§ Mr. CousinsTo ask the Secretary of State for Social Security, pursuant to his answer to the hon. Member for Northavon (Mr. Webb) of 26 June 2000,Official Report, columns 348–49W, on pensions, if he will re-present the figures assuming (a) the state second pension remains earnings related and (b) the minimum earnings guarantee is available to those who made no second pension provision and the Minimum Income Guarantee is uprated in line with earnings; if he will set out the assumptions about investment returns which underly his estimates of returns on stakeholder pensions; what assumption he has made about the level of contributions to stakeholder pensions; and if he will estimate the effects of these projections based on 75 per cent. of average earnings. [128623]
§ Mr. RookerThe information is in the tables.
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Estimated basic and compulsory second tier pension for someone on average earnings throughout their working life who reaches pensionable age in 2050, assuming state second pension remains earnings-related £ All Man Woman Basic Pension 31.00 31.00 31.00 Additional Pension from State scheme or stakeholder pension 71.00 73.00 67.00 Total Pension 102.00 103.00 98.00
Estimated basic and compulsory second tier pension for someone on 75 per cent. of average earnings throughout their working life who reaches pensionable age in 2050, assuming state second pension remains earnings-related £ All Man Woman Basic Pension 31.00 31.00 31.00 Additional Pension from State scheme or stakeholder pension 65.00 67.00 67.00 Total Pension 96.00 98.00 91.00 Notes:
1. Figures, which are in 1999 earnings terms, are rounded to the nearest £ and may not sum as a result.
2. The estimates are based on 100 per cent. and 75 per cent. of average earnings of (i) all full-time employees; (ii) all male full-time employees; and (iii) all female full-time employees.
3. The estimates are based on a person beginning work at 16 and working for 49 years until age 65.
4. The estimates are based on the Department's Lifepen model and the following assumptions:
- Stakeholder pensions start April 2001
- State Second Pension starts April 2002
- Earnings grow 1.5 per cent. a year faster than prices
- Basic State pension is uprated in line with prices
Projections for stakeholder pensions are based on National Insurance rebates only. They are estimated weekly amounts a person would receive if the investment return and other relevant factors affecting the amount of the stakeholder pension were the same as the assumptions underlying the calculation of the National Insurance rebates paid into a stakeholder pension. No allowance is made for voluntary contributions made by individuals or their employers.
The level of the rebates will be determined by the Secretary of State based on the advice of the Government Actuary. The assumptions which underlie the rebate, including investment return, will be the subject of a consultation exercise by the Government Actuary this summer, culminating in an Order to be laid before Parliament no later than April 2001. The Order will set the rebate rates for the period April 2002 to March 2007.
In 1999 earnings terms, the value of the Minimum Income Guarantee would remain constant at £75 a week if it were consistently increased in line with earnings.