§ Mr. FlynnTo ask the Secretary of State for Social Security if he will estimate(a) the additional cost in 2009–10 if the basic pension were raised in line with earnings from 2000 and (b) the increase in revenue from national insurance contributions if contributors paid the same proportion of their earnings in 2009–10 as in 1999–2000. [83496]
§ Mr. TimmsThe estimated additional net cost in 2009–10 of uprating basic State pension alone, without the linked benefits which include Incapacity Benefit and Widows Benefit, in line with earnings from April 2000 in 1999–2000 price terms is £4.6 billion pounds. The estimated increase in National Insurance contribution revenue if contributors paid the same proportion of their earnings in 2009–10 as in 1999–2000 is £1.7 billion.
Notes:
1. Figures are rounded to the nearest 0.1 billion. Gross costs have been provided by the Government Actuary's Department. The cost of uprating basic State pension in line with earnings is net of Income Related Benefit offsets.
2. Estimates should be treated as broad orders of magnitude.
3. Income Support and Housing Benefit offsets have been calculated using PENSIM which does not include offsets for linked benefits.
4. Both estimates assume real earnings growth of 1.5 per cent. per annum. The estimate for the increase in National Insurance contribution revenue is based on the March 1999 Budget assumptions.
53W
§ Mr. Duncan SmithTo ask the Secretary of State for Social Security (1) if he will list the governance structures, other than those based on trustees, which his Department has evaluated in relation to the governance of stakeholder pensions; [83602]
(2) what estimate his Department has made of the costs of the stakeholder pension being based on (a) trustee and (b) other forms of governance. [83607]
§ Mr. TimmsThe Green Paper asked for views on trustees and alternative governance structures which could provide comparable benefits for stakeholder pension scheme members. A number of suggestions have been made on aspects of how different arrangements might work. We shall be considering these carefully and propose to consult further on governance arrangements for stakeholder pension schemes shortly.
The costs of governance will be one of the factors to be taken into account in setting the proposed limit on charges in stakeholder pension schemes.
§ Mr. Duncan SmithTo ask the Secretary of State for Social Security if his proposals for stakeholder pensions will contain a statutory requirement for people to seek financial advice before they join a stakeholder pension scheme. [83600]
§ Mr. TimmsAppropriate information and advice for those who need it will be an important part of the decision making process for individuals considering a stakeholder pension scheme. We shall be consulting further on how that information and advice would best be delivered. Further details will be set out in due course.
§ Mr. Duncan SmithTo ask the Secretary of State for Social Security if he will make it his policy to allow group personal pensions to register as stakeholder pensions. [83603]
§ Mr. TimmsGroup personal pensions will be able to register as stakeholder pension schemes provided they meet the required conditions for such schemes. Those conditions are set out in the Welfare Reform and Pensions Bill currently progressing through Parliament, and will be developed in secondary legislation following further consultation.
We are also considering how far the proposed requirement, that employers should facilitate access to stakeholder schemes for employees where an occupational scheme is not available, should apply in cases where employers offer group personal pension arrangements.
§ Mr. Duncan SmithTo ask the Secretary of State for Social Security what estimates his Department has made of the average cost of financial advice for an individual seeking to join(a) a personal, (b) an occupational, (c) a group personal and (d) a stakeholder pension. [83601]
§ Mr. TimmsOccupational pension schemes are operated by employers and charges for financial advice do not arise for individual employees seeking to join such a scheme.
For people considering taking up a personal pension or joining a group personal pension scheme, the cost of advice is, in most cases, included in the overall charges attached to the pension. As my right hon. Friend the Chancellor of the Exchequer announced in his March 54W 1999 Budget, the Financial Services Authority is to draw up league tables of investment products, including personal pensions, and charges will be a key feature.
Information and advice for those who need it will be an important part of the decision making process for individuals considering a stakeholder pension scheme. We propose, therefore, to consult further on information and advice arrangements for those schemes. We shall then consider carefully what allowance should be made for the costs of information and advice in the proposed limit on charges.
§ Mr. FlynnTo ask the Secretary of State for Social Security at what level the upper limit of the middle band of earnings would have to be set in order to give higher earners the same pension entitlement from phase 1 of the state second pension as from SERPS, assuming that the lower limit is as proposed in the pensions Green Paper. [83495]
§ Mr. TimmsWe have recently reached the end of the consultation period on our proposals for the State Second Pension. Final decisions, including those on earnings thresholds at which different pension accrual rates apply, will take account of the responses received. However, to achieve the policy intention that higher earners would have broadly the same pension entitlement from State Second Pension as under SERPS, the upper limit for the middle band of earnings would need to be set at approximately £20,000 in 1998–99 terms.