National Savings Pension (Hansard, 15 May 1996)

§ Mr. Frank Field (Birkenhead)

I beg to move, That leave be given to bring in a Bill to make provision in respect of national savings schemes to enable persons to have an income in retirement. The long title explains the Bill's purpose, but it is customary for hon. Members to take a few minutes to explain the measure to the House.

This century, this country has made some major advances in extending pension coverage. There is a state retirement pension and, in addition, many employers have extended occupational pension coverage to their employees. But it was apparent, long before this Government's recent initiatives, that occupational pension coverage has stopped short at coverage of about 50 per cent. of the population. Despite the last Labour Government's attempts to gain universal coverage through the state earnings-related pension scheme, large numbers of people remained outside a second pension coverage. Even with this Government's personal pensions measures, a growing proportion of the working population is not covered by either the state retirement pension or a second pension. My modest Bill does not aim to tackle that major problem; I hope that, at some stage, the House will deal with it. The debate is between those who believe that we shall gain coverage on a voluntary principle and those of us who believe that we shall need an increasing element of compulsion.

The Bill makes a simple amendment to the National Savings Bank Act 1971 so that the Post Office can do two things. First, it can sell index-linked, inflation-proof bonds to those people who wish to save towards their retirement in that way. Secondly, the Post Office can, for those who wish, sell bonds that are linked to share issues and merely track the FT index. There will be two ways for individuals to save simply and cheaply.

When considering the cost of pension proposals, it is well worth looking at the cost of national savings generally, which charge, in administrative terms, only 0.5 per cent. of the cost of the savings themselves.

The Bill is a modest measure. It aims to help those on low incomes and on fluctuating incomes so that at their convenience they can make regular or irregular contributions towards their pension retirement savings. As I have said, the measure itself will not solve the problem of the growing number of people who do not have even state pension coverage, let alone occupational or personal pension coverage. However, it gives a resounding vote of support to the millions of our fellow citizens who wish to provide for themselves in retirement rather than rely on means-tested assistance. With that theme in mind I hope that the House will give me leave to introduce the Bill.