Clause 7

Part of Pensions Bill – in a Public Bill Committee at 12:00 pm on 30 January 2007.

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Photo of James Purnell James Purnell Minister of State (Pensions Reform), Department for Work and Pensions 12:00, 30 January 2007

Yes. Once the basic state pension has increased by earnings, as I have said the lower earnings limit would also rise in line with earnings. We do not believe that the lower earnings limit should   automatically increase with earnings simply as a knock-on effect of the changes to the basic state pension that we are making. For that reason, clause 7 breaks the legislative link in the Social Security Contributions and Benefits Act 1992 and that is the main purpose of the clause. The LEL is prescribed by regulation 10 of the 2001 contributions regulations and is amended annually by the Treasury. Regulations made annually by the Treasury through the setting of the LEL are subject to negative procedures in this House. Clause 8 makes corresponding amendments in the Social Security Contributions and Benefits (Northern Ireland) Act 1992 as it is just an equivalent change for Northern Ireland.

I turn to the amendments before us. I am happy to give the hon. Member for South-West Bedfordshire the assurance that he wanted, which is that of course people can make voluntary contributions if they are earning below the LEL. They can make class 3 contributions. People in that category who are not getting NI credits in other ways would get deficiency notices from HMRC which would alert them to the fact that they had a deficient year and the possibility of paying national insurance contributions. We are always open to suggestions on how that could be more widely publicised, although obviously with the caveat that we would not want to increase burdens on employers in an unjustifiable way.