Pensioner Incomes

To ask the Secretary of State for Social Security if he will estimate from the PENSIM model the proportion of pensioners likely to have incomes of less than (1) 20 per cent. of average earnings and (2) 30 per cent. of average earnings, (a) including the impact of the minimum income guarantee and other means-tested assistance and (b) excluding all forms of means-tested assistance for (i) 2000, (ii) 2005, (iii) 2010, (iv) 2015, (v) 2020 and (vi) 2025; and if he will list the assumptions made, with particular reference to those relating to (x) growth in earnings, (y) returns on investment and (z) prices. [75232]

The information is in the table.

Percentage of pensioners with incomes below 20 per cent, and 30 per cent, of average earning
Percentage
	Proportion below 20 per cent. of average earnings		Proportion below 30 per cent. of average earnings
	Single pensioners	Pensioner couples	Single pensioners	Pensioner couples
2000	30	¹—	70	5
2005	20	¹—	70	5
2010	30	¹—	70	10
2015	20	¹—	75	10
2020	30	¹—	75	10
2025	20	¹—	70	5

Total pensioner unit net income less income support and housing benefit
Percentage
	Single pensioners	Pensioner couples	Single pensioners	Pensioner couples
2000	50	¹—	75	10
2005	45	¹—	70	10
2010	40	¹—	75	15
2015	40	¹—	75	15
2020	45	¹—	75	15
2025	40	¹—	70	15
¹ = less than 2.5 per cent.

Notes:

1. The estimates requested have been made using the PENSIM model. Due to the number of assumptions used in PENSIM, and the uncertainty surrounding estimates so far into the future, these estimates should be considered as broad brush. In particular, PENSIM uses data from a number of different sources. As a result, changes over an interval as short as five years may be due to a change in the composition of the data set used to make projections. Therefore the results presented in the table should be treated with some caution and used to identify long-term trends rather than changes over short periods.

2. All figures are rounded to the nearest 5 per cent.

3. Average earnings are assumed to grow 1.5 per cent. faster than prices.

4. 20 per cent. of average earnings, in 1998 prices, for 2000 is £79.22 and 30 per cent. is £118.84.

5. The return on investments is assumed to be 2 per cent. greater than the rise in average earnings.

6. The answer is based on the current system of retirement pensions—it does not include the effects of the proposed State Second Pension which the Government are currently consulting on.

7. It is assumed that the Minimum Income Guarantee will be uprated broadly in line with earnings.

8. Part (b) is answered by deducting Income Support and Housing Benefit from pensioners' income. This is because the PENSIM model does not calculate other means-tested benefits.

9. A pensioner unit is defined as a single (non-cohabiting) person over State pension age or a couple (married or cohabiting) where the man, defined as the head, is over State pension age.

Volume 327: debated on Wednesday 17 March 1999