A question of fairness

MaeveSherlock-2-4x3.jpgMaeve Sherlock on why the Pensions Bill is a real chance to stand up for working people

Three years ago, if you mentioned pensions, most people under the age of 60 would switch off. Pensions were something you worried about when you were about to retire. All of that has changed since the coalition came to power.

Pensions policy matters. Not only to current pensioners but to all who hope one day to retire with a pension.  And as the Coalition’s Pensions Bill has worked its way through Parliament, it has become increasingly obvious that this is a crucial battleground in two of Labour’s key campaigns: to protect people from the relentless assault on their living standards, and to stand up for the individual against the might of big business and vested interests.

Next week, Report stage of the Pensions Bill will see the House of Lords focusing on issues which are at the heart of each of these campaigns.

The first session – on Monday – will major on issues to do with the state pension. The Bill abolishes the Basic State Pension and SERPS/Second State Pension, replacing them with a new Single Tier Pension for those retiring after April 2016. It will be non-means tested and available to all with 35 or more years of National Insurance credits. This continues the direction of travel set by the last Labour government; but despite a dribble of concessions from Ministers, some really significant issues need sorting.

One of our biggest concerns is the position of the hundreds of thousands of workers on zero or short hours contracts.

The government has found a way of bringing self-employed people into the system but refuses to address the problem for individuals on such contracts. Not only do they face insecurity about their total hours each week and what their pay will be, it’s also quite likely they’re not building up any entitlement to the Single Tier Pension. You can get a credit by paying NI or get credited for caring responsibilities; or indeed for being unemployed. But if you don’t earn £5,700 a year in any one job, forget it. Even those working 16 hours a week on minimum wage don’t get credits – and that also applies to the growing numbers who do two or more jobs. Bizarrely, while these hours could add up to the equivalent of a full-time job, if no single job pays enough for the NI system to kick in then it’s no Single Tier Pension for you.

Monday’s session will also see us press the government to communicate the proposed changes in good time; and explain what will happen to those benefits currently ‘passported’ on the back of the soon to be abolished Pension Savings Credit. And we also have concerns with the planned reform of bereavement support, which charities fear is being spread more thinly – with bereaved partners who don’t have children gaining at the expense of those who do.

Under the proposed system, the Bereavement Support Payment will only be available for a year and most people on lower incomes are also likely to need to claim Universal Credit. But after six months, they will be treated like any other parent and expected to go out to work if their children are school-age. Any decent person knows that the impact of a death on both the surviving parent and the children can be devastating, and we will call on DWP Minister Lord Freud to rethink the government’s plans.

The second session of Report – next Wednesday – will focus on private pensions.

Shadow DWP Secretary Rachel Reeves spoke recently about Labour’s commitment to fair pensions, and her concern that people who put aside hard-earned money are finding the value of their pensions slashed by charges and transaction costs in an annuities market that doesn’t work for them. So, all pension providers will be required to offer those saving with them the best deal on the market and we will introduce a cap on fees for those who are auto-enrolled.

We don’t however have to wait until we are in power to do something about these issues, and there is real cross-party interest in pushing the government on these issues – including from ex-Chancellor Nigel Lawson. So, we will be backing amendments that would require proper transparency of pension scheme charges, and for the Secretary of State to restrict these charges before the end of April 2015. 

In the end, these issues are all about fairness and prompt the same question that applies to energy prices, employment terms and conditions, and the squeeze on low and middle incomes. When people who have worked hard and put money aside for their retirement are left both bewildered by the system and out of pocket, should government stand idly by? Or should it step in and challenge vested interests to do the right thing?

Baroness Maeve Sherlock is Shadow Work and Pensions Minister in the House of Lords. She tweets @MaeveSherlock

Published 20th February 2014

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