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8 Nov 2006 : Column 1640W—continued
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions what assessment his Department has carried out of the impact on work incentives of (a) reducing the number of qualifying years needed to receive a full basic state pension and (b) gradually reducing the link between salary and state second pension accruals. [90418]
James Purnell: Our reforms will enable and encourage people to work longer as part of the UK's response to an ageing population and our aim to increase the number of older workers by a million.
The reduction in qualifying years for a full basic state pension combined with re- linking the basic state pension to average earnings will increase the return from working until 30 qualifying years have been attained, after which it would slightly reduce. However, those working past 30 years will continue to accrue rights to the state second pension.
Re-linking the basic state pension to earnings growth means that across their working life people in all income brackets can expect to receive more from the state pension system.
These changes will be complemented by a gradual increase in the state pension age, which is likely to have much more significant effects on employment through
signalling the need for a behavioural change towards working longer in line with gains in average life expectancy.
Overall, we expect our reforms to increase employment by empowering people to make informed choices about how they work and save towards their retirement in the context of increased life expectancy.
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions whether the calculations set out in figure 9 of the Pensions White Paper, “Security in retirement: Towards a New Pension System” assume that the age at which individuals become eligible to receive the guarantee element in pension credit rises in line with state pension age or remains at 65 years after 2020; and if he will publish a version of the table on the alternative assumption. [90421]
James Purnell: Under our reforms, more people will be receiving state pensions based on their national insurance records, and there will be a more generous basic state pension due to the restoration of the earnings link. This provides a solid foundation for private saving. The guarantee credit will continue to provide a safety net and reforms to the savings credit will reduce the spread of means-testing and support the savings incentives that are an integral part of the reform package.
The calculations set out in figure 9 of “Security in Retirement: Towards a New Pension System” assume that the guarantee credit age of eligibility rises in line with the proposed increases in state pension age. The first column in the following table, shows the resulting figures for the cost of state pension reform from 2020. The second column contains the equivalent figures assuming the qualifying age for the guarantee credit remained at 65 from 2020, while that for all other pensioner benefits—including the savings credit—rise to 68 by 2046, in line with the proposals set out in the White Paper. Estimates do not include any knock-on effects to housing benefit and council tax benefit. It is particularly important to note that no further policy decisions have been assumed, for example, relating to the behavioural effects on employment and savings, or to the structure of the tax, tax credit and benefit systems for people of working age.
Additional cost of state pension reforms, under the White Paper proposals, and as specified in the hon. Member’s question, is given in the following table.
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions by what mechanism he plans to accelerate the evolution of the state second pension as proposed in the Pensions White Paper, “Security in retirement: towards a new pension system”, so that new accruals become completely flat-rate by around 2030. [90423]
James Purnell: Under the current system, state second pension would eventually become a flat rate benefit in around 2056. However, in line with the view of the Pensions Commission, we propose to speed up the “flat rating” process. To this end, the Government will introduce a new “Upper Accrual Point” which, in year one of the withdrawal of earnings relation, will be set at around the same value as the upper earnings limit. This point will be fixed and not subject to annual uprating of its value. Over a period of time, the earnings-uprated lower earnings threshold will converge on the fixed upper accrual point.
We estimate that the lower earnings threshold will meet the upper accrual point in around 2030, at which point earnings-related state second pension will no longer accrue.
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions if he will list the research by outside consultants commissioned by his Department in connection with pension reform since January 2004. [90437]
James Purnell: Details of all commissioned research contributing to the evidence base for pension reform since January 2004 are contained in annex F of the Government’s White Paper on pension reform (“Security in retirement: towards a new pensions system”, May 2006).
The following lists all research by outside consultancy firms (rather than research organisations or academics) connected to pension reform that has been commissioned since January 2004. This list includes projects involving the use of specialist
academic or expert economic advice as well as “traditional” research projects involving primary data collection or analysis.
Investment options in personal accounts—CRA Intl (UK)
Competitive implications of alternative market structures: the microeconomics of NPSS—CRA Intl (UK)
Research study to develop a counterfactual for private pensions—CRA Intl (UK)
Impact assessment of the NPSS on annuities market—CRA Intl (UK)
The value of choice and brands in personal accounts—CRA Intl (UK)
Review of research relevant to assessing the impact of the proposed National Pensions Savings Scheme on household saving—PWC
Research into the costs of capital for personal accounts—PWC
Research into early policy development for personal accounts—Deloittes
This list has been compiled on the basis that
(a) projects undertaken by GAD, ONS or any other Government Department should not be included as they were delivered by civil servants
(b) projects commissioned by the Pensions Commission have not been included as the Commission was an independent body.
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions what assessment he has made of the factors that would influence consumers’ choice of provider under the model for personal accounts set out on pages 52 and 53 of the Pensions White Paper “Security in retirement: Towards a New Pension System”. [90438]
James Purnell: The value of consumer choice is an important criteria against which we will judge all delivery models. This issue was discussed further at our seminar on Consumer Choice on 20 September and we will publish our proposals in a personal accounts White Paper in December.
Mr. Philip Hammond: To ask the Secretary of State for Work and Pensions what the estimated cost to the Exchequer would be of deemed buy back if the rights to it were exercised by all those identified in the Ombudsman’s report “Trusting in the Pensions Promise”. [94081]
James Purnell: This information is not available.
Mr. Laws: To ask the Secretary of State for Work and Pensions what proportion of those aged (a) 40, (b) 45 and (c) 50 years with incomes of under £20,000 per annum he expects to receive effective real returns on savings in personal pension accounts of (i) more than £2 for every £1 saved, (ii) between £2 and £1.50 per £1 saved, (iii) between £1.50 and £1 per £1 saved and (iv) less than £1 per £1 saved, assuming no saving prior to the stated age and a zero real investment return on savings; and if he will make a statement. [97284]
James Purnell: The information is not available.
However, the Department for Work and Pensions will be publishing later this year detailed analysis of the
expected returns from saving in a private pension, such as personal accounts, illustrative of individuals of different ages and incomes.
Lynne Featherstone: To ask the Secretary of State for Work and Pensions what discussions his Department has had in bringing state pensions in line with average earnings. [100265]
James Purnell: There has been widespread discussion with the public, the pensions industry and pension campaigners about uprating arrangements for state pensions as part of the National Pensions Debate and in informing proposals in our White Paper “Security in retirement: towards a new pensions system”.
Post Office Card Account
Clive Efford: To ask the Secretary of State for Work and Pensions what the average cost to his Department was of Post Office card account transactions in the most recent year for which figures are available; and if he will make a statement. [96795]
Mr. Plaskitt: The information is not available in the format requested.
The estimated cost to DWP for the Post Office card account in the year April 2006 to March 2007 is £153 million.
Reduced Earnings Allowance
Mr. Laws: To ask the Secretary of State for Work and Pensions (1) how many people are in receipt of reduced earnings allowance; and if he will make a statement; [99844]
(2) how many people over the state retirement age are in receipt of reduced earnings allowance. [99846]
Mr. Jim Murphy: As at December 2005, there were 134,720 industrial injuries reduced earnings allowance cases in payment, of which 75,585 were to people over state retirement age.
Information Directorate, Industrial Injuries Computer System, 100 per cent. data.
1. Figures have been rounded to the nearest five.
2. Pension age is defined as females 60 and over and males 65 and over.
Remploy
Sarah McCarthy-Fry: To ask the Secretary of State for Work and Pensions if he will take steps to ensure that disabled people are not restricted from applying for Remploy jobs by inappropriate job descriptions. [97572]
Mrs. McGuire: The Department receives assurance from Remploy that they actively seek to employ disabled persons for all the company’s posts and that all job descriptions are written to ensure they are fair and non-discriminatory to disabled people. We also receive assurance that the company complies with all disability discrimination legislation.
Sarah McCarthy-Fry: To ask the Secretary of State for Work and Pensions whether there are measures in place to prevent Remploy factories employing able-bodied people when there are unemployed disabled people who have the necessary skills. [97312]
Mrs. McGuire: It has not proved possible to respond to the hon. Member in the time available before Prorogation
Sarah McCarthy-Fry: To ask the Secretary of State for Work and Pensions whether his Department issues guidance to Remploy factories on indirect discrimination against disabled employees; and what steps he takes to ensure that Remploy offers assistance to disabled employees to seek and obtain promotion. [97313]
Mrs. McGuire: Remploy is a non-departmental public body. The Department does not issue specific guidance to Remploy on indirect discrimination against disabled employees, but receives assurance that the company complies with all disability discrimination legislation. All Remploy employees, including disabled workers, have a formal personal development plan in place and are regularly given the opportunity to discuss their long-term career goals and ways in which the company can meet their development needs.
Small and Medium-sized Enterprises
Mr. Hunt: To ask the Secretary of State for Work and Pensions what steps his Department has taken to promote take-up of Access to Work funding by small and medium-sized businesses. [98316]
Mrs. McGuire [holding answer 30 October 2006]: Jobcentre Plus spends around £300,000 a year marketing all its disability programmes, including Access to Work. Information about Access to Work is available in leaflets from Jobcentre Plus offices and on the Jobcentre Plus website. In addition, disability employment advisers are regularly in contact with local employers to give advice on job retention if the disabled employee is concerned about losing their job because of their disability, and will raise awareness of Access to Work when appropriate.
Applications for Access to Work funding come from a wide range of sources, indicating that knowledge of the Access to Work scheme is widespread.
Workless Households
Mr. Laws: To ask the Secretary of State for Work and Pensions what proportion of children lived in workless households in each year since 1979-80. [97241]
Mr. Jim Murphy: The available information is in the following table. A consistent series is only available from spring 1992.
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