§ Mr. FlightTo ask the Chancellor of the Exchequer if he will place in the Library the figures underlying the graph on page 19 of "Modernising Annuities" published by the Inland Revenue in February; what the date is in each year for which the figures are valid; and what the source is of the date used for earnings, annuity rates and value of maturing personal pension funds. [61084]
§ Mr. McCartneyI have been asked to reply.
The information in the table sets out the figures underlying the graph on page 19 of "Modernising Annuities" published by the Inland Revenue and the Department of Work and Pensions in February.
Each individual contributes 10 per cent. of their earnings into a personal pension.For the first 21 years, the fund is invested in equities, providing a return in line with the FT30 price index (dividends are ignored to allow for the effect of charges).1049WOver the last 10 years of contributions, the fund is switched into gilts at a rate of 10 per cent. of the fund each year.The return on gilts is in line with the Barclays capital total return index.A further annual charge of 1 per cent. of the fund under management is paid out of the fund each year.Upon retirement on 31 December of the given year, an annuity is purchased at the prevailing rate of that year.Date and sources of information:
Historical annuity rates provided by Annuity Direct; and the rates refer to level annuity for a male aged 65, single life, guaranteed 5 years.The annuity rates were calculated by taking the average of monthly rates for each year. The annuity rates for 2001 refer to the average of monthly rates from January to October only.Earnings:
The average earnings series from 1963 to December 2001 is taken from National Statistics publication, 'The Abstract of Statistics for Social Security Benefits and Contributions and Indices of Prices and Earnings, 2001 Edition'.Two indices have been put together to form a monthly average earnings series, starting from 1963. The Index of Average Earnings from 1963 to 1975 covered employees in all industries and services, except postal services, banking and medical services. The Average Earnings Index (whole economy) from 1976 to present covered all employees.Prior to 1963 the earnings series was constructed by back calculating using the annual growth in average earnings of full time male manual employees.Figures for 2001 refer to the average of monthly rates from January to October only.
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