§ Mr. Dellasked the Secretary of State for Social Services whether he will publish his estimate on the basis of such assumptions as he thinks appropriate of the relative financial advantage to a person of 27 years of age leaving an employment after five years' service at an average salary of£1,500 per annum and covered by a good occupational pension scheme, as between return of his own contributions for the purpose of purchasing a pension and preservation under the Social Security Bill.
§ 2. Sir K. JosephOn the assumptions stated below, the preserved pension under the Social Security Bill would be not less than£125 a year. The actual rate would depend on the rules of the particular scheme. If, for example, the rules provided for the preserved pension to be increased at 3 per cent. a year over the period of deferment up to a pension age, the rate at that age would be£390 a year. How much—if anything—the employee paid in contributions would also depend on the rules of the scheme. But accumulated contributions representing 5 per cent. of his earnings would enable a pension of about£415 a year from age 65 to be purchased.
The assumptions are as follows:
1. The employee's annual earnings have been assumed to rise from£1,300 to£1,750 over his five years of service.
Occupational Pension Scheme
Pension scale: for each year of service, 1/60 of salary less£100, averaged over the last 3 years.
186WPension age: 65.
Widow's pension on death after 65: Half member's pension—the same assumption applies to the preserved pension and the pension bought with the accumulated contributions.
Pension increases from commencement of payment: 3 per cent. a year—such increases have been assumed to apply also to the pension bought with the accumulated contributions.
3. Current interest rates have been assumed in estimating the amount of pension purchased with the member's contributions.
§ Mr. Dellasked the Secretary of State for Social Services what estimate he has made of the number of persons in occupational pension schemes, in the public and private sectors separately, in 1980, 1990 and 2000 on the assumption that the Social Security Bill is enacted.
§ Sir K. JosephNo reliable estimates can be made but, with the expected increase in the working population, and assuming a progressive expansion of membership until, in the year 2000, two-thirds of employees are members, about 13 million, 16 million and 19 million respectively. At present about 63 per cent. of members are in the private sector; this proportion might rise to about 72 per cent. by 2000.
§ Mr. Dellasked the Secretary of State for Social Services what estimate he has made, as at the year 2000, of the number of persons who will hold more than one, two, three, four or five preserved pensions in occupational pension schemes, on the assumption that the Social Security Bill is enacted.
§ Sir K. JosephIt is not possible to produce worthwhile estimates; the numbers will depend, among other things, on the extent and character of labour mobility, the growth in transfer arrangements between pension schemes and the expansion of group and centralised pension schemes.
§ Mr. Dellasked the Secretary of State for Social Services what information is in his possession as to the failure of occupational pension schemes to provide enforceable benefits during the last 10 years.
§ Sir K. JosephThere are no central records which would enable me to identify such cases but I believe that there can have been very few and I know of none.
187W
§ Mr. Dellasked the Secretary of State for Social Services how many occupational pension schemes he estimates will be wound up if the Social Security Bill is enacted.
§ Sir K. JosephI have made no such estimate. The general effect of the Bill should be to increase the number of occupational schemes and if some are wound up they will, I hope, be replaced by better ones.
§ Mr. Dellasked the Secretary of State for Social Services if he will list the powers he now possesses to ensure the financial viability of occupational pension schemes.
§ Sir K. JosephExcept in regard to my responsibilities for the National Health Service Superannuation Scheme, I have no such powers, but the Registrar of Non-Participating Employments appointed under the National Insurance Act 1965 ensures that occupational pension schemes used for contracting out of the State graduated pension scheme make adequate provision to ensure the payment in full of equivalent pension benefits.