HC Deb 23 March 1998 vol 309 cc9-10
8. Mr. Flight

What representations she has received on the expected participation rates in the proposed stakeholder pension. [34049]

Mr. Denham

We have received more than 200 responses to the recent consultation on stakeholder pensions. The majority are from organisations including financial services businesses, employers, employee groups and trade unions. The Government see a key role for such organisations, particularly in partnership with each other, in developing and promoting stakeholder pensions.

Mr. Flight

If the pension fund industry recommends overwhelmingly that for the stakeholder scheme to succeed—in terms of adequate participation—it will need to be compulsory or have some degree of compulsion, is that something that the Government will consider?

Mr. Denham

It is true that a number of submissions to the pensions review strongly support compulsory second pensions. We already have a compulsory pensions system—the vast majority of employees are compelled to be members of both the basic state pension and a second pension. We made it clear that we would consider all representations received by the review, including those on compulsion, and would respond in due course.

Mr. Flynn

Will the Minister say that he is not minded to hand over the running of stakeholder pensions to those very firms that mis-sold at least 2 million personal pensions and left a large number of people facing poverty in their retirement years? Has he seen the Eagle Star submission, which lavishly praises the state earnings-related pension scheme, saying that it is the most portable of all pensions, is best value and has charges down to one tenth of those charged by the private firms? Indeed, Eagle Star complained that the only fault with SERPS is that its merits are not properly understood. Will he ensure that SERPS is properly considered and that we can have a rejuvenated form of it, independently funded and run, and separate from the national insurance scheme?

Mr. Denham

I have indeed read the Eagle Star evidence to the pensions review and can assure my hon. Friend that those are important issues for consideration by that review. He will also want to pay tribute to my hon. Friend the Economic Secretary for her action to clear up the problems of pensions mis-selling—in stark contrast to the record of the Conservative party, which did nothing to tackle that scandal although it was obvious for years that it needed to be dealt with

Mr. Viggers

Despite numerous references to low-cost pension schemes, does the hon. Gentleman agree that in fact pension costs will inevitably be high and that if any new scheme is not compulsory it will lead to a pensions benefit trap, which will be unfair and unacceptable?

Mr. Denham

On his question about compulsion, I refer the hon. Gentleman to the answer I gave some moments ago. I do not accept that it is inevitable that funded second pensions have to be as expensive and as inappropriate for those on low incomes or those who suffer intermittent working patterns as many personal pensions are today. I am confident that stakeholder pension schemes will be able to offer value-for-money, flexible second pensions to many people who cannot get such a pension at present.