HC Deb 18 July 2002 vol 389 c416
9. Sir Nicholas Winterton (Macclesfield)

What assessment he has made of the effect of his policies on public sector pension provision. [68406]

The Financial Secretary to the Treasury (Ruth Kelly)

Prudent financial and economic management has ensured that the finances of the public services are on a sustainable basis. Through the spending reviews and other initiatives we ensure that public sector pension schemes are managed efficiently and provide cost-effective recruitment and retention of staff.

Sir Nicholas Winterton

The welfare and income of all pensioners must be central in any civilised and caring society, so will the Minister acknowledge the depth of concern felt by millions of public sector pension contributors about the crisis in funded pensions? Will the Government finally admit the connection between that crisis and their £5 billion a year tax on pensions, which has cost each pension contributor £400 a year? The Government must accept some responsibility for the crisis in our pensions today.

Ruth Kelly

I should point out to the hon. Gentleman that the tax changes that affected pension funds do not affect public sector pension funds; those are primarily unfunded schemes.

Sir Nicholas Winterton

I said all pensioners.

Ruth Kelly

Of course we take the issue of saving for the long term, especially for pension provision, extremely seriously. That is why the Government commissioned the Sandler report to examine private sector pension provision, and also why we are seriously considering the proposals made by Alan Pickering in his review of the occupational pension scheme. We shall respond to those reports in the autumn, and put forward our proposals.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

Most public sector pension schemes are, of course, unfunded, and they are an important part of the rewards package for low-paid workers in local government, health, the fire service and the police. Is it Government policy to continue those public sector schemes on a final salary basis, including survivor benefits and indexation of the pension once it is in payment?

Ruth Kelly

I take it that my hon. Friend is referring to the Pickering review, which proposed some changes in what it is compulsory for employers to offer in their pension schemes. We are, of course, taking those proposals extremely seriously—but at first sight some of them, especially those on compulsory indexation and survivors benefits, do not seem attractive. Against that, however, must be weighed the overall impact on occupational pension schemes. We are taking the issues extremely seriously, and we will make proposals in due course.