Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 120 - 123)



  120. At the end of your memorandum, you say that it remains unclear how the Credit fits in with other parts of the Government's pension strategy, notably Stakeholder Pensions and the State Second pension. Baroness Hollis in the Lords described the Pension Credit as "completing the jigsaw of the Government's approach on pensions". Do you agree with that or do you prefer the comment of Sue Ward, which says that it reduces the Government's strategy to incoherence?
  (Mr Dilnot) I do not think I necessarily go with either of those two statements. All I should like to say is that the Pension Credit seems to be part of a world, which could be made coherent but it is very hard to make it coherent with the State Second Pension there as well.


  121. If you do not have the answer to this question, maybe you could send us a note. I am a bit unsure myself. Do you have an estimate of the DWP's operating scenario one? What percentage of the total pensioner population would you estimate to be eligible for Pension Credit in 2025 and 2050? I am asking these questions for a specific reason of our own. You may not have that information at the front of your brain, but is there a model you could run that question through for us?
  (Mr Clark) There is no model I would necessarily trust, which would do that. What we would need to do in order to answer that question is not only make very strong assumptions about what the Government is going to do in terms of operating the best system, but we would also need to make assumptions about what is going to happen to occupational pensions, to pensioner savings behaviour. There are certain things we can make good guesses at, like how many people will be over 65 in 20 years' time, but what their average final pensions will look like in relation to their final earnings is very, very difficult to know. It depends on stock market performance, it depends on how private sector pension institutions evolve.
  (Mr Dilnot) I entirely support that. One thing we could do would be to imagine that we had a system now that looks in real terms like we think the system in 2025 and 2050 might look, so the relationship between the Pension Credit thresholds and the Basic State Pension, what consequence that would have on how many people would be receiving relatively, which would give you the flavour of what it is you are really interested in.

  122. With all those health warnings, I should still like to encourage you to think about that. Andrew's suggestion is a helpful one and if you could do that for us, we should really, really like to have it within seven days because we are seeing the Minister in seven days' time. Would you think about that?
  (Mr Dilnot) Yes.

  123. We are seeing the Minister in a week, we are trying to get a report ready so that the Standing Committee, when the Bill comes through the House of Commons, will be better equipped, having access to your written and oral evidence. What would be the thing you would invite The Minister to re-examine with urgency if you had maybe one or two issues which from your perspective, having done all this work, you think would enhance the Government's proposals?
  (Mr Dilnot) May we take that away? If we can do anything on the numbers, we can certainly do it within seven days. Why do we not see what we can do and get back to you on that as well rather than answer off the top of my head?

  Chairman: Tom and Andrew, thank you very much. That has been very helpful and thank you for your written submission as well.

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