HC Deb 26 March 2003 vol 402 cc298-300W
Mr. O'Hara

To ask the Secretary of State for Work and Pensions of those people estimated to be entitled to pension credit, how many and what proportion are expected to have made a claim and be in receipt of their entitlement by October 2004. [103637]

Mr. McCartney

The Pension Service will be writing to all pensioner households to explain pension credit and invite applications. By 31 March, letters will have been sent to all MIG households letting them know we will convert their payment to pension credit automatically. Between April and September 2003, invites will be issued to around 20 per cent. of pensioner households with the remaining households targeted between October 2003 and June 2004. This systematic approach will be supported by regional and national advertising.

As the Secretary of State has said in the House, we want as many pensioners as possible who are entitled to claim pension credit to do so. We have set a PSA target of having at least three million households in receipt of pension credit by 2006. We expect to have made good progress towards this target by October 2004, and our aim is to have reached at least 2.8 million or 73 per cent. of those eligible, in 2004. The number of eligible households is estimated, from research data, to be 3.8 million.

Ms Walley

To ask the Secretary of State for Work and Pensions what plans his Department has to help women who were allowed to pay reduced national insurance contributions to gain a full state pension. [97269]

Mr. McCartney

We recognise that the majority of pensioners are women and are committed to ensuring that our pension reforms improve women's pension rights. We have already done much to help. The introduction of stakeholder pensions, State Second Pension, Winter Fuel Payments, improvements to the Minimum Income Guarantee and, from this October, Pension Credit are, or will be, of particular help to women.

In the recent pensions Green Paper "Simplicity, security and choice: Working and saving for retirement", (Cm5677), we have proposed looking at how best to ensure that women are aware of their pension position and the choices they make.

All married women are able to get a basic State Pension based on their husband's contributions of 60 per cent. of his entitlement once both have reached State Pension age and have claimed their State Pension.

The married women who opted to pay reduced rate contributions made an informed choice. They were required to give written notice of their decision on a form attached to a leaflet. The leaflet went to great lengths to describe the consequences of that decision and required them to sign a declaration that they had read and understood the leaflet. Employers could not make this decision on behalf of their employees. Women who chose to pay reduced rate National Insurance contributions were given a certificate to give to their employer. An employer was not allowed to deduct reduced rate National Insurance contributions without this certificate.

Mr. Willetts

To ask the Secretary of State for Work and Pensions if he will make a statement on the differences between the rules on accruing entitlement to(a) the basic state pension and (b) the state second pension. [104575]

Mr. McCartney

In order to become entitled to the basic State Pension, a person has to satisfy two conditions. The basic State Pension is available to both the employed and self-employed. In addition, anyone may make voluntary contributions, subject to a time limit, if this is necessary to build up entitlement.

The first basic State Pension entitlement condition is that a person has either: one qualifying year since 6 April 1975 which is derived from the payment of Class 1, 2 or 3 National Insurance contributions or from Class 1 contributions treated as paid; or paid 50 flat rate contributions at any time before 6 April 1975.

The second basic State Pension entitlement condition relates to the number of qualifying years a person has. Currently to get a full basic State Pension a man needs 44, and a woman 39, qualifying years. The number of qualifying years can be reduced if a person is entitled to Home Responsibilities Protection. The basic State Pension cannot be paid if a person has less than 25 per cent. of the qualifying years needed for a full State Pension.

A qualifying year for the basic State Pension is a tax year in which a person receives, or is treated as receiving, qualifying earnings of at least 52 times the National Insurance Lower Earnings Limit for that year.

In certain circumstances a person may be credited with earnings to help them get a State Pension if they do not have enough earnings in a tax year to reach the level needed to make it a qualifying year.

The State Second Pension is only available to employees and to certain carers and people who are disabled or long-term ill.

The entitlement condition to the State Second Pension depends on the level of earnings a person has, or is treated as having, between the Lower Earnings Limit and the Upper Earnings Limit in any tax year from 6 April 2002. Entitlement to the State Second Pension will be reduced or extinguished for any period where a person has contracted-out into an occupational or personal pension scheme.

Only earnings on which Class 1 contributions have been paid, or treated as paid, count towards the State Second Pension. Earnings of married women and widows who pay contributions at the reduced rate do not count.

Employees who earn above the Lower Earnings Limit but less than the Lower Earnings Threshold are treated as having earnings at the Lower Earnings Threshold. Certain carers and people who are disabled or long-term ill who earn less than the Lower Earnings Threshold, including those with no earnings at all, are also treated as having earnings at the Lower Earnings Threshold.

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