HC Deb 19 May 1986 vol 98 cc30-2

ACTUARIAL TABLES

'(1) Regulations prescribing actuarial tables for the purposes of any of the provisions to which this section applies—

  1. (a) shall be made only after consultation with the Government Actuary; and
  2. (b) shall not be made unless a draft of them has been laid before Parliament and approved by a resolution of each House.

(2) This section applies—

  1. (a) to sections 44, 44ZA, 44A and 45 of the Social Security Pensions Act 1975; and
  2. (b) to section 5 above.

(3) The tables—

  1. (a) shall embody whatever appears to the Secretary of State to be the best practical estimate of the average cost, expressed in actuarial terms and relative to a 31 given period, of making such provision as is mentioned in section 44(5)(a) or (b), 44ZA(11)(b), 44A(3) or 45(2) of the Social Security Pensions Act 1975 or in section 5(12)(b) above, as the case may be; and
  2. (b) shall assume for any period an average yield on investments which is not less than the average increase during that period in the general level of earnings obtaining in Great Britain,

but the regulations may provide for them to be adjusted according to whatever is from time to time the actual yield on prescribed investments or the average yield, as shown in prescribed published indices, on prescribed classes of investments.

(4) The Secretary of State may from time to time, and shall when required by subsection (6) below, lay before each House of Parliament—

  1. (a) a report by the Government Actuary on any changes in the factors affecting any of the actuarial tables prescribed for the purposes of any of the provisions to which this section applies; and
  2. (b) a report by the Secretary of State stating whether he considers that the regulations ought to be altered in view of the Government Actuary's report and, if so, what alterations he proposes.

(5) The changes referred to in subsection (4)(a) above are, in the case of the first report under that paragraph, changes since the last report under section 46(3)(a) of the Social Security Pensions Act 1975 and, in the case of a subsequent report under this section, changes since the preparation of the last such report.

(6) The Secretary of State shall lay the first report under this section not later than 6th April 1987 and subsequent reports at intervals of not more than five years.

(7) If in a report under this section the Secretary of State proposes alterations in the regulations, he shall prepare and lay before each House of Parliament with the report draft regulations giving effect to the regulations and to be in force—

  1. (a) from the beginning of such tax year as may be specified in the regulations not earlier than the second tax year after that in which the regulations are made; or
  2. (b) where it appears to him to be expedient for reasons of urgency, an earlier date not earlier than the date on which the regulations are made.

(8) If the draft regulations are approved by resolution of each House, the Secretary of State shall make the regulations in the form of the draft.' [Mr Major.]

Brought up, and read the First time.

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Major)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this it will be convenient to take Government amendments Nos. 18, 34, 117 and 133.

Mr. Major

I hope and believe that we can commence the Report stage on a non-contentious note in regard to policy.

There are circumstances in which it is desirable for premiums to be paid to the state effectively to buy people back into the state earnings-related pension scheme as if they had never been contracted out. That would happen, for example, when schemes ended, and the provision is wholly beneficial.

The cost of the premium is calculated by using actuarial tables that are prescribed under section 46 of the Social Security Pensions Act 1975. The new clause replaces section 46. All the provisions concerned refer to the cost of providing a guaranteed minimum pension. The actuarial tables include adjustments that are aimed at ensuring that schemes make neither a profit nor a loss as a result of changes in market yields on investments over the period of employment. The new clause reflects that more explicitly, as set out in subsection (3). It also eliminates the need to produce two sets of tables for each type of premium, which was required by the previous wording. It also allows the regulations to be made at a time other than the quinquennial review of the contracted out rebate, although I reassure the House that the quinquennial review will continue.

The new clause deals with existing premiums and those proposed in clause 5 and schedule 2 for protected rights premiums. The amendments in this group are consequential repeals and deletions and lead to what should be a simplification and improvement of present provisions.

Mr. Michael Stern (Bristol, North-West)

I am grateful to my hon. Friend for his explanation of the new

clause.

The actuarial profession has featured increasingly frequently in debates on social security legislation, and it has been put to me by a few members of that profession that they are beginning to feel somewhat over-regulated.

I wonder whether my hon. Friend would care at some stage to bring together all the provisions in the Social Security Act 1985 and its accompanying regulations, and what will be the Social Security Act 1986 and its accompanying regulations, which will be published in the next few years, to show the extent to which he is attempting to vary standard practice in the profession.

Mr. Major

My hon. Friend has raised a detailed, technical and interesting point. I understand the observations that he has made on behalf of the actuarial profession. I cannot give him a commitment to respond as he requests, but we will consider the matter carefully.

Mrs. Beckett

We appreciate the Government's deciding to pursue this course, and especially the proposal that the draft order should be laid before the House. That will give us more of an opportunity to scrutinise what is proposed.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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