§ 14. Mr. David ShawTo ask the Secretary of State for Social Security what assessment he has made of the effect that reduced equity investment yields would have on occupational and private pensions. [14364]
§ Mr. HealdAround three fifths of the £600 billion invested in UK pension funds is held in domestic equities. The yield on those investments has been, on average, 10 per cent. in real terms since 1980. All things being equal,
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§ Mr. Jim CunninghamTo ask the Secretary of State for Social Security what estimate he has made of(a) the savings to the Exchequer from the take-up of personal pension schemes and (b) the cost to the Exchequer of providing relief from employers' national insurance on contributions made by employers to pension schemes for their work force. [14668]
§ Mr. Heald[holding answer 12 February 1996]: The information is in the tables:
Table A: Estimated savings in SERPS expenditure in respect of appropriate personal pension scheme rebates for 1987–88 to 1992–93 £ million Decade Savings Cumulative savings 2002–09 250 250 2010–19 2,350 2,600 2020–29 5,300 7,900 2030–39 7,200 15,100 2040–49 4,500 19,600 2050–59 1,900 21,500 2060–69 500 22,000 Source:
Government Actuary's Department.
Notes:
1. The estimated savings are expressed in 1993–94 price terms.
2. Appropriate personal pension—APPs—have been available since April 1988, but earners were allowed to backdate their minimum contributions based on earnings for the previous tax year, as 1987–88. The estimated savings in the table relate to the SERPS that would have become payable in respect of earnings between April 1988 and March 1993, if those who took out an APP between those dates had not done so.
3. An increase in real earnings of 1½ per cent. has been assumed in these calculations.
any reduction in yield would mean that members would retire with lower pensions or that they and their employers would have to contribute more.