HC Deb 01 November 1999 vol 337 cc42-3W
Mr. Gardiner

To ask the Secretary of State for Social Security if he will provide the basis of his Department's calculation that restoring the basic state pension link with earnings would cost £8 billion by 2010. [96105]

Mr. Rooker

The gross cost of increasing the basic State pension in line with earnings is calculated by the Government Actuary's Department to be £7.6 billion in 2010–11. An explanation of the method for calculating gross costs of the basic State pension is given in Appendix D (paragraphs 14.21 to 14.35), of the Government Actuary's Department publication "National Insurance Fund: Long Term Financial Estimates", (Cm 4406: July 1999), which is available in the Library. For the purposes of this costing, it is assumed that annual real earnings growth is 1.5 per cent. above price inflation.

Mr. Paul Marsden

To ask the Secretary of State for Social Security if he will consider funding a one-off payment to pensioners of £50 in addition to the basic state pension on the occasion of the millennium. [96748]

Mr. Rooker

We have already increased the Winter Fuel Payment to £100 this year to ensure that today's pensioners do not have to worry about turning their heating up when it is cold because of the cost of their winter fuel bills.

Mr. Burstow

To ask the Secretary of State for Social Security, pursuant to his answer of 25 October 1999,Official Report, column 722, concerning SERPS if he will update the figures with net cost (a) using the pensions model and (b) using the assumptions made in the answer to the hon. Member for Northavon (Mr. Webb) of 16 December 1998, Official Report, column 611. [96677]

Mr. Rooker

Precise estimates of net costs using the pensions model are not available. For a delay in changes to inherited SERPS until 2010, income-related benefit savings are estimated to be in the range 0-5 per cent. of gross costs between 2000 and 2010, and 5-10 per cent. of gross costs between 2010 and 2020. A delay in changes until 2005 leads to estimated income-related benefit savings of the order of 0-5 per cent. of gross costs between 2000 and 2010, and between 5-15 per cent. of gross costs between 2010 and 2020.

Income-related benefit offsets based on the Family Resources Survey are not applicable as the latest model applies to the current year only.

Note:

Income-related benefit offsets are estimated using PENSIM, a dynamic simulation model that projects pensioners' incomes into the next century. PENSIM estimates are based on a number of economic and behavioral assumptions and show the broad order of magnitude of future changes—as such offset ratios should be viewed as indicative rather than definitive.