HC Deb 26 January 1998 vol 305 cc6-7
4. Mr. Purchase

What estimate she has made of future income inequality rates among pensioners. [23055]

Mr. Denham

We want today's and tomorrow's pensioners to enjoy security in retirement. Estimates show that the gap between the best-off and worst-off pensioners will be even wider in the future than it is today under current policies, so a key objective of the pensions review is to ensure that pensioners have an adequate income in retirement and that they share fairly in rising national prosperity.

Mr. Purchase

Is it not the case that most people will rely on the state earnings-related pension scheme right through to the early part of the next century? There appears to be some doubt in people's minds about the future value of such pensions. Does my hon. Friend accept that, the more people go into private pensions, the more share churning goes on, the more fees go up and the more arrangement costs increase? In fact, through the rebate, taxpayers' money is going directly into the pockets of the richest people in the country. In the pensions review, should we not reinforce our commitment to SERPS on a proper basis of related-to-earnings income in retirement?

Mr. Denham

We said in our manifesto that we shall retain SERPS as an option for those who wish to remain in it; and the pensions review is looking at a wide range of issues relating to the future of pension provision. Many people who enjoy security in retirement have a pension whose income comes from investments. It is possible to create a framework for value-for-money, flexible and secure stakeholder pensions, based on investment income, which can assist those with a basic state pension to enjoy security in retirement.

Mr. Flight

On the Government's own figures in the November consultative document, I recollect that there are about 40.5 million people with pension provision and 7.5 million without. Will the Minister give an undertaking that improving the position of those without pension provision outside the state will not come at the expense of those who have made provision, by the tax deductibility of pension contributions being reduced? That applies particularly to the over-40s who have made plans and who will find those plans all awry if there is yet another retrospective change in such taxation.

Mr. Denham

Taxation is a matter for my right hon. Friend the Chancellor, but I assure the hon. Gentleman that we wish to encourage people to save for their retirement.