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Lord Oakeshott of Seagrove Bay: My Lords, if I may say so, that is absolute nonsense. If one looks in detail at what has been blacked out, one can see that there is no way in which that is the case. I operate in financial markets. I know what is market sensitive and what is not. I must ask the Minister to look in detail at what has been blacked out and to reply to me on those lines.

Baroness Hollis of Heigham: My Lords, I have looked at it in detail. I have been assured that it is Treasury policy not to release information of that kind before the Secretary of State has stood up to present it in the House. That is the assurance that I have been given. If the noble Lord wishes to write to me, I shall be happy to follow this up further. I can see how irritating it may be for him, but I am assured that that is the convention and practice.

The noble Lord, Lord Oakeshott, raised the issue of compulsion. He is absolutely right that unless employers contribute, neither do employees. With regard to stakeholders—all the information from Legal & General shows this also—where employers contribute, so do 70 per cent of employees. Where employers do not contribute, only 15 per cent of employees do so. That is a key point.

The noble Lord asked about setting up the commission. Its point is precisely to see—and to hope—that we can make the voluntary provision, which has been so successful in this country, continue to work. But if it does not, we shall have to review it because we are determined that people will have the pension coverage they need.

As to the noble Lord's point about people saving too little, that is true. But that is a judgment about what people think they should have in their retirement. They can make that judgment by deciding to save more or by working longer or possibly even by reducing their aspiration of what income they should enjoy in their retirement. At the moment, unless they have such

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information and know what the options are, they will not be able to make informed choices. That is the push of this Green Paper.

5.55 p.m.

Lord Fowler: My Lords, I do not know whether or not this was blacked out in the copy, but I certainly do not accept paragraph 7 of the Minister's Statement. That states:

    "The United Kingdom is in a stronger position to meet this demographic challenge because of the choices we [the Government] have made over the past five years".

To ascribe our position exclusively to what the Government have done over the past five years is utterly absurd, and it is entirely typical of the kind of ridiculous claims the Government make.

On a more fundamental point, is not the real danger that we are heading for two nations in retirement? We have the public sector, with guaranteed final salary schemes and assured retirement ages, watching, at times with some complacence, the private sector which, as my noble friend has said, is in undoubted crisis. Surely the reason for that crisis is not uncaring employers, but the fact that over the past five years—and this is the significance of "the past five years"—the Government have struck against personal provision, including by the notorious 5 billion per year pensions tax.

Is the Minister aware that although some of these proposals are undoubtedly useful, they also undoubtedly fall short of the radical action needed to encourage wider personal provision, including scrapping the rule that requires in all circumstances annuities at the age of 75?

Baroness Hollis of Heigham: My Lords, leaving aside the purple prose, the noble Lord, Lord Fowler, has made two points: on ACT and annuities. On ACT, he knows perfectly well where the Government come from. We believe that the old ACT system was a tax deformation. Money was sent out in dividends which would have been better invested in companies. I think as a result we have seen the British Economy in a better state—weathering the global recession—than almost any other economy.

Secondly, the Myners report also made clear that what mattered was not so much tax dividends—ACT—but the investment decisions and investment strategies made by managers. That was tenfold more important. I think that was the major push of the noble Lord's question.

Baroness Turner of Camden: My Lords, I thank my noble friend the Minister for this very comprehensive Statement. We need a great deal more time to consider it, as the noble Lord, Lord Higgins, said. Clearly, we have to make time for a debate on the subject. It is far too complex to be dealt with simply in questions on the Statement.

As to the Minister's Statement today, the issue of people not saving has again been raised. People generally, particularly poorer people, do not save because they cannot afford to. In those circumstances,

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it is absolutely essential that the state basic pension is sufficient to enable people to live some kind of life. Indeed, I note that the NAPF has made this suggestion among its recommendations.

I still adhere to my view that the basic state pension should be linked to the earnings index. But the reason why a number of us feel that the pensions industry and pensions provision faces a crisis is what has happened recently in connection with final salary schemes. I declare my interest. I am a member of Amicus, the union that has been much involved in negotiating pensions for its members over the years. We were very proud that we had negotiated some very good schemes for our members, mainly final salary. We now know what is happening in a number of firms where these schemes are being wound up. New employees are being offered a deal that is fundamentally inferior to what was on offer in the final salary scheme. In some instances people who were members of final salary schemes are finding they will not get what they thought they would get under those schemes.

Clearly, there are major problems. It seems to me that something must be done to protect employees' rights in these schemes. I note that there will be a new pensions regulator. I do not know yet what role the pensions regulator will have. But clearly something must be done to protect employees' rights.

I notice that major unions have made statements this morning—the GMB, my own union and so on. The unions regard pension provision as deferred pay. They are concerned that if deferred pay is damaged, it is the same as wage cuts, and they are threatening dispute action in a number of cases. I have no doubt that if those developments proceed we shall see industrial disputes in some major companies. In that sense I believe that there is a crisis in the pensions industry.

However, there is no time this afternoon to conduct a full discussion of all the issues that arise in this important Green Paper. I hope that the opportunity will be afforded to this House to debate those issues in the near future.

Baroness Hollis of Heigham: My Lords, on my noble friend's last point regarding the shortness of time for debate, I do not believe I am breaching any great secret when I say that we are expecting, subject to the usual channels, one of our Back-Bench debates in late January to be made available for a debate on pensions as my noble friend suggests. As I say, that is subject to the usual channels and the arrangement of ordinary business. But I agree that we cannot deal with these complex issues in a quick Statement. We need time to reflect on the report, take advice and see how the debate develops.

My noble friend's second point related to the attachment to the basic state pension. I have already made the point that it does nothing to help those with incomplete NI records, of whom a large number are women. It is also the case that it preserves existing inequalities among pensioners. My noble friend may have been right in 1979 but she is wrong now.

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Since 1979 the bottom one-fifth of pensioners have seen their income grow by around 30 per cent; the top one-fifth by 80 per cent. The average is around 64 per cent. In other words, inequalities have widened and to throw the same money at everybody preserves those inequalities and does very little to reduce poverty. As a result of the actions of my right honourable friends in another place, both the current and former Secretaries of State, the poorest one-third of pensioners have seen an improvement in their income in real terms by 1,500 a year since we came into office. I am sure that my noble friend will want to congratulate us on that.

Again, I have already answered my noble friend's points about DB schemes. At the core is the level of contribution. Provided the level of contribution is as high over time, DC schemes should produce the same sort of result as DB schemes. But not, as my noble friend said, if employers use the opportunity to cut their contributions.

Baroness Barker: My Lords, following on from that, can the Minister say why the greatest inequality in pensions is not mentioned at all in the Statement? I refer to the inequality between men and women. It is simply not mentioned in the Statement. Are any measures to be introduced to tackle that issue?

Secondly, the Statement says that the Government will consider allowing employers to make membership of a pension scheme a condition of employment. What is that if it not compulsion? Why is the only issue on which there is compulsion one that is directed towards employees and not employers when, as the noble Baroness in her reply to the noble Lord, Lord Higgins, spelt out, numerous employers have welched on their deals on pensions in the past five years?

Finally, can the Minister explain how the incentives for deferment of the uptake of the basic state pension can possibly be in harmony with the pension credit? What measures will there be to ensure that people who defer their state pensions do not subsequently lose out on pension credits because of their greater income?

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