§ Mr. CousinsTo ask the Secretary of State for Social Security if, pursuant to the answer given to the right hon. Member for Birkenhead (Mr. Field) on 12 January 1999,Official Report, column 152, he will state (a) the assumptions about the growth of the minimum income guarantee relative to prices and earnings and (b) the number and proportion of state second pensioners who will be receiving the pensioners' minimum income guarantee in the years up to 2050. [66469]
§ Mr. TimmsInformation is not available in the form requested. Such information as is available is as follows.
It is assumed that, from the announced rates for April 1999, the Minimum Income Guarantee is uprated in line with the growth in average earnings (assumed to be 1.5 per cent. per year more than the growth in prices).
Estimates are not available of the number of pensioners who would be receiving payments of state second pension in future years. Overall, estimates taken from the PENSIM model suggest that under the new insurance contract for pensions approximately 1 in 4 pensioner units (2.5 million) would receive income from the Minimum Income Guarantee in 2050, and a lower proportion in years after 2050.
Projections forward to the year 2050 are subject to a high degree of uncertainty, given the number of assumptions in making them. Some of those who will be pensioners in 2050 have yet to begin work, and most are today in their 20s and 30s.
Estimates made by extrapolating projections from the PENSIM model can give only a broad indication of the likely order of magnitude of figures so far into the future.
§ Mr. CousinsTo ask the Secretary of State for Social Security if he will estimate the savings in income support or minimum pensioner income guarantee payments each year after 1 April 1999 till 1 April 2007 arising from the introduction of pensions splitting. [66462]
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§ Mr. TimmsThe information is not available in the form requested. Such information as is available is as follows.
Legislation to enable pensions to be shared at the time of divorce will be included in the forthcoming Welfare Reform Bill.
The financial implications of pension sharing are uncertain, and will depend on the number of spouses who obtain a pension share and the percentage of pension which is transferred. Current estimates are based on the assumption that there could be from 35,000 to 65,000 cases per year, with a central assumption of 50,000. All estimates made are also dependent on a large number of other assumptions and should be considered illustrative.
It is expected that any impact on the minimum income guarantee will initially be small, as income support entitlement will not be altered until a pension share comes into payment. As most divorces take place before the age of 40, it is likely that, in most cases, there will be a significant time lapse between a pension share being made and income being received from the pension. Broad estimates of the impact 20 years after implementation suggest that, using the central assumption of 50,000 pension shares per year, pension sharing on divorce could lead to a saving on all income related benefits of around £10 million (within a range of £0—£30 million using alternative assumptions).