§ Mr. WigleyTo ask the Secretary of State for Social Security if he will make it his policy to calculate future increases in pensions on the basis of a definite weekly sum above the rate of inflation.
§ Mrs. Gillian ShephardThe Government have honoured their commitment to maintain the value of the state retirement pension in line with prices. What matters most to pensioners is the value of their total income from whatever source. The success of the Government's policies is demonstrated by the 31 per cent. real-terms growth in pensioners' average total net income between 1979 and 1987.
§ Mr. MeacherTo ask the Secretary of State for Social Security (1) what has been the saving in public expenditure from the break in the earnings link in the uprating of pensions each year since 1979 and cumulatively, at current and 1990 prices;
(2) further to his answer of 20 March, Official Report, columns 594–95, regarding the gross cost of uprating the basic national insurance pension in line with average earnings each year, if he will now give the figures revalued at 1990–91 prices, including the figure for 1990–91; and if he will also give the figures including the gross cost of uprating the invalidity pension and the widow's pension in line with average earnings, also at 1990–91 prices;
(3) if, further to his answer to the hon. Member for Oldham, West of 20 March, Official Report, columns 594–95, regarding the gross cost since 1980 of uprating the retirement pension in line with average earnings, he will now give the figure for 1990–91; and if he will give the gross cost cumulatively since 1980 of uprating the invalidity pension and widow's pension, in addition to the basic retirement pension, in line with average earnings.
§ Mrs Gillian Shephard[holding answers 5 June and 14 June 1990]: The information requested is set out in the tables.
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Table 1. Gross additional cost of uprating retirement pension in line with the
higher of prices or earnings since 1979.
Year Current prices £ billion April 1990 prices £ billion 1980–81 nil nil 1981–82 0.22 0.35 1982–83 0.35 0.54 1983–84 0.43 0.62
Year Current prices £ billion April 1990 prices £ billion 1984–85 0.92 1.27 1985–86 1.10 1.43 1986–87 1.95 2.47 1987–88 2.78 3.38 1988–89 3.63 4.17 1989–90 4.50 4.80 1990–91 5.46 5.46 Total 21.34 24.49
Table 2 Gross additional cost of uprating retirement pension, widow's pension
and invalidity pension in line with the higher of prices or earnings
since 1980 (Current Prices).
£ billion Year Retirement pension Widow's pension Invalidity pension 1980–81 0.05 1— 1— 1981–82 0.26 0.02 0.04 1982–83 0.39 0.03 0.05 1983–84 0.47 0.03 0.07 1984–85 0.96 0.05 0.14 1985–86 1.14 0.06 0.16 1986–87 2.00 0.10 0.29 1987–88 2.83 0.13 0.43 1988–89 3.68 0.15 0.60 1989–90 4.57 0.18 0.79 1990–91 5.56 0.21 1.00 Total 21.91 0.96 3.57 1 less than £0.01 billion. Figures on the additional cost of retirement pensions in table 2 are higher than those in table 1. Table 2 uses the actual rate of benefit paid in November 1979 to calculate the additional costs. This actual rate is higher than the rate that would have been paid had the "earnings or prices" rule been applied. Table 1 uses the lower implied rate of benefit in 1979 and so the costs for all subsequent years are lower.
Table 3 Gross additional cost of uprating retirement pension, widow's pension
and invalidity pension in line with the higher of prices or earnings
since 1980 (April 1990 Prices)
£ billion Year RP WP IVP 1980–81 0.08 0.01 0.01 1981–82 0.42 0.04 0.06 1982–83 0.60 0.04 0.08 1983–84 0.69 0.05 0.10 1984–85 1.32 0.07 0.20 1985–86 1.49 0.07 0.21 1986–87 2.53 0.12 0.37 1987–88 3.44 0.15 0.52 1988–89 4.22 0.17 0.69 1989–90 4.87 0.19 0.84 1990–91 5.56 0.21 1.00 Total 25.22 1.12 4.08 The additional cost of uprating by this method for the benefits in table 3 would imply an increase in national insurance contributions of £4.63 a week for a person on average earnings.
The Government Actuary in his latest quinquennial review has indicated that national insurance contributions would have to rise even more steeply in the future if benefits were to be uprated in this way.
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§ Mr. MeacherTo ask the Secretary of State for Social Security what is the estimated reduction in public expenditure as a result of the changes in SERPS provided for in the Social Security Act 1986 for each year up to 2035, at 1990 constant prices.
§ Mrs. Gillian Shephard[holding answer 6 June 1990]: Estimated reduction in gross public expenditure as a result of the changes in SERPS provided for in the 1986 Social Security Act at 1990 prices is as follows:
Year £ billions 1995–96 1— 2001–02 1— 2005–06 1 2010–11 2 2015–16 3 2020–21 5 2025–26 8 2030–31 11 2035–36 14 Source: Government Actuary's Department.
1 Indicates negligible savings.
§ Sir Michael McNair-WilsonTo ask the Secretary of State for Social Security what is his latest estimate of the cost of reducing the pensionable age for men from 65 to 60 years.
§ Mrs. Gillian ShephardThe latest estimate based on 1985–86 benefit rates of the net cost of reducing pensionable age for men to 60 years is £3,000 million.