CONCURRENT HOLDING OF PENSIONS (Hansard, 26 July 2000)

§ Baroness Hollis of Heigham
My Lords, I beg to move that the House do not insist on its Amendment No. 18, to which the Commons have disagreed for their reason numbered 18A. This amendment was intended to enable people to be members of both the stakeholders scheme and an occupational scheme and make tax privileged pension contributions into each scheme at the same time. The amendment would, however, be ineffective because the legislation which governs such contributions is contained in Inland Revenue legislation, which this amendment does not alter. In any event, the Government have recognised, and were consulting at the time, that greater flexibility would assist people to build up pension savings. On 5th July the Government announced that people earning up to £30,000 a year will be able to save an extra £3,600 a year in stakeholder pensions, as well as saving in an occupational pension scheme. This means that almost 90 per cent of employees contributing to occupational schemes will be able to enjoy the benefit of stakeholder pensions as well. This announcement has been widely welcomed by the pensions industry.
The Government do not, however, believe that the cost of further extending this concession—which is what the amendment would have done—can be justified. Our partial concurrency benefits almost 90 per cent of people at a cost of £150 million. To extend it by the extra 12 or 13 per cent, for example, to people with incomes above £30,000 would incur a cost of a further £250 million for the better off. This Government believe that it is right to target available resources on moderate and low earners, and those most likely to be moving between schemes and therefore might find themselves in a confusing situation. That is what our proposals will do and I hope your Lordships will welcome them. I therefore ask your Lordships not to insist on their original amendment.
Moved, That this House do not insist on their Amendment No. 18 to which the Commons have disagreed for the reason numbered 18A. —(Baroness Hollis of Heigham.)

§ Lord Higgins
My Lords, it would not be appropriate for me to rise in the role of Oliver Twist. The Government have made a considerable concession on the arguments, although they propose to implement it in a different way from that which we envisaged. The level at which the Government regard people as low paid, medium paid or highly paid seems to fluctuate rather wildly between one part of the Bill 428 and another, but £30,000 a year in this context is not an unreasonable level. While we would have preferred full concurrency, the argument is accepted There is one question for the Minister. Does she envisage that that limit will eventually be indexed?

§ Baroness Hollis of Heigham
My Lords, I should imagine so but I should want to take advice.
The reason for the £30,000 figure is that stakeholder pensions were designed for those with an income of between £10,000 and £20,000 but, given indexation and people's climb up career ladders and so on, many of those on pensions of £18,000 or £19,000 may go up to about £25,000 or £27,000. The Government do not want people inadvertently committing a fraud by continuing one pension scheme while coming into an occupational pension scheme.
I am pleased that the noble Lord and the industry welcome our new position. I am also delighted that many people will have greater protection for their old age. I commend the Motion to the House.