Select Committee on Social Security Minutes of Evidence

Examination of witnesses (Questions 320 - 326)



  320. Finally, what impact will the Government's Green Paper on pension reform have on the fund, if any?
  (Mr Daykin) The ones which have not been dealt with in the Welfare Reform Bill?

  321. Yes.
  (Mr Daykin) A significant impact in terms of the structure of SERPS if that is replaced by a second state pension. It is difficult to say at this stage precisely because it depends on what the policy is, when it is placed in a Bill, but there will be some significant changes to the earnings related part of the long-term cost.

  322. So it is really too early to say in any detail, is it?
  (Mr Daykin) I think so. That is partly why the Green Paper itself did not have any estimate, because the policy is still not sufficiently precisely determined in the Green Paper to say what the cost would be. By the time it comes to the Bill it will need to be laid out in sufficient detail for us to be able to provide a financial memorandum.

  323. Maybe when it is in the financial memorandum you will be able to indicate at least ball-park figures.
  (Mr Daykin) Yes.

  324. What is the extent of your independence in all of this because I know you have quite strong views about SERPS and some of the policy issues? Supposing you did actually feel in your heart of hearts the Government were doing things that were inimical to the National Insurance Fund as you saw it and you have got a role to protect and develop, would you have the ability publicly to say, "I think that the Government are doing this the wrong way"?
  (Mr Daykin) That is a very difficult question to answer. I have independence professionally in terms of the advice that I give and independence professionally means that you do have the ability to widen the scope of the questions which are put to you. So I would feel free in a quinquennial review, for example, to raise issues which seem to me to flow directly from the current position without having specifically been asked that question, such as the way in which we present within the quinquennial review the other side of the coin of this financial stability which is the percentage of earnings which people will be getting by way of the award of a pension thirty years from now, which to my mind is important in terms of explaining what is going on. It is not specifically something that I am required to do. When it comes to criticising Government policy, I do not think that is the role of the Government Actuary and I would be very hesitant to criticise in areas of policy which are for politicians. I think my role as Government Actuary is to look at the consequences and to explain those and make sure that they are in the public domain so that everybody has good access to that sort of information which will help to inform good policy making.

  325. But privately you have got the opportunity, if you think the Government are going in the wrong direction, to say you are not too sure about this?
  (Mr Daykin) I can flag up issues which I think are important and I have been quite open in talking about the balance between funding and not having funding because those are issues which are very heavily debated in the actuarial profession and outside and where I do not have any hesitation in making my view felt which I do not think commits the Government in any way at all.

  326. That has been very helpful evidence. Keep up the good work. We look forward to your next quinquennial review. Thank you very much for your attendance.
  (Mr Daykin) Thank you very much.

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