§ Mr. Whitehead
asked the Secretary of State for Social Services what would be the saving to the Exchequer of raising the female pensionable age to 61, 62, 63, 64 and 65 years, respectively.
§ Mr. Rossi
[pursuant to his reply, 9 November 1981, c. 20–1]: On a set of assumptions designed to complement those made for the central estimates for lowering male pension age, given in reply to my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) on 19 November 1981—[Vol. 13, c. 230–1]—it is estimated that the net savings to central Government funds for a full year from raising pension age for women would be of the following order:
Raising pension age to Saving £ million 65 400 64 350 63 300 62 250 61 150
The costings are based on average 1981–82 benefit levels—that is, only very modest amounts of earnings related pension are included—and assume that the increase in pension age is introduced, is fully operational in all respects and that retirement behaviour has fully adjusted in that financial year. It has also been assumed that, where women work beyond the present retirement age of 60, 75 per cent. of the jobs which they take will represent the loss of a job opportunity for someone else. Of those workers so displaced 75 per cent. are assumed to register as unemployed.
The assumptions on job displacement can only be approximate. It is considered reasonable to assume that, with present high unemployment and low job vacancies, the extra supply of female labour following a change in pension age would produce only a fairly modest increase in the number of jobs available. In order to indicate the full range of possibilities the following are costings for the high growth extreme of nil job displacement, whereby the extra number of older women employed would not displace workers elsewhere, and the low growth extreme of 100 per cent. job displacement in which for every additional job held by a woman who would otherwise have retired there is a job fewer held by the rest of the labour force.
On the low growth extreme of 100 per cent. displacement, with all those displaced registered for employment, the net savings would fall as follows:
Raising pension age to Saving £ million 65 100 64 100 63 100 62 100 61 50
At the high growth extreme with no job displacement whatsoever then the net savings would increase and be approximately as follows:
Raising pension age to Saving £ million 65 950 64 800 63 700 62 500 61 250
The estimates take account of the net savings in public expenditure, that is, the combined effects of the conflicting implications of the reduced costs of pensions, the additional national insurance contributions and surcharge, National Health Service redundancy fund and maternity pay funds income, the additional cost of other national insurance benefits, mainly sickness, invalidity and unemployment benefit, the changes in supplementary benefit payments and in income tax revenue. The savings are those to central Government funds and take no account of the financial implications for occupational pension schemes. Nor do they allow for any effect on national output of any net increase in the work force at current or future employment levels.