree, if at all, the alternatives will be inflation proof; or exactly what the charges will be. We have had a discussion about that; we shall return to it. It is apparently still a matter of argument with those whom the Government are trying to entice to introduce stakeholder pensions. But these matters can profoundly affect the reliability of the pension which people draw at the end of their contributory period. We ask for comparative tables. What will people get for how many contributions in each case?

Over personal pension schemes, we discovered that when it came to their final pension contributors were losing £1 out of every £4 that they had carefully saved. We are told, "We shall not repeat that on the stakeholder pension, or anything else". But the Government have not spelt out by exactly how much each person's final pension will be reduced by the charges that have been levied.

Again we have the question of portability. I know that the Government are appreciative of the importance of that. They tell us about the flexible labour market in which we live, and how we have to adjust, and so on. But let people choose between the absolute portability which SERPS offers, as Eagle Star, has pointed out, and the as yet undefined and unequal portability of other schemes.

I ask the Government to do a very reasonable thing. I ask them to say, "Yes, we acknowledge the strengths of SERPS as everyone else has done. We shall not try to force people out of a state second pension into their earnings related stakeholder pension. State pensions will be flat rate, and we shall then deliver blessings to the very poor". I should hate to feel that this Government, with all their worthwhile ambitions to raise workers and incomes out of poverty, should be visualising that over the next half century there might be people living on £3,000 or £4,000 a year. I hope that our minimum income policy will have done something; if it is not doing something it should be increased. No one in this country should have to earn a living to the tune of £3,000 to £4,000 a year. Instead of tailoring our pensions provision to the existence of pay poverty, we should proudly declare, just as we have done about child

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poverty--and we all welcome it--that this Government are determined to abolish pay poverty; and let who will squeal.

I ask the Government: please consider very carefully the need for choice; and the need for that choice to be informed. We do not want any mis-selling of government alternatives through lack of information; and I am sure that this Minister will rise to the challenge that I throw down at her. I beg to move.

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