§ 2. Angela Watkinson (Upminster)
When the ratios of pensioners' income being derived from funded pensions from the state will be reversed. 
§ The Secretary of State for Work and Pensions (Mr. Alistair Darling)
In 1998, we set out our long-term objective of ensuring that funded pension provision is substantially increased. That remains our position.
§ Angela Watkinson
I see three obstacles to achieving the Government's target of 40 per cent. of pensions deriving from state funding: first, the increasing number of pensioners on means-tested benefits; secondly, the poor performance of many private pension plans, which are giving pensioners a much poorer income than they ever anticipated; and thirdly, the very poor performance of mortgage endowments, which means that many pensioners will not clear their mortgage debts and will still be making mortgage payments in their retirement years.
§ Mr. Darling
The hon. Lady makes three points. In relation to endowment products, she raises a matter of concern, especially for people who were possibly not given the right advice some years ago. Of course, the regulatory framework has been greatly strengthened since that time, but she is right to express concern about people in that position. She also referred to private pension funds. As we discussed in the previous Question Time and on other occasions, increased longevity and the fall in the stock market have caused a number of companies to rethink their position. Interestingly, in the now corrected Office for National Statistics data, of which the hon. Member for Havant (Mr. Willetts) made so much, we find not only that there was no £100 billion fall in pension assets, as he claimed, but that contributions rose by £27 billion, which is encouraging.
In making her first point, the hon. Lady complained about the pension credit, which will benefit more than half of pensioner households by an average of £400 a year. If the Conservatives are against that, we look forward to hearing more from them. About 2 million people are benefiting from the minimum income guarantee, which will be £100 next year. The state second pension sees 5 18 million people gain, and some of them are getting more than double what they would have received under the former state earnings-related pension scheme.
The hon. Lady was right to raise her point about endowment mortgages. On her other two concerns, the Government will make proposals on private pensions, and we are absolutely right to make state provision available, especially for those on low incomes, and to ensure that saving pays—something that never used to be the case.
§ Mr. Frank Field (Birkenhead)
Does the Secretary of State accept that the great driving force affecting funded provision is the new accountancy rules, which will make it more difficult for the Government to achieve objectives that the whole House supports? Is there not a case for suggesting that the Government should request the accountancy body to withdraw the rules to allow further consideration? Some accountancy rules are necessary in deciding what liabilities appear on what balance sheets, but the current rules are harmful to long-term funded pension provision.
§ Mr. Darling
My right hon. Friend refers to the accounting rule commonly known as FRS17. It is not FRS17 or any other accounting rule that is closing down pensions: companies are choosing to close down those pensions, but they should take a long-term view on their pensions just as they do on other matters. They would not make a major investment decision on one set of accounts, and they should not make a long-term decision on pension funds purely in relation to what is shown in respect of one accounting requirement. I have told the Accounting Standards Board that I think that FRS17 is exacerbating an already difficult situation. I find it difficult to understand why we have an accounting standard that is not shared by other countries—the standard used in the United States, for example, is different—and I have suggested to the board that it might be better for everyone concerned if we had a standard that allowed companies to look at their pension funds over a period of years, rather than taking a snapshot decision that could be grossly misleading.
I must make the point that companies considering their pension funds should themselves take a long-term view, and that simply getting rid of, or rewriting, FRS17 would not solve the problem that some occupational funds face. I certainly would not argue in favour of the Government taking over accounting standards, because I believe that there is some merit in those matters being independently scrutinised. I happen to think that the Accounting Standards Board has got it wrong on this occasion, and that it should accept that.
§ Mr. Steve Webb (Northavon)
Will the Secretary of State acknowledge that the lesson of history is that one group that, on average, does badly out of privately funded pensions is women? Women past and present tend to have fewer and lower occupational pensions, and lower private pensions. Is it not also the case that only one in three of the Government's new shiny stakeholder pensions have gone to a woman? Will the Secretary of State tell us what projections his Department has produced of the future entitlements of today's working women to funded pensions? If no such projections have been produced, will he commission a study of women's pension entitlements, 6 to ensure that history does not repeat itself and that women do not remain the poor relation in private pension provision?
§ Mr. Darling
The hon. Gentleman omitted—by accident, I am sure—to mention that most of the gainers under the pension credit will be women. He is right to say that women have not done so well out of funded pensions—partly because of low pay, and partly because, historically, there were fewer women in the labour market—and that the beneficiaries have predominantly been men. The pension credit, however, will predominantly benefit women. The state second pension—which I think that the hon. Gentleman opposed, although I might be wrong about that—will also benefit women, particularly those on low wages. Indeed, some 18 million people on low wages, and others, will gain from the state second pension, and women who take career breaks to look after children or other people will also now get a pension, whereas in the past they got none. So, in relation to both the pension credit and the state second pension, women have gained as a result of the changes that the Government have made.