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BeeHive  >  BeeLines  >  BeeHive in Parliament!

BeeHive in Parliament!

Well, there’s a thing.  I don’t know if you know or not, but there was a big debate in Parliament on Tuesday night.  It was an ‘adjournment debate’ introduced by the current Pensions Minister, John Hutton, on pensions and pension reform, calling for a consensus on the long term decisions to be made.

The debate centred around the key proposals set out in Lord Turner's report, published in November 2005, but actually ended up going all over the place and hitting on nearly every pension topic under the sun.  Because of that it made long reading, but I’m glad I did read it all through because right at the end, in his summing up for the Conservative Party, Nigel Waterson (the shadow Pensions Minister) quoted a line from the BeeHive to make his point on what is happening to final-salary pension schemes.  I mean, how good’s that?  It made me smile anyway.

The debate, when it finally ended, was drawn to a close by Stephen Timms, the Minister for Pension Reform, saying:

"We now have a foundation that opens up the chance of an enduring pensions settlement for the UK. I hope that the optimism expressed across the Chamber today will be fulfilled over the next few weeks as we move towards proposals for reform and a consensus about what we should do."

Having read the whole thing through the optimism comment looks a bit on the optimistic side itself to me, but I did think it was worth seeing where the Parliamentary types are coming from on the many important pension topics that are up in the air at the moment.  While reading it I thought you’d enjoy reading bits of it too, so we’ve broken the debate down into discrete chunks on particular issues so that you can cherry-pick if you like.  Don’t say we don’t look after you on the BeeHive – you won’t get this service anywhere else!

So, this is the debate broken down into bite-size chunks.  All you need to do is to click on the bits you want to read:

Reducing pensioner poverty

Encouraging saving - especially amongst lower earners

Women's pension entitlements

Pension entitlements of carers

Affordability of public sector pensions


Final salary schemes

National Pensions Saving Scheme

Reducing means testing in the social security system

Women's pension entitlements

Winding up of final salary pension schemes

National Pensions Saving Scheme

Public sector pensions

Means testing

Now, rather than put you to the trouble of clicking on the bit where the BeeHive was quoted I’ve taken the opportunity to cut and paste that bit here as I’m sure you’ll all want to read it and, anyway, I’d be pretty upset if you didn’t:

Extract from Hansard

31 Jan 2006: Column 283

10.50 pm

Mr. Nigel Waterson (Eastbourne) (Con): I begin by declaring an interest, in that I have some private pension provision.

This has been an unusually thoughtful debate on almost all sides of the Chamber. We had a thoughtful contribution from the right hon. Member for Birkenhead (Mr. Field), as one would expect, although I was a tad surprised by his apparent hostility to the Turner report and its central conclusions. The hon. Member for Yeovil (Mr. Laws) was right to talk about the transfer of risk that is taking place in the pensions world. That was something that Lord Turner drew to our attention in both his reports.

The Chairman of the Select Committee, the hon. Member for Bradford, North (Mr. Rooney), made a somewhat eccentric argument against political consensus, which was odd for a Select Committee Chairman, but he developed some other interesting points. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) made a red-blooded contribution to the debate. He had something to say about means-testing and is clearly not a consensus man.

The hon. Member for Coventry, South (Mr. Cunningham) made an interesting and thoughtful contribution to the debate, as he always does. He recognised the importance of pension funds investing in equities. My hon. Friend the Member for Gosport (Peter Viggers), who has great experience in real pensions issues, made some interesting points, particularly about longevity. I know all about that because I have a constituent, Mr. Henry Allingham, who will be 110 this year.

The hon. and learned Member for Redcar (Vera Baird) spoke powerfully, as she always does, about women's pensions. My hon. Friends the Members for South-West Norfolk (Mr. Fraser) and for Wellingborough (Mr. Bone) spoke eloquently about how public sector pensions should be addressed by any responsible Government. My hon. Friend the Member for Ludlow (Mr. Dunne) made a thoughtful speech in which he examined issues relating to the proposed national pensions savings scheme, such as consumer protection and the regulatory framework. He rightly drew our attention to the thought-provoking comments in the Cazalet report, which was published only in the past couple of days.

The Government have presided over the pensions crisis for something like nine years. In that time, they have taxed pensions, undermined savings by increasing means-testing and heaped ever more red tape, cost and bureaucracy on to companies with pension schemes. They came to office with the avowed policy of, rightly, changing the balance between public and private pensions from 60:40 to 40:60. They have failed signally in that ambition. The first pension reform Minister, the right hon. Member for Birkenhead, was appointed to think the unthinkable, then promptly sacked for his trouble. He has said, memorably, that in 1997, the United Kingdom

"had one of the strongest pension provisions in Europe, and now probably we have some of the weakest".

31 Jan 2006 : Column 284

Two million pensioners are still living in poverty and figures released only today show that the take-up of pension credit is still extremely disappointing. In the last six months of 2003–04, it was in the range of 58 to 66 per cent. by caseload. That means that a very large number of people, many of whom I presume are women, are failing to claim their entitlement. In spite of more than eight years in power, the Government have done absolutely nothing about the scandal of women's pension entitlement, except—I nearly forgot—to publish an annual report to tell us how bad the problem is.

The Government's flagship Pensions Bill, now the Pensions Act 2004, was introduced with great claims about how it would safeguard and encourage final salary schemes. The opposite has been the case. Final salary schemes are dead or dying. Most are already closed to new entrants; more and more are closing even to existing members. Recent examples include Rentokil and the Co-op. Experts such as the National Association of Pension Funds say that this is just the beginning.

In a powerful article produced in the last few days, Mr. Steve Bee, head of pensions strategy at Scottish Life, put it like this:

"It's simply a question of when and how the end will come, not if it will come . . . Final salary pension schemes in the private sector have got smoke coming out of the back—they're not going to make it back to the airfield."

The clearest and most pressing injustice is to those who lost all or most of their pension when their company schemes wound up with insufficient assets. We are talking about up to 85,000 people. Despite being unveiled as long ago as May 2004, the financial assistance scheme has only just started to make payments to people in trouble, as we heard from my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). Yesterday, the Minister was good enough to confirm that, so far, a grand total of 15 individuals in only one scheme have received payment. It is a scandal that it is taking so long. That is just adding insult to injury.

Everyone except the Government recognised long ago that the sums devoted to the FAS are hopelessly inadequate. Even if the money holds out for the time being, the FAS is paying significantly lower benefits than the Pension Protection Fund. Those honest and decent people, some of them facing penury, are being treated as second-class citizens. As if the Government have not troubles enough, they are on the receiving end of a case in the European Court of Justice and an ombudsman's investigation.

As the House has heard, we have fairness as one of our guiding principles in pensions reform, as do the Government, but if that is so, how can they possibly begin to justify the sweetheart deal they recently struck with the union bosses? Surely a key aspect of fairness is that the public and private sectors should be treated similarly, yet private sector workers would be lucky to find a final salary scheme to join. Not so public sector workers. That is not only patently unfair, and seen to be so by a lot of people out there, but it has seriously undermined attempts by responsible private sector employers to maintain their pension schemes. Attempts by such employers to agree changes to entitlements with their workers, which would make the schemes more

31 Jan 2006 : Column 285

sustainable in the long run, will be much more difficult to make, as workers look to the precedent set for public sector employees.

Nor can we be encouraged by the Government's initial reaction to the Turner report. They sought to rubbish it before it was even published. The Chancellor warned Lord Turner that

"'you should not assume' that the current link of the pension credit to earnings 'will continue beyond 2008'."

The report has been drawn into trench warfare within the Government.

It has even been suggested that the Chancellor has already decided to snaffle the £10 billion a year saving on equalising women's pension age for other purposes. Surely—this, perhaps for the first time in our political relationship, is something that the hon. and learned Member for Redcar and I can wholeheartedly agree on—that money should, in all fairness, be earmarked for improving pensions, particularly if, over a relatively short period, we are to ask women to move from a state pension age of 60 to one of 67, 68 or even higher.

Finally, as is so often the case, our underlying principles on pension reform are not very different from the Government's stated objectives. It would be unthinkable, as the Secretary of State has acknowledged, to implement reform based on Turner without a broad measure of social and political consensus. I am delighted that the Secretary of State has made it clear today that he is looking for such consensus. We call on the Government to involve us closely in the process. We have much to contribute. By the time the effects of any reforms, or indeed of a failure to act, are felt, several different Governments will have come and gone, and many different Ministers. As we saw earlier this evening, Governments can lose votes. Governments can lose elections. We are every bit as keen as they are to see a lasting and durable solution to the pensions crisis that will deliver fairness as well as dignity and security in old age for all our citizens.


End of extract

Well, that’s that.  If you trawl through the rest of the debate you’ll see that the issues of suitability and consumer protection that Nigel Waterson mentioned in his summary got a good airing on the night and I think that it’s good to see that the real pension issues are at last coming to the fore in the debating chamber of the Mother of all Parliaments.  It makes me hope that some common-sense is being injected into the debates around the important issues confronting good people doing their best to put money aside and provide for the future in the most bafflingly and insultingly complex pension system in the world.

Steve Bee

3 February 2006

Source - All extracts from United Kingdom Parliament, Commons Hansard 31 January 2006, Columns 245 - 288.

Parliamentary material is reproduced with the permission of the Controller of HMSO on behalf of Parliament.

Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.