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Pensions (Miscellaneous Provisions; Bill 8 JANUARY 1990
griously difficult fairly to compare pensions in untries the European Commission recently le a brave attempt at doing so. It took as a standard the unt paid to a new pensioner who had worked for an rage wage in manufacturing industry. Two different hods of comparison were used. I have urged the vernment to adopt them both, but so far they have lined. The first method is to convert the cash amount › ecus by using a standard rate of exchange known as purchasing power standard, which takes full account he cost of living in each country. The pension is thus ited to the value of purchases that can be made locally. Not surprisingly, and as was the case nine years ago, the ited Kingdom came out badly by comparison. The tish pension of £53 is almost half the £104 paid in xembourg and barely half the £101 paid in the therlands. Britain is only beaten into bottom place by land, with £43. I must be fair and give details also of the mmission's second comparison, which takes the nsion as an average of manufacturing industry earnings each country, after taking account of tax. That system known as net replacement ratio, and it uses the figure of 10 to represent average manufacturing earnings.
The best countries pay pensions of nearly 90 per cent. average earnings, while the United Kingdom and eland pay less than half of pre-retirement earnings, with pension of 46 per cent. It seems extraordinary that the eglect of the basic pension in particular should continue. The index linking of state pensions introduced in the ocial Security Pensions Act 1975 was once challenged, ut that provision managed to survive. It would not have one so had the proposals in the June 1985 Green Paper, The Reform of Social Security-Programme for Action" een implemented. It was the Government's clear tention to abolish SERPS, and with it the inflation- roofing mechanism, but their nerve again failed them. The scheme was savagely cut by the Social Security Act 985, but the inflation-proofing provision remained intact. Contracted out schemes must now provide inflation roofing of the guaranteed minimum pension up to 3 per ent., instead of the state scheme doing that for them. The tate scheme still makes provision above that level.
The Government's newly-found enthusiasm for index inking-provided that someone else bears the cost-is about to bear fruit in the next social security Bill, which will require limited indexation of occupational schemes above the guaranteed minimum pension level--but apparently, only when a scheme is about to be wound up.
The first Civil Service pension was granted in 1684 to Martin Horsham, a land waiter in the Port of London, who, in the memorable words of the Treasury Warrant at the time, was paid it because he was:
"so much indisposed by a great melancholy that he is at present unfit for business".
There is little in the Bill or the Government's pension policy that would have lifted Martin Horsham's melancholy and, sadly, there is much that would have deepened it.
This is a mean-spirited, patch and prop Bill. In the past, Britain has led the world to liberate retired people from the anxiety of deep poverty. Europe is now leading Britain, coaxing and coercing the Government out of their obsolete fixations. The Bill continues a Government pension policy that is wasteful, confused and mean.
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Mr. Ivor Stanbrook (Orpington RECEIVED pactare a financial interest in the Bill as I am a beneficiary of the
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arrangements that it makes for public service B1990
virtue of service in the colonial administratsen of Nigeria.
I welcome the Bill. We should all support the details of the Bill, and I was distressed to hear my hon Friend the Member for Eastbourne (Mr. Gow), whose judgment is usually quite sound, appear to cast some doubt on the merits of the Bill because some of its proposals have apparently been prompted by events within the European Community. If that is so, it is a jolly good thing.
Women's equality is not a subject on which I normally speak at great length, or with enthusiasm, because women may be equal but they are also different. However, there can be no doubt that the small amendments proposed in the Bill are good ones for women and I am surprised that they have not been made before. They are mostly self-evident and logical, because the pound paid by a woman civil servant is as good as the pound paid by a man during their service, and there seems to be no reason for discrimination between the sexes and in that respect the proposals in the Bill are to be commended.
Apart from amending injustices and anomalies and improving pensions for public officers, there is a need for the Bill and for all pension arrangements to be index linked due to inflation---the evil and the scourge of modern times. Inflation distorts economies and causes great misery and cruelty, and it should remain the enemy of all Governments. If we can beat inflation, we shall not need to introduce measures constantly to reappraise the value of pensions to people who have earned what they are paid at the end of their service in a pension because of the contributions that they have made or that have been notionally made for them during their service. The Government should bear in mind that the financial burden of the Bill can be eased by the extent to which they are successful with their anti-inflation policy.
A number of other more detailed matters come to mind when we discuss public service pensions. Many British citizens, resident in Britain, are pensioners of a public service that is, in fact if not in law, under the Government of the United Kingdom. For example, the pension rights of people who served in the colonial service under the Government of the Federation of Rhodesia and Nyasaland were secured on the basis that employers' contributions would be made by the Governments concerned-successor Governments, where transfers have taken place. The value of such pensions was therefore tied to agreements between Governments, which has meant in practice that many former British civil servants serving in our overseas territories must live on a pittance. The value of their pensions has not benefited from inclusion in the general arrangements covered by the Bill, because technically their employer was not the United Kingdom Government but the result of arrangements between the United Kingdom and other countries--or for other similar
reasons.
To their credit, the Government have recently eased the problem concerning the Federation of Rhodesia and Nyasaland by making an ex gratia payment into the fund, which has enabled pensions to be increased. That, however, is merely a stopgap measure, welcome though it
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