Clause 10
Pensions Bill
4:00 pm
James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge and Hyde, Labour)
It is a pleasure to serve under your chairmanship this afternoon, Mr. Gale. I said in our previous sitting that I hoped today to provide the hon. Member for Yeovil with the figures that he has asked for in the amendment—I hope to his satisfaction—and therefore to remove the need to legislate to provide them at a later stage.
In choosing £135, the hon. Gentleman picks a key amount, to which we have referred in our publications on the issue. We have alighted on the figure of £135 because it is our current estimate of what a low earner in 2053 who has had a good working life would achieve by way of state pension, by working and/or caring. To be clear, we have assumed that a good working life would mean someone working or caring from the age of 25 to state pension age. In describing the objectives of the new state pension, we have focused on a couple of key amounts. The first is our estimate of the number of people who, at the point of retirement, will be clear of the standard minimum guarantee of about £114 in the 2050s. The second amount is the minimum amount that will be received by someone who has been working or caring for a good part of their life.
Those amounts are important, because they help to underpin the key objective of the state pension reforms, which is to provide a solid foundation for private saving. Making pension saving worth while to the point at which it is a routine part of organising personal finances depends on giving people decent returns on their investment. We have shaped the reform system to meet just that objective.
By extending the coverage of the basic state pension and the state second pension, the number of people building the foundation will increase and by increasing the state pension by earnings, we will preserve the value of the foundation. By simplifying the system, we will make it transparent, so that people can understand what they will get and, as importantly, will not take kindly to anyone trying to take it away from them in the future.
Just using the current information, and without taking account of greater employability or a fitter work force, I can give the hon. Gentleman the following information, in response to the questions that he sought to elucidate. Around 60 per cent. of those reaching state pension age in 2030 will receive at least £115 a week just from the basic state pension and the state second pension. More than 40 per cent. of those reaching state pension age in 2030 will receive £125 or more in their basic state pension and state second pension, and more than 30 per cent. of those reaching that age in 2030 will receive £135 or more in their basic state pension and state second pension. Those figures are of course not the same as the means-tested proportion of the pensioner population, because people would also have private savings and other forms of income on top of that. We forecast that in 2050 around 75 per cent. of people will retire on an income of more than £115 a week just through their state pension entitlement and that a quarter of pensioners will retire on a state pension of £140 or more in 2050.
Rather randomly, I do not have the relevant figure to give the hon. Gentleman for the £135, but I shall ensure that I give it to him in writing as soon as I have it available.
Given that the Department for Work and Pensions has produced significant material, as part of our long-term projections and continual assessment of the pensions system, and that that information will be made available in the normal way—including through any future parliamentary questions that the hon. Gentleman might seek to table—I urge him to withdraw the amendment.