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Invalidity Benefit

Volume 174: debated on Monday 18 June 1990

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To ask the Secretary of State for Social Security if he will make a statement as to the reasons for the subtraction of the state earnings-related pension scheme from the entitlement of persons in receipt of invalidity benefit when they reach 65 years of age.

Where an invalidity pensioner who reaches pension age—65 for men, 60 for women—chooses not to retire, the amount of invalidity benefit payable is determined by the amount of retirement pension that would have been payable had he retired.The earnings-related additional pension—AP—element of retirement pension can be paid either by the state or through an occupational pension scheme, which is contracted-out of the state scheme. Persons in contracted-out schemes and their employers pay a lower national insurance contribution and in return the employer is required to provide a guaranteed minimum pension— GMP—to the employee from age 65—or 60. Up to pension age, AP is paid with invalidity benefit, but thereafter the amount of any AP payable is reduced by the amount of the GMP received from the employer. This ensures that people contracted out of the state scheme are not treated more favourably than those who are not.