Pensions Bill

My Lords, as the noble Baroness, Lady Hollis, has said, if we are going to keep the contributory principle, the amendment would meet several needs. First, it addresses the steep cliff face that will be reached in spring 2010, when woman number one could retire needing 39 years’ worth of contributions for a full state pension but the day after woman number two would need only 30 years’ worth of contributions. Under the amendment, anticipating this change before retirement, woman number one could buy nine years of class 3 contributions. Would that really be so complicated? We are not talking, after all, about tapers or backdating, which might be both more complex and expensive than what is suggested in the amendment. The Minister may say that the amendment would encourage some people to invest money that they would have spent in paying contributions on the nail, knowing that they could buy contributions at a later date. However, I do not think that that is a likely scenario given the kind of people whom this amendment is designed to help. The most obvious of those are those groups of women whom we have heard about today who do not have a full contribution record for the basic state pension. The Minister will almost certainly say that bringing down the number of years from 39 to 30 is quite enough help for that group because nearly every woman, whatever her circumstances, is likely to have some periods of settled employment. However, that is not the calculation of those who have studied people’s work patterns, who reckon that over 1 million people, most of them women, will not have a full basic state pension in 20 years. When the noble Baroness, Lady Hollis, moved the amendment in Committee, she made a powerful case, part of which was that, because of the failure of a government computer, people were indeed able to buy more than the six years allowed now to make up for the deficiencies in the contributions that the computer had failed to tell them about in time. If it was not too complicated then, why is it too complicated today? Today, more than ever, people live for the moment. They have a portfolio of jobs, with often not much thought for their pensions. But, as they reach retirement, these people may inherit some money, which they would like to use to plug several gaps in their contributions record for earlier years in order to receive a full basic state pension. What more prudent course could they take? However, unless the principle behind the amendment is accepted, they will not be allowed to. Obviously the amendment is not cost free, but, as the noble Lord, Lord Dearing, said, if it prevents the need for so much means-testing for retired people in the future, that surely must be factored into any calculations of cost. I simply ask the Minister to consider the problem again. After all, he has said already that to make such a change does not need primary legislation; it can be put through as delegated legislation under the Social Security Contributions and Benefits Act 1992. The Bill gives us a golden opportunity to put fairness into the system by accepting the amendment, which we strongly support.