Previous SectionIndexHome Page


Funded Pension Schemes

10. Bob Spink (Castle Point): What recent assessment he has made of the viability of funded pension schemes. [63394]

The Minister for Pensions (Mr. Ian McCartney): Funded provision is crucial to overall pension provision in the United Kingdom. If it is to remain viable, we need to ensure that we have an appropriate level of regulation and the right incentives to encourage employers and employees to contribute to pensions. That is why we have commissioned the Pickering and Sandler reviews, which will be published in the next few weeks.

Bob Spink: Now that the Government have admitted that, like Enron, they gave false figures, will they admit two specific points: first, that the number of people benefiting from occupational pensions is now 10 per cent. lower than when they took office in 1997 and, secondly, that the proportion of money saved by British households last year fell to the lowest level since records began? Will the Government try to correct that situation and help those on funded pension schemes by now withdrawing the £5 billion pensions tax that they imposed?

Mr. McCartney: The hon. Gentleman never ceases to amaze us. I and my colleagues gave information to the House on the basis of an independent analysis. When challenged about that analysis, we rightly said that, the analysis being independent, Ministers had given the House the information that was available. As the hon. Gentleman can confirm, when it became clear that there was a need for a review and as soon as Ministers knew that the answer that I had given in good faith to the House could be questioned, we informed the hon. Member concerned, and spoke to him personally. At 3.30 pm, we will put forward proposals to ensure that an effective response is made in respect of my answer.

More importantly, in this complex area, the last Government continued to give wrong information in a non-independent way. We have initiated a review by independent experts, and I hope that there will be an agreed settlement on how, in future, we publish statistics in this area. The hon. Gentleman's Government failed to inform people about their entitlement to SERPS, which cost widows about £1 billion a year. When Labour Ministers find that there is a problem, at least we report it to the House immediately and take action to rectify it.

John Robertson (Glasgow, Anniesland): Does my right hon. Friend agree that one of the best incentives that could be given for pensions would be to establish a minimum amount of money that employers must contribute—9 per cent., for example—to ensure that workers would also put in their money?

Mr. McCartney: My hon. Friend is right that employers need to make contributions to pension schemes. In general, we would agree with that. I would like to wait, however, to see whether the Pickering review recommends further action on compulsion. I want to make it absolutely clear that Ministers want to ensure that the review gives an incentive to employers to contribute, and to continue to contribute, to the pensions of their

1 Jul 2002 : Column 17

employees. It is in everybody's interests, including employers, that they invest in their employees' future through pensions.

Crisis Loan Payments

11. Mr. David Heath (Somerton and Frome): What proportion of crisis loan payments were made in response to alignment claims in the last 12 months. [63395]

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): Social fund alignment payments provide valuable help to people awaiting their first payment of wages on taking up work. They also help people with essential day-to-day living expenses in advance of their first payment of benefit. During 2001–02, just under half of crisis loans were made through alignment payments.

Mr. Heath: Is not it extraordinary that the crisis loan fund, which is cash-limited and which is there to help the poorest of our constituents in the most extreme circumstances, is largely pre-empted by payments that, effectively, are made as a result of administrative delay? I am not denying that payments must be made in that instance, but I am not sure that they should be made from that fund. When the Minister wrote to me on 14 May, he said that he was considering this matter, and that new guidelines would be issued. He said that a review would be done on a region-by-region basis. Have those things yet been accomplished?

Malcolm Wicks: I do not accept that alignment payments are made predominantly because of delays. It may interest the House to know that, during 2001–02, income support claims were cleared, on average, within 9.7 days of all relevant information being received, which is less than our target of 12 days. Similarly, we are performing well in terms of incapacity benefit and jobseeker's allowance. Alignment payments are becoming better known by our claimants, which may be a factor, but there may be an issue in relation to our procedures. I can therefore confirm that we are currently considering the detailed guidance that we offer to our staff on this aspect of crisis loans. The guidance is expected to be with staff by mid-July.

Mr. James Clappison (Hertsmere): Is not the fact of the matter that alignment payments are made to compensate for other payments that recipients should have received from the Government, and that, in a way, part of the crisis fund is being spent on crises created by the Government? Has not the proportion of the crisis fund so allocated substantially increased since 1997, and does not it now stand at 40 per cent. of the crisis fund, as the Minister had to admit in a written answer that he gave to me correcting, properly, incorrect information—more incorrect information—that he had given in a previous written answer? Will the Government now take urgent action to ensure that funds are not diverted from vulnerable people in that way and that the Government act promptly and efficiently in their benefit payments?

Malcolm Wicks: I think that there is some misunderstanding about this issue. When people first apply for benefit, they may have to wait some days before

1 Jul 2002 : Column 18

they receive it. If they are in urgent need, they will receive an alignment payment. Similarly—although in a smaller percentage of cases—if people have a job and are waiting for their first wage packet, one of the alignment payments may be made. I suspect that there is some confusion because the payments are paid through crisis loans. However, as I have said, although there are a number of factors behind the trend, we are looking at the matter carefully. We will issue the new guidance later this month.

Private Pensions Industry

12. Mr. Michael Jack (Fylde): What plans he has to publish a pensions White Paper on the state of the private pensions industry. [63396]

The Minister for Pensions (Mr. Ian McCartney): The Sandler review into long-term savings and the Pickering simplification review are due to report shortly. The Government will then consult on proposals in the autumn.

Mr. Jack: In thanking the Minister for that answer, may I say that his combative approach to previous questions and his attacks on the previous Conservative Government are no way to respond to the real fears of people about whether they will have anything like a long-term income from their pensions? On the very day that The Times carries articles questioning the strength of our insurance companies, may I ask the Minister to bring together all the arguments about employees and employers in a White Paper that will review the whole desperate pension situation?

Mr. McCartney: This Government have acted already. We have introduced the state second pension, which means that 14 million low-paid workers will for the first time receive an additional pension as well as the basic state pension. We have made advances in that 2 million carers and 2 million people with disabilities who were outside the system will receive an additional pension in the form of the stakeholder pension. We have sorted out the Tory Government's mis-selling of pensions, we have sorted out SERPS and we have introduced the simplification review.

I have said on at least three occasions today that, when the reviews by Sandler and Pickering are in the public domain, the Government will publish their response to them this autumn. At that point, I will be more than happy to debate the future of pensions with the right hon. Gentleman. Three points apply to the future of pensions. The first is that employers accept their responsibility, the second is that the Government accept theirs and the third is that there should be vehicles that will enable employees to start investing in their own future. When we have got all those three pillars in place, we can modernise the state pension and the contributions that employers and employees make and will be able to secure pensions for the future.

Dr. Vincent Cable (Twickenham): When the Minister looks further at private pension schemes, will he agree to consider the case of Parsons Energy and Engineering in south-west London? That American company has not merely closed its final salary scheme to existing as well

1 Jul 2002 : Column 19

as new employees, but has halved the pension entitlement arbitrarily. Does he not agree that the trusteeship arrangements are far too weak to prevent cowboy capitalists of that kind from stealing from their own pensions funds?

Mr. McCartney: I do not have all the details of that case but, if the hon. Gentleman writes to me, I will be more than willing to meet him and his colleagues to discuss this matter. I will then subsequently give or not give advice as appropriate to the circumstances.


Next Section

IndexHome Page