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24 Apr 2006 : Column 903W—continued

Wilberforce 2007 (Hull)

Ms Diana R. Johnson: To ask the Secretary of State for Culture, Media and Sport what central Government support there will be for the Wilberforce 2007 commemoration in Hull. [64584]

 
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Mr. Lammy: Next year is an important opportunity to mark the 200th anniversary of Parliament's abolition of the Slave Trade in the British Empire and I know that Hull's plans are already well advanced. Hull is a key member of the Deputy Prime Minister's Advisory Group on 2007. I am pleased that Hull Museums are a partner in the Understanding Slavery Initiative, sharing £750,000 of DCMS and DfES funding to encourage more informed and effective teaching about slavery in the classroom. To support the preparations the Wilberforce House Museum has recently benefited from a £800,000 award from the Heritage Lottery Fund and £202,400 from the DCMS/Wolfson Museums Improvement Fund.

WORK AND PENSIONS

A New Deal for Welfare"

Mr. Ruffley: To ask the Secretary of State for Work and Pensions whether the consultation deadline for the Green Paper A New Deal for Welfare" is being extended to take account of the fact that it was not available in accessible format for disabled people until 28 February; and if he will make a statement. [63075]

Margaret Hodge: The Disability Discrimination Act requires service providers to make reasonable adjustments to ensure that disabled people can access their services. In line with this requirement, where individuals and organisations need more time to take part in the consultation, we will extend the deadline of 21 April to ensure that everyone has an opportunity to respond. We will continue to provide support to enable people to complete their response within the deadline.

Adult Disadvantages

Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions pursuant to the letter of 19 July 2004 from the hon. Member for Croydon, North to the hon. Member for Arundel and South Downs, if he will recalculate the figures on adult disadvantages to include retirement on 31 December 2004 and 31 December 2005. [56985]

Mr. Timms: The information for 2005 is not currently available. The calculations referred to are based on figures published by UBS Global Asset Management. Figures for 2005 are expected to be published in June. Figures for 2004 are presented in the table.

Since 2004 we have improved the methodology used to calculate these figures. The previous methodology overstated the decline in pension incomes since the early 1990s.

The principal change to the methodology has been to use actual earnings growth data as opposed to using average earnings growth for the entire period between 1963 and 2004. The previous methodology had the effect of overstating investment returns and contribution growth during periods of high inflation and understating them in periods of low inflation.
 
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As the trend in inflation has been steadily downwards since the 1970s the previous methodology introduced a bias towards those with the biggest pension pots in the 1970s, who are those retiring earliest in the data series. It also failed to show the result of the late 1990s boom in equity returns that hid the increase in longevity and
 
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consequential fall in annuity rates that can be clearly seen in these tables.

The other change in methodology has been to make the hypothetical individual on whom calculations are based more typical.
Table 1: pension entitlement assuming the fund is wholly in equities throughout the investment period (100 per cent. equities)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	69,017	11 .6	153
1965	1995	31	78,860	11 .3	171
1966	1996	31	82,797	11 .0	175
1967	1997	31	93,624	10.4	187
1968	1998	31	100,623	9.4	181
1969	1999	31	117,617	8.9	201
1970	2000	31	102,767	9.1	179
1971	2001	31	82,036	8.9	140
1972	2002	31	57,991	7.5	83
1973	2003	31	66,096	7.4	94
1974	2004	31	68,395	7.3	96

Table 2: pension entitlement assuming the fund is wholly in bonds throughout the investment period (100 per cent. bonds)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	37,595	11.6	84
1965	1995	31	42,867	11.3	93
1966	1996	31	43,134	11.0	91
1967	1997	31	48,622	10.4	97
1968	1998	31	57,585	9.4	104
1969	1999	31	53,660	8.9	92
1970	2000	31	54,901	9.1	96
1971	2001	31	51,694	8.9	88
1972	2002	31	53,516	7.5	77
1973	2003	31	51,699	7.4	73
1974	2004	31	53,285	7.3	75

Table 3: pension entitlement assuming the fund is half in bonds and half in equities throughout the investment period (50–50 split)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	52,416	11.6	117
1965	1995	31	59,697	11.3	129
1966	1996	31	61,236	11.0	129
1967	1997	31	69,016	10.4	138
1968	1998	31	77,716	9.4	140
1969	1999	31	81,425	8.9	139
1970	2000	31	76,914	9.1	134
1971	2001	31	66,647	8.9	114
1972	2002	31	57,828	7.5	83
1973	2003	31	60,696	7.4	86
1974	2004	31	62,445	7.3	87

Table 4: pension entitlement assuming the fund starts wholly in equities, then switches wholly to bonds five years before retirement (five year immediate switch)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	76,912	11.6	171
1965	1995	31	71,406	11.3	155
1966	1996	31	71,036	11.0	150
1967	1997	31	76,195	10.4	152
1968	1998	31	89,125	9.4	161
1969	1999	31	85,827	8.9	146
1970	2000	31	89,154	9.1	155
1971	2001	31	88,040	8.9	150
1972	2002	31	93,043	7.5	134
1973	2003	31	83,082	7.4	118
1974	2004	31	104,903	7.3	147

 
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Table 5: pension entitlement assuming the fund starts wholly in equities, then switches away gradually from five years before retirement, until it is wholly in bonds at retirement (five year gradual switch)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	67,649	11.6	150
1965	1995	31	72,924	11.3	158
1966	1996	31	72,570	11.0	153
1967	1997	31	81,434	10.4	162
1968	1998	31	97,995	9.4	177
1969	1999	31	92,272	8.9	157
1970	2000	31	99,113	9.1	173
1971	2001	31	94,038	8.9	160
1972	2002	31	94,464	7.5	136
1973	2003	31	82,698	7.4	117
1974	2004	31	79,854	7.3	112

Table 6: pension entitlement assuming the fund starts wholly in equities, then switches away gradually from ten years before retirement, until it is wholly in bonds at retirement (10 year gradual switch)

Year started contributing	Retire at end of year	Total years of contribution	Lump sum built up (£)	Annuity rate in retirement year (percentage)	Weekly pension at retirement (£)
1964	1994	31	64,295	11.6	143
1965	1995	31	72,679	11.3	157
1966	1996	31	72,332	11.0	152
1967	1997	31	79,913	10.4	159
1968	1998	31	94,704	9.4	171
1969	1999	31	88,218	8.9	150
1970	2000	31	90,750	9.1	158
1971	2001	31	85,769	8.9	146
1972	2002	31	88,200	7.5	127
1973	2003	31	82,474	7.4	117
1974	2004	31	82,647	7.3	116

Notes:
1.Lump sums and weekly pensions are all in 2004 earnings terms.
2.The tables above present results from a hypothetical analysis of pension fund investment. The model is based on the following assumptions and underlying data:
A person contributes to a pension fund for 31 years (this is an individual pension fund as opposed to an occupational one). The investment generates returns for 30 years.
Contributions are made at 5 per cent. of gross earnings.
Individuals earn average earnings (£22,000 in 2004 terms) for the entirety of their working life (Annual survey of hours and earnings, Office of National Statistics).
Contributions are made annually at the end of each year.
The return on equities is based on an average of UK equities (FTSE All-Share Index) and Overseas equities (Composite index for representative overseas markets, and FT/S&P World Ex-UK Index from 1987). To be published in Pension Fund Indicators 2004, UBS Global Asset Management.
The return on bonds/gilts is based on an average of UK bonds (FTA Over 15-year Index, and UBS 25-year index up to 1975) and Overseas bonds (JP Morgan Global Bond Index, ex UK). To be published in Pension Fund Indicators 2003, UBS Global Asset Management.
1 per cent. of the value of the fund at the end of each year is deducted from the fund, in order to account for charging/fees.
Upon retirement at the end of the final year of investment, an annuity is purchased at a prevailing market rate. The annuity rates are as at December each year, for a level annuity (for £100,000), male aged 65, single life, guaranteed five years. These have been supplied by Annuity Direct.

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