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Pensioner Households

Annabelle Ewing: To ask the Secretary of State for Work and Pensions what his latest estimate is of how many pensioner households there are in (a) the UK and (b) Scotland. [102034]

Mr. McCartney: There are 5,800,000 pensioner households in the United Kingdom and 515,000 pensioner households in Scotland.

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Notes:
1. Estimates are based on Census 2001 Key Statistics for local authorities in England and Wales and the General Register Office for Scotland rounded to the nearest 5,000 households.
2. A household comprises one person living alone or a group of people (not necessarily related) living at the same address with common housekeeping, that is sharing either a living room or sitting room or at least one meal a day.
3. A pensioner household is defined as either a single person over state pension age, a couple, where both partners are over state pension age, or a group of individuals who are all over state pension age.

Pensioners (Portsmouth)

Mr. Hancock: To ask the Secretary of State for Work and Pensions what recent steps he has taken to improve the financial position of pensioners in Portsmouth; and if he will make a statement. [98347]

Mr. McCartney: Over 5,300 people in Portsmouth benefit from the Minimum Income Guarantee—a policy we introduced—and receive an average £49.83 a week. 31,600 pensioners have benefited from the above inflation increases in the State Pension. Additionally 33,800 people received a Winter Fuel Payment of up to £200. Those Portsmouth pensioners eligible for Pension Credit stand to gain around 400 a year on average.

The creation of The Pension Service provides an ideal opportunity to further encourage pensioners to take up their entitlements. Not only are our customers being encouraged to claim when they ring their pension centre but we also have a network of local service teams throughout the country actively encouraging take up.

There is a local service team of 18 staff covering the area of Portsmouth, Havant and East Hants, meeting customers in the community and actively encouraging take-up. They are developing advice and drop-in surgeries in partnership with other local organisations. For example, in partnership with Portsmouth local authority, the team provide Pension Service advisors every Monday at the Somerstown and Landport Access Points, and in partnership with JobCentre Plus they attend Robuck House Cosham on Tuesdays, Wednesdays and Thursdays.

Pension Entitlement

Mr. Goodman: To ask the Secretary of State for Work and Pensions what steps he has taken to make available information on pension entitlements to British Citizens working in other EU countries. [101079]

Mr. McCartney: There are several information products available from either DWP or Inland Revenue (IR) to British Citizens who leave the UK to work in another European Union (EU) country. These products provide appropriate information that can be either general in nature or specifically tailored to the individual.

There are two comprehensive information leaflets available. The leaflet SA29, "Your Social Security Insurance, Benefits and Health Care Rights in the European Economic Area', explains specifically about social security, including State Pensions, within the EU. Leaflet NI38, "Social Security Abroad" explains about social security for people living abroad. Both leaflets are

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available on the internet, from local DWP offices or from the Pension Service and IR offices in Newcastle, which deal specifically with people living abroad.

The websites of DWP, the Pension Service and IR give comprehensive information about their services. This includes information about working in another EU country and the impact on State Pension entitlement. These sites have links to each other and there is a hyperlink from the DWP website to the European Commission website for people wanting further information about the European Community Regulations on Social Security. In addition, the DWP is playing a major role in a new EU-funded project aimed at linking national social security administration websites (the COWEBS project). This project is specifically targeted at the information needs of migrant workers. It will compliment the web services already available; both by providing user friendly access to each country's website and, in the medium term, by making general information available on each site in the main European languages, in addition to the national language.

IR provide, on written request or via the internet, a comprehensive State Pension forecasting service for people who have lived or worked abroad, which tells people about their future State Pension entitlement including the effect of the EC Regulations on Social Security. IR issue approximately 9,000 State Pension forecasts a year to people who have worked or lived in the EU.

A State Pension claim pack is sent to people about four months before they reach State Pension age inviting them to claim their State Pension, including those who are recorded as living or who have lived or worked in the EU.

Mr. Gardiner: To ask the Secretary of State for Work and Pensions if he will make it his policy to use the terms 'pension income' instead of 'annuity' and 'pension savings' for funds paid into a pension plan. [101331]

Mr. McCartney: The terms 'annuity' and 'pension income' are not interchangeable. An annuity is a product that guarantees an income stream rather than being the income stream itself. Consequently, while an annuity can be a source of pension income, pension income need not be in the form of an annuity and it is important that this distinction is made clear. As far as the term 'pension savings' is concerned, the Government are generally in favour of terms like these, which are simple and understandable to individual savers and pension scheme members. The expression 'pension savings' is used in several places in the Green Paper, "Simplicity, Security and Choice: Working and Saving for Retirement" (Cm 5677), which contains proposals to make information available to individuals in the clearest possible way, to help them make decisions about working longer and saving more for retirement.

Mr. Gardiner: To ask the Secretary of State for Work and Pensions what research he has done to assess the likely impact of the end of the Inland Revenue qualifying regime on the ability of those on low incomes to save for their retirement. [101356]

Ruth Kelly: I have been asked to reply.

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I refer my hon. Friend to the answer I gave him on 6 February 2003, Official Report, column 397W, and confirm that the Government will consider the impact of the Sandler proposals on those on low incomes.

State Pension

Matthew Taylor: To ask the Secretary of State for Work and Pensions if he will estimate the cost to the Exchequer, net of savings in means-tested benefits and of non-introduction of the pension credit and of additional income tax revenue, of an increase of £5 per week in the basic state pension together with the introduction of age additions of £5 per week at age 75–79 and £10 per week at age 80 years and over, on the basis that the age additions for those aged 75 to 79 and 80 years and over are paid in full, regardless of contribution record. [94404]

Mr. McCartney: Our priority is to target help on those current pensioners who have the lowest incomes. While it is true that older pensioners tend to be poorer on average, income inequality is far more pronounced across the whole pensioner population than between pensioners of different ages. For example, the median net income of the richest fifth of pensioner couples is around four times that of the poorest fifth.

Age additions are not the most effective way to target those pensioners with the lowest incomes. For example, just under half of all minimum income guarantee claimants are aged under 75.

From October 2003, the poorest third of pensioner households will have gained over £1,500 a year in real terms as a result of the reforms introduced by this Government.

If the maximum rate payable of the basic state pension was increased by £5 per week and weekly age additions of £5 were introduced for people aged 75–79 and £10 for people aged 80 and over in 2003–04, we estimate that the increase in public expenditure could be in the region of £0.5bn. This assumes that pension credit is not introduced and spending is re-directed into the basic state pension. It is also calculated on the generous assumption that consequent savings in other benefits and any additional tax yield are channelled back into the basic state pension.

In this scenario, many of the poorest pensioners are no better off than they would have been under pension credit because their increased basic state pension is completely offset by the reduction in their minimum income guarantee. Instead, expenditure is targeted on those further up the income distribution. In addition many pensioners with modest private pension provision would be worse off under this scenario than under pension redit.

For example, a person aged 75 is receiving a full basic state pension and has a small private pension worth £10 per week. Under these proposals, they would receive a basic state pension of £87.45, plus their private pension of £10 per week and would be topped up to £102.10 by the minimum income guarantee.

Under pension credit they would receive £77.45 from the basic state pension and would still be topped up to the guarantee of £102.10. However in addition they

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would also receive a savings credit of £6 per week, giving a total weekly income of £108.10. This person is over £300 per year better off under pension credit than under the suggested proposals.

Notes:

1. Estimates are in cash terms for Great Britain and are rounded to the nearest £0.5bn.

2. The estimate takes account of offsetting savings in income related benefits and additional tax yield. Income related benefit offsets are calculated using the Department for Work and Pensions Policy Simulation Model for 2003/04. Additional tax yield is calculated by the Inland Revenue based upon the Survey of Personal Incomes2000/01, projected to 2003/04.

3. Calculations assume the maximum rate payable of the Basic State Pension is increased by £5 per week and all other payments proportionately and that age additions of 5 per week are paid to all those aged 75–79 and £10 per week to those aged 80 and over.

4. For modelling purposes, the pension credit is assumed to be in place throughout2003/04. In fact, the pension credit will begin in October 2003.

5. Projections of distributional consequences for 2003/04 are subject to a variety of assumptions and should be treated with caution.

Source:Department for Work and Pensions calculations.

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