Clause 12
Pensions Bill
4:30 pm
James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge and Hyde, Labour)
Ah, that is the difference. There was a certain amount of cognitive dissonance in the back of my head, which has now, thankfully, been cleared up.
Clause 11 introduces the new method of calculation for the state second pension, which will consist of a simple flat-rate component and a residual earnings-related element. I say residual because clause 12 brings in the relevant provisions for phasing out the earnings-related element. In our debate on clause 10, I explained that S2P was originally intended to be a short-term measure to increase the pension entitlements of low earners and certain carers, which complemented the introduction of stakeholder pensions.
Let me take this opportunity to correct a slight misapprehension possibly caused by hon. Members’ remarks. We do not intend to abolish stakeholder pensions with the reforms. They have had real success in reducing charges, as we set out in our White Paper on personal accounts, and we foresee them continuing to play an important role in both personal and company pensions. We have made it clear that we plan to remove the requirement on companies to have a stakeholder pension, because it will be superseded by personal accounts.