Contracted-out Money Purchase Schemes

HC Deb 23 March 1998 vol 309 c63W

Mr. Duncan Smith

To ask the Secretary of State for Social Security how much she estimates the average extra cost will be to the members of occupational contracted out money purchase schemes, as a result of the decrease in the SERPs rebate, if they are to maintain contributions to their funds at the same level. [32973]

Mr. Denham

New rebate levels for contracted-out money purchase schemes (COMPS) have been set out for the year 1999–2000, 2000–2001 and 2001–2002 in a draft Statutory Instrument and laid before Parliament. These rebates are lower than those set previously to take account of the higher prevalence of larger COMPS, which have lower administrative expenses. To set these rebates at a higher level would amount to an unwarranted reduction in the National Insurance fund, especially since it could lead to salary-related schemes changing their method of contracting-out without changing their benefit provision to increase the amount they get from the taxpayer.

The reduction in the amount of rebates for individual COMPS members will vary according to their age and earnings levels, but the for average COMPS member in 1999–2000 it is estimated to be £74.