Graduated Pension Scheme (Hansard, 29 June 1964)

§ 39. Mr. Small
asked the Minister of Pensions and National Insurance if he will refrain from deducting graduated contributions from those workers who will not benefit from such payments.

§ Mr. Wood
No, Sir.

§ Mr. Small
Does the right hon. Gentleman recognise that this did not exist in 1951, and that it is immoral to extract contributions when there is no reward at the end? Will he tell that to these contributors to get them to support the Tory Party?

§ Mr. Wood
Those who pay graduated contributions will find that, when they finally draw their pensions, they will be drawing benefits worth many times the value of all the contributions which have been paid, even if they have been paying since 1926. I therefore think that National Insurance retirement pensions are a good bargain for all.

§ 40. Mr. Lawson
asked the Minister of Pensions and National Insurance if he will now make transferability of pension rights a condition which must be observed by any pension scheme which is contracted out of the graduated part of the National Insurance Scheme.

§ Mr. Wood
Preservation of pension rights, which may be by means of a transfer, up to the maximum which could have been acquired in the State graduated scheme over the same period of employment is already required for every employed person who leaves contracted-out employment. It would not be feasible to require more than this degree of preservation as a condition for contracting out.

§ Mr. Lawson
Does not the right hon. Gentleman agree that there is ample evidence to show that what people want is that if there is a good private scheme by law it should be made transferable? Is it not the case that many people are being driven into the State graduated pension scheme, which they do not want to be in, knowing that they are paying very much more in contributions than they get in benefits? Will he introduce a Measure, which we shall support, making all private schemes transferable by law?

§ Mr. Wood
The contracted-out equivalent part of the private scheme is fully transferable, because a contracted-out man, when he leaves a job, must be able to take with him at least the equivalent of what he could have earned in the graduated pension scheme if he was earning at the maximum end of the scale. What the hon. Gentleman seems to be arguing is that we should go further and make transferable in National Insurance the whole pension even if it was very much higher than is provided by the graduated scheme. I think that that would have undesirable consequences.

§ Mr. Lawson
The argument for this was set out when the Bill was going through the House. It was argued that private schemes should be regarded as payments of right and be fully transferable. Will the right hon. Gentleman make private schemes fully transferable from one scheme to another? That is what we are asking for.

§ Mr. Wood
If we made the private pension fully transferable, when a man left contracted-out employment it would have the effect of putting a premium on the poor schemes and penalising the better schemes. I do not think that that would be a wise action to take.