HC Deb 20 March 1995 vol 257 cc6-8
6. Mrs. Angela Knight

To ask the Secretary of State for Social Security what is the total amount of funds in private pension provision in the United Kingdom; and what is the equivalent figure for the two next largest European Union countries. [12993]

The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot)

In 1992, the total amount of funds in private pension provision in the United Kingdom was around £500 billion. That is more than three times the amount in any other European Union country.

Mrs. Knight

I thank my hon. Friend for that reply. This is an area in which we appear to be doing much better than our European partners. Can my hon. Friend confirm that more than 65 per cent. of people retiring now have occupational pensions, and that the Pensions Bill will mean greater confidence in occupational schemes so that personal schemes will be more attractive to many people, thus improving financial security in old age?

Mr. Arbuthnot

I can indeed confirm that. My hon. Friend is quite right. This is an area in which European and other countries are looking to us to take the lead. My hon. Friend may be interested to know that recently retired pensioners have been retiring with an occupational pension of around £100 a week on top of their state retirement pension.

Mr. Fraser

Is there not something seriously wrong when the initial charge on a pension contribution is equivalent to the first two years' yield on that contribution and when, in addition, the annual management charges take a substantial part of the yield? Are not a few people making a lot of money out of millions of pensioners?

Mr. Arbuthnot

The Government have made it plain that people must be able to judge for themselves which pension to take out. That is why we introduced, from 1 January this year, the requirement that there should be full disclosure of the amount of charges so that people can make their own choices.

Mr. Anthony Coombs

Recognising the United Kingdom's excellent record in respect of occupational pensions compared with its European counterparts, does my hon. Friend agree that one reason why in the past 15 years pensioners in this country have seen their incomes rise on average by 50 per cent. compared with an average of 30 per cent. is precisely because so many of them have made provision for their retirement through an occupational pension?

Mr. Arbuthnot

Yes, my hon. Friend is right. The additional flexibility that we are providing, partly in the Pensions Bill, and which we have been providing over the years, has attracted people to providing for themselves in old age. That has never proved attractive to the Labour party.

Mr. Ingram

When Ministers talk about personal pensions, they sound like seedy street traders saying, "Never mind the quality, feel the width." Why do the Government continue to over-promote the benefits of personal pensions when it is known that an estimated 1.5 million people have been wrongly advised to leave their occupational pension scheme and up to 2.5 million low-paid workers have been wrongly advised to contract out of the state earnings-related pension scheme in favour of a personal pension plan? Given the nature and extent of the scandal, why have the Government introduced further measures in the Pensions Bill actively to encourage even more people into personal pensions and away from well-run and well-funded occupational schemes?

Mr. Arbuthnot

I did not realise that I sounded like a street trader. The Securities and Investments Board has identified a problem and has made sure that it will not recur. We believe that it is right that those who are found to have suffered from mis-selling should be given redress. Appropriate personal pensions are right for some people. In many cases, they are the only thing for people. That is one of the reasons why we want to give more people more flexibility and more choice.