The Committee did not say that we were against the abolition of derived rights in principle for future pensioners. We accept the Government’s argument that people should have a state pension in their own right, and that they should accrue their own credits to get it. The consequence is that there will be no married woman’s allowance in future. The problem I have addressed is how we get from the current position to that one without being unfair on the group of women who are within 15 years of reaching their pensionable age. As the Bill stands—we hope it might change by tomorrow—that group of women will get nothing from April 2016. The Committee believes that that is a particularly harsh cliff edge. We have no problems with what happens in future. Because women work or because of changes made by the previous Government in how national insurance can be credited for caring—not only for children, but for disabled adults or elderly relatives—women are more likely to have credits towards their own pension, which previous generations did not have. We accept that the world and society have changed and that, as a result, women who have not been in this country and who have not been in a position to build up credits will not get a pension in the long run.
The Government face a problem in getting over to people exactly what the pensions Bill means. They have concentrated on saying that the new arrangements
are much simpler and easier to understand, which is understandable. They have said, “The new single-tier pension will be £144, and that’s it. That’s all you need to know.” However, as a result of that simplification of the message, people have got the wrong end of the stick with regard to what it means in their individual cases. That is why it is crucial that the Government think again on a clear communication strategy. That should start as soon as possible, and not wait until the Bill has become an Act of Parliament. In anything to do with pensions, planning is so long term that people have to be sure about what they may expect. If things are going to change, people have to know they are going to change. That is especially true of the group of women born in 1952 and 1953, as they have suffered a double whammy with the increase in the state pension age. Many of them are worried that they will lose out, but they may not. The point is that they do not know, and the Government have not been able to given them enough information or explain what will happen.
This week I got a letter from a lady who was convinced that she will get only £144 a week because she will reach pension age after April 2016. She has paid SERPS all her life and she is convinced that the Government will steal her SERPS from her. She does not know that she will get whichever is higher—SERPS or the single-tier pension. One gentleman thinks that it is really unfair that he has paid SERPS all his life, but will get only £144, whereas his next-door neighbour, who was contracted out and gets an occupational pension—and has been paying less national insurance—will also get £144, but of course that is not true. The person who has been contracted out will lose out, depending how the calculation goes. The calculation is a complicated one and the headline message has continued to be that everyone will get £144 for their state pension, so many people think that the introduction of the new scheme is unfair.
I have to say that initially some people who had already reached pension age were keen to get on to the new system until they realised that they would not necessarily be much better off. They are not quite so keen now to get on to the single-tier pension. It is worth pointing out that the Govt are doing this only because it is cost-neutral. The Treasury does not have huge extra wads of money sitting around somewhere to pay to people who reach pension age after April 2016. The worry of many women born in 1952 and 1953 is that they would have qualified for pension credit anyway.
The Committee was concerned that the single-tier pension was being set only £1 above pension credit levels. We thought that the Bill should include a provision that would always ensure that the single-tier pension would be above the level of pension credit. We were disappointed that the gap between pension credit and the single-tier pension was so narrow. It would help to allay some of the fears if there was a guarantee that the single-tier pension would always be above the basic level.