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Graduated Pension Scheme

Volume 649: debated on Monday 13 November 1961

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asked the Minister of Pensions and National Insurance approximately how many persons are paying graduated contributions; what proportion this is of the total number of persons insured in Class I; how many persons have contracted out; and what is the current flow of applications to be granted certificates of non-participating employment.

The number paying graduated contributions will not be known until employers' P.A.Y.E. returns for the year 1961–62 have been received and analysed. A total of 4,385,280 employees have been contracted out. The number of employees covered by certificates issued since 3rd April of this year is 92,832 and certificates have been issued in the last few weeks at a rate increasing this number by an average of about 1,200 per week.


asked the Minister of Pensions and National Insurance what difficulties he has encountered in the launching of the graduated pensions scheme; what steps he is taking to overcome them; and whether he will make a statement.

I have so far encountered no special difficulties and the arrangements seem to be working well; but it would be premature to try to make a comprehensive statement before the returns for a full year's working have been made and examined.

Is the right hon. Gentleman aware that there appears to have been a good deal of difficulty about wrong National Insurance numbers supplied to the Inland Revenue, that thousands of them have come back for verification and correction and that the staff of the Inland Revenue have gone on overtime to do this job? Is that a local difficulty or is it more serious than some people suggest?

When a new and radically different scheme such as this starts there is always this sort of problem, but I am happy to say that the staff of the Inland Revenue, as one would expect, have been most helpful over this and that the problem is on the way to being overcome.

By what amount has the number of people who contracted out exceeded the Minister's estimate? How near is it to the danger point at which the number contracted out would make the scheme unworkable?

The figure put in the White Paper as long ago as 1958, although it could hardly at that stage, before the Bill had even been published, be called an estimate and was in fact no more than a guess, was 2½ million. The figure I have just given was 4,300,000-odd. The assumptions, financial and otherwise, on which the scheme was founded were highly conservative—with a small "c"—and contracting out of this sort does not of itself do other than indicate that there was a real demand for it and that the purpose of the Measure, to stimulate the development of good private schemes, is well on the way to fruition.


asked the Minister of Pensions and National Insurance if he is aware of the grievance of those who have been compelled to make contributions towards a graduated pension which prove to be insufficient on retirement to enable them to gain any benefit; and if he will refund the contributions to those concerned.

I do not think there is a grievance here. The basis of the scheme is that, on retirement, any odd graduated contributions which amount to a half unit or more are treated as a whole unit producing 6d. a week graduated pension; amounts of less than a half unit do not count. I think this is fair.

There is a grievance on the part of those who find themselves in the position of having made contributions of less than half a unit and being unable to get any benefit from it. Since it was known that this would happen, will the Minister review the position of those who are obviously going to retire before any benefit can be gained for them and who therefore make contributions which, as far as they are concerned, are worthless?

No. Looked at broadly, the chance of somebody getting a whole unit for contributions of less than a whole unit must work out at about the same as the chance of someone who contributes less than half a unit and gets nothing. Broadly, that is surely a sensible arrangement. In any event, the hon. Member will recall that the graduated pension is paid jointly with the flat-rate pension, in respect of which no one who retires now or for many years to come will have contributed anything like the actual cost.

Is the Minister aware that I am not talking about partial benefits or portions of benefits, but about those who get no benefit from the graduated scheme at all because their contributions have been so small that they cannot qualify in any way? It is only to those cases, in which there is a natural sense of grievance, that I have referred.

I fully understand the hon Member's point, and I understood it originally. He must bear in mind that the small, nugatory, contribution made comes in the overwhelming majority of cases from people who will get the full flat-rate pension for which they have by no means fully paid.