Pensions Bill

My Lords, I too wish to support Amendment No. 5. I suspect that Amendment No. 4 will be subsumed under Amendment No. 5, which covers much of the same area although on a different timescale. I am sorry that I was not able to be present at the previous debate in Committee to talk on this subject but I should like to say a few words now. For those of us who have been following pensions closely, the past 10 years have seen the most phenomenal changes. There have been a remarkable number of short-term changes with considerable impact, many of which were unpredicted at the time; and, of course, the speed of the changes and the volatility also strike one. On the deficits of private sector pension defined benefit schemes, there are any number of analyses going on about exactly how they will change—and change quite quickly, with interest rates changes and things of that sort, and changes in the long-term bond yields. There is still a considerable lack of understanding of those kinds of changes among many people who follow pensions and who are affected by pensions. Indeed, I have long wondered—I have spoken on this in the House before—whether we have the right way of assessing liabilities in looking at deficits because they can change so remarkably quickly in a short space of time, and yet the size of the deficit for an individual company can have a major impact on what that company is doing in a given year. I was struck by how the Pensions Commission was able to bring together so much information which has been of great benefit to all of us who are interested in pensions. I do not just mean policy makers; I think that that is so for employers and many others. We have a lot of available information from all sorts of other sources—the NAPF, the ABI and so on—but the advantage of an overall authoritative and well researched and well resourced analysis seems to me to be so much better. I think that the commission is different from the Monetary Policy Committee, a matter mentioned briefly by the noble Lord, Lord Oakeshott. As I understand it, and hope, the body will gather analyses and trends and monitor all those sorts of things, which will help policy-makers to reach conclusions. It will not have, as the Monetary Policy Committee has, the independent ability to make decisions which affect us all. So I think that there is a distinction in that case. Amendment No. 5 covers the crucial points. We could add one or two, but latest trends will probably enable them to be covered. I have to say to the noble Baroness, Lady Turner, that the words, "““the terms, benefits and affordability of public sector pensions””," are simply to illuminate public debate. They will not lead to any policy decisions, but there are a considerable number of analyses of the overall impact of public sector pensions on long-term costs and they vary considerably from time to time. I think that an authoritative look at this subject from time to time is terribly important. The noble Baroness must know that there is great concern among many private sector employers and pensioners about what has happened with public sector pensions and private sector pensions and the enormous changes over the past few years. An independent analysis will help proper public debate about that. As for the latest trends in private pension savings, there seems now to be general agreement that defined benefits are on the way out, at least for new employees, and that defined contribution schemes will replace them. Four years from now, we may see unforeseen consequences of those changes. I do not know, but it is possible, and an independent analysis could help there. As for the latest trends in life expectancy, there is no doubt that what has taken so many of us by surprise is the increase in longevity by so much in recent years. Again, an authoritative independent analysis would help. On the latest trend in private pension savings, I am a chairman of pension fund trustees. One is struck by the number of advisers that one has, often with different advice from actuaries, lawyers, investment management consultants, and the rest. Again, the Turner commission helped many of those who were first getting involved in becoming pension trustees to understand the issues. I think that an independent commission would do the same. Finally, if the review demonstrated that average retirement ages were rising, as we all expect from various employment and social trends, I hope that that will accelerate the argument for bringing forward the dates laid down for the increase in the state pension age. Those are all issues that are left to be decided by others, but would greatly illuminate what is happening at present and help to make better decisions.