HC Deb 23 July 1996 vol 282 cc134-6
7. Mr. Dunn

To ask the Secretary of State for Social Security when he last met representatives of the private pensions sector to discuss improvements in private pension provision. [36962]

Mr. Lilley

Earlier this month, I addressed two conferences about pensions, and I have frequent contacts with representatives of the pensions industry.

Mr. Dunn

When my right hon. Friend next meets representatives of the industry, will he tell them that the Government have no plans whatever to nationalise private pension funds or to seek to control them in any way as an aid to state spending? That is the policy of the Labour party, and it is another example of new Labour, new danger, new nightmare for pensioners.

Mr. Lilley

I shall certainly pass on the points that my hon. Friend makes. He is quite right to say that the Opposition have flirted closely with the Singapore scheme, which involves the state running pension schemes, to the great disadvantage of pensioners in Singapore, whose return since 1980 was only 2 per cent. a year above inflation, whereas private pensions in this country have returned nearly 10 per cent. a year on top of inflation.

Mr. Rogers

Private pensions are all right for people who can afford them. Is the Secretary of State aware that some of my colleagues and I met a group of miners today—some of them amputees—who were disabled early in their careers, that their wages dropped considerably and, as a result, they have spent a lifetime on a very low income? They could not make any provision for retirement and private pensions. They relied on a Government undertaking that they would receive a special hardship allowance as a result of the injuries that they suffered, and that translated into a reduced earnings allowance. The Government have betrayed those people, who have acted in good faith and given great service to this country.

Mr. Lilley

I met some miners myself in Scotland when I was there, and they put their case with impressive eloquence and moderation. I endeavoured to explain, as my hon. Friend the Under-Secretary did, that we are simply fulfilling the original intention of Parliament. When, during their working lives, people are incapacitated by injury, they receive a reduced earnings allowance, as the name suggests; when they retire, they receive a reduced retirement pension to match the fact that they were unable to contribute as much into funds as they would if they had been working all the time. That is a fair and sensible system, but it was misapplied. We have merely put it back to what Parliament always intended.

Mr. John Greenway

Does my right hon. Friend agree that one of the best improvements that we could make to the personal pension regime to encourage more people to opt for such pensions would be the introduction of a minimum contribution for tax relief, regardless of earnings? That would greatly benefit the self-employed, people on low incomes and, I dare say, those to whom the hon. Member for Rhondda (Mr. Rogers) referred. My right hon. Friend may say that this is a matter for our right hon. and learned Friend the Chancellor of the Exchequer, but his encouragement would be a great help.

Mr. Lilley

My hon. Friend is right: this is a matter for my right hon. and learned Friend the Chancellor when he considers his Budget. I know that he has received representations on the subject. As it overlaps with my responsibilities, however, I will certainly discuss it with him.

Mr. Denham

Instead of scaremongering about plans that he knows the Labour party does not have, will the Secretary of State face up to the reality of personal pensions? Will he confirm that it is eight years since so-called appropriate personal pensions were first on sale? Is it not a scandal that, eight years later, according to the Government Actuary, at least 30 per cent. of the savings of a typical woman with a typical personal pension will be lost in fees and charges by the time she retires?

Is not that typical of the Tories and their privatisation of the welfare state? Is not the message clear? The Government are prepared to pour savers' and taxpayers' money down the drain. Only a Labour Government will provide security in retirement with that money, instead of pouring it down the drain.

Mr. Lilley

We have arranged a system that gives people the option of remaining in SERPS if their circumstances make that more attractive. If, as in the majority of cases, they can do as well or better outside SERPS, they are encouraged to opt out of it and to build up funded personal and occupational pensions totalling some £600 billion, to the great benefit of the country. That means that, in advance of people's retirement, we have saved more funds than all the other European countries put together. The hon. Gentleman may regret that deeply—I know that he does—but the hon. Member for Islington, South and Finsbury (Mr. Smith) has said that the Labour party wants to remove SERPS. In May this year, he wrote, "SERPS must go."