§ 15. Mr. DuncanTo ask the Secretary of State for Social Security what proposals he has to improve the flexibility of personal pensions in retirement.
§ Mr. ArbuthnotWe propose to introduce two measures: age-related rebates, which will make appropriate personal pensions attractive across a wider age range; and more flexible use of personal pensions savings, which will allow personal pension holders to draw an income from their fund each year and defer annuity purchase until a time of their choosing up to the age of 75.
§ Mr. DuncanI welcome those measures. Will my hon. Friend confirm that he has no intention of introducing the so-called minimum pension guarantee, as advocated by the Commission on Social Justice and the right hon. Member for Sedgefield (Mr. Blair)? Does he agree that a Government would never be able to deliver such a guarantee in 20 years' time? That proposal would stop people taking out flexible personal pensions, yet such pensions offer people the real guarantee of being able to provide for themselves in their old age.
§ Mr. ArbuthnotMy hon. Friend is right. The Labour party's proposals amount to further means testing.
§ Mr. Nicholas BrownIs it not the case that, as well as making personal pensions more attractive, the Government are making the state earnings-related pension scheme less attractive by adjusting the outcome in the adjusted formula proposed in the Pensions Bill? People will still have to contribute the same amount of money to SERPS, but, eventually, they will receive £2.50 less as the outcome.
§ Mr. ArbuthnotThe amount is not £2.50 for every pensioner. As this is the first time that he has raised the subject, the hon. Gentleman has apparently only just discovered the change to the annualisation of SERPS, which was announced in June. That change is necessary to restore the original intention behind the SERPS calculation, which provided that SERPS should be uprated in line with earnings. For various technical reasons, SERPS has gone up even faster than earnings since 1979.