HC Deb 24 February 1976 vol 906 cc178-80
11. Mr. Tim Renton

asked the Secretary of State for Social Services what further consultations she has had with the pensions industry about the implementation of the Social Security Pensions Act 1975.

12. Mr. McCrindle

asked the Secretary of State for Social Services what consultations she has had with industry over the working of the Social Security Pensions Act 1975.

Mr. O'Malley

We keep in regular touch with the TUC, the CBI and the pensions organisations about the implementation of the Act. The most recent meeting with the pensions organisations was on 15th January.

Mr. Renton

Is the Minister aware of the profound disquiet at the present arrangements for contracting out, since they will discourage pension schemes that offer above-minimum benefits? Will the Minister point out to the TUC that if pension funds are forced to invest in nonviable State enterprises our retired citizens will inevitably receive lower occupational pensions?

Mr. O'Malley

I am not aware of the existence of profound general disquiet of the type that the hon. Member suggests. I think that his Front Bench will confirm that I am right in that. I understand the problems of the industry in regard to the effect of the counter inflation policy after 31st July. Although this is primarily a matter for the Department of Employment, I have indicated to the pensions interests that we should be very pleased to receive representations and to have consultations with them in the discussions leading up to the counter-inflation policy that will take effect after next August.

Mr. McCrindle

Does the Minister accept that the Government's current incomes policy is a considerably restricting factor in the development of occupational pension schemes? Will he therefore put maximum pressure on the Chancellor of the Exchequer so that when we move into the next phase of the incomes policy a positive encouragement is given to the development of occupational pension schemes?

Mr. O'Malley

I do not think the hon. Member is being quite fair on this. As from 31st July this year, employees and employers will be able to implement schemes which have the effect of providing half pay on maturity and on final salary basis. Those are high and hitherto unattained levels for large numbers of the work force. I recognise some of the problems inherent in a situation of this kind and I shall be pleased to hear the detailed views of the pensions industry on this matter.

Mr. Patrick Jenkin

I greatly welcome what the right hon. Gentleman said, especially about the consultations concerning the next stage of the incomes policy. Does he agree that it is rather miserly to restrict the improvement in benefits to the minimum contracting-out level? Will he take an open view on this matter, because this is a process that could properly proceed without damage to the Government's incomes policy?

Mr. O'Malley

Millions of people would not think it miserly to have half their final salary or pay on retirement. They do not have anything like that at present. The right hon. Gentleman must recognise that contributions to pension funds have an effect on unit labour costs, just as other forms of pay have an effect. Pensions and pension funds are deferred pay. Nevertheless, I have made it clear that we are prepared to listen to the detailed views of the industry on this sub- ject, because specific instances—for example, those affecting back crediting—can produce difficulties. We are prepared to discuss these matters with the pensions interests.