§ Mr. Pattieasked the Secretary of State for Defence (1) pursuant to circular letter OE 72(SP)/SGN/10/77/3800, why the method of payment of Royal Navy and RAF pensions is being changed;
(2) why it will not be possible for future Royal Navy and RAF pension vouchers to be made payable to a post office;
(3) what arrangements are being made for Royal Navy and RAF pensioners who do not have bank or building society accounts;
(4) what will be the estimated saving in money and manpower of the proposed change in payment of Royal Navy and RAF pensions.
(5) what arrangements are currently in force for the payment of Army pensioners; and whether it is proposed to change these.
§ Mr. DuffyThe pensions of Royal Navy ratings, Army soldiers and Royal Air Force airmen have traditionally been paid weekly in advance by means of pensions orders cashable at a nominated post office. However, this method is costly, requires more staff and is more open to fraud than payment through a bank by the Paymaster General's Office, the method already employed for all officers' pensions and public servants generally. Many more people now have a bank, building society or Giro account. My Department is therefore inviting existing Royal Navy and Royal Air Force 739W weekly paid pensioners to accept payment of their pensions monthly in arrears, by credit transfer to their bank or similar account.
Where the pensioner has no account of his own, payment can be made in the form of a crossed payable order or voucher—which is similar to a cheque—which can then be cashed through the account of someone else, for example, a relative. Alternatively, the circular letter to which the hon. Member refers makes clear that any pensioner for whom monthly payment would cause hardship, or who has personal reasons for wishing to receive his pension by weekly pension order at the post office, may continue to do so.
A similar drive was made in the Army about two and a half years ago and -met with a good response. As a result, over half of Army soldier pensioners now receive their pensions monthly, though, as in the case of existing Royal Navy and Royal Air Force pensioners, they retain the option to continue with weekly payments if they so desire. There are no plans to change these arrangements.
It is hoped that about 70 per cent. of existing Royal Navy and Royal Air Force pensioners and most new pensioners will agree to monthly payments through a bank or similar account by the Paymaster General's Office. It is estimated that this measure will save the Ministry of Defence 33 staff, post office charges and other expenses, costing £300,000 a year. After allowing for increases in staff and postage costs in the Paymaster General's Office, the net saving to Her Majesty's Government is estimated at £160,000 a year.