Pensions Reform

I entirely agree. The point that I was seeking to make was that if we have a significant element of means-testing, those people who are means-tested may see any employer contribution wiped out as a result. If we are talking about people saving only their own money, when they could be using it to pay off debt or save through some other instrument, it is unlikely that they would choose this particular instrument unless the effect of the auto-enrolment inertia is so great as to keep them in the scheme. However, as the hon. Gentleman suggests, we would not want to keep them in the scheme if they were effectively being mis-sold these pensions, and that is a critical point. One point has been implicit throughout our debate and was touched on by the Chairman of the Select Committee; however, it is worth spelling out in a little more detail. The proposals entail an enormous transfer of risk away from the state in relation to second-tier pension provision, and away from employers, who have not been able easily to manage the risks in recent years. Employers will welcome that and, as a politician, I welcome the move away from political involvement in second pensions, but we must consider whether individuals are ready for the risk to be transferred to them. I fear that the level of financial illiteracy is very high, so the Government will need to address the challenge of trying to ensure that we have some prospect of people understanding the risks that they will take before the NPSS starts. Secondly, I agree with what the Conservative spokesman said earlier about the ombudsman’s report. The Government’s response has been extremely disappointing. Even if the potential liabilities fall due a long time in the future, they are just the sort of unexpected contingency that ought to be met out of the contingency reserve. What is that reserve for, if not for dealing with precisely such matters? It has been possible to find the money needed for Iraq in the contingency reserve, so it must be possible—over 30, 40 or 50 years, and with the co-operation of the Chancellor of the Exchequer—to find in that reserve the money necessary to offer some justice for those who have lost their pensions. The Secretary of State also referred to the financial assistance scheme. I hope that the Minister for Pensions Reform will be more successful than his predecessor in getting the scheme’s administration to work effectively so that, over the next six months, people will not have to wait as long for the pay-outs as they have in the past year. We welcome the debate for which the Government have given us scope today. I regret that it has been necessary to table some amendments to the Government’s motion, but it had the flavour that the Government expect us to sign up to their proposals in an unthinking way. We agree with the direction of travel and we concur most strongly with the philosophy behind the White Paper, but over the next couple of years the House of Commons must ensure that there is consensus about the proposals and that they will deliver in the future.