Clause 1 - Entitlement
State Pension Credit Bill [Lords]
4:30 pm
Mr James Clappison (Hertsmere, Conservative)
My question for the hon. Lady is this: will the extra reward that the pension credit establishes encourage saving? We know that there is no incentive for saving for those who see their every pound—100 per cent. of the savings they accrue—taken off their benefits. The Government know that. We must now ask whether the reward and withdrawal system that the Government are putting in place will create an incentive to save. As the hon. Lady has studied the Select Committee's report, she would do well to consider also the evidence given to the Select Committee by expert groups. One of the points made by the expert groups was that the Government's
proposals do not entirely remove the 100 per cent. disincentive to save. Many groups are still subject to that disincentive.
As the hon. Lady and other hon. Members are evidently interested in the subject, I shall ask them some questions. Perhaps they would like to tell me whether they agree with the view that has been expressed about those—there are many of them—who are entitled to less than the full basic state pension. The first part of such a pensioner's personal savings will be used to bring them up to the level of the basic state pension and will not attract the additional savings credit. They will face a rate of withdrawal of 100 per cent. Quite a large number of those people are women who for historical reasons have not have the opportunity to accumulate a full savings record.
The hon. Lady will be interested to know that that is not the only case in which women are the losers. There is also the case of women who are aged between 60 and 65. They become entitled to the guaranteed part of the credit at 60, but they are not entitled to the savings credits until they reach 65. Presumably, between 60 and 65, if they fall within the appropriate threshold and have savings, they will have a rate of withdrawal of 100 per cent. and will gain no benefit from their savings in that period of their lives. If I am wrong about that Labour Members will put me right, but that seems to be explicit in the Bill. Those two substantial groups, one consisting exclusively of women and one of many women, will have a 100 per cent. withdrawal of their savings under the proposals.