Baroness Penn (Con)

My Lords, I am grateful to the Economic Affairs Committee for this report. It reminds us that an ageing society is not simply about older people, it is about how we structure our whole lives and how that may need to change in future. I will touch on two points; the first is pensions, where I welcome the work of the Pensions Commission. While we await its final report, there are three issues on which I would welcome the Government’s thoughts. The first issue is how we build a stronger culture of investment more broadly. For most people, pensions are their main exposure to the stock market, and outside that, too many people still default to cash saving, missing out on longer-term growth. The second is the gender pensions gap. Among 55 to 59 year-olds, the commission finds a 48% gap in private pension wealth. This is not primarily because women contribute less when they are saving into a pension, but because they are more likely to work part time, earn less and take time out for caring. So how are the Government considering pensions alongside women’s labour market participation? The third issue is public service pensions, which are firmly beyond the commission’s remit. The committee heard evidence about pension cliff edges discouraging people from potentially working longer. More broadly, we need to ask ourselves whether we have the balance right across the whole life course, particularly when people in their 20s, 30s and 40s face pressures to buy a home or pay for childcare, while some pension schemes provide a substantially greater amount of security in retirement. Do the Government have a clear assessment of the affordability of these pension schemes and the incentives they create? The second area I will touch on is fertility, where I agree with the noble Baroness opposite: we should not treat this as a lost cause. Looking at the evidence to the committee and beyond, I am not advocating for one-off incentives or baby bonuses, for which the evidence is weak, but there is evidence to say that fertility responds to economic confidence. UK fertility rates rose through the 2000s, before falling off after the financial crisis and never recovering. Growth must be part of the answer, but that is beyond a three-minute speech. However, research by Dad Shift and Movember found that 57% of fathers say that financial insecurity after their first child holds them back from having more. Eligibility for paternity leave and the levels of pay in the UK are almost uniquely low compared with other developed economies. I ask the Minister what the Government’s approach is under this Prime Minister to the review of parental leave, due to conclude by the end of the year. Even if the Government do not think that it would impact fertility, there is strong evidence to show that better leave for dads increases mothers’ and overall labour market participation. That matters doubly in an ageing society for strengthening workforce participation now and helping to close the gender pay gap in future. These issues are related and I hope the Government will treat them as such.