§ Mr. Jim CunninghamTo ask the Secretary of State for Work and Pensions how his Department intends to help lower earners build up their entitlement to the state pension. [143927]
§ Malcolm WicksThere are already a number of measures in place to help lower earners build up their entitlement to state pension.
Employees who earn above the lower earnings limit (LEL) but less than the lower earnings threshold (LET) are treated as having earnings at the LET. Certain carers and people who are disabled or long-term ill who earn less than the LET, including those with no earnings at all, are also treated as having earnings at the LET. Because the LET is set at a higher amount than the LEL, some employees do not have to pay national insurance 875W contributions (NICs) but are treated as if they have paid them. This means that they continue to build up entitlement to contributory benefits such as state pension and incapacity benefit even though they are not paying NICs.
In addition, people with earnings below the level at which they are treated as paying NICs or no earnings can have their state pension entitlement protected by home responsibilities protection (HRP). HRP helps to protect the basic state pension position of people whose opportunities to work are limited because of caring responsibilities at home. It is available to eligible people for complete tax years and reduces the number of qualifying years they would otherwise need for a basic state pension.
Also, recipients of working tax credit whose earnings are below the level at which they are treated as paying NICs can be credited with contributions for state pension purposes.
Further, the state second pension focuses help on those with low to moderate earnings and on qualifying carers and long term-disabled people who have broken work records. 20 million people have started to benefit from the reform of state earnings-related pension scheme (SERPS) through the state second pension, introduced in April 2002. Low earners will get at least double what they would have got from SERPS, while carers and disabled people with broken work records will be entitled to an additional state pension for the first time.