Pensions (Hansard, 15 September 2004)

§ Mr. Willetts
To ask the Secretary of State for Work and Pensions pursuant to the answer of 14 June 2004,Official Report, column 729W, on pensions, what a pensioner's income from the State Pension was in each year in (a) cash and (b) real terms, broken down by the components identified in footnote 3. [186768]

§ Malcolm Wicks
The information is in the tables.
The maximum rate of basic State Pension plus the average amount of additional State Pension in payment for recently retired men aged 65 and women aged 60 in:
1619W

(b) Real terms (2004–05 prices)

£

1996 1997 1998 1999 2000 2001

BSP Maximum Rate 74.75 74.50 74.20 75.35 74.00 78.10

Average additional State Pension 18.10 18.70 15.30 16.55 15.50 16.40

Notes:

1. Average additional State Pension figures are derived from a 5 per cent. sample of DWP administrative data taken at March in each year.

2. State Pension is calculated as the maximum rate of basic State Pension plus the average amount of additional State Pension in payment for recently retired men aged 65 and women aged 60. Weekly rates are shown.

3. The real value of Retirement Pension is calculated by uprating the cash value in April of each year to April 2004 prices. In each year the April increase in basic State Pension is related to the increase in the Retail Price Index in the year to the previous September. In most years the increase in the Retail Price Index in the year to April is not exactly the same as the increase in the year to the previous September. Measuring the real value of BSP in April inevitably appears to show some small reductions or increases that would not appear if the new level of basic State Pension were introduced in September. These small variations do not affect pensioner living standards as any differences in inflation are automatically reflected in the following year's uprating.

§ Mr. Cousins
To ask the Secretary of State for Work and Pensions if he will estimate the sum required to produce an annuity of the same size as the minimum income guarantee/pension guarantee credit for pensioners with pension inflation protection in each year of the MIG pension guarantee credit scheme. [188810]

Table 1: The amount required to ensure an RPI escalating annuity income equal to the MIG/PC guarantee at the point of retirement

Guarantee (£) RPI escalating annuity rate (percentage) Amount required to produce an income equal to the guarantee (£)

1999 82.25 6.94 62,000

2000 86.05 6.83 65,000

2001 92.15 6.54 73,000

2002 98.15 6.03 85,000

2003 102.10 5.45 97,000

2004 105.45 5.23 105,000

Notes:

1. The guarantee rate is for a single person, entitled to the highest age premium in the years before the age related premia were equalised.

2. The RPI escalating annuity rate has be en provided by the Annuity Bureau for a single male aged 65; it is the top rate in December of each year (except 2004 where the top rate at September has been used) for a £100,000 sum.

3. The amount required has been rounded to the nearest £1,000.

Table 2: The amount required to purchase an RPI escalating annuity sufficient to close the gap between a full basic state pension and the MIG/PC guarantee at the point of retirement

Guarantee (£) Full BSP (£) Amount guarantee exceeds BSP (£) RPI escalating annuity rate (percentage) Amount required to produce an income equal to the gap between the guarantee and a full BSP (£)

1999 82.25 6625 15.50 6.94 12,000

2000 86.05 67..i0 18.55 6.83 14,000

2001 92.15 72.'0 19.65 6.54 16,000

2002 98.15 75.:,0 22.65 6.03 20,000

2003 102.10 77.45 24.65 5.45 24,000

2004 105.45 79.60 25.85 5.23 26,000

Notes:

1. The guarantee rate is for a single person, entitled to the highest age premium in the years before the age related premia were equalised.

2. The BSP is the maximum single person rate.

3. The RPI escalating annuity rate has been provided by the Annuity Bureau for a single male aged 65; it is the top rate in December of each year (except 2004 where the top rate at September has been used) for a £100,000 pot.

4. The amount required has been rounded to the nearest £1,000.

(b) Real terms (2004–05 prices)
£
	1996	1997	1998	1999	2000	2001
BSP Maximum Rate	74.75	74.50	74.20	75.35	74.00	78.10
Average additional State Pension	18.10	18.70	15.30	16.55	15.50	16.40
Notes:
1. Average additional State Pension figures are derived from a 5 per cent. sample of DWP administrative data taken at March in each year.
2. State Pension is calculated as the maximum rate of basic State Pension plus the average amount of additional State Pension in payment for recently retired men aged 65 and women aged 60. Weekly rates are shown.
3. The real value of Retirement Pension is calculated by uprating the cash value in April of each year to April 2004 prices. In each year the April increase in basic State Pension is related to the increase in the Retail Price Index in the year to the previous September. In most years the increase in the Retail Price Index in the year to April is not exactly the same as the increase in the year to the previous September. Measuring the real value of BSP in April inevitably appears to show some small reductions or increases that would not appear if the new level of basic State Pension were introduced in September. These small variations do not affect pensioner living standards as any differences in inflation are automatically reflected in the following year's uprating.

Table 1: The amount required to ensure an RPI escalating annuity income equal to the MIG/PC guarantee at the point of retirement
	Guarantee (£)	RPI escalating annuity rate (percentage)	Amount required to produce an income equal to the guarantee (£)
1999	82.25	6.94	62,000
2000	86.05	6.83	65,000
2001	92.15	6.54	73,000
2002	98.15	6.03	85,000
2003	102.10	5.45	97,000
2004	105.45	5.23	105,000
Notes:
1. The guarantee rate is for a single person, entitled to the highest age premium in the years before the age related premia were equalised.
2. The RPI escalating annuity rate has be en provided by the Annuity Bureau for a single male aged 65; it is the top rate in December of each year (except 2004 where the top rate at September has been used) for a £100,000 sum.
3. The amount required has been rounded to the nearest £1,000.

Table 2: The amount required to purchase an RPI escalating annuity sufficient to close the gap between a full basic state pension and the MIG/PC guarantee at the point of retirement
	Guarantee (£)	Full BSP (£)	Amount guarantee exceeds BSP (£)	RPI escalating annuity rate (percentage)	Amount required to produce an income equal to the gap between the guarantee and a full BSP (£)
1999	82.25	6625	15.50	6.94	12,000
2000	86.05	67..i0	18.55	6.83	14,000
2001	92.15	72.'0	19.65	6.54	16,000
2002	98.15	75.:,0	22.65	6.03	20,000
2003	102.10	77.45	24.65	5.45	24,000
2004	105.45	79.60	25.85	5.23	26,000
Notes:
1. The guarantee rate is for a single person, entitled to the highest age premium in the years before the age related premia were equalised.
2. The BSP is the maximum single person rate.
3. The RPI escalating annuity rate has been provided by the Annuity Bureau for a single male aged 65; it is the top rate in December of each year (except 2004 where the top rate at September has been used) for a £100,000 pot.
4. The amount required has been rounded to the nearest £1,000.