Schedule 1

Part of Pensions Bill – in a Public Bill Committee at 11:15 am on 5th February 2008.

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Photo of James Plaskitt James Plaskitt Parliamentary Under-Secretary, Department for Work and Pensions 11:15 am, 5th February 2008

As hon. Members have identified, this is an important aspect of the Bill. It is right to seek these reassurances and I will try to oblige. There is understandable interest in how the personal accounts scheme will be funded, whether the scheme will receive financial support from the Government, and if so, in what form. Let me reassure the Committee of the Government’s intentions in that area.

The personal accounts scheme should be self-financing in the long term—I know we will discuss that further—through charges paid by the members of the scheme, and be delivered at no overall cost to the taxpayer. I want to stress that if any degree of Government support is involved in helping the scheme get up and running, it will be fully compliant with all European requirements on competition and state aid—it must be, it should be, and it will be. However, as  with many new businesses, there will be a period of time during the scheme’s early years when revenues will be insufficient to cover set up and operational costs. That is understood and accepted.

No decision has yet been made on the best approach to filling that funding gap. It will be for the personal accounts delivery authority to consider the range of funding options available and to make recommendations to the Secretary of State about the best possible approach. Before the authority can provide such advice, it must carry out further work on the detailed design of the scheme, refine its estimates of the costs, and engage with private sector suppliers who will deliver the services that underpin the scheme.