I welcome the reduction in means-testing, but the hon. Gentleman should be aware that there are two different types of pension credit. There is the savings credit, which the Bill is abolishing completely; that means that someone with savings but no other income might be worse off than someone who has no savings. The savings credit tended to be more complicated, and people found it difficult to judge whether or not they qualified for it. The people eligible for savings credit were generally those who had a little saved or were a bit above the minimum, but those people tended to believe that they did not qualify for anything because they had never qualified for anything before. The take-up among those who qualified for just the minimum income guarantee part of pension credit, on the other hand, was well over 90%. I do not want the hon. Gentleman to be confused over the fact that large numbers of people were not claiming what they were entitled to in pension credit. Very often, the savings credit might have qualified people for only about 50p a week, so they thought that it was not worth going through the bureaucracy. I know this from conversations I have had with my own constituents.
The hon. Member for Amber Valley (Nigel Mills) mentioned that the Work and Pensions Committee undertook pre-legislative scrutiny, but we scrutinised only part 1 of the Bill. That was our remit. I shall say no more about the fact that the start date was accelerated, as I recall laying into the Minister for that when we last debated the issue on the Floor of the House. We took no evidence on the later parts of the Bill, the most controversial of which is probably the issue of raising the pension age. The many briefings I have received from various organisations have focused their criticisms mainly on that issue.
The impression has been created that, if there is to be a review every five years, the pension age will increase every five years, which has frightened quite a number of people, as it seems to underpin a never-ending increase in the pension age. That is why my hon. Friend the Member for Amber Valley—I call him my hon. Friend because he sits on our Select Committee—was wondering, given his present age, what age he will be before he receives any kind of state pension. I know how he might feel. I have said here before that as someone born in 1955, I have been hit by all the increases. I was of the generation of women who, under the Pensions Act 1995, would not receive a state pension until 65. I had accepted that and was planning for that, but then the Government introduced an acceleration up to 66 for 2020, so I can well understand why some women feel that they never seem able to reach their state pension age because the Government are continually moving the goalposts. That thinking may well be behind some of the anxieties expressed in many of the briefings I have received on the pension age provisions.
Other issues concerning not just the state pension but the pensions landscape are not covered in the Bill, even though the Select Committee produced reports on them. The hon. Member for Amber Valley mentioned that we published a report on the governance of pension schemes, in which we recommended that the Government should consider making a single regulator responsible for pensions. He has also set out some of the Select Committee’s concerns about the present regulatory framework, particularly regarding the gaps or confusion about exactly which body is responsible for which parts of the regulations.
Ultimately, pensions must be well regulated, because we have to rebuild trust in them so that people know that if they invest in a pension they will get a good income from it and not be ripped off by a pension company. They want to know that the charges they pay for their pensions are fair, that there are no hidden charges and that nothing pertaining to their pension has not been properly explained to them. It is really important for people to have that faith in the pensions industry and for the pensions industry to step up to the plate and ensure that it offers very good, well regulated products that are not overly expensive.
We also produced a report about the lifting of restrictions on the National Employment Savings Trust. If the Government are to make sense of auto-enrolment and if indeed they are to get rid of what was the state second-tier pension in SERPS, or S2P, it is crucial that a state-backed second-tier pension is available, and that default option should always be NEST. In saying which restrictions should be lifted, we said only that the transfers in and out and the cap should be lifted; we did not say that the restriction on NEST always to have a public service duty should be lifted, as we thought that was absolutely right. There has to be a default scheme that cannot turn anyone away. If NEST is to undertake that important work, it is unfair if some of the restrictions have not been lifted. I hope that, as the Bill goes through its stages here and in the other place, the Government will come up with some proposals to change the present restrictions that are hampering NEST’s ability to do business.
The Government have accepted some other elements of the Select Committee’s report. The implementation date is now in the Bill and it has also been specified that the minimum qualifying years should be no more than 10 years. It was the hon. Member for Amber Valley again who argued for exactly that, and we were happy to accept it as one of our recommendations.
During today’s debate, it has become clear that a good communications strategy is crucial. There is no doubt that when the single-tier pension was first mooted, everyone thought that those who were born on the day before the relevant date would receive £107 a week, while those who were born the day after would receive £144. I think that people still have that impression, and that it is still felt that the new system will be more generous to everyone. Well, it will be more generous to some—the self-employed will probably do slightly better out of it—but those who have assumed that all their second tier of pension will be covered by the state earnings-related pension scheme or by the state second pension may be worse off in the long term.
It is incumbent on the Government to try to deal with some of those misunderstandings. I assume that they have sent a letter to every woman who is within 10 years of pension age, because I received such a letter, but the letter that I received was very vague, and—as has already been pointed out today—not everyone knows how many years of credit they have in their state pension, because not everyone understands what work qualifies for credit and what work does not.
It is crucial for us to warn people who are close to retirement that they must have made national insurance contributions for 35 years rather than 30. Some have already retired under the misapprehension that they have contributed the full amount. It must be made clear
to them that they can buy back national insurance years, they must be told how they can do that, and it must be ensured that they do not buy back years that will give them no extra income.