Which income group will benefit the most from stakeholder pensions. [145964]

Stakeholder pensions will particularly benefit people who earn, on today's figures, between £10,000 and £20,000 a year—£200 to £400 a week—and who do not have access to an occupational scheme. They will also be of benefit more generally, including to some non-earners. The largest single income group that will benefit comprises up to 5 million people whose income is between the figures that I have given

Why did the Secretary of State say on 6 May last year in The Times: They"— stakeholder pensions— have always been intended for moderate earners and higher-income earners"? Surely that contradicts the Labour party manifesto—or is it just a recognition of the reality that the average family must now pay an extra £670 a year in tax and, with the minimum income guarantee, has an earnings-related benefit from the state on which to fall back?

Irrespective of what was reported in The Times, we have never deviated from the stakeholder target group. Those who earn in the income ranges set out in the green paper have been mentioned in this House, outside and in Committee. That target group does not comprise the market for stakeholders. The market and the target group, as I have repeatedly said, are different. To confuse the two is disingenuous, and the hon. Gentleman knows that.

Did my right hon. Friend see the example of a personal pension introduced under the Conservative party by Skandia Life? A man discovered that, of the £25 premium that he was paying, £17.50 was taken in commission. When he stopped the premiums, the company continued to rob his fund of the £17.50 and told him that if he wanted to close the fund and take his money, it would deduct 22 per cent. of its value. That is the truth of personal pensions introduced by the Conservative party. The man was also told that if he had had a stakeholder pension, the charge would have been not £17.50 but 20p.

The last part of my hon. Friend's question destroyed my answer. I was about to say that we have learned the lessons provided by the pension robbers who operated under the Conservative party. That is one reason why companies are queueing up to provide stakeholder pensions—almost 30 are now regulated to do so—under which costs to individuals are controlled and capped.

Some say that the public prints are confusing. Stakeholder pensions are so "confusing" that Tesco is planning to take contributions at its 650 supermarket checkouts, and the Trades Union Congress is to provide them. They will take off because they are safe and secure, and the pension robbers will not be able to get a look in.

Surely a Minister who is a member of a Government who extract £5 billion a year from pensions should not talk about pension robbery. Will he explain why, if stakeholder pensions are good for those earning more than £10,000 a year, those earning less than that will be entitled to the same rebate and not allowed to opt out for a stakeholder pension?

That is incredibly confusing, and shows that the former pensions Minister has not followed the debate. Stakeholder pensions will be simple. Even the Pm says: The new stakeholder pension is simpler than any pension yet. They will be widespread and safe, and available to everybody. As I have said, the target group comprises those on moderate earnings of between £10,000 and £20,000 a year who are not in occupational pension schemes and for whom, by and large, there is no other provision. Stakeholder pensions are available right up the income scale and, as the right hon. Gentleman knows, are not work-related.

We have repeatedly said that it is up to those who earn below £10,000 a year to decide what to do, but that, all things being equal, they will be better off remaining in the earnings-related pension scheme, which is to be modified next year to become the state second pension, than they would be in a funded scheme. Those without earnings, be they children, non-working spouses or others, are entitled to join a stakeholder scheme.

Many people across income groups who have stakeholder pensions will be required to buy an annuity. Given the poor current returns on annuities, what is stopping the Government ending the compulsory requirement to purchase an annuity?

As the hon. Lady knows—we have debated these matters before—the Government are considering the report of the retirement group's income working party, chaired by my former colleague Dr. Oonagh McDonald. In due course, we shall announce our decisions.