HC Deb 17 March 1997 vol 292 cc480-4W
Ms Harman

To ask the Secretary of State for Social Security what estimate he has made of the cumulative cost of the basic pension plus proposals between 2020 and 2040. [20488]

Mr. Heald

I refer the hon. Member to the reply I gave her on 11 March,Official Report, column 194.

Ms Harman

To ask the Secretary of State for Social Security what estimate he has made of(a) average pensioner incomes, (b) the distribution of future pensioner incomes and (c) the number of pensioners living on incomes under half the national average for the years before pension benefits will be paid under the basic pension plus scheme. [20469]

Mr. Heald

The available information is contained in Government economic service working paper No. 129, titled "PENSIM: A dynamic simulation Model of Pensioners' Incomes", a copy of which is available in the Library.

Ms Harman

To ask the Secretary of State for Social Security (1) how many pensioners he estimates would be reliant on means-tested benefits in retirement if people made contributions only at the minimum 5 per cent. level under the basic pension plus proposals; and what assumptions about the level of means-tested benefits underlie this estimate; [20500]

(2) what would be the impact on the retirement income of (a) people on (i) a quarter,(ii) a half,(iii) three quarters and (iv) average earnings and (b) public spending on means-tested benefits under the basic pension plus scheme if people made contributions only at the minimum 5 per cent. level. [20499]

Mr. Heald

The rebates will be around £9 a week plus for employees—around 5 per cent. of earnings on which national insurance is payable. The basic pension guarantee will ensure that everyone gets at least as high a basic pension as they would from the current state scheme; and the investment of their funds gives a good prospect of higher pensions. The number of pensioners reliant on income-related benefits could be lower than under the present scheme, even if there were no increase in the number making voluntary additional provision.

Ms Harman

To ask the Secretary of State for Social Security if his basic pension plus proposal will involve any alteration to the rates of national insurance contributions set out in table 3 of the Government Actuary's report on the 1994 Pensions Bill. [20440]

Mr. Heald

I refer the hon. Member to the reply I gave her on 11 March,Official Report, columns 197–98.

Ms Harman

To ask the Secretary of State for Social Security what assumptions underlay his estimate of £10 billion for the continuing cost of the basic pension guarantee after 2040. [20442]

Mr. Heald

The broadly estimated cost of the basic pension guarantee is £10 billion per annum, on the assumptions that broadly the same proportion of the work force as now will accrue credits, and that because of low charges and simple but effective regulation there will not be many funds which fail to produce the required minimum return of 4.25 per cent. per annum.

Ms Harman

To ask the Secretary of State for Social Security what assumptions he has made about me number of employees opting out of their occupational pension scheme in his basic pension plus proposals. [20490]

Mr. Heald

It has not been assumed that anyone would opt out of an occupational pension scheme as a result of basic pension plus. Members of occupational pension schemes will be able to opt to have their basic pension plus funds managed as an additional voluntary contribution by the occupational scheme.

Ms Harman

To ask the Secretary of State for Social Security what assumptions he has made in his basic pension plus proposal about the level of additional contributions beyond the 5 per cent. minimum contribution level. [20498]

Mr. Heald

In costing the basic pension proposal, no assumptions have been made about additional contributions beyond the minimum rebates of £9 a week plus 5 per cent. of earnings to fund the state pension. Everyone will have their own pension fund and will have the opportunity to make additional contributions.

Ms Harman

To ask the Secretary of State for Social Security (1) what estimate he has made of the value of the pension earned under the basic pension plus for(a) a male and (b) a female on (i) a quarter and (ii) three quarters of male and female average earnings, relative to average male and female earnings in 2040; [20463]

(2) what estimate he has made of the value of the pension earned on entering the basic pension plus in the years (a) 2010, (b) 2020, (c) 2030 and (d) 2040, for those on (i) a quarter,(ii) a half,(iii) three quarters and (iv) average earnings relative to average earnings when they can expect to retire; [20467]

(3) what estimate he has made of the value of the pension earned under the basic pension plus for a woman on average earnings, relative to overall average earnings in 2040. [20464]

Mr. Heald

Generally, at least as good as the pension available from the present state scheme or better.

Ms Harman

To ask the Secretary of State for Social Security if he will assess the impact of altering the capital limits on benefits on the incentive to save under the Government's basic pension plus proposal. [20475]

Mr. Heald

The incentive to save under the basic pension plus proposal will come from the existence of a basic pension plus fund for each individual, to which they can add. The effect on the propensity to save of a change in the capital limits on eligibility for income-related benefits is independent of the basic pension plus proposal.

Ms Harman

To ask the Secretary of State for Social Security if public employees who opted out of their pension scheme, or moved to a job in the private sector, would be able to move their pension into a funded private sector pension scheme under the basic pension plus proposals. [20492]

Mr. Heald

Yes. Under current legislation, public service employees who terminate their pensionable service more than one year before the scheme's normal pension age have a statutory right to transfer the cash equivalent of their accrued rights. The transfer payment may be made to another occupational pension scheme, personal pension scheme or suitable insurance policy able and willing to accept it.

Ms Harman

To ask the Secretary of State for Social Security what level of charges was assumed for years when people are not contributing to the scheme under the basic pension plus proposals; and what is the estimated effect of this level of fees and charges for years when people are not contributing to the scheme on expected pension benefits. [20502]

Mr. Heald

As the technical note, paragraph 19, explained, the Personal Pensions Investment Authority will publish a list of personal pension providers whose charging structures do not penalise people who take career breaks, intentionally or unexpectedly.

Ms Harman

To ask the Secretary of State for Social Security if his assumptions for the costs of his basic pension plus proposals allow for behavioural effects resulting from the proposed change in tax relief. [20497]

Mr. Heald

No. There is no reason to believe that there will be significant behavioural effects resulting from the proposed change in tax relief. We will consult the pensions industry and other interested bodies to ensure that any changes are made in a way which preserves, undiminished, the immense contribution that existing pension schemes make to people's pension provision. Pension savings will remain an attractive form of investment for individuals.

Ms Harman

To ask the Secretary of State for Social Security what assumptions were made about the proportion of occupational pensions schemes (a) providing salary-related benefits and (b) operating money purchase arrangements under the basic pension plus proposals. [20491]

Mr. Heald

None.

Ms Harman

To ask the Secretary of State for Social Security what level of fees and charges was assumed in calculations of the pension benefits under the basic pension plus proposals; what are the administrative costs of occupational pension schemes; and if he will make a statement on the impact of fees and charges on pensions under the basic pension plus proposals relative to the impact of administrative charges in occupational pension schemes. [20501]

Mr. Heald

The assumptions are consistent with those made by the Government Actuary in his report "Occupational and Personal Pension Schemes: review of certain contracting-out terms" Cm 3221. There is currently a range of different cost structures for occupational pension schemes.

Ms Harman

To ask the Secretary of State for Social Security what is the estimated public expenditure cost under the basic pension plus proposals of top-ups for employees with national insurance contributions of less than £9 per week. [20441]

Mr. Heald

Whether such top-ups should be classified as public expenditure is under consideration.

Ms Harman

To ask the Secretary of State for Social Security what estimate he has made of the number of pensioners who will retire on incomes under half the national average under the basic pension plus scheme. [20468]

Mr. Heald

The number is expected to be smaller than under the current state pension scheme.

Ms Harman

To ask the Secretary of State for Social Security if he will estimate the additional contributions necessary for people on(a) a quarter, (b) half, (c) three quarters and (d) average earnings to receive a pension equivalent to the value of the single and married person's tax allowances for those over the age of 65 years if these allowances are uprated in line with (i) prices and (ii)earnings under the Government's basic pension plus proposals. [20476]

Mr. Heald

The information could be provided only at disproportionate cost.

Ms Harman

To ask the Secretary of State for Social Security at what point the Government would use their powers to impose a ceiling on charges under the basic pension plus proposals; and for what reasons the Government have not used their existing powers to limit the charges imposed by existing providers of personal pensions. [20503]

Mr. Heald

During the period prior to legislation we will consult extensively about means of ensuring competitive pressures bear down on costs and charges, but we will not hesitate to use legal powers to impose a ceiling on charges should they not reflect those reduced costs.