§ Mr. ButlerTo ask the Secretary of State for Social Security, what significant policy developments since the publication of the White Paper will be reflected in the forthcoming Pensions Bill.
§ Mr. LilleySince the publication of the White Paper, "Security, Equality, Choice: The Future for Pensions", the Government have refined their proposals in respect of a statutory minimum solvency requirement and age-related rebates following further detailed analysis and consideration of comments received on the original proposal.
In relation to the proposed statutory minimum solvency requirement, I now propose that there should be an adjustment to the valuation basis in respect of very large schemes, to allow an equity component in the calculation of their pensioner liabilities; that the time limits for restoring schemes' funding levels to at least 90 per cent. 369W and 100 per cent. of the statutory minimum solvency requirement should be extended to one year and five years respectively; and that the statutory minimum solvency requirement calculation should be smoothed over a period of months rather than being based on market values on a particular day. With these changes the statutory minimum solvency requirement should deliver an appropriate level of security for members' pension entitlements, without imposing unnecessary burdens on business.
The White Paper announced our intention to introduce age-related rebates for appropriate personal pensions and contracted-out money purchase occupational pension schemes in April 1997. This will ensure that money purchase pensions remain attractive across a broader age range. To help phase in this policy, I intend to introduce a 9 per cent. cap on the age related rebates when they are brought in. This should enable the vast majority of existing appropriate personal pension scheme holders to continue with their scheme until they reach state pension age. It will also mean that younger employees can continue to take out new appropriate personal pensions. Details of the illustrative rates of the age-related rebates will be published by the Government Actuary in his report on the forthcoming Pensions Bill.
Further details are set out in a letter of 8 December to the hon. Member for Bournemouth, West (Mr. Butterfill) which is in the Library.