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BeeHive  >  BeeLines  >  What's Buzzing in Pensions - Mid June

What's Buzzing in Pensions - Mid June

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Well with the football World Cup underway in Germany the Pensions World Cup in the Mother of all Parliaments looks like getting stuck in its usual midfield slog. It's not pretty to watch but dedicated followers may like to see how every attempt at going forward ends in a hospital pass to whoever makes a forward run on the pitch. As afficionados know, this is what the game is all about really. We seem to be stuck in midfield pointlessness with more chance of an own goal than an inspired breakthrough from our strikers.....

Steve Bee

13 June 2006

White Paper 9788

 

HOUSE OF COMMONS WRITTEN ANSWERS

Savings Credit  -  06 Jun 06
Asked by David Laws (LD)

Pensions Credit  -  06 Jun 06
Asked by Kerry McCarthy (Lab)

Pensions Credit - 06 Jun 06
Asked by Paul Clark (Lab)

Pensions -  06 Jun 06
Asked by David Laws (LD)

Pensioners (Income)  -  08 Jun 06
Asked by Vincent Cable (LD)

 

LABOUR PARTY

Lets talk:  pensions Reform  -  06 Jun 06
Comments and questions put in Labour’s Lets Talk programme

 

PRESS RELEASES

Government has wildly exaggerated cost of pension redress  -  06 Jun 06
Conservative Party

Good growth in individual pensions sales show industry is performing well  -  08 Jun 06
ABI

Blair’s ASW Compensation Figures "Way Over The Top"  -   08 Jun 06
Jenny Willott (Liberal Democrats)

 

House of Commons Written Answers

Savings Credit 1

Mr. Laws: To ask the Secretary of State for Work and Pensions how many people were (a) eligible for and (b) receiving Savings Credit in (i) 2004-05 and (ii) 2005-06; how many he expects (A) to be eligible for and (B) to receive the credit in 2006-07; and if he will make a statement. [70329]

James Purnell [holding answer 16 May 2006]: The information requested is not available in the format requested. Information that is available is in Table 1 and contains estimates of eligibility in 2004-05 and projected estimates of eligibility in 2005-06 and 2006-07.

Table 1

Number eligible (million)

2004-05

2.7-3.1

2005-06

2.9-3.3
6 Jun 2006 : Column 519W

2006-07

3.0-3.4

Notes: 1. Estimates of the numbers eligible are given as ranges in order to account for possible biases inherent in estimates from data that is less than perfect. They also take account of the effects of sampling variation. 2. The figures given relate to those who may be eligible for the Savings Credit, with or without the Guarantee element. 3. Estimates cover all those aged 60 and over in the private household population of Great Britain. 4. For the purposes of this analysis, the unit of analysis is the benefit unit. This is either a single person aged at least 60 years old or, if a couple, both will be termed pensioners if one is aged at least 60 years old. This is consistent with both the definition used in “Income Related Benefits Estimates of Take-up” publications, and with the fact any individual aged 60 or over is entitled to pension credit. 5. The data source for eligibility estimates is the Family Resources Survey. Estimates of eligibility for 2005-06 and 2006-07 are based on Family Resources Survey data for 2003-04 and 2004-05, with incomes and benefits projected forward into the future in order to estimate the eligibility for each pensioner household on the survey. They are calibrated to the 2004-05 National Statistics estimates of non-eligibility to pension credit, which adjust 2004-05 Family Resources Survey data to take account of possible biases in reporting. 6. All figures have been rounded to the nearest hundred thousand. 7. Projections of eligibility may be adjusted following publication of future editions of the National Statistics take-up estimates.

 

Table 2: Number of pensioners receiving the Savings Credit in 2004-05

Number receiving (million)

2004-05

1.8

Notes: 1. Figures relate to those in receipt of the Savings Credit, with or without the Guarantee Credit. 2. The numbers receiving in 2004-05 are derived from the Work and Pensions Longitudinal Study, and relate to the average number of recipients over the financial year. They are consistent with the figures used to calculate National Statistics estimates of take-up, and so exclude cases in non-private households, and take account of any backdated awards that were paid in respect of 2004-05. Estimates presented here will therefore differ from other published sources. 3. The latest estimates of the take-up of Pension Credit can be found in the DWP report entitled “Pension Credit Estimates of Take-Up in 2004/2005”. Copies of the publication are available in the Library. 4. Projected take-up figures are indicative only and not comparable to the published Take-Up figures for 2004/2005, which include backdated awards of Savings Credit. Forecasts of future recipients are based on extrapolation of administrative data from the Work and Pensions Longitudinal Study. 5. All figures have been rounded to the nearest hundred thousand.

Current forecasts suggest that around 1.8 million pensioners may be in receipt of the Savings Credit in 2005-06 and around 1.9 million in 2006-07. However, these projections are indicative only and do not include adjustments for backdated awards so are not directly comparable with the take-up estimates for 2004-05.

 

Pension Credit 2

Kerry McCarthy: To ask the Secretary of State for Work and Pensions how many recipients of pension credit claimed the extra amount for carers in the last financial year for which figures are available; and how many pensioner households received double the extra amount because both partners were eligible to claim. [71189]

James Purnell: The information requested is in the following table:

Number of pension credit beneficiaries with prescribed additional amounts for carers in payment

November 2005

All pension credit beneficiaries of the extra amount for carers

182,300

One beneficiary with a prescribed additional amount

164,800

Both beneficiaries with a prescribed additional amount

17,500

Notes: 1. Figures are based on a 5 per cent. sample, and are therefore subject to a degree of sampling variation. 2. Caseloads are rounded to the nearest hundred. 3. Totals may not sum due to rounding. 4. Beneficiaries includes both claimants and their partners. Source: The Department's Quarterly Statistical Enquiry (QSE) five per cent. administrative data.

Kerry McCarthy: To ask the Secretary of State for Work and Pensions how many recipients of pension credit were also in receipt of (a) the lower rate and (b) the higher rate of extra amounts for severe disability in the last financial year for which figures are available. [71191]

James Purnell: The information requested is in the following table:

Number of pension credit recipients with the prescribed extra amount for severe disability

November 2005

All recipients with an extra amount for severe disability

631,970

Recipients with the extra amount for severe disability—higher rate

46,360

Recipients with the extra amount for severe disability—lower rate

585,610

Notes: 1. Figures are rounded to the nearest 10. 2. Recipients are those people who claim pension credit either on behalf of themselves only or on behalf of a household. This number is equal to the number of households in receipt of pension credit. Source: Work and Pensions Longitudinal Study.

Paul Clark: To ask the Secretary of State for Work and Pensions how many residents in the Medway towns local authority area received pension credit in the most recent period for which figures were available, broken down by ward; and what the average payment was. [74714]

James Purnell: The information is provided in the following table:

Pension credit individual beneficiaries and the average weekly amount of benefit for wards in Medway, November 2005

Ward name

Individual beneficiaries

Average weekly benefit (£)

Chatham Central

885

47.40

Cuxton and Halling

210

39.46

Gillingham North

745

42.60

Gillingham South

650

43.81
6 Jun 2006 : Column 517W

Hempstead and Wigmore

175

38.46

Lordswood and Capstone

375

41.71

Luton and Wayfield

835

43.59

Peninsula

615

41.33

Princes Park

295

44.41

Rainham Central

425

36.76

Rainham North

345

36.15

Rainham South

425

38.72

River

340

46.36

Rochester East

600

39.52

Rochester South and Horsted

575

37.20

Rochester West

460

36.85

Strood North

530

42.55

Strood Rural

505

38.68

Strood South

775

39.52

Twydall

940

37.57

Walderslade

460

37.31

Watling

290

39.71

Medway total

11,390

41.02

Notes: 1. The numbers of individual beneficiaries are rounded to a multiple of five. 2. Average amounts are rounded to the nearest penny. 3. Totals do not always sum to area total due to rounding. 4. The number of individual beneficiaries includes both claimants and their partners. 5. Wards are based on 2003 ward boundaries. Source: Work and Pensions Longitudinal Study 100 per cent data.

 

Pensions 3

Mr. Laws: To ask the Secretary of State for Work and Pensions what plans he has to review the uprating arrangements for UK pensioners who have moved overseas in the context of the publication of the White Paper on Pensions. [73918]

James Purnell: We uprate the State Pension in countries with which the UK has a reciprocal agreement or a legal obligation to do so. We have no plans to change the current arrangements.

 

Pensioners (Income) 4

Dr. Cable: To ask the Chancellor of the Exchequer if he will estimate the number of pensioners with pension income in excess of £50,000 in each year since 1997; and if he will make a statement.

Dawn Primarolo: There are an estimated 60,000 people with pension income in excess of £50,000 in 2006-07, of whom an estimated 40,000 are above state pension age.

Pension income includes pensions and annuities paid under occupational and personal pensions schemes and state retirement pensions.

The information is based upon the 2003-04 Survey of Personal Incomes projected forward to 2006-07 in line with March 2006 Budget assumptions.

 

Labour Party

Lets talk: pension reform 5

Comments and question on pensions reform in an open online consultation.  Here are some examples of the kind of comments and questions being made and asked.

http://www.labour.org.uk/pensionsreformcomments

 

Press Releases

Hammond: Government has wildly exaggerated cost of pension redress 6

The Department for Work and Pensions has today published its official response to the Parliamentary Ombudsman’s report on occupational pensions, which found the Government guilty of maladministration and recommended it consider providing financial redress to those who have lost pension savings.

Commenting on the Government’s response, Shadow Secretary of State for Work and Pensions, Philip Hammond, said:

"It is a disgrace that the Government has refused to accept the findings of the Parliamentary Ombudsman. The Ombudsman alone is empowered by Parliament to rule on maladministration. This represents a direct challenge to the authority of Parliament."

"The small print of this report also shows that the Government's estimate of a £15 billion cost is massively exaggerated. The figure is not properly discounted and it fails to take into account factors such as the higher tax receivable on pension income and the reduced cost of means-tested benefits.

"We accept that the Government can't be asked to write a blank cheque, but we have already suggested that the Government carry out an immediate audit of unclaimed assets to assess whether they could be used to top up the pension funds of those who have lost their pensions partly as a result of Government maladministration."

Notes to Editors

Response to the Report by the Parliamentary Ombudsman was published today by the DWP.

  • The document confirmed that the Government continues to reject the Ombudsman’s finding of maladministration. However, in her report, the Ombudsman notes: ‘In relation to whether the evidence set out in my report justifies a finding of maladministration in relation to the content of official information, I should first state quite clearly that Parliament has decided that it is my role – and not that of any party to a complaint – to determine what constitutes maladministration.’ (Trusting in the Pensions Promise, Parliamentary Ombudsman, March 2006).
  • Tony Blair has said that the cost of redress would be £15 billion: ‘…although of course we must and do treat seriously the ombudsman's findings, we are being asked as a consequence of them to give, on behalf of general taxpayers £15 billion-worth of commitment. We simply cannot do that.’ (Tony Blair, Hansard, 15 Mar 2006, Col. 1450)
  • But page 45 of the report shows that the cost in net present value terms of providing financial redress is between £2.9 billion and £3.7 billion. £13-17 billion represents a cash figure.
  • The report also notes: ‘The costs presented here are gross figures which do not taken into account the increased tax revenue and reduced income-related benefit expenditure which would arise.’ (p.46)

 

Good growth in individual pensions sales show industry is performing well 7

Latest ABI (Association of British Insurers) figures show good overall growth in life and pensions new business for the first quarter of 2006, with the highest level ever recorded for overall sales – £3.3bn APE. In particular, single premium individual pensions new business was £3.84bn, up by 49.1% on the same quarter in 2005. Regular premium individual pensions new business stood at £624m, an increase of 28.9% on Q1 2005.

Chris Kenny, the ABI’s Director of Life and Pensions, said:

“These figures show that the insurance industry has risen to the challenges of A-Day. It has delivered for customers while adapting complex systems to implement the new tax regime.

“The insurance industry’s flexibility and experience has allowed it to innovate and maintain high levels of customer service through statutory changes to its’ business environment. There are lessons here for delivery of a national pensions saving scheme. The pensions industry can and should be used both to improve pension saving for lower and middle income groups, and to build the existing market which our latest figures show is beginning to thrive once more.”

 

- ENDS -

Notes for Editors

 

Enquiries to:        

         Alan Leaman        020 7216 7440 (Mobile: 07957 482 330)

         Jonathan French   020 7216 7392 (Mobile: 07958 330 480)

         Malcolm Tarling    020 7216 7410 (Mobile: 07776 147 667)

         Lucy Butler          020 7216 7411 (Mobile: 07712 841 184)

         Kelly Ostler          020 7216 7415 (Mobile: 07968 364 302)  

Overall, life and pensions new business for Q1 2006 was £3.339bn APE (Annual Premium Equivalent, an industry benchmark of Regular Premiums plus one-tenth of single premiums), an increase of 29.2% on Q1 2005. This is the highest level of new business in real or nominal terms ever recorded in a single quarter by the ABI.

Total Regular Premium new business in Q1 2006 was £1.344bn, an increase of 13.8% on Q1 2005. Total Single Premium new business was £19.960bn, an increase of 42.2% on Q1 2005.

Total Single Premium individual pensions new business in Q1 2006 was £3.843bn, up 49% on Q1 2005. Of this, new sales accounted for £2.3bn (59%), transfers accounted for £1.4bn (36%) and rebates accounted for £198m (5%).

Summary tables giving overall new business data from 2000 to Q1 2006 are available on the ABI web site, www.abi.org.uk.

 

Blair's ASW Compensation Figures "Way Over The Top"  8

The Department of Work and Pensions has effectively admitted that Tony Blair’s figure of £15bn to fully compensate the 125,000 people who had lost Occupational Pension rights, including former Allied Steel and Wire workers, was wildly overestimated.

The revelation came in the Department’s recently published final response to the Parliamentary Ombudsmen’s report, where DWP figures, buried in the annex, show that the true cost to compensate all those who have suffered is between £2.9bn and £3.7bn.

Commenting, Jenny Willott, Welsh Liberal Democrat MP for Cardiff Central and member of the Public Administration Committee, said:

“It is outrageous that Tony Blair tried to make people believe that it would cost £15bn to compensate people who lost much if not all of their pension, like former Allied Steel and Wire workers. On the Government’s own figures, the true costs are between £2.9bn and £3.7bn - four or five times less. That means it would cost no more then £100m in any year to properly compensate all those who have suffered.

“What’s more, with the savings the Government could make from not paying people means-tested pension credits and the money they get back in taxing the payouts, it would actually cost even less to compensate everyone.

“I find it deeply disturbing that the Government was trying to scare off MPs and the public from supporting this cause with figures that are way over the top. The Prime Minister must explain the huge difference in the real costs to compensate ASW workers and others, and the figures he announced in the House of Commons in March this year.

“It is equally unbearable to see the Government continuing to reject outright the Ombudsmen’s report.

“125,000 people have lost pension rights that they worked and saved for and many are suffering real hardship and uncertainty over their future. It is simply unacceptable for the Government to continue to behave like this.

“This problem will not disappear and the next step is undoubtedly going to be a legal challenge.”

 

ENDS

Notes to Editors:

For Tony Blair’s comments in the House on March 15th 2006 see:
www.publications.parliament.uk

www.publications.parliament.uk

On page 58 of the response, the Net present Value (standard figure for Government costings) is given as between £2.9-3.7bn.

The Public Administration Committee will be carrying out an inquiry into the affair later this year.

APE – Annual Premium Equivalent, an industry benchmark of Regular Premiums plus one-tenth of single premiums

Extra3Years9787

 

Sources:

  1. United Kingdom Parliament, Commons Hansard Written Answers 6 June 2006 Column 518W – 519W.
  2. United Kingdom Parliament, Commons Hansard Written Answers 6 June 2006 Column 515W – 517W.
  3. United Kingdom Parliament, Commons Hansard Written Answers 6 June 2006 Column 517W.
  4. United Kingdom Parliament, Commons Hansard Written Answers 8 June 2006 Column 860W.
  5. Labour Party – Let’s Talk: Pensions Reform
  6. Lansons Public Affairs – Parliamentary Monitoring week ending 9 June 2006
  7. ABI news release 8 June 2006
  8. Jenny Willott press release 8 June 2006

Parliamentary material is reproduced with the permission of the Controller of HMSO on behalf of Parliament.

Any research and analysis has been provided by us for our own purposes and the results of it are being made available only incidentally.