§ Mrs. Beckettasked the Secretary of State for Social Services what information he has in relation to each of the countries of the European Community and each of the other countries with which the United Kingdom has a reciprocal agreement on social security, as to the minimum qualifying condition for (a) a full pension and (b) a minimum pension for (i) people resident in that country and (ii) people resident in the United Kingdom.
§ Mr. ScottIn respect of EC nationals covered by the Community's social security regulations, rights to retirement pension acquired in one country are maintained on moving to another member state. Under the agreements the United Kingdom has with most of the countries listed there are provisions either for maintaining pension rights for someone who moves residence or for counting insurance in the United Kingdom towards the122W qualifying conditions for pension in the other country, and vice versa. The exact position depends on the individual's circumstances, on the terms of the agreement and on the characteristics of the other country's system. For EC countries, the main qualifying conditions for pension are given in the Department's publication, "Tables of Social Benefit Systems—the European Communities (Position at 1 January 1986)", a copy of which is in the Library. Such information as is readily available for the other countries is contained in the publication by the United States Department of Health and Human Services, "Social Security Programs throughout the World—1985". A copy of this, too, is in the Library.
Countries with which United Kingdom has a social security agreement (excluding EC member states) including provisions relating to pensions:
- Australia
- Austria
- Bermuda
- Canada
- Cyprus
- Finland
- Iceland
- Isle of Man
- Israel
- Jamaica
- Jersey and Guernsey
- Malta
- Mauritius
- New Zealand
- Norway
- Sweden
- Switzerland
- Turkey
- United States of America
- Yugoslavia
§ Mrs. Beckettasked the Secreary of State for Social Services what information he has as to the basic full retirement pension for (a) a single person and (b) a couple in each of the countries of the European Community and in each of the other countries with which the United Kingdom has a reciprocal agreement on social security.
§ Mr. ScottMost countries of the European Community, and most of those with which the United Kingdom has a reciprocal social security agreement covering pensions, do not recognise the concept of a basic retirement pension. The pension is usually related to an individual's own record of contributions and earnings between certain limits, much like the United Kingdom's state earnings-related pension, and may thus vary widely even for those with an unbroken contribution history. Full or maximum pension would depend on continuous earnings and contributions at the highest possible level within the particular scheme. Some but not all, countries have a minimum pension within the earnings-related scheme for those with contributions over a specified number of years, designed to protect people on low earnings. This may be most closely compared with the United Kingdom basic pension. However, international comparisons of one element of social security support cannot reliably be made. Account has to be taken also of the existence of other forms of assistance—such as occupational pensions and help with housing costs whose availability varies widely between countries.
A fuller explanation of the difficulties involved in making this type of comparison is contained in my letter of 23 June 1987 to the hon. Member for Sheffield, Central (Mr. Caborn). The text of the letter is as follows: 123W
I am sorry we were unable to reply before the dissolution to the Question you set down in April about the level of United Kingdom pensions as compared with pensions and earnings in other EC countries. This letter explains why a cut-and-dried answer is not possible, and gives the best information we have.Ministers of all parties have previously declined to answer questions of this kind, on the grounds that the great difference between pension and other social protection systems in different countries rendered valid comparisons impossible. In view of the very misleading publicity in the press and elsewhere about pensions in Britain and Europe, we decided on this occasion to depart from the usual practice and we asked officials to research a more precise answer. The work has taken some time to complete, and bears out the reasons for previous refusals to draw comparisons.The major difficulty in making any reliable comparisons is that the United Kingdom is unusual in providing a basic pension unrelated to an individual's previous earnings. Only Denmark, Ireland and the Netherlands have fiat-rate pensions of broadly the same type. In other EC countries, pensions are related to the individual's own contributions and earnings between set limits—like our own earnings-related pension—and there is accordingly a wide variation in the amount of benefit received. People on low earnings or with a poor work record receive correspondingly low pensions. Someone on average or above-average earnings will get a higher amount. Pensions are not normally related to national average earnings, and it is quite misleading to compare—as the press sometimes does—the pension available to a German or a Frenchman who has been on national average earnings with the British basic pension. In neither case does the figure actually represent the benefit received by most pensioners.The other difficulty with your specific question is that the basic pension is not itself the only form of state pension provision in this country. About 6.5 million pensioners have graduated pension, which can add about £5 to the basic level. About 1.7 million now have earnings-related additional pension, which can add over £20 to the pensions of a man retiring this year who has been on average earnings. The average earnings-related pension awarded is much lower, because most new pensioners have not consistently earned at the national average level. These variations in United Kingdom provision give some indication of the problems when comparing with countries whose schemes are wholly earnings-related.Further points to take into account are, firstly, that the United Kingdom is unique in paying a pension in her own right to a married woman, even if she has made no contributions herself. Dependency additions payable in other EC countries are generally speaking much less generous. Secondly, no deductions are made from United Kingdom pensions, whereas some countries, such as France, require pensioners to pay health contributions. Thirdly, occupational pensions are an integral part of the United Kingdom system and are received by some 70 per cent. of recently-retired couples. They are much less significant in most other EC countries, particularly at lower levels of earnings. Fourthly, our pension system is backed by a comprehensive national system of means-tested help for those on lower incomes, for both special needs and regular housing costs. Whilst some EC countries have extra help of this kind, the systems tend to be local and more limited than ours. It is difficult to obtain good information about such schemes, and indeed about average pensions in payment in other EC countries. This is largely because in many EC countries the pension and benefit systems are not centrally administered and good statistics are not held.In view of these complications, you will appreciate why we have found difficulty in providing a straightforward answer to your question. Some EC countries do however have, within their earnings-related pension scheme, a minimum pension payable to those who have satisfied certain contribution conditions. Such a provision is by no means—universal Germany, for example, has no minimum—but where it exists it seems the best proxy for our basic pension. The contribution conditions vary markedly—50 years of full contribution in the Netherlands (which has a flat-rate but no earnings-related system) against as few as 15 in Italy and about 44 for a man in the United Kingdom. Subject to this 124W caveat, however, it appears that on this basis our basic pension is about fifth in value in Europe. (Cash values have of course been adjusted to take account of differences in purchasing power.) But I must stress that in terms of overall benefit support for pensioners the comparison is inadequate. Taking account of all sources of support for pensioners, the European Statistical Bureau shows the United Kingdom to spend a higher share of GDP on the elderly than any EC country except Denmark and perhaps France.You also asked for information on contribution levels. I am afraid that once again there is no clear-cut answer. The United Kingdom has a single contribution covering all benefits. Most EC countries have separate contributions for groups of benefits, since the insurance system is not unified. Denmark, on the other hand, meets most of the cost of social security from general taxation, and benefits are not contribution-related. It is however possible to make a rough estimate of the share of our total NI contribution of 19.45 per cent. (employee and employer combined) required to fund selected benefits. On this basis, it is clear that our contribution rates for pension, widows' and invalidity benefits are among the lowest in Europe.I think you will see from the foregoing that a neat tabulation of comparative benefit and contribution levels is simply not possible. What is clear is that the total package of care going to pensioners in Britain is among the best in Europe, and that the picture on the basic pension alone is much better than some commentators have claimed.
§ Mrs. Beckettasked the Secretary of State for Social Services (1) what information he has in relation to each of the countries of the European Community and each of the other countries with which the United Kingdom has a reciprocal agreement on social security as to whether the retirement pension is paid on the basis of working, of working and paying contributions, or of residence;
(2) what information he has in relation to each of the countries of the European Community and each of the other countries with which the United Kingdom has a reciprocal agreement on social security as to the minimum age at which state retirement pension can be received by (a) men and (b) women.
§ Mr. ScottFor countries within the European Community I refer the hon. Member to section IV of the Department's publication, "Tables of Social Benefit Systems in the European Communities (Position at 1 January 1986)", a copy of which is in the Library. For the other countries (listed as follows) with which the United Kingdom has an agreement on social security I refer the hon. Member to the publication by the United States Department of Health and Human Services, "Social Security Programs Throughout the World—1985". A copy of this, too, is in the Library.
Countries with which United Kingdom has a social security agreement (excluding European Community member states) including provisions relating to pensions:
- Australia
- Austria
- Bermuda
- Canada
- Cyprus
- Finland
- Iceland
- Isle of Man
- Israel
- Jamaica
- Jersey and Guernsey
- Malta
- Mauritius
- New Zealand
- Norway
- Sweden
- Switzerland
125 - Turkey
- United States of America
- Yugoslavia
§ Mrs. Beckettasked the Secretary of State for Social Services what is the value in real terms of the basic retirement pension for a single person and a married couple, as a proportion of (a) average gross male manual earnings, (b) average net male manual earnings, (c) average male earnings, whole economy and (d) average earnings of men and women, whole economy, compared with their value after the November 1977 uprating.
§ Mr. ScottThe information requested is shown in the tables. Table 1 expresses the basic pension rate as a proportion of average gross earnings, and table 2 shows the rate as a proportion of average net earnings for each of the three earnings indices specified in the question.
Table 1: Basic pension as a proportion of average gross earnings Per cent. November 1977 April 19872 Single Person Male manual earnings 23.1 21.1 All male earnings 21.0 17.7 Whole economy earnings1 23.6 19.9 Married Couple Male manual earnings 37.0 33.7 All male earnings 33.6 28.4 Whole economy earnings1 37.7 31.8 1 Average earnings of all employees, all occupations. 2 Based on provisional April earnings figures.
Table 2: Basic pension as a proportion of average net3 earnings Per cent. November 1977 April 19872 Single Person Male manual earnings 33.8 29.8 All male earnings 31.0 28.4 Whole economy earnings1 34.3 28.3 Married Couple4 Male manual earnings 50.8 45.3 All male earnings 46.8 38.9 1 Average earnings of all employees, all occupations. 2 Based on provisional April earnings figures. 3 Earnings net of national insurance contributions at the contracted in rate and of tax. 4 It is not possible accurately to express the married couple's pension as a proportion of the net combined earnings of male and female employees because of the differences in tax treatment of men and women.
§ Mrs. Beckettasked the Secretary of State for Social Services if he will make it his policy to make allowance in the Government's proposals for planned public expenditure in 1988–89 and subsequent years for the cost of increasing pensions by more than the rate of increase in the retail prices index; and if he will make a statement.
§ Mr. ScottDetailed public expenditure decisions for 1988–89 and later years have yet to be taken. Any consideration of an increase in public expenditure for the purpose suggested would need to take account of a number of factors, including the high level of real increase in pensioners' average net total income in recent years.