§ 79. Mr. Houghtonasked the Minister of Pensions and National Insurance whether he will publish a leaflet or make a statement to remove doubt and misunderstanding regarding the reasons why the contributions of insured workers in non-participating employments under the 1959 Act will be higher for both men and women than the corresponding contributions in participating employments for the same flat rate benefits.
§ Mr. Boyd-CarpenterIt would not be appropriate to publish a leaflet on this subject, but I am circulating a statement in the OFFICIAL REPORT setting out the considerations which cause the National Insurance contributions for contracted-out people to be higher than the minimum contributions payable in respect of people not contracted out. These matters, as the hon. Member will recall, were explained in the White Paper on Provision for Old Age and during the debates on the National Insurance Bill, 1959.
Following is the Statement:
It was made clear in the Government White Paper on Provision for Old Age (Cmnd. 538) that the introduction of a graduated scheme of contributions would have the advantage of permitting some reduction in the minimum contribution payable for existing benefits by those with earnings of £9 a week or less who 110W were participating in that scheme. The placing of the National Insurance scheme on a graduated basis, so far as pensions are concerned, allows the Exchequer support of the scheme to be concentrated more effectively on the benefits of the lower wage-earner.It was at the same time made clear that persons contracted out of the graduated part of the state scheme would have to continue to pay their fair share of the cost of the flate-rate pension.It is considered essential to the working of a system of contracting out that the national insurance contribution payable in respect of those contracted out shall be on a flat-rate basis. To fix the amount of this flat-rate contribution at a level no higher than that payable in respect of the lowest paid workers participating in the state scheme would give to all persons contracted out, regardless of their earnings, the full advantage of the measure of Exchequer support which is provided for those on the lowest earnings. In general, persons with substantial occupational cover are at a level of earnings well above that to which the minimum contribution under the state scheme is related.It is in addition to be noted that these persons cannot be contracted out unless there is available to them, on top of their flat-rate national insurance pension, additional pension provision equivalent at least to the pension which they could have earned over the same period under the state scheme. It would there fore be unfair to other participants in the scheme if persons contracted out were to be treated for the purposes of attracting Exchequer support on the basis that they were all persons on a low level of earnings, and it can indeed be argued that the flat-rate contribution now proposed in the National Insurance Bill, 1960, is lower than in theory it should be in respect of the generality of those contracted out. It is, however, to be noted that those contributions maintain exactly the same margin over the minimum contribution applicable to those participating in the graduated scheme as was laid down in the National Insurance Act, 1959, so making it unnecessary for employers to reconsider decisions already made, or in process of being made, in relating to contracting out.