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Occupational Pensions
6. Sir David Knox: To ask the Secretary of State for Social Security what proportion of those retiring now are in receipt of occupational pensions; and what he estimates the proportion will be in 10 years' time. [11374]
The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald): It is estimated that in 1979, 55 per cent. of recently retired people were in receipt of an occupational pension, compared with 70 per cent. in 1994-95. This is projected to rise further to more than 75 per cent. in the next 10 years.
Sir David Knox: Does my hon. Friend agree that adequate occupational pensions have done a great deal to ease poverty and anxiety among retired people and that further extension of them is essential if retired people are to live fuller and more satisfying lives?
Mr. Heald: The Government's policy to maintain the value of the basic state pension, encourage more private provision and target help on those most in need has led to record rises in pensioners' incomes--rising almost as
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much each year as they did during the whole of the last Labour Government's period in office. My hon. Friend is right; we must go further.
Mr. Frank Field: After 18 years of Conservative rule, will the Minister tell the House how many pensioners are still poor?
Mr. Heald: The hon. Gentleman asks a question that I am very happy to answer. Even the poorest pensioners have seen incomes rise by 28 per cent. since 1979.
Mr. Field: How many are in poverty?
Mr. Heald: It is all very well for the hon. Gentleman to ask that question, because he defines poverty in relation to the level of income support--so that, if one increases income support, one ends up with more poverty. It is nonsense. What is demonstrable is that, since 1979, under the Government, pensioners' incomes have increased dramatically--on average, by 60 per cent.--and that even the poorest pensioners have seen a 28 per cent. increase. That is very different from what happened under Labour, when pensioners were robbed of their savings through high inflation.
Mr. Dykes: There has been spectacular growth in private pensions--which have given the elderly new horizons and new freedoms, and are a matter of great pride for Conservative Members. None the less, is my hon. Friend satisfied that expenses and commissions on the new pension schemes are now under adequate control?
Mr. Heald: As my hon. Friend says, it is important to ensure that pension charges are kept to the minimum. The new disclosure rules are having that effect, and the Securities and Investments Board is meeting with pension providers to discuss those issues. The most important factor, however, is the yield on pensions. Since 1980, there has been a 9 per cent. annual real yield on private pensions in the United Kingdom. We also have more invested in pensions than all of Europe put together. The result is that, in 2030, when the UK's finances are in surplus, France and Germany will have a debt of 100 per cent. of GDP, and Japan's debt will be 300 per cent. of GDP.
State Earnings-related Pension Scheme
7. Mr. Flynn: To ask the Secretary of State for Social Security what proposals he has to ensure that SERPS becomes a partially funded scheme. [11375]
Mr. Heald: We have no proposals to make SERPS a partially funded scheme. Our policy is to encourage private pension provision through the contracting out of SERPS.
Mr. Flynn: Does the Minister agree that the two most profitable pension schemes have been occupational pensions and SERPS? He failed to mention the 2 million people who face impoverishment in old age because of their money-purchased personal pension schemes, and that only 7,000 of them have been compensated. Does he realise that someone on average wages who has been in a SERPS pension since 1978 will now be receiving an additional £70 a week, doubling his or her pension?
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Why does not the Minister forget ideology and look anew at fresh pension schemes and at renewing and strengthening SERPS, so that it will be funded and run independently of the national insurance scheme and managed by independent managers?
Mr. Heald: I have examined the proposals to which the hon. Gentleman refers, and I believe that they make him the most expensive Labour Member. His wish list of extra DSS expenditure on pensions would cost more than £6.8 billion by 2000, and more than £65 billion by 2030. He is proof of the type of pressures that a Labour Government--were one, heaven forfend, elected--would face to increase public spending. His ideas would result in national insurance costs rising by a third.
Mr. Bernard Jenkin: Does my hon. Friend agree that allowing people to opt out of SERPS is exactly what the hon. Member for Newport, West (Mr. Flynn) wants--a move towards a funded income-related scheme and away from a pay-as-you-go state scheme? Until the Labour party understands that we are achieving what it now says it wants, it is unlikely that Labour will be fit to govern.
Mr. Heald: My hon. Friend is right. Contracting out of SERPS and encouraging the private sector are what have helped pension incomes to rise so fast since 1979. Let us not forget, however, that the Labour party is proposing equalising the state pension age at 60--
Ms Harman: That is not relevant.
Mr. Heald: It is relevant to SERPS, because Labour is talking about equalising the state pension age at 60, with a pension of £40 a week. With no income support, that would lead pensioners to destitution. It is risky--it is new Labour, new danger.
Income Support
8. Mr. Austin Mitchell: To ask the Secretary of State for Social Security what estimate he has made of the number of pensioners entitled to income support who do not claim it. [11376]
Mr. Burt: The only way to determine the precise number not taking up their entitlement would be for them to come forward and make a claim. However, the most recent figures suggest that between 800,000 and 1.1 million pensioners have an unclaimed entitlement to income support.
Mr. Mitchell: Why are the Government so complacent about that extraordinarily high number of pensioners not claiming income support? The income of those million pensioners not claiming income support is £14 a week lower and they are not entitled to cold weather payments. Other estimates suggest that 800,000 of those pensioners are single women living on their own with no occupational pension and no savings. If the Government believe in targeted benefits, should they not be seeking out those people and ensuring that they get the money to which they are entitled, instead of wringing their hands and being complacent because they are saving money?
Mr. Burt: The Government are in no way complacent about those figures. It is the responsibility of the
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Department to present information to the public about the availability of benefits. The Department's publicity budget for the past three years, including the current year, has been £84 million. Some £9 out of every £10 worth claiming is claimed and four out of five claimants are paid. Take-up campaigns must be properly targeted to be effective. We do that successfully with family credit. It is not possible to target a take-up campaign on pensioners in the way that the hon. Gentleman would like. However, there is a new Benefits Agency national awareness campaign, running from 13 to 26 January, entitled "Pensions and Benefits for Older People". It is our job constantly to put information before the public. If someone comes forward with a claim, we can, we will and we want to honour it.
Mr. Gallie: Will my hon. Friend give a commitment to maintain the level of old-age pensions above the rate of the rise in the cost of living, as the Conservatives have done over the past 18 years, unlike Labour, who allowed the value of pensions to plummet while they were in office?
Mr. Burt: I can make that commitment to maintain the value of the pension. I am sure that my hon. Friend and the House will be happy to learn that, while 31 per cent. of those in the lowest tenth by income of the population in 1979 were pensioners, today that figure is only 7 per cent. Our commitment to maintain the value of the pension in line with inflation is clear. We have not threatened to means-test it, as has been suggested by Opposition Members.
Mr. Denham: The Minister says that he is not complacent. Does he agree with the Under-Secretary of State for Social Security, his hon. Friend the Member for North Hertfordshire (Mr. Heald), who told the Standing Committee considering the Social Security Administration (Fraud) Bill in December:
- "we do not know why certain pensioners do not take up income support"?--[Official Report, Standing Committee E, 5 December 1996; c. 44.]
Mr. Burt: I am more than happy to agree with my hon. Friend the Under-Secretary, who was entirely right. The hon. Gentleman's bluster would mean a great deal more if he committed himself and his colleagues to a take-up campaign that would deal with the problem that we face. No such commitment has been made, either while we were considering the Bill or since. It is all bluster and no money up front from Labour Members. We will continue to make sure that benefits are available to all who need them and to publicise them. The considerable advance in the position of pensioners under this Government is likely to continue only under the economic policies advocated by the Conservatives.
Mr. Devlin: Will my hon. Friend confirm that taking up benefits is not compulsory? There may be a variety of
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reasons why elderly people do not wish to claim income support or other benefits. The best way to target those people is to make them aware that benefits are available if they want them, not to sneak into records of their savings and other matters to find out whether they are entitled and to tell them that they must have the benefit.
Mr. Burt: My hon. Friend is correct. It is not possible to define in every circumstance why someone has not taken up a benefit. It may further reassure the House to know that local authorities are now under a general obligation, set out in our guidance, to use whatever information they have if it is suggested that someone might have a claim for benefit. We have also provided local authorities with the software to assist them in that task. The matter is much more complex than the Opposition suggest. If they are to work, take-up campaigns must be properly targeted. That was the case with family credit, and we increased the number of people claiming it. We shall continue our efforts to ensure that all those who need benefits get them.
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