§ Ms WalleyTo ask the Secretary of State for Social Security (1) what assessment she has made of the impact on income of paying retirement pensions on the first Monday after a 65th birthday and not on the day on which a pensioner reaches pensionable age; [6850]
(2) what representations she has received in respect of financial loss for the days before the pay day following retirement; and if she will make a statement; [6848]
(3) what plans she has to review the payment of pensions on a weekly basis; and if she will make a statement; [6847]
(4) what estimate she has made of the annual cost of paying the retirement pension on the day on which a pensioner reaches pensionable age. [6849]
§ Mr. DenhamThe Government are committed to reviewing all the main areas of insecurity that affect pensioners. The key objectives of the review will be that pensioners should have an adequate income in retirement, that they should share fairly in rising national prosperity and that public finances should be both sustainable and affordable.
I have received a number of representations from hon. Members on the issue of retirement pension pay days. Retirement pension is a weekly benefit paid in advance from the first pay day, usually a Monday, on or after the 65th birthday. In assessing the impact on income, account needs to be taken of the fact that, although retirement pension is paid in advance, income received immediately preceding retirement, such as earnings and most social security benefits, are generally paid in arrears. Most pensioners are therefore entitled to a week's pension within a week of receiving their last income.
Account also needs to be taken of the fact that, as a consequence of the pension being paid in advance, any change of circumstances which would result in reduction of benefit, such as hospitalisation, is effective only from the next pay day. In addition, no benefit is recoverable in respect of the week in which the pensioner dies.
The estimated gross annual cost of paying retirement pension for the days between state pension age and the first retirement pension pay day is £22 million.
We will announce shortly our pensions review which will examine all aspects of the basic pension and its value. We will consider any representations that are submitted on this issue.
We will retain the basic state pension as the foundation of pension provision, increasing it at least in line with prices.
Notes
1. Estimate provided by the Government Actuary's Department. This cost is in 1997–98 prices and is the gross cost to the national insurance fund. Some £l million of this cost would be offset by reduced payments of widow's benefit where cases transfer from widow's benefit to retirement pension.