Contribution
My Lords, as the Minister indicated earlier, we left much of the meat for this debate around pre-1997 indexation to this group, not anticipating the events that happened outside, which I know we all regret. Knowing who was involved, who was a friend, I very much hope that the outcome is the best it may be.
This amendment, which is similar to one we moved in Committee, basically looks at the situation of those people who, for one reason or another, have not had their pensions uprated for inflation. Basically, it sets out that:
“The Secretary of State must, within 12 months of day on which this Act is passed, publish a report”.
When I discussed this with the Minister, I think we agreed that having a review is not necessarily the best way forward, but the problem is finding a way to bring this to the attention of government in a manner that might result in some sort of outcome for those affected. The problem we were discussing around surpluses was very much around how a surplus is made, who can have it, and so on. I would just like to go back to the argument I was making in relation to the fact that defined benefit schemes to me are a contract between the employee and the employer.
I know that in Committee, on a different group much later on, one of the noble Lords present commented that, in his view, a DB scheme is just a giant Ponzi scheme. I thought that comment was a bit uncalled for and indicated that he neither fully understands the evil impact of a Ponzi scheme nor the benefit of a properly constructed DB scheme. In a DB scheme where there are sufficient contributions from the employee and the employer and well-run trustees follow a good investment strategy, the great likelihood is that, at the end of the day, a good solid pension will be paid.
What we are discussing here is really whether trustees who are in a position to do so can in fact share the benefits of a surplus. In some circumstances, that is written into the contract between the employee and the employer, as in the case of the PCPF, which is the one I know—it is absolute and we have to pay it; it is uprated by CPI, and that is in our investment objectives and we invest in order to achieve that. There were a number of schemes where the scheme rules did not actually mandate that to happen, but if you read the literature produced for many of these schemes at the time, it made clear that the anticipation was that that would happen. The amendment seeks to highlight the fact that a great many people could reasonably have expected to receive a pension that broadly kept pace with the cost of living but which today is substantially less than it might have been.
As I woke up this morning, listening to the “Today” programme and the ministerial rounds that were going on, I could not help but note that what was on the grid for today was how much the Government are concerned by the cost of living, so it is apt that this amendment is being discussed today. I completely accept that this amendment may not move the dial hugely and that it may be somewhat imperfect, but I think we owe it to those who are now in some considerable hardship to make at least some effort to try and get them back to where they might have been.
Finally, in looking at all the different economic inputs that go into growth, one of the most important is the ability for the consumer to spend. One of the things I learnt when I was still in business was the power of grey purchasing power, as it was known in marketing terms in those days. The pensioners who were earning their pension in the 1960s, 1970s and 1980s and who retired in the 1990s had that strong purchasing power and spent a great deal of money on activities that supported the economy. Therefore, I think there is merit—moral merit, if you like—in looking after these people, and there is also sound economic merit in looking after these people. Having rehearsed all the detailed arguments before, I leave it there. I beg to move.