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KeithBradley.jpgKeith Bradley on the need for more adequate testing in the government’s pension reform plans

Later today, Peers will debate government legislation on both the taxation of pensions and pension schemes. The Taxation of Pensions Bill makes changes to the tax regime to allow people to access their pension pots flexibly, while the Pension Schemes Bill allows for the creation of ‘Defined Ambition’ and Collective Defined Contribution (CDC) schemes.

While Labour wants people to be able access their pensions flexibly, three tests must be met. First, that savers get the right guidance. Second, that there’s fairness for low and middle income savers. Third, that reforms don’t lead to additional burdens on the State. We also support the creation of CDC schemes – something we were calling for before the government made its announcement. Today however, we will probe what work has been done to consider how these reforms fit together, and the impact that flexibility will have on the types of shared risk schemes that may emerge. 

The Pension Schemes Bill contains the guidance guarantee that will be associated with freedoms and flexibilities. Ministers understand the importance of this guarantee (or whatever it becomes known as) meeting the substantial challenge of equipping people to navigate an at times difficult market. This reflects another tension between the different strands of the reforms. Auto-enrolment is based on the idea that consumers do not always make the best decisions and may end up doing nothing instead. The new freedoms are predicated on those same consumers becoming highly engaged with the decision they face on retiring. The guarantee therefore, is the bridge over which they are attempting to cross that particular fault line and it needs to be up to the job.

There are also some missed opportunities in the government’s plans.

Amongst the excitement of the flexibilities being rolled out next April, we must not forget about reforming those parts of the market that haven’t worked well but which still provide products where this is demand. It would be of real benefit to consumers to require an independent broker’s recommendation before it were possible to sell an annuity to someone who has saved with the scheme they’re purchasing from. 

We would also urge the government to act to prevent people who are taking advantage of the new flexibilities being subject to similar examples of consumer detriment (albeit through a different product). It is concerning that plans to address rip-off pensions don’t include income drawdowns, despite the fact that 320,000 people are likely to want to access these products after April. If charges equivalent to many of today’s drawdown products were applied, someone investing a pension pot of £30,000 could lose 27% of their savings to charges. Indeed, as the median annuity in 2013 was purchased with a pot of £20,000, such charges could be very significant.

The Coalition’s proposals are currently more of a framework than fully worked through legislation. A pensions market that protects consumers and provides them with what they need in retirement needs more adequate testing.

Lord Keith Bradley is a member of the Shadow Work and Pensions team in the House of Lords

Published 16th December 2014

Work in progress

Keith Bradley on the need for more adequate testing in the government’s pension reform plans

MichaelCashman.jpgMichael Cashman on why the government must rethink its approach to the post-2015 Millennium Development Goals

The 2015 Millennium Development Goals (MDGs) have raised ending global poverty as an urgent challenge and a priority for global action. However, the level of achievement of these goals varies and assessments illustrate that, in the new framework, strong links between poverty eradication, fighting inequalities and the promotion of sustainable development are required. It is also crucial that we have a single and universal set of goals with differentiated approaches.

To date, poverty reduction has been uneven. Inequalities between and within countries represent a major challenge, especially when they involve the dubious concept of labelling countries ‘Middle Income Countries’ according to GDP rather than other indexes. Access to early childhood development, and to education and training of the highest attainable quality for every young person and adult is essential to break the cycles of inter-generational poverty and inequality.

Sadly, little progress has been made on gender equality and the empowerment of women. Globally, women and girls constitute a majority of those in extreme poverty. And it is staggering that every day an estimated 800 women die due to complications during pregnancy or childbirth.

The EU and its member states, including the UK, are the largest donors of development aid, and should remain the driving force during the next phase of UN negotiations. The aim should be to promote a human rights-based approach based on equality, non-discrimination, participation and inclusion in the design and implementation of the post-2015 framework. That is the only way forward, accepting that such rights are universal and apply without discrimination – not stopping at man-made borders.

The inclusion of the promotion of a human rights-based and people-centred approach among the Sustainable Development Goals proposed by the UN Open Working Group is both welcome and essential. It should include the promotion of universal access to sexual and reproductive health rights, and the protection of the rights of migrants, disabled people and minorities, including LGBTI people and people living with HIV. Every individual should have a fundamental right to dignity.

Now is not the time to fail. Discrimination is on the rise in many parts of the world, and we must have the courage to challenge such wanton discrimination and the basis on which it is regularly peddled. That is why I have real concerns about the approach and attitude taken by the UK government.

We achieved much before because the EU took a single approach. That is not happening now and I am reliably informed that our government’s intention is to reduce the number of goals proposed by the UN Open Working Group. Ministers are also unhappy with the universality of the framework, wanting targets fixed for each state instead. Surely, that which we demand of others we should also demand of ourselves?

It is important, to have weight in the UN debate that the EU speaks with one voice in the face of opposition. But our government is preventing this, bypassing EU representatives in the negotiations. The draft Conclusions being adopted tomorrow need our support and it is regrettable that Conservative MEPs recently voted against such an approach in the plenary session of the European Parliament. I hope this is not a foretaste of what is to follow.

Lord Michael Cashman is a backbench Labour Peer in the House of Lords. He tweets @mcashmanCBE

Published 11th December 2014

Moving the goal posts

Michael Cashman on why the government must rethink its approach to the post-2015 Millennium Development Goals

AliciaKennedy.jpgAlicia Kennedy on the issues coming up at today’s final session of Committee of the Modern Slavery Bill

We tend to think slavery is hidden from view. Much of it is but some is taking place in plain sight on our streets, farms and factories – and it is shocking and sickening. Babies bought, like cattle at a marketplace, for illegal adoptions. Children forced to beg on the streets or steal from passers-by. Sold in the UK for profit and personal gain. Sold as gardeners for cannabis farms, as sources of blood and hair for UK based witchcraft rituals, and sexual exploitation. And UNICEF estimates that at least 10 children are trafficked every week in the UK.

No wonder therefore, that there has been unanimity across the House of Lords for the Modern Slavery Bill to give greater support for victims, and increased protection for trafficked and enslaved children. In particular, the need to better protect children so they’re not prosecuted for crimes that their trafficker forced them to commit.

As drafted, the Bill adds a so-called ‘reasonable person test’, before a non-prosecution defence would apply to children. This would have a detrimental and harmful effect, going beyond both our current law and international law. It could help evil traffickers escape justice. It could also stop children being seen as victims from the outset, and therefore denied vital services and support.

Sadly, Ministers don’t seem willing to listen to the harmful effects of their immigration policy on Overseas Domestic Workers. In Second Reading, many Peers expressed concern about the increased level of abuse faced by this vulnerable group as a result of the government’s visa change in 2012 which ‘tied’ them to their employer.

So entrenched are Ministers in their position, it is hard to comprehend. How can they legislate to fight modern day slavery while also refusing to amend existing legislation that creates an enslaved situation? It is dogmatic and illogical. The 2012 change created the perfect storm: work carried out in isolated conditions, employers having excessive power afforded to them, and a legal system that offers no protection. Is it surprising abuse increased?

Slavery is a global problem that needs global solutions – something the Bill only has with a clause on transparency in supply chains thanks to campaigners, NGOs, businesses, trade unions, and others. They put issue under the spotlight and the government rightly gave way – even if in an ill-defined way.

Over the years, cheaper transport and communication costs have dramatically changed the way consumer goods are produced. Multinational corporations now have production plants around the world. They outsource many more stages of their production to different suppliers in different countries, who in turn employ sub-contractors to manage demand and beat the competition. In this way supply chains get very long and very complex, and one multinational can be interconnected to thousands of workplaces and millions of workers.

The sad fact is these supply chains can allow slavery to thrive and there is probably nothing we own that is completely slave free. But as multinationals enjoy the profits afforded to them, so too must they accept responsibility for the working conditions of their global workforce. This has to be the deal. Consumers expect this to be the deal.

Baroness Alicia Kennedy of Cradley is a backbench Labour Peer. She tweets @aliciakennedy07

Published 10th December 2014

Inhuman behaviour

Alicia Kennedy on the issues coming up at today’s final session of Committee of the Modern Slavery Bill

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