§ 9. Mr. Graham Brady (Altrincham and Sale, West)
If he will estimate the amount which a person retiring would need to have invested in a pension fund in order to be better off than a person retiring on the basic state pension. 
§ The Secretary of State for Social Security (Mr. Alistair Darling)
Building on the basic state pension, people can contribute to the state second pension, or to an occupational, stakeholder or personal pension. Under the pension credit, no matter how much people save, they will be better off.
§ Mr. Brady
I note that the Secretary of State avoided answering the question and was not prepared to say how much someone needs to have in a pension fund to be better off. The accurate answer—as he will know if he has read the excellent briefing note prepared by the Conservative research department—is about £100,000. If he doubts that figure, he could provide his own.
People now know that they have to have a very significant sum in a pension fund to be better off than if they had saved nothing. That is why the savings ratio has declined by 70 per cent. since the Government have been in office. Cannot the Secretary of State understand the long-term damage that he is doing to people's long-term behaviour by discouraging savings and deterring people from making proper provision for their future?
§ Mr. Darling
I had of course looked at the Conservative party briefing, and the hon. Gentleman's question was all too predictable.
§ Mr. Darling
I remind the hon. Gentleman what he asked: how much someone would have to save to be better off than someone retiring on the basic state pension. Everyone in this country who contributes gets the basic state pension. The point that I was making is that, under the system we have introduced, if someone saves a pound more than that, they will receive a credit for having done so.
On the savings ratio, the amount of money going into funded, personal and occupational pensions last year was £25 billion—the highest ever, and much higher than when the Conservatives were in office. The only reason for anyone to be concerned about the basic state pension is the prospect of the Tories getting in. The Tories are beginning the process of scrapping the basic state pension and want everyone under 30 to opt out of it. The hon. Gentleman is right; under the Tories, people would have to save because they would not have even the basic state 642 pension. I believe that a mix of basic state pension and second pension is the best way of making sure that people can retire on a secure and decent pension.
§ Ms Oona King (Bethnal Green and Bow)
Does my right hon. Friend share my amazement that the only thing the Tory Front-Bench spokesmen could say last week about the proposals to reward pensioners who save—whether in a pension fund or otherwise—was that the proposals would put strain on the tax system? What about the strain on pensioners for all these years? Will he confirm that when the pension credit is introduced, a pensioner on the basic state pension who has saved and has an income of about £20 a week from those savings is likely to receive an extra credit of £12 a week as a reward for saving?
§ Mr. Darling
I do not know whether we should be amazed or not, but as far as I am aware, the Conservative party is the only organisation that is against the principle that someone who saves ought to be rewarded and not punished for it. The Conservatives have made that abundantly clear—not just today, but in their helpful briefing, which I am more than happy to circulate among my hon. Friends so that they can better see exactly what they are up against. The briefing makes it abundantly clear that the Conservatives are opposed to a credit which will mean that people with an income of under £135 will be better off if they save. Surely it must be right that the social security system rewards thrift and does not punish it.
§ Mrs. Jacqui Lait (Beckenham)
Will the right hon. Gentleman consider future pensioners? Is he aware that last week's pre-Budget statement will lead to a shortage of gilts in the market and hence a bad deal for people with defined contribution pension schemes? Is he aware that the delay on the Myners report until after the election, because it is too difficult, is a bad deal for people with occupational pension schemes? Is he further aware that the increase in the minimum income guarantee means that a man aged 45 will now have to save £50 to £55 a month in a stakeholder pension to do better than the minimum income guarantee? Does he agree that the Government have created a hat-trick of disincentives for future pensioners to save?
§ Mr. Darling
I am beginning to wonder whether Conservative party spokesmen have actually read the consultation paper on the credit, because the principle is clear—for every pound someone saves, they will get a cash reward. Under the system that the Tories want, people will be punished for saving. Under the present system, people who have too much money in the bank or who get a small occupational pension lose out. Under our proposals, 5.5 million pensioners will gain as a result of the credit. If those people vote Conservative, they will lose out.
On the Myners report, the hon. Lady must be aware that opinion as to what should be done in terms of the minimum funding requirement is divided. No clear view is emerging, other than the fact that the present system is not working. We are consulting at the moment, with a view to putting in place another reform: a review which is long overdue and to which the Conservative party has contributed not very much at all.