HC Deb 15 February 2000 vol 344 cc502-4W
Mr. Webb

To ask the Secretary of State for Social Security if he will obtain a copy of the report on the research undertaken by the Financial Services Authority into the effect of decision-tree approaches to pension choices; and if he will place it in the Library. [109842]

Mr. Rooker

We see a key role for decision trees, as part of a package of information, in enabling many of those considering a stakeholder pension scheme to make an informed choice about whether it will be a suitable option for them. We have been working closely with the Financial Services Authority (FSA), which is carrying out a three-stage programme of consumer research aimed at developing an effective decision tree. The final stage is currently under way and is due for completion in April. The FSA will be publishing a report of its completed research in due course.

Mr. Webb

To ask the Secretary of State for Social Security if he will estimate the number of employees who fall within the target group for stakeholder pensions and who will not be entitled to workplace access to a stakeholder pension because they currently work for a firm with fewer than five employees. [109838]

Mr. Rooker

We estimate that the exemption for employers with fewer than five employees will mean that around 750,000 employees, from a target group of over five million, will not have an automatic right of access through the workplace. We expect, however, that some employers will voluntarily offer access. Furthermore, those who cannot join a stakeholder pension scheme through the workplace will be able to join a scheme on an individual basis.

Mr. Webb

To ask the Secretary of State for Social Security what restrictions he proposes on the investment strategies which may be adopted by the managers of stakeholder pension funds. [109840]

Mr. Rooker

The position for trustees of stakeholder pension schemes is set out in legislation and mirrors the current requirements on trustees of occupational pension schemes. For example, the trustees will have a duty to consider the need for diversification and the suitability of proposed investments, and to take appropriate advice when making investments. They will also have to prepare a statement of investment principles.

Details of the rules applying to schemes run by an authorised scheme manager, as an alternative to a trustee board, including any rules relating to investments, will be announced shortly.

Mr. Webb

To ask the Secretary of State for Social Security if he will estimate for each of the 10 financial years after the introduction of the State Second Pension the number of people receiving the State Second Pension; and of these, how many will also be receiving Income Support. [109839]

Mr. Rooker

The information is not available in the format requested. Such information as is available is in the table.

It is not possible to provide precise estimates of the numbers of individuals who will receive the State Second Pension for specific years following its introduction. The table shows very broad brush estimates of the numbers who will benefit from the State Second Pension. These are subject to uncertainty and possible subsequent revision. Income Support is means-tested and is paid on a benefit unit basis. Therefore, in order to estimate the overlap between those receiving the State Second Pension and Income Support we would need information on the incomes, assets and family circumstances of the State Second Pension recipients for up to 12 years in the future. No sufficiently reliable estimates of all these factors are available to answer this question.

Numbers benefiting from State Second Pension at the end of the financial year
Year Millions
2003–04 0.3
2004–05 0.5
2005–06 0.8
2006–07 1.2
2007–08 1.7
2008–09 2.1
2009–10 2.6
2010–11 3.0
2011–12 3.5
2012–13 3.7

Notes:

1. The numbers given are the estimated numbers of individuals who will benefit from the State Second Pension at the end of each financial year. For example, with the first year of awards being 2003–04, the entry in the table headed 2003–04 shows the number of beneficiaries after the first full year of awards.

2. Numbers have been rounded to the nearest 0.1 million.

3. Figures include people who would receive the State Second Pension payments as well as those receiving contracted—out pensions where they have benefited from higher contracted—out rebates than would have applied under SERPS.

4. The figures exclude those higher earning individuals who are contracted-out and whose rebates would be the same under the State Second Pension as under SERPS, since such individuals would not benefit from awards of the State Second Pension, nor would they gain from any increase in contracted-out rebates.