§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what would be the gross cost to the Exchequer of servicing and redeeming gilt-edged stocks held by pension funds for 40 years at the present 20-year yield basis, and the corresponding figure for index-linked stock assuming that inflation averages the amounts shown in the medium-term financial strategy.
§ Mr. Ian StewartEstimates of the cost over an) period of servicing and redeeming gilt-edged stocks held by pension funds depend upon assumptions about the path of inflation over the whole life of the stocks.
These stocks have varying maturity dates, the last of which is in 2020. The cost of financing both types of stock will depend upon the course of inflation over this period.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what would be the saving on an income basis to the Exchequer if the securities held by pension funds were to be converted into index-linked stocks on the presented weighted-average yield of such stocks on a fully taxed basis.
§ Mr. Ian StewartPension funds held some £18.3 billion of gilt-edged at the end of March 1983, of which most was in conventional—that is, non-index-linked—form. The stocks are of varying maturities, some of which are not due to be redeemed until 2020. The saving or cost of conversion of conventional gilt-edged stocks to indexed stocks at current yields, if such a conversion were possible, would depend on the course of inflation over the lives of the stocks.