Pensions (Hansard, 30 June 1997)

§ 1. Mr. Terry Lewis
To ask the Secretary of State for Social Security what plans she has to encourage people to take out value-for-money pensions. [4334]

§ The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham)
We want to ensure that all pensioners can share fairly in rising national prosperity. We will support and strengthen the existing framework for occupational pensions. We will develop stakeholder pensions to offer secure, flexible, value-for-money pensions, particularly to those who cannot join an employer's occupational pension scheme, or whose pay is low, or who have intermittent wages, and for whom personal pensions may therefore be unsuitable.

§ Mr. Lewis
I thank my hon. Friend for his answer. Over several years, there has been a sad decline in the membership of occupational pension schemes. How will my hon. Friend tackle the effects of, for instance, the flexible labour market on the membership of such schemes?

§ Mr. Denham
My hon. Friend is right: there has been a sharp decline in the membership of occupational pension schemes, particularly among men. Part of that was caused by the mis-selling of personal pensions to members of occupational schemes. I am sure that my hon. Friend will welcome the action that my colleagues in the Treasury are taking to sort the problem out.
Many people in the flexible labour market cannot join an employer's occupational scheme, because there is not one on offer. They may be badly hit by high fees and charges for existing personal pensions. It is to give those people some of the advantages of occupational pensions that we wish to develop stakeholder pension schemes.

§ Mr. Brooke
Does the Minister acknowledge the international recognition of the extremely sound basis of British pension provision, as endorsed by a recent report by the International Monetary Fund? Will he give an assurance that in no particular will the Government threaten the soundness of that basis?

§ Mr. Denham
It is certainly true that the size of funded occupational pensions is a strength. Occupational pensions have always been supported by Labour Governments; indeed, membership of occupational pension schemes has peaked under Labour Governments and declined under Conservative Governments. I hope that the strength of the British pension scheme in that regard will continue to be recognised, but we must tackle the problems faced by people who have no opportunity to take advantage of a good, value-for-money employer's occupational scheme.

§ Mr. Olner
Will the Minister also take account of the huge black hole that has been created by the fact that many workers are now on temporary wage contracts, and cannot enter occupational pension schemes? Will he do anything to remedy the problem?

§ Mr. Denham
My hon. Friend is right to raise that issue. It is one of the difficulties to which I have been referring. Some of the personal pension schemes that are currently on the market will impose very high charges, and will take a large proportion of people's savings if, for example, they can enter and stay in the schemes only for a few months or years. That is why the Government place emphasis on developing value-for-money, flexible schemes that will not unfairly penalise people who change their jobs or spend periods outside the labour market.