New clause 5 - State pension rights of women with a - record of reduced rate contributions

Part of Pensions Bill – in a Public Bill Committee at 9:45 am on 18 March 2004.

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 9:45, 18 March 2004

The cost of subsections (1) and (2) of the new clause would be negligible. It would be the cost of 1.5 million stamps, essentially, plus that of turning the handle. Given that the Government plan to send pension forecasts to everyone eventually, it would happen anyway, but we want to bring it forward. It has no significant cost.

The cost of allowing people to top up is difficult to estimate. In the short term, it would bring money in. It would allow people to pay extra national insurance contributions now, and build up future entitlements. To be honest, I do not know what that would cost in the medium term, partly for the reasons raised by the hon. Member for Cardiff, West. There will be people for whom it does not make sense, and therefore the number of people who take up the option might be quite limited. The amounts of pension that they get will probably run on only until their husbands are 65 and there will be pension credit offsets, so the issue is quite complicated. I do not think that we are talking about a large sum of money. The Government Actuary will report and investigate the issue if he thinks that there has been unfairness.