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Lord Astor of Hever moved Amendment No. 2:
"(2A) The Secretary of State may, by regulation, make provision for extra benefits to be provided for current members of the existing scheme during the transitional period.
(2B) For the purposes of subsection (2A), the transitional period is the time between the date of the new scheme coming into force for new servicemen and women and the date on which existing servicemen and women are given the opportunity to transfer."
The noble Lord said: My Lords, we did not move our amendment on Report, on the Minister's recommendation and assurance that he would today give the House some positive answers to the benefits available during transition.
This amendment proposes to offer, on the face of the Bill, a guarantee for those who may be adversely affected during the transitional period. We had a thorough and potentially encouraging discussion on this matter in Committee. During the debate the Minister admitted that the transitional phase of the coming into effect of the Bill was something of a problem. Existing personnel will
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not be able to join the new pension scheme from its introduction on 6 April 2005, but some time after that, although no later than 6 April 2007. This means that there will therefore be a period when those personnel currently serving do not have access to the improved death-in-service and dependants' benefits available to new entrants from April 2005. It may affect only a handful of people, but the principle is important. It is unjustifiable to have existing personnel being denied improved benefits that new recruits will be entitled to.
As the noble Baroness, Lady Dean, stressed during Committee stage, the devil is always in the detail. While we are happy that the Government see the need to address the transitional problem, we have only this opportunity to get on record the details of the extra benefits that will be offered. I beg to move.
Baroness Dean of Thornton-le-Fylde: My Lords, I rise to speak in support of the amendment, which has my name on it. This is about the third time in the course of this short Bill that we have dealt with the matter. We had expected to be able to deal with the matter last week; my noble friend the Minister explained that he could not report last week but that he would be today.
Few words are needed, therefore, except to say that we need a solution to this problem—otherwise we shall have a situation with people who have been in the Armed Forces for years being in the transitional period. If something should unfortunately happen to them, they and their families would be in a worse position than the new recruits, who will be immediately recruited into the new pension scheme.
Lord Bach: My Lords, I thank the two noble Lords who have spoken in this debate. I am grateful for their patience in waiting an extra week so that we could find a solution to what is undoubtedly a very real problem, which they raised some time ago.
I can now set out our proposed approach, which I believe should meet their concerns. There is no need to write the provision into the Bill, as our proposal will be achieved through amendments to the current scheme rules in the prerogative instruments, and does not thus require primary legislation. Although we did not discuss this matter at Report, my noble friend Lady Dean has raised this issue both at Second Reading and in Grand Committee. As she said, this is a transitional problem which calls for a transitional solution.
The problem arises because currently serving personnel will not be able to join the new pension scheme until up to two years after its introduction for new entrants on 6 April 2005. There would therefore be a period when those personnel currently serving would not have access to the improved death-in-service and associated dependants' benefits available, which will be available to new entrants from April 2005.
The Ministry of Defence has been considering how to minimise the impact of this gap. I had suggested at Grand Committee that we might offer service personnel the opportunity to buy additional voluntary contributions to
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cover some or all of the improvement offered in the new pension scheme. Following extensive discussions with Her Majesty's Treasury, the government actuary and the three single services, we have decided to go down a different path.
We propose instead that for deaths in service during the transitional period, the dependants of currently serving personnel who are members of the existing pension scheme will be given the better of the two benefits packages from either the current or the new pension scheme. The Armed Forces Personnel Administrative Agency will calculate the respective benefits packages to decide which offers the better package of benefits in each case, but the dependant will have the right to appeal the decision through the Discretionary Awards Panel.
We plan that the War Pension Welfare Service would also have a role, visiting the bereaved widow or widower to help them to understand their entitlements under the current and new pension schemes and why one is considered to be more advantageous than the other. That would allow feedback into any appeal consideration. In this way, we will ensure that, during the transitional period when current service personnel are unable to make a choice about which scheme best meets their own personal needs, their dependants will not be disadvantaged should the worst happen.
It may be tempting to think the new pension scheme will always be the answer. I should say that, in coming up with this proposal, we concluded that it would not be right to take away entitlements under the existing scheme and replace them with the new scheme; taken individually, some of these existing entitlements, such as the short-term widow's pension or the rapid early accrual of benefits are more advantageous than under the new scheme. We could not take these away unilaterally, even though we consider that the overall package under the new scheme will in most cases be very significantly more generous.
Once the offer-to-transfer exercise has taken place and serving personnel have been allowed the opportunity to join the new pension scheme, pension benefits would be determined by the individual's decision between the two schemes, although there would still be opportunities to improve benefits by taking out an additional voluntary contribution, such as that currently available to improve death-in-service benefits.
Finally, I should make it clear that there is not a transitional issue for attributable benefits payable when a death is due to service. From 6 April 2005, these will be paid from the new compensation scheme, covering all service personnel deaths caused from that date.
I hope that the solution that we have found here satisfies both noble Lords and the House.
Lord Astor of Hever: My Lords, I am grateful to the noble Baroness, Lady Dean, for her support. The Minister has given a very full response to the amendment. There was a transitional problem, which the Minister has
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taken on board and addressed head-on. I received a nod from the noble Baroness, Lady Dean, so I assume that she is content with the Minister's proposals. In thanking the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Astor of Hever moved Amendment No. 3:
"WIDOWS' PENSIONS FOR LIFE
From 6th April 2005, widows and widowers currently in receipt of an unattributable forces family pension shall retain that pension for life."
The noble Lord said: My Lords, the noble and gallant Lord, Lord Boyce, whose name is attached to this amendment, is abroad, but has asked me to say how important he considers this issue.
I shall not rehearse the arguments about the payment of pensions for life for the existing non-attributable service widows. Your Lordships by now fully appreciate that those unfortunate women will lose their pensions should they choose to remarry or cohabit. Furthermore, noble Lords will be aware that this ruling affects only those ladies and widowers who are beneficiaries under the current Armed Forces pension scheme. In future, all widows and survivors of registered unmarried partnerships, be they deemed attributable or non-attributable, will, thanks to action by this House in the past, be permitted to retain their family forces pension for life.
I also find it difficult to understand the arcane distinction between an attributable death and a non-attributable death. If a husband dies, through whatever cause, the widow will face exactly the same problems of financial responsibility and an uncertain future.
This is a highly emotive issue, which has been a subject of grave concern throughout discussions in this House and the other place. We need to give clear answers to those who feel that they are being unfairly let down.
I start by looking at the issue of read-across. We are constantly assured that the Armed Forces are "special". However, the Minister told the House at Report that:
"The Government do not believe that special treatment should be extended to circumstances where the pension relates to a death which is not due to service. In this case we could not in all fairness treat differently the widow of a service person and the widow of, say, a fireman, a policeman, a civil servant or a teacher. There is no basis for paying pensions for life in one case and not in the other".—[Official Report, 8/9/04; col. 610.]
I find the logic in this argument impossible to follow, particularly when I read Malcolm Wicks, who stated that,
"The Local Government Pension Scheme introduced widows' and widowers' pensions for life from April 1998. Since October 2002 the new Civil Service pension scheme has provided for survivor pensions to be paid to unmarried partners . . . At the same time the requirement to terminate widows' and widowers' pension on remarriage or cohabitation was removed".—[Official Report, Commons, 13/5/04; col. 553W.]
4 p.m.
There is inconsistency here, and the Government refuse to recognise that the Armed Forces are a special case. If read-across is such a sacred cow which always has to be applied across the public sector, why were those changes, which introduced widows' pensions for life, not read across into the Armed Forces pension scheme at the time? Surely the Minister cannot argue that the amendment would have to be read across, when the reverse does not apply when improvements are introduced in other public sector schemes.
The Minister also said on Report:
"The special circumstances of service life are, in my view, fully recognised in the high value benefits we are making available under the new pension and compensation scheme".—[Official Report, 8/9/04; col. 610.]
I suggest that that is a smokescreen. The Forces Pension Society has contracted an independent actuary to measure the benefits inherent in the new scheme against modern good practice. The results of the survey revealed that, while the new scheme was a step in the right direction, it remained bottom of the public sector league table in all its principal benefits. Surely our servicemen deserve better.
I turn now to the serious matter of cost implications. Throughout our discussions on the matter the Government have repeatedly returned to the assertion that the retention of pensions for life for non-attributable widows is unaffordable. In its memorandum dated 18 December 2002 on legacy issues to the Defence Select Committee, the MoD stated that the cost of providing non-attributable widows' pensions for life would be £8 million per annum, but only 18 months later when the matter was debated in the other place that figure had nearly doubled to £14 million. Will the Minister explain to the House the logistics of that change?
In the same memorandum, the MoD attributed £500 million to the cost of retrospection. The Minister continues to trot out that figure. Retrospection and the £500 million figure have been the bone of contention in our debates. Our amendment is not retrospective in that it proposes paying only from 5 April 2005; nor does it seek to restore the pensions of widows who have already remarried.
Yet it was only today, late this morning—when I was also not in my office—when the Bill has passed through the other place and had its Committee and Report stages here, that I received from the Minister a letter setting out the cost implications in proper detail. I thank the Minister for that letter, but I cannot emphasise enough how disappointed and frustrated I am that it has taken so long for the Government to give a comprehensive response.
The amendment was intended to remove a long-term injustice that causes disproportionate grief and suffering for the small and diminishing number of victims. I do not agree with the implication that there would be a cost of £3 billion because of the read-across to the rest of the public sector. We have already seen that the Government are not bound by consistency. However, I understand that at this late stage in
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proceedings and when a Bill has to pass Parliament within a few weeks, it is essential that we take more time to review the alleged implication cost. It would therefore be undesirable to press the amendment today.
I think that the House and all those interested in this worrying issue will feel let down that those detailed figures have been produced so late. If the costs were to prove to be far less than have been alleged, there would be deep anger in service circles. But this House cannot press expenditure on the scale alleged on another place, nor could our party entertain such a commitment without weighing the many other calls on the public purse in general and the defence vote in particular.
This is a serious problem which, were we in power, we would put every effort into trying to rectify. However, I realise that in these circumstances I cannot responsibly press the amendment. I hope that the Minister will give a commitment to look further into the issue to see if there is any way in which it can be resolved in the future. I beg to move.
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