Previous SectionIndexHome Page


4. Mr. Rendel: To ask the Secretary of State for Social Security what plans she has to increase the number of people with fully funded second-tier pensions.[9031]

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): I welcome the hon. Gentleman to his new post as social security spokesman for the Liberal Democrats. As part of our pensions review, we shall examine ways in which we can further support and strengthen the existing framework of occupational pension provision where that is necessary. We shall consult widely on our proposals for stakeholder pensions that will offer secure, flexible and value-for-money funded second pensions for those who cannot join an employer's occupational pension scheme. They will be particularly aimed at those on low earnings or with intermittent patterns of employment, for whom personal pensions are usually unsuitable.

Mr. Rendel: I thank the hon. Gentleman for his initial remarks and for his support in general for second-tier pensions. Does he agree that it is certainly regrettable that

28 Jul 1997 : Column 6

the Chancellor in his Budget introduced measures that will discourage people from taking out fully funded second-tier pensions?

Mr. Denham: Pensions are a long-term investment and they depend on the success and the strength of the economy. It was therefore right for the economy and for future pensions provision that my right hon. Friend the Chancellor took measures to remove biases against investment and to increase the level and quality of long-term investment. That will produce the wealth on which pensions can be paid in future.

Mr. Pike: Is it not time to do something for pensioners such as those in the Bellings pension fund scheme who will not get what they paid for because of the fraud that was committed by the former directors of the scheme? When they retire, those pensioners will get only about 30 per cent. of what they expected.

Mr. Denham: My hon. Friend is right to raise that problem. The new regulatory authority for occupational pensions came into operation at the beginning of April. I hope that the measures in the Pensions Act 1995 will strengthen the protection of pension scheme members. However, we shall take stock of the practical workings of that Act to identify any areas where further improvement is necessary.

Mr. Viggers: Is the Minister aware that many of my constituents thought that they had fully funded pension schemes until 2 July and they are now affronted to discover that they have lost 15 to 20 per cent. of the benefit of those schemes? Is he aware that my constituents are furiously angry that the Government are now promoting second pensions when the Chancellor removed many of those benefits on 2 July?

Mr. Denham: Those of the hon. Gentleman's constituents who have defined benefits schemes will have their benefits protected by the schemes. Those in personal pension schemes who are approaching retirement would in the normal course of events have already seen their investments switched away from equities either automatically by some providers or, in other cases, on the advice of financial advisers. In any case, I would refer the hon. Gentleman to the performance of the stock market since January, as that should give him some reassurance.

Mr. Wicks: Does my hon. Friend recognise that some of the hardest-working people in the country are not in the waged economy, but are carers for elderly people and for others with disabilities? They are often denied access to a decent pension. What plans does he have to ensure that carers in Britain--our most responsible citizens--can have a decent old age with a decent pension?

Mr. Denham: My hon. Friend is right to point out that some people work hard for society, but are not in a position to pay into a funded second pension. That is why, as part of our pensions review, we shall consult widely on our proposals for a citizenship pension, to explore ways in which those who exercise responsibilities as carers can

28 Jul 1997 : Column 7

develop rights to a decent second pension and avoid the fate of retirement on to means-tested benefits--a prospect which faces far too many people today.

5. Mr. David Davis: To ask the Secretary of State for Social Security if her Department will write to those people with personal pensions informing them of recent or prospective changes to their pensions.[9032]

Mr. Denham: The package of measures in the Budget will promote an environment in which pensions will flourish. It will encourage investment, stable economic policies and sustainable economic growth. Pensions are a long-term investment. Responsibility for advising policy holders lies with individual providers and financial advisers, within the guidance offered by the regulators.

Mr. Davis: The Minister should be able to answer my question more quickly than that--a simple yes or no will do. In view of what he has just said, do the Government welcome the fact that a number of companies are considering whether to move from final salary pensions to money-purchase pensions?

Mr. Denham: Many factors govern the decision of employers as to what type of pension scheme to offer. The right hon. Gentleman will be well aware that there was much speculation before the Budget about whether schemes would switch to contracting out on a different basis. I am sure that he agrees that what matters is the quality of the pension on offer, rather than the detail of the scheme.

New Deal for Lone Parents

6. Mr. Bill Michie: To ask the Secretary of State for Social Security if she will make a statement on the Government's new deal proposals to help lone parents into work.[9033]

Ms Harman: Our manifesto committed us to introducing a new deal for lone parents. That has already begun in eight areas, including Sheffield--in which my hon. Friend's constituency lies--where it is offering hope and opportunity for 10,000 lone mothers on income support, who are bringing up 20,000 children.

Mr. Michie: I welcome the Government's programme of removing the barriers that prevent lone parents who want to work from doing so. Will my right hon. Friend assure me that a lone parent who finally takes a job but who then, for reasons that were unforeseen initially, cannot continue with that employment will not be financially disadvantaged relative to their previous situation?

Ms Harman: There is no question of people being penalised if they leave their work. Lone parents who go to work are, on average, £50 a week better off than they were on benefit. That is why so many of them want to work. Part of the job of the personal advisers to lone parents, who have been appointed already in eight areas, including Sheffield, is to assist lone parents when they start work, helping them to get their child care and benefits sorted out and advising them during their first

28 Jul 1997 : Column 8

few weeks and months in work to ensure that they manage to keep their work rather than falling back to income support.

Mr. Brazier: Bearing in mind the fact that some of those who pay taxes for such child care are low-earning families, which group of lone parents does the right hon. Lady think will benefit from the extension of the child care disregard from £40 a week to £100 a week?

Ms Harman: The child care disregard is designed to increase the affordability of child care, as part of our national child care strategy. We want more people to be trained with child care qualifications to improve the supply of child care workers. We also want to increase the number of child care places. We shall do that through the single regeneration budget, as a start, and with funds from the midweek lottery. That will benefit not only lone parents, but low-income families in which the woman is working and wants to ensure that her children are safely looked after while she is at work.

Reduced Earnings Allowance

7. Ann Clwyd: To ask the Secretary of State for Social Security when she expects the review of the reduced earnings allowance to be completed; and if she will make a statement.[9034]

Mr. Denham: We have completed the review of reduced earnings allowance. Those affected by the transfer of over-pension-age recipients of reduced earnings allowance to the retirement allowance 16 months ago were harshly treated by the previous Government. Many people lost up to £30 a week in benefit with little or no advance warning, and without the transitional protection which we proposed at the time.

Regretfully, however, we have concluded that we cannot remedy that injustice without breaking our manifesto commitment to keep within current spending totals. We have also concluded that retirement allowance is the right benefit for those recipients who are over retirement age. We are determined that reduced-earnings-allowance recipients will receive sufficient advance warning in future. The Benefits Agency will remind people receiving REA of the forthcoming transfer to retirement allowance well in advance of retirement.

Ann Clwyd: Well, I am very sorry to hear that answer, particular given that my hon. Friend described the situation in which such people were left as harsh. My right hon. Friend the Secretary of State said to me in a letter last year that those people had been left in an appalling situation. We are talking about 20,000 people, many of whom live in the poorest parts of the country. Certainly in Wales, many are widows and living on very low incomes. They have already taken a 75 per cent. cut in their income through the withdrawal of the reduced earnings allowance. If it was wrong last year, why is it right this year?

Mr. Denham: I have recognised the hardship caused by the previous Government's action. I am sure that my hon. Friend will recognise the difficulty in putting right every single injustice perpetrated by that Government. To restore reduced earnings allowance to those who are

28 Jul 1997 : Column 9

transferred on to retirement allowance would cost about £45 million a year and would require us to cut expenditure elsewhere. This Government have not been afraid to take the difficult decisions necessary in order to stick within our manifesto commitments.

Mr. Garnier: As the Minister fairly said, it was right that those who were about to retire should receive advance warning of changes of plans. Where, therefore, in the Labour party's manifesto will pensioners and future pensioners find a reference to advance corporation tax?

Madam Speaker: I am not clear whether that was a substantive question. If the hon. and learned Member wants an answer, perhaps he will table a substantive question, to which I am sure that he will be given a response.

Next Section

IndexHome Page