§ Mr. Pawseyasked the Secretary of State for Social Services what would be the net cost of abolishing the earnings rule for retirement pensioners on the assumption that 40 per cent of those currently deferring retirement would continue to do so.
§ Mr. Rossi[pursuant to his reply, 18 January 1982, c. 571]: Assuming that all the other costing assumptions previously used remained unchanged, it is estimated that if 40 per cent. of those currently deferring retirement chose not to draw the unabated pension to which they would be entitled, following abolition of the earnings rule for retirement pensions, the cost to the national insurance fund in a full year and at 1982–83 benefit levels would be about £105 million. This would result in a net cost to public funds of about £25 million after taking account of increased revenue from taxes and national insurance contributions. I refer my hon. Friend to my reply to the hon. Member for Pontypridd (Mr. John) today, which contains the detailed assumptions on which the Department's current estimates have been based.
§ Mr. Pawseyasked the Secretary of State for Social Services what would be the cost of reducing the age ranges affected by the earnings rules for pensioners to 60 to 62 years inclusive for women and to 65 to 67 years inclusive for men.
§ Mr. Rossi[pursuant to his reply, 18 January 1982, c. 57]: On the basis of the assumptions set out in my pursuant reply to the hon. Member for Pontypridd (Mr. John) today, it is estimated that the cost to the national insurance fund in a full year at 1982–83 benefit levels would be about £45 million. After taking account of the assumed increase in revenue from taxes and national insurance contributions, this would reduce to a net cost to public funds of about £15 million.
§ Mr. Johnasked the Secretary of State for Social Services what would be the cost of abolishing the earnings rule for all pensioners.
§ Mr. Rossi[pursuant to his reply, 25 January 1982, c. 285]: It is estimated on the unchanged assumptions set out as follows that the cost to the national insurance fund of the abolition of the earnings rule and the retirement condition would be about £140 million in a full year at 1982–83 benefit levels. This would be offset by about £85 million from an assumed increased revenue from taxes and national insurance contributions, thus resulting in a net cost to public funds of about £55 million a year. The assumptions involve a projected net increase in working hours by those over pension age and, to the extent that this increase in employment amongst older people was not accompanied by an increase in the demand for labour, increased unemployment amongst other workers would occur which would substantially increase the net cost of abolition. The estimate also assumes that increments to pensions for deferred retirement are not immediately abolished and that 20 per cent. of those deferring retirement at the time of the abolition of the earnings rule would continue not to claim their pension. The other assumptions on which this estimate is based are that abolition would be introduced at November 1983; that at the time of abolition four per cent. of men aged 65 to 69 and 2½ per cent. of women aged 60 to 64 would be deferring retirement; that those who immediately claim the 863W pension to which they would be newly entitled reduce their earnings on average by 10 per cent.; that on average 10 per cent. of working pensioners would change from part-time to full-time work; that one per cent. of non-working pensioners, who have none the less had some employment since age 45, would take up part-time work; that 20 per cent. of the men deferring are self-employed; that 10 per cent. of non-working male pensioners who take up work are self-employed; and that the proportion of self-employed women who defer or take up work is negligible.