HC Deb 28 February 1994 vol 238 cc639-41
10. Mrs. Angela Knight

To ask the Secretary of State for Social Security what proportion of pensioners now have some other incomes from occupational pensions, savings and state earnings-related pension scheme in addition to basic state pension.

Mr. Lilley

An estimated 84 per cent. of pensioners receive income from savings or an occupational pension, in addition to basic retirement pension. Thirty nine per cent. receive state earnings-related pension in addition to basic retirement pension.

Mrs. Knight

Is my right hon. Friend aware that, although Britain is increasing pensions in accordance with the rate of inflation, the Governments of France, Germany, Italy and Portugal are reducing benefits? Will my right hon. Friend confirm that earnings-related schemes in other European countries mean that low earners receive low pensions, but without the comprehensive network of support that only Britain provides?

Mr. Lilley

My hon. Friend makes a very good point. We have taken care to ensure that pensioners are protected against inflation. This year, of course, we are increasing pensions faster than inflation, to allow people some extra to cope with VAT on fuel, even though the Opposition voted against that measure and that increase. Not one of them voted for it. We in this country are far better off than those in many continental countries, where people face pensions that are being cut or that are entirely earnings-related and therefore significantly lower than ours for those who were low-earners during their working lives.

Mr. Tony Banks

Is not it a scandal that a large number of people have come out of occupational pension schemes and gone into private pension schemes as a result of the encouragement of, and inducements from, the Government, and have found themselves with pension terms that are much worse than before? What will the Government do about that? The Government are responsible for those people being deceived.

Mr. Lilley

As the hon. Gentleman may know, the Securities and Investments Board issued a statement today on its progress so far in investigating people who have opted out of occupational funds and gone into private pension funds. It has the Government's support in looking at that matter thoroughly and making sure that remedies are applied where they are found to be necessary.

Mr. Ian Taylor

Does my right hon. Friend agree that although the important decision on SERPS was taken some years ago, it will start to apply only at the beginning of the next century? That is why the country needs to think carefully about long-term pension provision—not for people who are about to move to pensions but certainly for people under 40? Is not that exactly what is happening on the continent?

Mr. Lilley

We have improved the position for those over 30 by boosting the rebate for over-30s since April last year. That ensures that it should be attractive for people, even if they are over 30, to opt out of SERPS into private pensions. In accordance with our manifesto commitment, we are considering introducing age-related rebates which will make it equally attractive for people of all ages to opt for private pensions.

Mr. Dewar

Is not the Minister concerned about the atmosphere of scandal that now surrounds the sale of private pensions? Has he studied the figures featured in the Financial Times today which suggest that 60 per cent. of the 5 million people who have taken out private pension cover since 1988 are contributing only the basic SERPS opt-out figure and many of them therefore are likely to be very inadequately provided for on retirement? If he wishes to protect people in private pensions, what does he intend to do about the estimate that, since 1988, between £400 million and £1.3 billion of the money contributed by the taxpayer to encourage the pension provision of those people has been taken in commission? Should not he be acting on that now?

Mr. Lilley

If we had not allowed people the opportunity to opt for private pensions when their firm did not have occupational pensions, many of those 40 per cent. who are making greater provision than they would have had if they had stayed in SERPS would not have done so. I want to see more and more people make additional pension provision over and above the minimum level laid down by SERPS and therefore laid down for those who opt out of SERPS. I am glad to see that one of the leading pension providers, Prudential, believes that 70 per cent. of those taking out personal pensions with that company are now making extra provision over and above the minimum laid down by the state. If the Labour party is against private, personal and occupational pensions and wants to re-nationalise them, it should tell the pensioners of this country before the next election.