HL Deb 17 December 1990 vol 524 cc647-8

2.56 p.m.

Baroness Turner of Camden asked Her Majesty's Government:

What has been the cost to the taxpayer of the Government's decision to encourage people to opt out of SERPS.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, the Government Actuary's report on the Social Security Benefits Up-rating Order 1990 and the Social Security (Contributions) (Re-rating) Order 1990 showed that in 1990–91 the total national insurance contribution reductions attributable to both occupational and personal pensions would be about £7.6 billion, of which about £2 billion would be in respect of rebates and incentives for personal pensions.

Baroness Turner of Camden

My Lords, I thank the Minister for that Answer. Is it not a fact that far more people have opted for personal private pensions than was originally envisaged? The result is that the National Insurance Fund is now substantially in debt. Is this not a rather short-sighted policy, since perhaps a large number of those people may find at a later date that they need to come back to the state earnings related pension scheme? I suggest to the Minister that it may be at a time when there is no longer a Conservative administration in power.

Lord Henley

My Lords, I am not sure that that is likely to happen in the foreseeable future. The National Insurance Fund is at a satisfactory level. I have to tell the noble Baroness that it was difficult to predict the number of people who would opt for personal pensions. I hope that the noble Baroness will accept that the number of people who have opted for personal pensions is a sign of the success of that policy. It should be a matter for praise rather than recrimination.

Lord Boyd-Carpenter

My Lords, is it not a fact that the excess of people who have opted out beyond the figure expected by the noble Baroness means that there has been more beneficial investment in industry in this country?

Lord Henley

My Lords, my noble friend is absolutely correct; 4.1 million people have so far taken out personal pensions. As I said in my response to the noble Baroness, this is a sign of the success of the Government's personal pensions initiative.

Baroness Turner of Camden

My Lords, does the Minister agree that it is not so much the success of the policy but the success of the advertising campaigns conducted by people in the business of providing personal pensions? Is it not a fact that there can be no degree of security for people who have taken out personal pensions? Is that not a concern for the future?

Lord Henley

No, my Lords; I repeat that it is a sign of the success of the scheme. The noble Baroness takes far too cynical a view of the industry. I repeat that 4.1 million people have so far taken out personal pensions and this is a sign of the success of the initiative.

Lord Monkswell

My Lords, do the Government agree that with pensions one should look at the long term rather than the short term over the next year? Can the Minister give any figures for the cost requested in the Question for the next 10 years and the next 20 years?

Lord Henley

My Lords, I cannot give figures offhand for the next 10 or 20 years. However, I agree with the noble Lord that we should look to long-term costs. That is why we proposed changes to SERPS through the Social Security Act 1986 which should yield savings of some £14 billion per annum by the year 2035 at 1990 prices.