HC Deb 16 January 1998 vol 304 cc340-1W
Mr. Rooney

To ask the Secretary of State for Social Security if she will publish figures showing the level of the basic pension and SERPS addition for men and women on(a) average full-time earnings for their sex, (b) half average earnings and (c) earnings of £40 a week, and its equivalent as a proportion of average earnings in later years, expressed in today's prices and as a percentage of average earnings in (i) 1997–98, (ii) 2015–16, (iii) 2025–26 and (iv) 2035–36, based on the assumption of (1) price indexation and (2) earnings indexation. [20809]

Mr. Denham

[holding answer 15 December 1997]: The information is not available in the format requested. Such information as is available is in the tables. Where someone is earning £40 per week in 1997 terms, as this is well below the lower earnings limit for National Insurance contributions, they would not qualify for any basic Retirement Pension or SERPS in respect of these earnings.

Table 2: Level of SERPS for men and women on earnings levels shown—uprated in line with prices but expressed in 1997–98 prices. Amounts expressed as proportion of national average earnings
Average full-time earnings Men Average full-time earnings Women Half average full-time earnings Men Half average full-time earnings Women
£ Per cent. £ Per cent. £ Per cent. £ Per cent.
1997–98 83.45 22.3 51.56 13.8 34.48 9.2 18.54 5.0
2015–16 93.69 19.2 61.25 12.5 39.21 8.0 22.04 4.5
2025–26 103.40 18.2 71.75 12.6 45.87 8.1 26.67 4.7
2035–36 107.49 16.3 82.91 12.6 53.03 8.1 33.10 5.0

Table 3: Level of basic pension for men and women on earnings levels shown—uprated in line with earnings but expressed in 1997–98 prices. Amounts expressed as proportion of national average earnings
Average full-time earnings Men Average full-time earnings Women Half average full-time earnings Men Half average full-time earnings Women
£ Per cent. £ Per cent. £ Per cent. £ Per cent.
1997–98 62.45 16.7 62.45 16.7 62.45 16.7 62.45 16.5
2015–16 80.90 16.5 80.90 16.5 80.90 16.5 80.90 16.5
2025–26 92.89 16.5 93.89 16.5 93.89 16.5 93.89 16.5
2035–36 108.96 16.5 108.96 16.5 108.96 16.5 108.96 16.5

Table 4: Level of SERPS for men and women on earnings levels shown—uprated in line with earnings but expressed in 1997–98 prices. Amounts expressed as proportion of national average earnings
Average full-time earnings Men Average full-time earnings Women Half average full-time earnings Men Half average full-time earnings Women
£ Per cent. £ Per cent. £ Per cent. £ Per cent.
1997–98 83.45 22.3 51.56 13.8 34.48 9.2 18.54 5.0
2015–16 94.78 19.4 60.42 12.4 38.39 7.9 21.22 4.3
2025–26 108.36 19.1 69.95 12.3 44.07 7.8 24.86 4.4
2035–36 120.14 18.2 80.28 12.2 49.43 7.5 29.50 4.5

1. Figures provided by the Government Actuary's Department.

2. For all years except the first year, national average earnings and earnings uprating factors are assumed to increase by 1.5 per cent. in real terms per annum. For 1998–99 the latter is assumed to increase by the change in real earnings in the 12 months to September 1997.

Mr. Corbyn

To ask the Secretary of State for Social Security what would be the net cost to the Exchequer of raising the state pension in line with earnings in the current year over the pension payable in 1996–97; and what would be the net additional cost if the link between pensions and earnings had not been ended in 1980. [17364]

Mr. Denham

[pursuant to his reply, 12 December 1997, c. 730–31]: The additional net cost to the Department of raising State pensions in line with earnings from April 1997 is estimated to be £530 million in 1997–981.

If the link between pensions and earnings had continued since 1979 to date the additional net cost to the Department in 1997–98 is estimated to be £10.4 billion2.

Notes:

1. Figure is rounded to £10 million.

2. Figure is rounded to nearest £100 million.

3. These estimates are in respect of contributory RP and linked benefits. The gross costs were estimated by the Government Actuary's Department. Net costs were calculated by using income related benefit offset ratios. The income related benefit offsets were calculated using specific offset ratios of 27 per cent. and 22 per cent. respectively. The offset ratios were calculated using two models: the 1997–98 Policy Simulation Model based on the 1995–96 Family Resources Survey, and the 1997–98 Income Support Simulation Model based on the May 1996 Quarterly Statistical Enquiry; both uprated to 1997–98 prices, benefits and earnings levels, and calibrated to the forecasts underlying the 1997 Departmental Report.