Ill-Health Benefits - Non-attributable ill-health benefits
Armed Forces (Pensions and Compensation) Bill
8:55 am
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
I was not suggesting that. I was merely pointing out the facts—we have spent two hours and 10 minutes on this group. I was not commenting on progress. As my right hon. Friend the Secretary of State made clear on Second Reading, we are more than happy for amendments to be tabled, so that they can be fully discussed and scrutinised by the Committee. I welcome that, as did our response to the Select Committee report, which I quoted at the last sitting.
At the end of that sitting, we were considering the question raised by the hon. Member for Aldershot as to the widows' group and the issue of non-attributable widows missing out on the new scheme. I think that I can clarify that point. He will be aware that in October 2000 the attributable widows were allowed to keep their pensions for life on remarriage or cohabitation. That group was seen as being exceptional because of the nature of their spouses' deaths.
It is normal policy for public service schemes to cease widows' pensions on remarriage. The improvements that we have been able to make with the new scheme have been paid for by restructuring benefits—the hon. Gentleman knows that from previous exchanges—but there are no compensating offsets in the current armed forces scheme to pay for that improvement. I hope that shows that we recognise the special status of the armed forces and that it is not possible to distinguish between the widow of a serviceperson, policeman or doctor who died off duty or due to natural causes.
The hon. Gentleman also asked me about the War Widows Association of Great Britain. I confirm that we have no intention of replacing the term ''war widows'' in respect of those widows who receive benefits relating to their partner's death due to service.
I am glad to see that the hon. Member for New Forest, West (Mr. Swayne) is here—no doubt after his early morning exercise. Last week, he asked about forfeiture of pay. It is a basic principle of UK defined benefit pension schemes that only periods of paid service are reckonable for pension, so if a serviceman forfeits pay—for example, as a punishment for a disciplinary offence—the period for which pay is forfeited is not reckonable for pension. Such periods, as he will recognise, are generally short, and the effect this would have on the final amount of an individual's pension is very small indeed.
We also heard a number of comments on full career pension after 35 years. I want us to talk briefly about the issue of the Inland Revenue limit of 66 2/3 per cent. That figure is a maximum, not necessarily a target, and under current plans for pension reform this limit will not exist from April 2005. As only about 10 per cent. of officers and just under 2 per cent. of other ranks serve a full career, the matter of what is the level of a full career pension does not affect many people. We have, however, extended the accrual period in the new scheme to allow up to 40 years of reckonable service, which means that those few long-serving members can accrue over 70 per cent. of pensionable pay. It is not
going to be possible to bring the full career pension for 35 years up to the current Inland Revenue limit within the available funding, so the headroom of up to 40 years means that those who want to increase the value of their pension to 66 2/3 per cent. can make additional voluntary contributions to achieve that. We began to touch on that matter last week.
We also had a brief discussion about the early departure plan and, in particular, its index linking of preserved pensions. I hope all members of the Committee received the notes I sent out last week about that plan. I am sure we will have a long and interesting discussion about it when we debate new clause 9. What the note makes clear, and what I put on record this morning, is that from age 55 the income payments will be adjusted to take account of the changes in the retail prices index since the point at which the early departure payments scheme was originally taken, and thereafter on an annual basis until the preserved pension comes into payment at age 65. That is in line with the treatment of the current immediate pension scheme.