HC Deb 23 July 1996 vol 282 cc130-1
4. Mr. Jim Cunningham

To ask the Secretary of State for Social Security if he will make a statement on his power to determine the levels of fees and charges levied by providers of personal pensions. [36959]

The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald)

We have always made it clear that competition and disclosure are the preferred means of ensuring that charges levied are not excessive. We have no plans to use the powers referred to.

Mr. Cunningham

Given that £16 billion is paid out every year in pension rebates—£4 billion of which goes on fees and charges—and that the people that are most affected are the poorer in society, when will the Minister do something about the 25 per cent. charge?

Mr. Heald

There are 5.6 million people with personal pensions in Britain, and 99 per cent. of them are as well off—or better off—as if they had remained in the state earnings-related pension scheme, typically by up to £1,000 a year on their pension at today's prices. That is not my view, but the view of the Securities and Investments Board. What is more, in its recent report, "Disclosure: One Year On", the Personal Investment Authority suggests that competition and disclosure are working, and that there is evidence of lower charges and better surrender values. The Government's policy is working, and there are no plans to introduce powers of the sort that have been referred to.

Mr. Wilkinson

Will my hon. Friend take time during the summer recess, like the Select Committee on Social Security, to go to Chile to see how state-approved personalised pension schemes that are funded really work to provide both a very high level of benefit in retirement and an engine for growth, which has been sustained at over 6 per cent. per annum over the past few years?

Mr. Heald

Like the Select Committee, my right hon. Friend is considering visiting Chile to see the progress that has been made there. We should not forget that, in the United Kingdom, £600 billion is invested in private pension provision. That gives a much better future for people in this country than would otherwise be the case.