Contribution
I welcome the overall thrust of the Bill. Measures such as the pension pot consolidations are long overdue and will make a real difference to savers, particularly small savers. Every new year, I try to tidy up the numerous tiny pensions from jobs I had in my 20s and 30s, but the pots are so small that the cost of a financial planner and the exit fees would wipe them out, so this reform is great news for consumers who have been on low incomes and have moved from job to job. I urge the Government to go further by lifting the threshold. After all, a pension pot of £10,000 will generate a payback of only around £50 a month, which is barely enough to cover a basic weekly shop. The Bill goes in the right direction, but it does not go far enough or move fast enough. I am concerned that it leaves groups of pensioners who did the right thing by saving for the future considerably out of pocket.
Like others in the Chamber, I welcome the long-overdue decision to provide some indexation for pre-1997 pensions in the PPF and FAS, but let us be clear: this is not full justice. These pensioners have endured decades without inflation protection, and a CPI increase capped at 2.5% starting in two years’ time, at a time when the cost of living has soared, is still going to leave people struggling. They expected fairness and parity with post-1997 benefits, but what they have received is a compromise that falls short of restoring their full dignity and security in retirement. I call on Ministers to support the calls of many people, including the hon. Member for Llanelli (Dame Nia Griffith), to ensure that pensioners outside the PPF and the FAS are fully supported.
The case of AEA Technology pensioners is a long-running injustice that I have been dealing with since my first days in this place. Employees, who were often nuclear scientists and safety engineers, were promised pensions “no less favourable” than the civil service scheme, and many worked at the Winfrith atomic energy establishment, just outside my constituency in Dorset. I have met and talked to a number of them, including Peter, Phil, Sally and Michael, as well as Jonathan, who wrote to me saying that
“nearly 20% of AEAT pensioners have died since the campaign started in 2012, including my colleague and campaigner Derek Whitmell. This has echoes of the Post Office and infected blood scandals. Delay by the Government is simply unacceptable…this is now in sharp focus for me with Derek’s passing”.
Those pensioners trusted the promise that the Government gave them at the time, yet after AEAT collapsed, their pensions were cut by almost half, with inflation protection stripped away. Today, the fund holds far in excess of what is needed to restore their pensions in full, yet thousands of them remain short-changed.
I recognise the changes in the pre-1997 pensions announced last week, but they are woefully inadequate. That is not just unfair; it is a breach of trust. New clause 1, tabled by my hon. Friend the Member for Didcot and Wantage (Olly Glover), calls for an independent review so that we can finally deliver justice for those pensioners, just as the Government have started to deliver justice on many other historical scandals, which I welcome. This is one of those scandals.
I turn to another. While the Government’s intention to allow surplus sharing of defined benefit schemes is welcome, the Bill as drafted leaves pensioners exposed. UK DB schemes hold an estimated £222 billion in surplus, yet 88% of those funds have failed to use those surpluses to restore pensions eroded by inflation. Companies such as BP transfer the assets to insurers in bulk annuity deals worth £50 billion annually, while pensioners see their living standards fall.
My amendments 17, 18 and 19 seek to put fairness at the heart of the process. Amendment 17 would ensure that surplus sharing principles applied even when schemes were wound up. Amendment 18 would require consultation with members before the surplus was extracted, and amendment 19 would reinstate trustee consent and oblige trustees to consider whether pensions had kept pace with inflation and past requests for discretionary increases.