Pensions

My Lords, I welcome the comments of the noble Lords, Lord Skelmersdale and Lord Oakeshott of Seagrove Bay. I searched for consensus on support for the main package. I think that I found it but I had to work hard to do so. Both noble Lords clearly mentioned ““consensus””. All your Lordships are agreed, as we have debated before, that it is absolutely essential to reach consensus if we are to have a lasting settlement on pensions. That must be the conclusion of anyone who has studied pension policy over the last 20 to 30 years. The Government are keen to engage there and to seek a consensual way forward. I believe that we owe enormous credit to the noble Lord, Lord Turner, and to his commission. The performance it achieved in the quality of its report, and now in its outcome, was remarkable. Noble Lords may have heard the noble Lord, Lord Turner, say this morning that he agrees very much with the broad thrust of what the Government have decided. The pension debate that we undertook up and down the country was also a way to build consensus, but I am anxious to continue those discussions and will of course be happy to hold meetings with your Lordships and officials to discuss the details when we return after the recess. The noble Lord, Lord Skelmersdale, referred to haggling; I am not sure what he meant by that. We have had vigorous discussion within government, as would be expected on such an important issue. Today’s Statement is very important and the Government are fully behind it. It provides considerable certainty for 30, 40 or 50 years ahead. I welcome the support that both noble Lords gave to extending the financial assistance scheme. The noble Lord, Lord Oakeshott, asked how much extra money is being put in. Over the whole life of the scheme, we expect the cost to be about £2.3 billion, but I am happy to set out in some detail how we think it will be spent in the intervening years. I know of the frustration that all noble Lords feel about the rate of payments made so far from the FAS. I can report that there have been constructive discussions with pension find trustees about the basic problem of getting the information supplied as quickly as possible, and we are obviously keen to ensure that the matter of payments is speeded up. I did not agree with the noble Lord, Lord Skelmersdale, on the point he raised about the uprating of the basic state pension in line with earnings. Along with the issue of national insurance payments, the issue of flat-rating of the second state pension and the issue of contracting out, this has to be seen as a broad package. The flat-rating of the second state pension, which will take place over a considerable number of years, is in line with the Pensions Commission’s deliberations in that area. It clears the space towards personal accounts and it helps towards the cost of some of the other changes being made. That is a reasonable adjustment to make. The noble Lord asked about the phasing in of personal accounts and asked why we are allowing time for that to happen. There are two points to be made here: first, on any count, this will be a major undertaking, and it is important that we get the infrastructure right, have the arrangements in place and are confident that it is ready to go. It requires careful timing. He did not mention it, but in the White Paper we make clear that we are still of a view that the model suggested by the commission for the NPSS is our preferred model. However, we continue to discuss with the private sector the other options it has put forward, and we will come to a conclusion about that in the autumn. The noble Lord, Lord Oakeshott, was rather unfair when he used the words ““mean”” and ““timid””. Overall this is a good package, and, importantly, it is affordable. The latest means testing figure I have is between 43 per cent and 48 per cent. We are confident that the figures will come down, as has been outlined in the White Paper. I recognise that because figures are not attached to the bar charts it is quite difficult to analyse them. I will undertake to produce the figures that go with the bar charts and put them in the Library as soon as possible, so that noble Lords are absolutely clear what the figures are. Regarding annuities, the Government are of the view that 75 is the appropriate uprate limit at the moment, but we will keep that matter under review. We have discussed the matter of public pensions on a number of occasions, and the fact is that what has been negotiated in outline, with individual scheme negotiations having taken place or taking place, reaches the cost envelope set by the Treasury. I remind noble Lords that, given the turnover in the public sector, it will not be too long before the majority of public sector employees will be covered by the new arrangements. That does not differ very much from the approach taken by many private pension schemes. Finally, I say to the noble Lord, Lord Oakeshott, with regard to our decision not to agree to the establishment of a standing pensions commission, that we are not persuaded that we need another quango, if I may put it that way, in permanent residence over the next 40 or 50 years. From time to time we may well set up bodies to review some aspects of pension policy, but I have no doubt we will debate that at some length when we bring legislation before your Lordships’ House.