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Written Answers to Questions
Thursday 17 July 1997
SOCIAL SECURITY
Pensions Review
Mr. Davidson: To ask the Secretary of State for Social Security if she will make a statement about the review of pensions which her Department is to undertake. [9606]
Ms Harman: Our Election Manifesto promised a review of the central areas of insecurity for elderly people in this country. I have today launched a wide-ranging review of pensions.
We have inherited a major pensions challenge. The failure over the last two decades to develop an adequate pensions strategy has resulted in widening inequalities amongst pensioners. Too many of our older citizens do not enjoy security in retirement.
Only by achieving a sustainable consensus for change can the country meet the pensions challenge. We want everyone who can make a positive contribution to this review to do so.
Our starting-point must be the health and success of the wider economy. We must give everyone a real opportunity to be able to participate in it. By establishing the conditions for stable, sustainable growth, we will build a stronger economy and provide the essential foundations for decent and secure pensions. By opening up fresh opportunities to come off welfare and into work, we will ensure that more people have the opportunity to contribute to their own pensions.
The review will address nine fundamental challenges:
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This is a formidable challenge and the Government has a key role in bringing change about. But it cannot tackle the issues on its own. We want to receive advice and hear new ideas from everyone with an interest in pensions.
We shall retain the basic state pension as the foundation of pension provision, and SERPS for those who wish to remain in it.
We will also build on the good quality second pensions that many employees enjoy by supporting and strengthening the existing framework of occupational pension provision where that is necessary. And we wish to consider with the pensions industry how an Investors in Pensions award could be established to set a benchmark against which employers, employees and trustees can measure the quality of their own scheme.
We recognise that, for many people, security in retirement can best be achieved by building up their own funded second pension. We shall therefore consult widely on how best to take forward our proposals for new Stakeholder Pensions. These will offer secure, flexible and value for money second pensions for those who cannot join an employer's occupational scheme, whose pay is low or intermittent, and for whom personal pensions are usually unsuitable.
The review will take forward consultation on the development of Citizenship Pensions for carers who are unable to contribute to pensions in their own right. As a result, carers can lose out on the pension entitlements they would otherwise acquire, and end up on means-tested benefits.
Both these proposals, which we plan to legislate for and implement in this Parliament, will be particularly good news for women.
As part of our consultative approach, I have invited Tom Ross, of Alexander Clay and vice-president of the National Association of Pension Funds, to chair a group of pensions experts to report to me on the current state of pension provision in the United Kingdom and on likely future trends. Their work will inform the development of our plans for a modern, responsive pensions system for the future.
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Modernising the social security system is a key priority of the Government. Our long-term objective is to ensure that everyone has the opportunity to build up an adequate pension to guarantee security in retirement. We aim to build a society in which there is a wide consensus on the future for pensions, both now and tomorrow, and provide dignity in retirement for the whole nation.
Ms Stuart:
To ask the Secretary of State for Social Security when she will publish the thirteenth annual report of the Chief Adjudication Officer; and if she will make a statement. [9607]
Mr. Keith Bradley:
The report published today records some welcome improvement in the Benefits Agency and the Employment Service in standards of decision making. Whilst overall the improved performance of last year has been maintained, the report makes clear that there is still much to be done.
The Social Security Bill introduced on 10 July is a key step towards building a modern welfare state using new technology to develop improved benefit processes. The Bill makes provision for the simplification of decision making and appeals.
The report describes favourably the numerous initiatives that the Agencies have introduced to tackle weaknesses and improve their overall performance. But the decision making and appeals framework at present works against the decision makers. Despite the valuable help the Agencies get from the Chief Adjudication Officer and his staff, the system is too cumbersome, over-legalistic and prevents the use of modern technology.
The Social Security Bill will create a framework which enables the Agencies to make decisions in a more straightforward way. The decisions made will be more accurate and easier for both the decision makers and customers to understand.
Ms Stuart:
To ask the Secretary of State for Social Security when she intends to publish her annual report on the Social Fund for 1996-97 and the annual report of the Social Fund Commissioner. [9608]
Mr. Keith Bradley:
The Secretary of State's annual report on the Social Fund for 1996-97 (CM 3667) was published today and has been laid before Parliament. The report records that the gross budget allocated to the discretionary part of the Fund during the year was £440.5 million.
Total gross expenditure in 1996-97 was £539 million. This included almost 2 million non-repayable grants and interest free loans worth £432 million and Funeral, Maternity and Cold Weather Payments worth £107 million.
The Secretary of State makes clear in the Report our commitment to modernising and improving welfare delivery. The current Social Security Bill will enable the decision-making process for budgeting loans to be made easier for applicants to understand, less time consuming for staff to operate and more cost effective to administer.
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The Social Fund Commissioner's annual report has also been published today and copies placed in the Library.
Mr. Garnier:
To ask the Secretary of State for Social Security if she will ensure that social security entitlements are increased to match any increases in consumer charges due to the windfall tax. [2976]
Mr. Field:
Any increase in consumer charges will be a matter for the regulators. Representations from individual companies would have to be considered on their own merits, but we can see no reason for any price increases as a result of the windfall tax. Benefit amounts will be reviewed at the normal time in the normal way taking account of movements in the Retail Prices Index and Rossi indices.
To achieve a sustainable consensus on pensions policy. We need to reach a broad-based agreement, which will allow people to plan for their long-term future and avoid the constant changes in pensions policy we have seen in the last 20 years.
To agree where the responsibility for funding pensions should lie and to establish the right balance between the public and private sectors.
To respond to demographic change. Talk of a demographic "time-bomb" is exaggerated, but there are real issues to address as the ratio of working age people to pensioners falls in the first half of the next century.
To respond to social and labour market change. The last 50 years have seen far-reaching changes in the way we live and work. The pension system needs to reflect this. It must be capable of responding to future change. We need to ensure it provides everyone--men and women, the self-employed, full and part-time workers, those in permanent jobs and those on short-term contracts--with the chance to build up better pensions in their own right.
To ensure resources devoted to pensions are used to maximum effect. We need to make sure that every penny available for pensions is used as efficiently and effecively as possible, whether it comes directly from individuals and employers, or indirectly from them through the tax system.
To get the regulation of pensions right. The personal pensions mis-selling scandal illustrates too clearly what can go wrong when pensions are not properly regulated. People need to have confidence in pensions and be sure their pensions are secure. We need to find a balance with provides an appropriate level of security, eliminates the scope of abuse and does not impose an undue burden on providers.
To raise awareness of pensions and improve the level of financial education so that people understand the importance of saving for retirement and make the right choice about which pension product is best for them.
To narrow the pensions gap between men and women so as to give women more security in retirement. Many pensions are simply not flexible enough to cope with women's working patterns. Women still earn less on average than men and are more likely to have caring responsibilities.
To strike the right balance between the generations. We face the challenge of providing for the future, but we must also look at the position of today's pensioners. The views and concerns of current pensioners will be at the heart of the review process. We will ensure that current pension costs are manageable and that excessive costs are not placed on future generations.
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