§ Lord LEATHERLANDMy Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how the proposed wage and salary restrictions will affect local government and other pensions where the rate of superannuation is based on the final year's or final three years' salaries.
§ The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes)My Lords, my right honourable friend the Secretary of State for Employment made the position on pensions clear in his speech during the Second Reading of the Remuneration, Charges and Grants Bill in the other place last Wednesday. My right honourable friend announced that the arrangements for the payment of pensions under existing schemes may continue unchanged. Such arrangements are not affected by the pay limit. He also said that it will be open to those concerned to decide, if they wish, to continue to calculate pension entitlements on the basis of the rate of pay to which the employer was committed before 11th July, even though that commitment may be limited by the new policy.
§ Lord LEATHERLANDMy Lords, I thank my noble friend for that Answer. Does it mean, as I think it does, that if a man was supposed to have a £500 increment this year, the year of his retirement, the figure upon which his pension is based would be £500 more than the cash he actually drew?
§ Lord HUGHESYes, my Lords; if that was the commitment entered into before 11th July.
§ Lord LEATHERLANDMy Lords, I thank my noble friend for that Answer. I am sure that it will give great pleasure to many thousands of local government employees.
§ The Earl of ONSLOWMy Lords, is it not rather odd that we should base pensions on a notional salary received? I note that this habit was started in another place, but surely a pension should be based on the actual salary, not on the notional one.
§ Lord HUGHESMy Lords, I think the information given by my right honourable friend in another place has received the same sort of general welcome as that given by my noble friend Lord Leatherland.
§ The Earl of ONSLOWMy Lords, could the noble Lord, Lord Hughes, go slightly further in answering my question, as opposed to saying what his right honourable friend said in another place, and not repeating it?
§ Lord HUGHESMy Lords, I do not know what the noble Earl, Lord Onslow, wants me to say. I find the position perfectly satisfactory.
§ The Earl of ONSLOWMy Lords, what I am asking the noble Lord opposite is this. Is it not very odd to base a pension on a notional salary as opposed to a salary actually received?
§ Lord HUGHESNo, my Lords. This is not something which has just arisen as a result of these present arrangements. It is something which happens from time to time in the ordinary course of pension and working arrangements.
§ Lord CROOKMy Lords, is the noble Earl, Lord Onslow, not aware that this is part of the contract of employment of the people in question?
Viscount ST. DAVIDSMy Lords, is the noble Lord aware that this habit has been going on for at least 200 years in the Navy, which has been in the habit of making retiring captains into yellow admirals for the specific purpose of getting them a pension of appropriate size?
§ Lord HUGHESMy Lords, that goes back before my time! But I will accept the noble Viscount's word for it that it is correct.
§ Viscount DAVENTRYMy Lords, may I just say that that is not correct?