§ 78. Mr. BrazierTo ask the Secretary of State for Social Services what incentives there will be from July 1988 for individuals to build up additional pensions.
§ 79. Mr. Jacques ArnoldTo ask the Secretary of State for Social Services what incentives there will be from July 1988 for people to establish personal pension schemes.
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§ Mr. PortilloFrom 1 July 1988 it will be possible to contract-out of the state earnings-related pension scheme through a personal pension from a scheme approved by the Occuptional Pensions Board. Personal pensions will attract minimum contributions paid by the Department. These will be made up of a partial rebate of national insurance contributions and, until April 1993, a special incentive payment. In most cases the payments by the Department will include tax relief on the employee's share of the minimum contribution. People taking out a personal pension before 6 April 1989 will be able to backdate membership to 6 April 1987 and claim an extra year's minimum contributions, including the incentive.
§ Mr. BoswellTo ask the Secretary of State for Social Services if he will make a statement about the regulations governing the sale of personal pensions, in the light of the Governments decision that they should not be available before 1 July 1988.
§ Mr. PortilloI announced on 26 August that the start date for the new personal pension arrangements introduced by the Social Security Act 1986 was to be postponed from 4 January 1988 to 1 July 1988. This decision was taken in the interests of investor protection, following an announcement by the Securities and Investments Board that certain key rules relating to the provision of product information to consumers would not come into force until 1 July 1988.
The postponement necessitates some changes to the regulations governing personal pensions, and amending regulations are being laid before Parliament today. These revoke the Personal Pension Schemes (Appropriate Schemes) Regulations 1987 (S.I. 1987, No. 1109), with the result that the Occupational Pensions Board cannot consider applications for personal pension schemes to be appropriate to receive minimum contributions under the Act. Replacement regulations will be made as soon as possible. These will empower the board to accept and consider applications for approval from 1 March 1988 and to issue appropriate scheme certificates from 1 July 1988.
The amending regulations also make a change to the conditions in which the 2 per cent. incentive addition will not be paid to someone taking a personal pension. The original regulations provide that the incentive will not be paid to a person who, having been a member of a contracted-out occupational pension scheme for two years or more, leaves the occupational scheme voluntarily and without changing employment on or after 4 January 1988 in order to take a personal pension. Under the amending regulations the incentive will not be payable to a person who leaves an occupational scheme in these circumstances on or after 6 April 1988.