§ Mr. DenhamTo ask the Secretary of State for Social Security what is the net present cost, in 1996 prices, of national insurance rebates and incentives paid to those who have joined appropriate personal pensions since 1988–89, assuming the social discount rate used by his Department. [13841]
§ Mr. Heald[holding answer 4 February 1997]: For the years 1987–88 to 1994–95, the latest date for which certified figures are available, the cost of national insurance rebates and incentives was £21.7 billion at net present value. This figure has been calculated using the GDP deflator and a social discount rate of 3.75 per cent, consistent with the Government Actuary's review of contracting out terms (Cm 3221). The figure includes the cost of providing flat rate rebates, incentives and age 713W additions to holders of appropriate personal pensions during this period. From 6 April 1997, flat rate rebates for APPs, and the age addition, will be replaced by age-related rebates. The costs of the new rebates will be contained by tailoring the amount needed by a funded pension to replace the state pension foregone according to the age of the policyholder. The allowance made for administrative expenses in the rebates are based on those of the more efficient providers. The rebates will also be capped to avoid excessive rebate levels.