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Private Pensions
7. Mr. Dunn: To ask the Secretary of State for Social Security when he last met representatives of the private pensions sector to discuss improvements in private pension provision. [36962]
Mr. Lilley: Earlier this month, I addressed two conferences about pensions, and I have frequent contacts with representatives of the pensions industry.
Mr. Dunn: When my right hon. Friend next meets representatives of the industry, will he tell them that the Government have no plans whatever to nationalise private pension funds or to seek to control them in any way as an aid to state spending? That is the policy of the Labour party, and it is another example of new Labour, new danger, new nightmare for pensioners.
Mr. Lilley: I shall certainly pass on the points that my hon. Friend makes. He is quite right to say that the Opposition have flirted closely with the Singapore scheme, which involves the state running pension
schemes, to the great disadvantage of pensioners in Singapore, whose return since 1980 was only 2 per cent. a year above inflation, whereas private pensions in this country have returned nearly 10 per cent. a year on top of inflation.
Mr. Rogers: Private pensions are all right for people who can afford them. Is the Secretary of State aware that some of my colleagues and I met a group of miners today--some of them amputees--who were disabled early in their careers, that their wages dropped considerably and, as a result, they have spent a lifetime on a very low income? They could not make any provision for retirement and private pensions. They relied on a Government undertaking that they would receive a special hardship allowance as a result of the injuries that they suffered, and that translated into a reduced earnings allowance. The Government have betrayed those people, who have acted in good faith and given great service to this country.
Mr. Lilley: I met some miners myself in Scotland when I was there, and they put their case with impressive eloquence and moderation. I endeavoured to explain, as my hon. Friend the Under-Secretary did, that we are simply fulfilling the original intention of Parliament. When, during their working lives, people are incapacitated by injury, they receive a reduced earnings allowance, as the name suggests; when they retire, they receive a reduced retirement pension to match the fact that they were unable to contribute as much into funds as they would if they had been working all the time. That is a fair and sensible system, but it was misapplied. We have merely put it back to what Parliament always intended.
Mr. John Greenway: Does my right hon. Friend agree that one of the best improvements that we could make to the personal pension regime to encourage more people to opt for such pensions would be the introduction of a minimum contribution for tax relief, regardless of earnings? That would greatly benefit the self-employed, people on low incomes and, I dare say, those to whom the hon. Member for Rhondda (Mr. Rogers) referred. My right hon. Friend may say that this is a matter for our right hon. and learned Friend the Chancellor of the Exchequer, but his encouragement would be a great help.
Mr. Lilley: My hon. Friend is right: this is a matter for my right hon. and learned Friend the Chancellor when he considers his Budget. I know that he has received representations on the subject. As it overlaps with my responsibilities, however, I will certainly discuss it with him.
Mr. Denham: Instead of scaremongering about plans that he knows the Labour party does not have, will the Secretary of State face up to the reality of personal pensions? Will he confirm that it is eight years since so-called appropriate personal pensions were first on sale? Is it not a scandal that, eight years later, according to the Government Actuary, at least 30 per cent. of the savings of a typical woman with a typical personal pension will be lost in fees and charges by the time she retires?
Is not that typical of the Tories and their privatisation of the welfare state? Is not the message clear? The Government are prepared to pour savers' and taxpayers'
money down the drain. Only a Labour Government will provide security in retirement with that money, instead of pouring it down the drain.
Mr. Lilley:
We have arranged a system that gives people the option of remaining in SERPS if their circumstances make that more attractive. If, as in the majority of cases, they can do as well or better outside SERPS, they are encouraged to opt out of it and to build up funded personal and occupational pensions totalling some £600 billion, to the great benefit of the country. That means that, in advance of people's retirement, we have saved more funds than all the other European countries put together. The hon. Gentleman may regret that deeply--I know that he does--but the hon. Member for Islington, South and Finsbury (Mr. Smith) has said that the Labour party wants to remove SERPS. In May this year, he wrote, "SERPS must go."
8. Mrs. Lait:
To ask the Secretary of State for Social Security what steps he is taking to improve the regulation of occupational pensions. [36963]
Mr. Heald:
The Pensions Act 1995 will improve security for occupational pension scheme members and increase confidence in private pension provision, but without imposing undue burdens on employers or schemes.
Mrs. Lait:
Can my hon. Friend confirm that, during the Bill's passage last year, Labour Members tabled more than 700 amendments, the bulk of which would have increased regulation of occupational pensions? Does he agree that that burdensome and over-regulatory approach constitutes yet another new danger from new Labour?
Mr. Heald:
As usual, my hon. Friend is right. In fact, Labour Members tabled not 700 but 740 amendments, most of which would have added to regulation. In the debate the other night, they were doing it again--proposing further regulations. There is danger in this. Over-regulation can put employers off setting up schemes and continuing with them. New Labour, new danger.
Mr. Clapham:
The Minister will be aware that, although salary-based schemes provide a minimum pension, the new money purchase schemes that many people have been encouraged to join since 1988 do not. What steps is he taking to improve the benefits provided by contracted-out money purchase schemes?
Mr. Heald:
All forms of private pension provision have something to recommend them in individual cases. Salary-related schemes provide excellent benefits and, for some people, so do money purchase schemes, which have the advantage of being more flexible. The Government's policy has been to encourage such flexibility while providing the security that pensioners need if they are to have confidence in the system. The rebates announced earlier this year build on that. Let us not forget that the Labour party is talking about introducing schemes run by trade unions, which would undermine what the Government have done, and involve a guaranteed minimum pension that would cost up to £5 billion and a flexible decade of retirement costing £15 billion.
Welfare Support
9. Mr. Viggers: To ask the Secretary of State for Social Security what is his policy in respect of providing support for those who most need assistance. [36964]
Mr. Burt: Our policy is to focus benefits on those who need them most by improving incentives, bearing down on abuse and encouraging personal responsibility.
Mr. Viggers: A number of my constituents have complained to me about the generosity of benefits paid to those whom they describe as professional claimants, compared with the meagre benefits available to those who have worked all their lives and have become unemployed for the first time. Does my hon. Friend recognise that contrast, does he think that it is fair, and what further action can the Government take to improve the situation?
Mr. Burt: Under present legislation, and under the jobseeker's allowance scheme, the Employment Service works hard to distinguish between those who should be entitled to unemployment and income-related benefits and those who for their own reasons have chosen not to work or to avoid interviews and the like. I assure my hon. Friend that we take this matter seriously. It is important that benefit is paid to those who need it and who have not done anything to put themselves out of the labour market. The new jobseeker's allowance will help in that cause.
Mr. Frank Field: The Government's targeting of benefits means that families who work are penalised, families who save are penalised, and families who tell the truth are penalised. Are the Government proud of the fact that they have doubled the number of families on means-tested assistance, up to one in three of the population?
Mr. Burt: I do not accept the hon. Gentleman's premises for a moment. The work that we have done to increase earnings-related benefit, work-related benefit, means that a family in work on family credit are £23 a week better off than if they were on income-related benefit. We have tried to improve the benefits system to make sure that it is worth going into work. Many of the changes announced by the Chancellor a couple of years ago which come into effect this year--earnings top-up and the like--will benefit 750,000 people. That is the right way to set about the problem.
Mr. Churchill: Given the massive scale of social security fraud, when will the Government introduce a national system of workfare for all able-bodied unemployed so as to guarantee them an income while at the same time smoking out those who make multiple fraudulent claims or who are already employed but also drawing benefit?
Mr. Burt: The issue of workfare is more a matter for the Department for Education and Employment. First, as I said earlier, the new system of jobseeker's allowance should distinguish rather better between those who want to work and those who choose for some reason not to work. Secondly, the measures that we have introduced this year, particularly earnings top-up, still try to find a
way to boost the income of those who have just come off benefit so as to make work more attractive. We persist in believing that that is the best way forward.
Ms Lynne: Does the Minister accept that axing the benefits helpline will cause untold hardship to benefit claimants, especially pensioners, who often do not claim what they are due? Will he reconsider the decision, or does he expect organisations such as the citizens advice bureaux and Age Concern to fill the gap?
Mr. Burt: No, it is not a question of that. Local Benefits Agency offices now provide a great deal of support and information for people looking for information about their benefits. All too often, callers to the national helpline had to be redirected to the local Benefits Agency office line, and we prefer that to be the process. The benefits inquiry line, which is specifically designed for queries about disability benefits, remains in place. We have substantially boosted the amount of information that is made available through the Benefits Agency and this good policy will continue.
Mr. Bernard Jenkin: Will my hon. Friend confirm that since 1988 we are spending an extra £1.2 billion on less well-off families and that to claim that more people on means-tested benefits equals increased poverty is a complete distortion of the truth, because in fact it demonstrates that we are helping more and more people in need?
Mr. Burt: My hon. Friend is correct. The changes in benefits in 1988 enabled us to redirect £1 billion a year to the poorest families. The Opposition should not criticise that. In contrast with all the difficult decisions that we have made and all the decisions to redirect benefits and target them more effectively, there has been nothing constructive from the Opposition--merely a series of reviews and attempts to think the unthinkable. The Opposition have produced nothing workable, only dissent. It is another example of a party not really ready to govern.
Mr. Chris Smith: Can the Minister tell us how it can possibly have helped those in need for his right hon. Friend the Secretary of State to have talks about the disposal of DSS offices, as he is reported to have done on 21 February, with Mr. John Beckwith, chairman of the Premier Club, who is usually employed drumming up money in return for the dubious privilege of meeting the Prime Minister? Will the Minister tell us whether such a meeting took place, and will he now rule out Mr. Beckwith's participation in any such disposal?
Mr. Burt: In the past four or five minutes the House has had a sensible discussion about the targeting of benefits. It is a shame that the hon. Gentleman cannot rise to the quality of that discussion.
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