§ Mr. FieldTo ask the Secretary of State for Social Security (1) if he will estimate the public expenditure costs for each of the next five decades of(a) SERPS and (b) the state second pension; [65014]
(2) if he will list the projected public expenditure costs of (a) SERPS and (b) the state second pension over each of the next five decades. [65169]
§ Mr. Timms[holding answer 11 January 1999]: The information is in the table.
The estimated gross public expenditure costs £ billion 1998–99 prices Year SERPS SSP Difference, net of income related benefit effects 2010 9.4 9.0 -0.4 2020 12.0 11.9 -0.3 2030 14.0 15.6 0.5 2040 14.0 18.8 2.5 2050 14.6 25.1 6.2 Notes:
1. This shows the net public expenditure effects of the difference between the costs of SERPS and Second State Pension (SSP), taking into account the effects of income related benefits.
2. The SSP figures include all expenditure on State second-tier pensions, including SERPS pensions already in payment and pre-2002–03 SERPS accruals yet to come into payment.
3. These figures exclude the effect of the introduction of stakeholder pensions, which is expected to lead to higher levels of contracting out.
§ Mr. FieldTo ask the Secretary of State for Social Security if he will estimate the number of carers in each of the next five decades who will be credited in to the new state second pension. [64852]
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§ Mr. TimmsIt is not possible to make a precise forecast of the numbers of carers who will qualify for credits into the new State Second Pension in each of the next five decades. For costing purposes, it has been assumed that around 2½ million carers each year will qualify for State Second Pension credits over the period concerned. This includes 2 million cases where Child Benefit is in payment for a child aged 5 and under.
§ Mr. FieldTo ask the Secretary of State for Social Security if he will estimate the number and proportion of workers who will qualify on grounds of low income for the new state second pension(a) at its inception and (b) at each 10 year interval for five decades after the scheme's introduction. [64940]
§ Mr. Timms[holding answer 11 January 1999]: At the scheme's inception, it has been assumed that around 20 per cent. of contributing employees (some 4 million) will be contracted in to the State Second Pension and have earnings below £9,000 a year in today's terms. This percentage may grow slightly over subsequent decades as real earnings increases bring proportionately more employees above the Lower Earnings Limit for National Insurance contributions.
§ Mr. FieldTo ask the Secretary of State for Social Security if he will estimate how many disabled people will qualify for credits for the second state pension in each of the next five decades. [64851]
§ Mr. TimmsIt is not possible to make a precise forecast of the numbers of disabled people who will qualify for credits into the new State Second Pension in each of the next five decades. For costing purposes, it has been assumed that around 2 million disabled people each year will qualify for State Second Pension credits over the period concerned (with variations of up to 200 thousand in any single year).
§ Mr. FieldTo ask the Secretary of State for Social Security if he will list over the next five decades the net impact on the employee National Insurance contribution rates following the introduction of State Second Pensions. [65170]
§ Mr. Timms[holding answer 11 January 1999]: The information is as follows:
The estimated percentage employee National Insurance contribution rates for each of the next five decades following the introduction of the State Second Pension Year Current policy (SERPS) State Second Pension 2010 8.5 8.5 2020 8.1 8.3 2030 8.3 8.7 2040 7.7 8.3 2050 6.8 7.9 Notes:
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- 1. These figures exclude the effect of the introduction of stakeholder pensions, which is expected to lead to higher levels of contracting out.
- 2. The current employee National Insurance contribution rate (not contracted out) is 8.95 per cent. (after excluding the NHS Allocation).
§ Mr. WebbTo ask the Secretary of State for Social Security what principles will govern the annual indexation arrangements for the proposed State Second Pension once it has been implemented. [70597]
§ Mr. TimmsAs explained in the Green Paper on pensions "Partnership in Pensions" the new thresholds of £9,000 and £18,500 for the State Second Pension, on which we are consulting, will be uprated in line with average earnings.
Payments of the State Second Pension will be uprated in line with prices, as the Additional Pension earned from the State Earnings Related Pension Scheme is currently.
§ Mr. WebbTo ask the Secretary of State for Social Security if he will estimate the value of the total income from basic state pension and stakeholder pensions relative to the value of the minimum pension guarantee of someone earning £10,000 per annum through their working life assuming (i) price indexation of the minimum pension guarantee and (ii) earnings indexation of the minimum pension guarantees, and, in each case, that the only sums paid into the stakeholder pension were National Insurance rebates. [70626]
§ Mr. TimmsThe State Second Pension is designed to ensure that any person earning above the National Insurance Lower Earnings Limit, or caring, for a 49 year working life will have an income in excess of the Minimum Income Guarantee level.
A person who earns £10,000 per annum in 1998 earnings terms throughout their working life would, on the basis of having paid only their National Insurance rebates into a stakeholder pension scheme, receive a total income from the basic State Pension and stakeholder pension of £83 per week (in 1998 earnings terms). This represents 110 per cent. of the Minimum Income Guarantee (MIG) level where the MIG is raised in line with earnings. If the MIG were raised in line with prices, this sum would be 240 per cent. of the MIG level. As explained in the Green Paper "Partnership in Pensions", the structure of contracting out rebates will be reviewed in light of stakeholder pension schemes.
Notes:
- 1. It has been assumed, in line with normal Government Actuary's Department (GAD) assumptions for calculating the contracted out rebates, that the amount received from a rebate-only stakeholder pension would be equal to the amount received from the State Second Pension. If the rate of return was higher than that normally assumed by GAD (ie, 4 per cent. above price inflation), the amount received would increase.
- 2. The hypothetical individual in this example is assumed to begin work at 16 years old in 2002 and work for 49 years until retirement.
- 3. Only National Insurance rebates are paid into the stakeholder pension scheme.
- 4. Real earnings growth is assumed to be 1.5 per cent.
- 5. Figures are rounded to the nearest pound.
- 6. Percentages are rounded to the nearest 5 per cent.