§ Baroness Turner of Camden asked Her Majesty's Government:
§ What protection exists for individuals who accept the incentive to opt for a personal pension (as opposed to SERPS), but who later find that their expectations of a reasonable pension in retirement are likely to be disappointed.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, individuals who choose to take out a personal pension are made aware that the amount that they will receive at retirement is dependent on the level of investment return achieved by the companies. After retirement part of the pension must be increased each year by the rate of price increases up to 3 per cent. If prices rise by more than 3 per cent., an addition is added to the individual's state retirement pension.
§ Baroness Turner of Camden
My Lords, I thank the Minister for that reply. However, is he aware that personal pensions are currently being advertised with the statement that the incentive being provided could amount to up to £1,000? Is it not immoral to persuade people to gamble with their future in this way? What will it cost if people seek to rejoin SERPS at a later date? Will it not then have been a very costly exercise?
§ Lord Henley
My Lords, it is entirely up to the individual to decide whether he or she wishes to take out a personal pension and to seek appropriate advice in his or her case. In the case of personal pension schemes which are investments as defined in the Financial Services Act, persons regulated by bodies under that Act have a duty to provide the best advice on such products. It is for the individual to make arrangements for obtaining any further advice that may be necessary in the light of changing circumstances.
§ Lord Henley
My Lords, as I said, that is entirely a matter for the individual to decide in the appropriate circumstances. We believe that an individual can make that decision for himself on advice from advisers, and having read, for example, our own book, NP 41 New Pension Choices—information for employees.