HC Deb 16 October 2002 vol 390 cc884-5W
Mr. Ruffley

To ask the Secretary of State for Work and Pensions (1) if he will estimate the value of the basic state retirement pension if the retirement age were raised to(a) 70 years and (b) 75 years of age and if the pension tax credit were abolished in its first full year of implementation and the savings used to increase the basic state retirement pension; [71575]

(2) if he will estimate the value of the basic state retirement pension if Government spending on the basic state pension for 2002–03 were kept constant but the retirement age was raised to (a) 70 years and (b) 75 years of age; [71576]

(3) if he will estimate the saving in expenditure on the basic state retirement pension in 2002–03 if the retirement age were raised to (a) 70 and (b) 75 years of age. [71578]

Mr. McCartney

[holding answer 24 July 2002]Currently, State Pension Age is 60 for women and 65 for men, but this will be equalised at age 65 from 2020 with gradual introduction from 2010. It will not be possible to raise the State Pension Age further until 2020. Assuming the same phasing in period (ie ten years to raise the SPA by five years) then at 2030, if the State Pension Age was raised to 70, the Basic State Pension could be around £120 in today's prices. Similarly, if, by April 2040 the State Pension Age was 75, the Basic State Pension could be around £190 in today's prices.

The Government Actuary's Department estimate that if the state pension age were raised gradually from 65 in 2020 to 70 in 2030 around 1.9 million people who are alive today would reach age 65 in the future but would not be expected to reach the relevant revised state pension age.

If the state pension age were raised from 65 in 2020 to 70 in 2030 and to 75 in 2040 around 4.4 million people who are alive today would reach age 65 in the future but would not be expected to reach the relevant revised state pension age.

These figures assume that a change in the state pension age is fully phased in by 2030–40 and that all savings from not paying State Pension prior to these ages, including money allocated to the Pension Credit, are used to pay the Basic State Pension. In addition, these figures ignore the effects on other benefits.

Notes:

1 Figures are for 2020 in 2002 prices.

2 The calculations are based on the scenario 1 costs of the Pension Credit in 2020 set out in the DWP publication "The Pension Credit: Long-term projections".

3 Figures take account of current uprating policy.

4 Note 4 Source: 2000-based population projections for Great Britain.