§ 32. Mr. RiddickTo ask the Secretary of State for Social Security what steps he has taken to encourage people to make greater provisions for their old age through occupational pensions.
§ Mr. Peter LloydSince October 1987 everyone in an employer's pension scheme has been able to pay extra contributions to a separate pension plan of their own. From April this year all employers' schemes have to accept extra contributions from members who wish to make them. Employers who want to provide a contract-out pension scheme can now choose between a salary-related scheme, where the rules have been simplified, and a money purchase scheme where employers wish to keep their pension commitment to a known level. This will also encourage employers to come together and set up industry-wide schemes. In addition, a special incentive payment worth an extra 2 per cent. of that part of the employee's earnings on which national insurance contributions are paid at the lower contracted-out rate, is payable until 1993 for both money purchase and salary-related schemes.
§ Mr. ConwayTo ask the Secretary of State for Social Security what action the Government have taken to encourage employers to set up occupational pension schemes.
§ Mr. Peter LloydSince April employers have been able to use a money purchase scheme for contracting out of SERPS, thereby keeping their pension commitments to a known level. As further encouragement, the 2 per cent. special incentive payments will be made to new occupational pension schemes, both salary-related or money purchase, which have been set up for the first time since 1 January 1986. These payments will be made until April 1993. Some 5,000 new contracted-out money purchase schemes have already been set up since April.