§ Mr. Nicholas BrownTo ask the Secretary of State for Social Security (1) what assumptions he has made about(a) the growth in the retail prices index and (b) the growth in earnings when changing the calculations of the earnings factors used to derive SERPS entitlement as proposed in the Pensions Bill;

(2) if the changes in the calculation of the earnings factors used to derive SERPS entitlement contained in the Pensions Bill will (a) reduce the sum paid out to the pensioner from what it is currently forecast to be, (b) contain any element of retrospection and (c) impact in a regressive way;

(3) what is his forecast of the cost or saving in paying out SERPS pensions brought about by the changes in the calculation of the earnings factors used to derive SERPS entitlement contained in the Pensions Bill;

(4) if he will list by earnings decile the impact of the changes in the calculation of the earnings factors used to derive SERPS entitlement contained in the Pensions Bill by comparison with the forecast outcome under the present arrangement for the years (a) 2000–01, (b) 201011, (c) 2020–21, (d) 2030–31, (e) 2040–41 and (f) 2050–51;

86W(5) how the amount paid to SERPS beneficiaries will be affected by the changes in the calculation of the earnings factors used to derive SERPS entitlement from 6 April 2000 onwards contained in the Pensions Bill.

§ Mr. ArbuthnotThe changes in the calculation of earnings factors used to derive SERPS, as outlined in the Pensions Bill—annualisation of SERPS—is a technical change to the SERPS formula which will restore the original policy intention that SERPS entitlements are based on average earnings between the lower and upper earnings limit.

The change will result in a recalculation of the amount of SERPS payable in respect of past years for those people who become entitled from 6 April 2000. There will be no loss for people who reach state pension age or qualify for widows benefits before that date.

The maximum weekly reduction in individual entitlements, using the woman's current pension age, is estimated to be (a) £2.70, (b) £3.80, (c) £4.90, (d) £4.60 (e) £4.40 and (f) £4.40.

This effect is flat rate and applies to those with a complete work history of earnings above the lower earnings limit since 1978 or age 16, whichever is the later. For those with broken work records, the effects will be smaller.

Savings as a result of the change will amount to £400 million in 2010 rising to £2.3 billion by 2050. Projections assume that future upratings will continue to increase flat-rate benefits in line with prices and therefore have been calculated on 1994–95 prices. An assumed real earnings growth rate of 1.5 per cent. has been used.