§ Mr. Austin Mitchellasked the Secretary of State for Social Services whether he will provide an estimate of the loss to the national insurance fund from a reduction of one percentage point in the rate of contribution.
§ Mr. MajorIt is estimated that a reduction of one percentage point in all the class 1 rates of National Insurance contributions in 1986–87 would cost the national insurance fund in a full year £1,470 million in respect of employees' contributions, and £1,630 million in respect of employers contributions.
§ Mr. Stevensasked the Secretary of State for Social Services when he expects to complete his quinquennial review of the contracted-out rebate on national insurance contributions.
§ Mr. FowlerThe contracted-out rebate reflects the cost to pension schemes of providing a guaranteed minimum pension for their members. That cost is decreasing with the lower average age of scheme members; and it is therefore generally acknowledged that the rebate should in future be lower than its present 6.25 per cent. I have decided to fix the rebate at 5.8 per cent. for the five-year period from 6 April 1988 including an additional margin of 0.4 per cent. for this period over and above the 5.4 per cent. suggested by the Government Actuary. This will cover the implementation of our pension reforms under the 1986 Act. The rebate will be divided 3.8 per cent. on employers' contributions and 2 per cent. on employees'. The rates at which pension schemes can buy their members back into the state scheme will be based on the 5.4 per cent.408W suggested by the Government Actuary. I am today laying his report before Parliament, together with the draft order and regulations to give effect to these decisions.