§ Mr. KidneyTo ask the Secretary of State for Work and Pensions if he will calculate the date at which a single woman of 65 years retiring today relying solely on pensions savings of £100,000 buying an indexed linked single annuity at market rates can be expected to become eligible for income support if the minimum income guarantee for pensioners continues to be linked to earnings. [15495]
§ Mr. McCartneyThe length of time that will pass before the individual in the question becomes entitled to minimum income guarantee (MIG) will depend on a number of assumptions. These assumptions are the annuity rate, the rate of price inflation and the rate of real earnings growth.
It should be noted that the introduction of pension credit will ensure that this individual receives a direct reward for her saving. Pension credit will provide additional weekly income on top of any income derived from the annuity.
It should also be noted that over 95 per cent. of women have some entitlement to state pension and that if this individual had entitlement to full basic state pension, entitlement to MIG would not arise for 48 years.
Based on the assumptions of an annuity rate of 6.0 per cent. (the most favourable available on 15 November 2001), price growth of 2.5 per cent. per annum and real earnings growth of 1.5 per cent. per annum, it is estimated that a single woman of 65 years retiring solely on pension savings of £100,000 would become eligible for MIG after 16 years.