Ending pension poverty demands trust and transparency – Rachael Maskell

It was in the city of York that Joseph Rowntree first introduced pensions in his factory in 1906, ahead of the Old Age Pensions Act 1908, which came into effect on January 1, 1909 – on pensions day, as it was known.

It was Seebohm Rowntree’s work in this field that brought about that Act, so my city has a real investment in this debate.

We need to ask what the problem is that we are trying to solve around pensions. Are pensions simply part of reward packages and used as a recruitment and retention tool by employers? Are employers really interested in the economic fortunes of their former employees once they have left their employment?

How do we address the serious issue of pensioner poverty, and are pensions fair and equitable or dependent too much on past income, which we know is inequitable in itself?

Today, 1.9 million older people live in poverty, which really amplifies how pensions have gone wrong, and we therefore need to look at how we address those issues.

I view this issue through the prism of women and their experiences of the inequality that is already built into their working life by the pay gap. They are more likely to be in part-time employment and more likely to be carers, and there is also the serious issue of underemployment. In fact, since the start of the pandemic, 70 per cent of people who have lost their jobs are women. We therefore need to understand why so many women are in pensioner poverty.

Young workers and black workers are more likely to be in insecure jobs. Disabled people lose out altogether and fare worse. Inequality is hardwired into our pension system, exacerbating the unfairness of employment. I observed over the years as a trade union official how we needed to bring redress into our pension system.

On state pensions, many countries such as the Netherlands, Denmark and Australia have far better statutory provision in later life, as can be seen in the quality of life that people experience. The Netherlands pays 95 per cent of average earnings, Denmark 66 per cent, Australia 58 per cent and the UK just 29 per cent.

Insufficiency is also built into our pensions system. We have heard much about the pension credit system, but take-up is only 60 per cent, with £2.8bn not claimed. I therefore support automation. Data can be shared and the technology is there to tackle inequality and enable people to access not only their pensions but, as we have heard, TV licences and other such benefits. It is really important that the gap is closed with the mechanisms we have available to achieve that.

I would also like Ministers to look at the number of pension schemes. Many countries have just a few hundred pension schemes altogether; we have more than 10,000, and we know that many of those schemes are struggling. I have looked at the charity sector, where, among the top 50 charities, there is now a deficit of £1.5bn.

We know that in other sectors, people move from job to job to job and therefore have no time to build up a pension pot with a company. If we moved to a more sectoral model, that would give individuals a lot more scope to build a pension for their future, and a model of sectoral bargaining could shape such pension schemes. I think it would be helpful to look into that.

As I have mentioned, equality needs to be brought to the fore, not least because of the impact in terms of women in poverty in later life. Economic events impact on pensions so much. We therefore need to address those issues, but we also need to recognise that in later life, people from areas of deprivation are more likely to be in poor health and so working longer is not always relevant.

We need more flexibility to be built into pensions in later life, but we also need to ensure that individuals do not lose out because they work in different ways. The WASPI women are one example of a group that certainly made the right choices, yet was badly let down. We need to build confidence in our system to ensure that there are fair choices for people in the future.

Rachael Maskell is Labour MP for York and spoke in a Parliamentary debate on pensions – this is an edited version.

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