§ Mr. WebbTo ask the Secretary of State for Social Security what would be the rate of return on the lifetime National Insurance contributions of(a) a man aged 65 and (b) a woman aged 60 retiring in the current financial year and receiving a full basic state pension. [48972]
§ Mr. DenhamThe Government Actuary's Department estimates that the real rate of return on lifetime National366W Insurance contributions for someone reaching State Pension Age in 1998 would be 1.1 per cent. for a man aged 65 and 4.0 per cent for a woman aged 60.
Notes1. The following assumptions have been made:The man/woman is single and has been in employment throughout his/her working life from age 16. Juvenile rates of contributions have been used where appropriate. For the period covered by the Graduated Pension scheme and subsequently, the individual is assumed to receive constant full time average earnings. The amount of Retirement Pension (RP) payable includes Graduated Pension and SERPS on a not contracted out basis.The contributions are based on total National Insurance (NI) contributions (excluding any NHS Allocation or other elements), employer plus employee. It has been assumed that this total relates solely to RP entitlement. In practice NI contributions cover other benefits (e.g. Incapacity Benefit, Widows Benefit, and in the past Industrial Injuries benefit) in addition to RP.The value of the pension received has been based on mortality rates for a man reaching 65 and a woman reaching 60 in 1998 derived from the 1996 based population projection.The rate of return quoted in the reply represents a real rate of return, after adjusting for inflation (as measured by the Retail Prices Index).2. The rate of return for a married man whose wife is receiving a married woman's (category B) pension would be higher than the figure quoted for a single male.