§ Baroness Castle of Blackburn
asked Her Majesty's Government:
What would be the impact on National Insurance contribution rates of restoring the original intention of SERPS of enabling contributors to qualify for a pension of 25 per cent. of earnings between the lower earnings limits and the upper earnings limits at the end of their working lives. [HL1539]
§ Baroness Hollis of Heigham
The information requested is set out in the following table.64WA
The estimated increase in National Insurance contributions that would be required if SERPS accruals were increased to 25 per cent. of band earnings from 2000/01 (all other aspects of SERPS remaining unchanged) Year Current baseline Increase in respect of 25 per cent. accrual rate Total contribution rate required 2000/01 17.7 per cent. 0.7 per cent. 18.4 per cent. 2010/11 17.4 per cent. 0.6 per cent. 18 per cent. 2020/21 16.8 per cent. 0.6 per cent. 17.4 per cent. 2030/31 17.2 per cent. 0.6 per cent. 17.8 per cent. 2040/41 15.8 per cent. 0.6 per cent. 16.4 per cent. 2050/51 14 per cent. 0.7 per cent. 14.7 per cent.
1. Estimates have been prepared by the Government Actuary based on the Third Quinquennial review (National Insurance Fund Long Term Financial Estimates HC 160).
2. The current baseline refers to the pension system as provided for in the 1995 Pensions Act.
3. The contribution rates given are those required to balance the National Insurance fund by producing sufficient income to match expenditure on benefits and administration in each year shown.
4. Assumptions are as follows:
(a) Price uprating of benefits and earnings limits.
(b) SERPS accruals at the 25 per cent. rate would commence in 2000/01.
(c) All contribution rates increase proportionately.
(d) The illustrative rates exclude the NHS allocation.