Pensions (Hansard, 30 July 1997)

§ Mr. Flynn
To ask the Secretary of State for Social Security what estimate she has made of the increase required in class 1 contribution rates in each year up to 2000–01 if the basic pension were uprated in line with average earnings, relative to the contributions required for price-uprating, assuming that other contribution rates are increased by the same percentage. [10568]

§ Mr. Denham
[holding answer 25 July 1997]: The information is in the table.

Percentage increase in national insurance contribution rates¹

1998–99 1999–00 2000–01

Employee Class 1² 0.1 0.2 0.4

Employer Class 1 and Class 1A² 0.1 0.1 0.2

Source:
Government Actuary's Department.
Notes:
¹ Calculations are based on the 1997 Budget economic assumptions.
² Figures have been rounded to the nearest 0.1 per cent.
1. It has been assumed that the cost for all benefits whose rate is the same as the basic state pension, i.e. widow's benefit and the long-term rate of incapacity benefit would rise accordingly.
2. The split of rates between employee and employer contributions was achieved by considering that for an employee on average earnings for a full-time adult, the increase in contributions paid by an employee would be the same as the increase paid by the employer.

§ Mr. Gibb
To ask the Secretary of State for Social Security what would be the cost of allowing pensioners to draw their state pensions from the age of 60 years. [7547]

§ Mr. Denham
It is estimated that the cost of allowing all pensioners to draw their full retirement pension from age 60 would be around £9 billion a year. When changes in incapacity benefit and income-related benefits are taken into account, the net cost would be around £7 billion.
The review of pensions announced by my right hon. Friend the Secretary of State will consider all aspects of the basic state retirement pension. However, the Government have no plans to put forward proposals for lowering state pension age.
Notes:
1. Estimates are in respect of 2000–01, and are in 1997–98 prices. They assume the change takes effect from April 2000, with no phasing.
2. The expenditure effects on the national insurance fund have been estimated by the Government Actuary's Department. The income-related benefit offsets have been calculated using the 1997–98 policy simulation model based on the 1994–95 family resources survey and the 1997–98 prices, benefits and earnings levels, and calibrated to the forecasts underlying the 1997 departmental report.
3. Underlying assumptions are that everyone will claim their pension entitlement at 60, and that there will be no behavioural effects—for example, the economic activity and income other than retirement pensions of individuals in benefit units who gain remains constant.
4. Effects on national insurance contributions, rebates and tax have not been taken into account.

Percentage increase in national insurance contribution rates¹
	1998–99	1999–00	2000–01
Employee Class 1²	0.1	0.2	0.4
Employer Class 1 and Class 1A²	0.1	0.1	0.2