HC Deb 28 July 1997 vol 299 cc5-7
4. Mr. Rendel

To ask the Secretary of State for Social Security what plans she has to increase the number of people with fully funded second-tier pensions. [9031]

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham)

I welcome the hon. Gentleman to his new post as social security spokesman for the Liberal Democrats. As part of our pensions review, we shall examine ways in which we can further support and strengthen the existing framework of occupational pension provision where that is necessary. We shall consult widely on our proposals for stakeholder pensions that will offer secure, flexible and value-for-money funded second pensions for those who cannot join an employer's occupational pension scheme. They will be particularly aimed at those on low earnings or with intermittent patterns of employment, for whom personal pensions are usually unsuitable.

Mr. Rendel

I thank the hon. Gentleman for his initial remarks and for his support in general for second-tier pensions. Does he agree that it is certainly regrettable that the Chancellor in his Budget introduced measures that will discourage people from taking out fully funded second-tier pensions?

Mr. Denham

Pensions are a long-term investment and they depend on the success and the strength of the economy. It was therefore right for the economy and for future pensions provision that my right hon. Friend the Chancellor took measures to remove biases against investment and to increase the level and quality of long-term investment. That will produce the wealth on which pensions can be paid in future.

Mr. Pike

Is it not time to do something for pensioners such as those in the Bellings pension fund scheme who will not get what they paid for because of the fraud that was committed by the former directors of the scheme? When they retire, those pensioners will get only about 30 per cent. of what they expected.

Mr. Denham

My hon. Friend is right to raise that problem. The new regulatory authority for occupational pensions came into operation at the beginning of April. I hope that the measures in the Pensions Act 1995 will strengthen the protection of pension scheme members. However, we shall take stock of the practical workings of that Act to identify any areas where further improvement is necessary.

Mr. Viggers

Is the Minister aware that many of my constituents thought that they had fully funded pension schemes until 2 July and they are now affronted to discover that they have lost 15 to 20 per cent. of the benefit of those schemes? Is he aware that my constituents are furiously angry that the Government are now promoting second pensions when the Chancellor removed many of those benefits on 2 July?

Mr. Denham

Those of the hon. Gentleman's constituents who have defined benefits schemes will have their benefits protected by the schemes. Those in personal pension schemes who are approaching retirement would in the normal course of events have already seen their investments switched away from equities either automatically by some providers or, in other cases, on the advice of financial advisers. In any case, I would refer the hon. Gentleman to the performance of the stock market since January, as that should give him some reassurance.

Mr. Wicks

Does my hon. Friend recognise that some of the hardest-working people in the country are not in the waged economy, but are carers for elderly people and for others with disabilities? They are often denied access to a decent pension. What plans does he have to ensure that carers in Britain—our most responsible citizens—can have a decent old age with a decent pension?

Mr. Denham

My hon. Friend is right to point out that some people work hard for society, but are not in a position to pay into a funded second pension. That is why, as part of our pensions review, we shall consult widely on our proposals for a citizenship pension, to explore ways in which those who exercise responsibilities as carers can develop rights to a decent second pension and avoid the fate of retirement on to means-tested benefits—a prospect which faces far too many people today.

5. Mr. David Davis

To ask the Secretary of State for Social Security if her Department will write to those people with personal pensions informing them of recent or prospective changes to their pensions. [9032]

Mr. Denham

The package of measures in the Budget will promote an environment in which pensions will flourish. It will encourage investment, stable economic policies and sustainable economic growth. Pensions are a long-term investment. Responsibility for advising policy holders lies with individual providers and financial advisers, within the guidance offered by the regulators.

Mr. Davis

The Minister should be able to answer my question more quickly than that—a simple yes or no will do. In view of what he has just said, do the Government welcome the fact that a number of companies are considering whether to move from final salary pensions to money-purchase pensions?

Mr. Denham

Many factors govern the decision of employers as to what type of pension scheme to offer. The right hon. Gentleman will be well aware that there was much speculation before the Budget about whether schemes would switch to contracting out on a different basis. I am sure that he agrees that what matters is the quality of the pension on offer, rather than the detail of the scheme.