My Lords, I thank the Minister for his very helpful explanation of the regulations and the noble Lord, Lord German, for his contribution, too. Generally speaking, the regulations seem to broadly reflect the intention of the legislation, so I shall concentrate on only two or three points on which I would like some clarification, which mostly have already been raised by the Minister—although I confess that I was not planning on talking about prisoners, or his idea of people being “at large”. I completely agree that people should not be rewarded for this, but the Government’s argument for not giving them a pension is that the state is taking care of their bed and board—which, presumably, the state is not doing if they have absconded. However, I shall let him off on that point for now.
Regulation 10 sets the accrual rate for increments when someone defers claiming their state pension. The rate has now been set at 5.8% per year, which is slightly above what we were told in Committee. Have the Government had time to reflect further since the Bill became an Act about the reasons behind the decision to stop people being able to take a lump sum when they defer, instead of an enhanced ongoing pension? During the passage of the Bill through this House, my noble friend Lady Hollis of Heigham challenged the Government and said that doing this was removing the only opportunity for some future pensioners, particularly those of lesser means, to acquire a lump sum to use in retirement, which might be the last opportunity to fix some particular problem with the house or buy a car. She pushed the Government on that.
I understand—the Minister can correct me if I am wrong—that of the 1.2 million who defer their pensions, only 63,000 take the lump sum, which on average is worth about £14,000. Could the Minister remind us of the reasoning for this? I seem to recall at the time the Minister for Pensions Steve Webb said it was to “simplify the system”, but I do not think it is very hard to understand that you can have a lump sum or a higher weekly amount. So I do not find that reason hugely compelling. Furthermore, government policy on pensions has evolved a bit in recent times, and the idea that people who have been saving for their retirement should be allowed to take a lump sum rather than a weekly pension has become rather flavour of the month. For example, it is there in the Taxation of Pensions Act, whereby people who would have had to spend their retirement savings on an annuity in future may take it out and spend it on a Lamborghini—I believe that is the phrase—should they be so moved. Has the Minister had any second thoughts on that, in the light of changing government pension policy?
Secondly, Regulation 13 was raised by the noble Lord, Lord German. I shall not repeat all the questions that he asked, some of which I would have asked myself, but I will be very interested to hear the Minister’s answer. I am interested in the rationale—that the reason for doing this now is because of the profile of the people who would be affected not being the people one would have expected when the legislation was going through. The Explanatory Memorandum suggests that only 2% to 3% of the people affected would be living in Great Britain, versus 18% to 23% overseas, but the absolute numbers are broadly comparable. We are talking 9,000 to 12,000 in Great Britain and 6,000 to 10,000 overseas. The memorandum says:
“Current projections by the Department indicate that in the medium and long term, abolition of the de minimis condition would have disproportionately benefitted people living outside the UK”.
What is expected to be the short-term impact?
As the noble Lord, Lord German, said, the changes made by the last Labour Government in the Pensions Act 2007 are the context for this. It meant that people who reached state pension age on or after 6 April 2010 needed only 30 qualifying years to qualify for a full basic state pension—and, of course, the HRP, as the noble Lord, Lord German, said. With fewer than 30 years, they qualify for a BSP of one-30th of the full rate for each complete qualifying year that they have built up. That means that somebody reaching state pension age from 6 April 2010 who would not be entitled to any BSP would only be somebody who had built up not even one qualifying year. So it is quite a significant difference. The Labour Government estimated that to mean that, by 2025, over 90% of people reaching state pension age would be entitled to a full BSP. It is quite a big difference from that to someone with, say, nine qualifying years, who as I understand it would not receive anything at all. Labour tried in various ways during the passage of the Bill to soften the transitioning, which would have dealt with some of the issues, but the Government rejected it. Have the Government had any further thoughts on that?
On another point, that is only one of many reasons why someone might not find themselves entitled to a full new state pension, which has become a bit of an issue of late. I understand the desire for simplicity, but in trying to advocate for the single-tier pension, there is a danger that the Government have led many people to believe that they will all qualify for the new state pension, when, in fact, we now know—from freedom of information papers released after Christmas—that 55% of people will not be on the new flat-rate state pension. Obviously, this is partly down to the way the Government have presented this. In an unusual bout of politicians declaring their responsibility, I gather that the Pensions Minister Steve Webb told the Daily Telegraph:
“I think I may have been guilty of oversimplifying the new flat rate state pension”.
Could the Minister tell the Committee, given that that misapprehension is out there, for whatever reason, what steps the Government are taking to correct it? What kind of information campaign is going on to make sure that people who are approaching retirement within the next 10 years will have a better understanding of what they can reasonably expect to get?
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I am just very conscious that we discussed all this in both Houses of Parliament during the passage of the Bill, and it attracted some, but only minority, interest in the media. Now that we are running up to the introduction of the new state pension, there is a huge amount of media interest, but that is very close, and too late for anyone to take any action. What are the Government doing to notify people?
Finally, I should like to ask the Minister for an update on the issue of mini-jobs, raised during the passage of the Bill. I hope he will give me enough licence to raise this. This is the issue of people who have more than one job, but with none of them individually taking them over the lower earnings limit for national insurance. Thus, no matter how many hours they work, they are not gaining any qualifying years towards the new state pension. What is the Government’s latest thinking on this?