§ 4. Ms Bridget Prentice (Lewisham, East)What assessment he has made of the contribution of stakeholder pensions to saving for retirement. [55490]
§ The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle)Stakeholder pensions have made an encouraging start, and figures from the Association of British Insurers show that about 815,000 had been bought up to the end of March 2002. They have also had a wider beneficial effect on pension provision, helping to drive down other personal pension charges and stimulating the provision of personal pensions. Everyone now has access to a good-value pension arrangement. That is all good news for consumers.
§ Ms PrenticeWhile I appreciate my hon. Friend's reply, two things concern me. The first is the suggestion from the Financial Services Authority that there should be compulsion on private pensions and the second is the report published today that says that a number of private pension companies are apparently unaware that we are all living longer thanks to wonderful advances in medical science and our health service. Does she have any comment on compulsion in pensions and what has she to say to encourage people to take up stakeholder pensions, given their success so far?
§ Maria EagleMy hon. Friend is right that there has been discussion around and about in the pensions industry on whether there should be compulsion. Opposition Members have raised the issue in debates, as have my hon. Friends occasionally. The Government have no plans to make it compulsory for employers to contribute to their work force's stakeholder pensions. In respect of living longer, 9 I agree with my hon. Friend that it is entirely a good thing. Perhaps we should make that clear. [Interruption.] I am not going to claim that the Government are making people live longer. It is a Monday afternoon; I am not going to make claims like that.
The fact that we now have a low-cost simple vehicle that people can save into helps to ensure that they can make proper provision for their old age. People now live longer in retirement, so it becomes all the more important that they make proper provision during their working lives to enable them to enjoy their retirement with an adequate pension. In that respect, the stakeholder pension is important. The value of new regular pension premiums rose by 52 per cent. in 2001. That is due in part to stakeholder pensions—I am not going to say that it is all due to them—and it shows that when people are provided with simple low-cost vehicles that they can save into for their retirement, they start to do so. Members on both sides of the House should welcome and encourage that, and I hope they all do.
§ Mr. Kelvin Hopkins (Luton, North)I am in favour of increased life expectancy, having reached an age when mortality becomes all the more apparent. My hon. Friend will have seen the weekend reports that private pensions are not worth while for those on average or lower incomes. She will also be aware, as we all are, of the deterioration in employee occupational pensions. Is it not time for the Government seriously to consider a substantial increase in the basic state pension, funded by compulsory savings from employees and compulsory larger contributions from employers?
§ Maria EagleFirst and foremost, my hon. Friend is looking particularly well this afternoon, even if he is feeling mortality closing in on him. On his points about the basic state pension, Government policy in respect of the balance between state pensions and private provision is clear and he will have heard it discussed during debates on the State Pension Credit Bill. We believe that the balance is about right. We all recognise the fact that the key to ensuring that people have enough money to lead a pleasant and well-provided old age is a mix between private and public pensions. We must encourage people to save, where they are able to do so, into a good private pension, and that is what we intend to do.