HC Deb 28 January 1997 vol 289 cc143-4
7. Mr. Flynn

To ask the Secretary of State for Social Security what proposals he has to ensure that SERPS becomes a partially funded scheme. [11375]

Mr. Heald

We have no proposals to make SERPS a partially funded scheme. Our policy is to encourage private pension provision through the contracting out of SERPS.

Mr. Flynn

Does the Minister agree that the two most profitable pension schemes have been occupational pensions and SERPS? He failed to mention the 2 million people who face impoverishment in old age because of their money-purchased personal pension schemes, and that only 7,000 of them have been compensated. Does he realise that someone on average wages who has been in a SERPS pension since 1978 will now be receiving an additional £70 a week, doubling his or her pension? Why does not the Minister forget ideology and look anew at fresh pension schemes and at renewing and strengthening SERPS, so that it will be funded and run independently of the national insurance scheme and managed by independent managers?

Mr. Heald

I have examined the proposals to which the hon. Gentleman refers, and I believe that they make him the most expensive Labour Member. His wish list of extra DSS expenditure on pensions would cost more than £6.8 billion by 2000, and more than £65 billion by 2030. He is proof of the type of pressures that a Labour Government—were one, heaven forfend, elected—would face to increase public spending. His ideas would result in national insurance costs rising by a third.

Mr. Bernard Jenkin

Does my hon. Friend agree that allowing people to opt out of SERPS is exactly what the hon. Member for Newport, West (Mr. Flynn) wants—a move towards a funded income-related scheme and away from a pay-as-you-go state scheme? Until the Labour party understands that we are achieving what it now says it wants, it is unlikely that Labour will be fit to govern.

Mr. Heald

My hon. Friend is right. Contracting out of SERPS and encouraging the private sector are what have helped pension incomes to rise so fast since 1979. Let us not forget, however, that the Labour party is proposing equalising the state pension age at 60—

Ms Harman

That is not relevant.

Mr. Heald

It is relevant to SERPS, because Labour is talking about equalising the state pension age at 60, with a pension of £40 a week. With no income support, that would lead pensioners to destitution. It is risky—it is new Labour, new danger.