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Mr. Peter Lilley (Hitchin and Harpenden) rose—
Mr. Darling: As I have mentioned the right hon. Gentleman, I shall give way to him, after which I shall come to the other Opposition Members who wish to intervene.
Mr. Lilley: The right hon. Gentleman is correct that, before stakeholder pensions were introduced, I expressed my hope that they would be a success. I did so because I would like any measure that is designed to increase private funded provision for pensioners to succeed. He did not, however, mention that I expressed my fear that stakeholder pensions would, at best, make a small contribution to increasing funded provision and that, at worst, they would undermine that provision. Have his assiduous officials drawn his attention to my remarks to the same audience a few days ago, in which I expressed my disappointment that stakeholder pensions had been such a flop and my belief that, in the light of that lack of success, the only way in which the Government could make them work would be to move to compulsion? Will he confirm that that is now on his agenda?
Mr. Darling: I appreciate that Conservative Members sometimes have to perform heroic acrobatic feats to get from what they said at one point to what they now wish to say. The framework and design of stakeholder pensions were very clear when the right hon. Gentleman gave his interview earlier this year, and at no point did he say anything other than that he would be surprised if the Tories ever sought to get rid of them. He was extremely complimentary.
Mr. Lilley: Will the right hon. Gentleman give way?
Mr. Darling: No, please let me finish. I have just read out what I believe to be an accurate quote of what the right hon. Gentleman said. He may not like it, but that is what I have done. I have not quoted what he said three days ago, because I have not seen what he said three days ago.
Mr. Lilley: Will the right hon. Gentleman give way?
Mr. Darling: I will not give way to the right hon. Gentleman now, but I will in a moment because he obviously feels very strongly about this. I have quoted what he said in his interview with the Financial Adviser and, no matter what he is now trying to do, he was extremely complimentary about stakeholder pensions a few months ago. I am bound to wonder what has changed now. He is clearly embarrassing his own Front Benchers.
Mr. Lilley: In the article in the Financial Adviser in February, I also said:
- "I have emphasised the danger that the introduction of stakeholder pensions may undermine existing company defined benefits schemes, accelerate the pace of closures and lead to mis-buying by members leaving such schemes . . . even reducing overall pension provision."
Stakeholder pensions are filling a crucial gap in the market. They are good value. The 1 per cent. cap on management fees is now being reflected across other pension products.
Mr. Darling: I have promised that I shall give way in a moment.
Stakeholder pensions are portable, and can be taken from job to job. That is important when one recalls that the average worker now moves employer six times. People are flexible; they do not need to be earning to benefit. If people take career breaks, they ought to be able to contribute. They also allow people to contribute to a stakeholder and to an occupational scheme.
Given that the Government's—and, I think, the Opposition's—objective is to encourage people to save for their retirement, it is encouraging that, over the past few months, the sales of pensions in general, as well as stakeholder pensions in particular, have been extremely buoyant. More people are taking out pensions. Some of that may be attributable to advertising; I do not know. The advertising was general, not geared to one particular product. The evidence is that more people have been taking out pension products in the last few months.
The impact of stakeholder pensions, in relation to the cap on administrative charges and the other features, such as their flexibility and portability, that make them more attractive, will now and in the longer term have a wholly beneficial effect on the pensions industry. I will now give way to the hon. Member for Wycombe (Mr. Goodman), as he has been straining at the leash for so long.
Mr. Goodman : I am very grateful to the Secretary of State for giving way. Will he now answer directly the question put to him by my hon. Friend the Member for Tatton (Mr. Osborne)? How many of the 416,000 stakeholder pensions sold have been sold to people in the target group?
Mr. Darling: Some 400,000 stakeholder pensions have been sold. Frankly, nobody is in a position, at this stage, to say who exactly has bought them. Nobody knows that yet. I make that point because I am now beginning to see why Conservative Members have called this debate now, rather than in a few months' time, when there might be further evidence. This product has been on the market for just over six months. Pensions are not something that people just go out and buy on a whim; they think about it, and take time to build up to it.
There is an analogy here with individual savings accounts. I remember Conservative Members saying that ISAs would not take off, and that they would not be sold. In fact, what happened was that, after a slow start, sales of ISAs increased year by year. To be fair, exactly the same thing happened with PEPs and TESSAs; it took some time before they became extremely popular. That is not uncommon in financial products.
I understand that the professor who speaks for the Liberal Democrats—the hon. Member for Northavon (Mr. Webb)—has some research that he is going to tell
the House about shortly. I am sure that he has been a professor for a long time; I notice that his name is now prefaced with that title. No doubt he will tell us exactly what that research shows.At this early stage, we know that more than 400,000 stakeholder pensions have been bought. I am sure that that figure will increase over time, but at the moment there is no empirical research to show exactly who has bought them. It is more important to consider the amount of money that has been invested in pensions this year. Investment in all forms of pensions has increased by some 50 per cent., which is a significant part of our drive to increase the number of people holding funded pensions.
Mr. Mark Prisk (Hertford and Stortford): Given the Secretary of State's confidence in the potential success of these schemes, will he rule out the need to make them compulsory in future?
Mr. Darling: I did not realise that the Conservatives' policy was further to extend compulsion. The hon. Gentleman wants to rule it out, while the right hon. Member for Hitchin and Harpenden wants to rule it in. It is worth bearing it in mind that it is compulsory, at the moment, for anyone who is employed to contribute to a pension scheme—either to the state second pension or to a funded pension, if the individual contracts out.
Stakeholder pensions are new on the market; they have been on the market for just six months, and it is encouraging that some 400,000 have been sold. If there are people who were in personal private pensions who should not have been, and who transfer to stakeholder pensions because they find them better value, I shall not criticise that. Some people may be in pension schemes that close down or change, and they may go into stakeholder pensions. That is precisely why we developed stakeholder pensions: to ensure that those options were there. As for the idea that we should criticise people who start making pension or savings provision for their children or grandchildren, I thought that that was something that the Conservatives used to encourage. Now they seem to be condemning it.
Lynne Jones: Will my right hon. Friend give way?
Mr. Darling: I will give way in a moment.
One has to remember that, in the last few months, the sale of pensions has increased by some 55 per cent., the sale of single premium pensions is up by some 192 per cent., and group personal pension sales are up. One also has to bear it in mind that, last year, the overall amount contributed to non-state pensions was the highest ever—a real-terms increase of some £19 billion since we came to power in 1997. What we are seeing in the funded pension sector is encouraging, and it is wholly in line with our stated aim in the Green Paper to encourage more people to take out funded pensions.
Mr. Darling: I shall give way to my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones), and then come back to the hon. Member for Havant.
Lynne Jones: Is not my right hon. Friend concerned at the evidence that many of the people taking out
stakeholder pensions are among the most affluent? They are benefiting from generous tax reliefs of up to £792 a year at the basic rate and more at the higher rates, while people in the target group cannot afford to take out pensions or, if they do, are scarcely better off. I understand him not wanting to take lessons on pensions from the Conservatives, but will he listen more closely to groups such as the pensions provision group and the Institute for Public Policy Research, which has said that it is looking into the subject of pensions and that the Government's policy is in danger of unravelling? Will he study its report when it is produced early in the new year?
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