HC Deb 19 March 1996 vol 274 cc157-8
3. Mr. William O'Brien

To ask the Secretary of State for Social Security what plans he has to assist people to retain more of their occupational pensions; and if he will make a statement. [19701]

Mr. Roger Evans

By their very nature, income-related benefit schemes normally take account of most forms of income, including that from an occupational pension; hence, it is only right that entitlement to those benefits should reduce as income increases. However, from April 1996, in line with Department of Health changes to the charging rules for people in residential care, people whose care costs continue to be met by income support may have 50 per cent. of their occupational pension disregarded where they remit at least this amount to their spouses who remain in the community.

Mr. O'Brien

Is the Minister aware of the situation in my constituency of retired mineworkers who are entitled to an 80p a week increase in occupational pension? The Department of Social Security claws back 57p of that in housing benefit. A further 15p is taken out of council tax refund. The increase in the cost of fuel oil last year meant a further increase of l0p a week in transport costs. All the occupational pension increase for retired miners is being clawed back by the DSS and the Government's taxation policy. Furthermore, Yorkshire Water has increased water rates by more than twice the rate of inflation, which takes a large slice out of the increase in national pensions. When will the Government do something to allow pensioners to retain something of their occupational pensions?

Mr. Evans

The constituent about whom the hon. Gentleman wrote to me was receiving a retirement pension and a modest occupational pension from the mining industry. He was, however, eligible for housing benefit and council tax benefit. Under the general rules, because those benefits are payable in circumstances other than those relating to income support, above the applicable amount 65 per cent. is taken off, and 15 per cent. is taken off in respect of council tax. If a full disregard for occupational pensions across the income-related benefits were introduced, the cost to the taxpayer in 1996–97 would be more than £2 billion. That is a public expenditure programme that Labour's spokesman had better contemplate with greater caution than the hon. Gentleman does.

Mr. Dunn

Will my hon. Friend give the House an undertaking that the Government will continue to press for increases in the holding of private pensions? Does he agree that the proposed nationalisation of private pension funds by the Labour party is a nightmare for those who are about to retire and those who are retired?

Mr. Evans

My hon. Friend makes a powerful point. The great success of British pension provision has been UK-funded pension schemes in the private sector by way of occupational pensions, personal pensions and retirement annuity contracts. The total of those funds, in aggregate, is £600 billion. As the funds are properly privately invested, the return on capital in real terms since 1980 has been 10 per cent. per annum. It is a threat to ordinary pensioners in occupational pension schemes if other people such as trade unions, the Government or the state try to interfere with that private enterprise approach.

Mr. Denham

Is not my hon. Friend the Member for Normanton (Mr. O'Brien) right? Is it not true that many of today's pensioners retired believing that their state and occupational pension would keep them out of poverty, but that the Tories have taken their pension away and pushed them into poverty? Does the Minister agree with the Secretary of State for Social Security, who wrote in The Times on Saturday that means testing punishes people who save? Is not that a clear example of the Tories saying one thing and doing another?

Mr. Evans

The hon. Gentleman is wrong on every score—he is not even halfway right, as the Evening Standard reported today. The issue at stake is whether retirement pensions should be uprated in line with prices, which is the undertaking that the Government have fulfilled. Everyone knows that the success of our pensions policy is due to private funds run by private organisations in occupational schemes and the like, which have provided, and continue to provide, a rising standard of living for pensioners. That is why recently retired pensioners enjoy higher occupational pension levels than those who retired a couple of decades ago.