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Pensions

Volume 448: debated on Tuesday 11 July 2006

To ask the Secretary of State for Work and Pensions what the net present cost is of reinstating the pensions of those pension scheme members covered by the recommendations of the parliamentary ombudsman. (68591)

We estimate that the net present value of the cost of implementing the ombudsman's proposals is between around £2.9 billion and £3.7 billion.

To ask the Secretary of State for Work and Pensions if he will estimate the total change in revenue to the Treasury resulting from the cancellation of contracted-out rebates to defined contribution schemes in each year from 2012. (78001)

The estimated total change in public finances resulting from the abolition of contracting out for defined contribution schemes is shown in the following table.

Over time, the costs to S2P and the reductions on the rebate are expected to be broadly equivalent. The abolition of contracting out leads to a cash-flow effect from the rebate, balanced by a longer term increase in state second pension liabilities. The increase in the cost of the state second pension will arise as people retire, many of them after 2050. Therefore, some of the increase in cost is not captured in this table.

State second pension and rebate costs due to the abolition of contracting out for defined contribution schemes

£ billion

State second pension

Rebates

2012

0

-4.0

2013

0

-4.1

2014

0

-4.1

2015

0

-4.2

2016

0

-4.2

2017

0

-4.2

2018

0.1

-4.2

2019

0.1

-4.3

2020

0.1

-4.3

2021

0.2

-4.3

2022

0.2

-4.3

2023

0.3

-4.3

2024

0.4

-4.2

2025

0.5

-4.2

2026

0.6

-4.2

2027

0.7

-4.2

2028

0.9

-4.1

2029

1.1

-4.1

2030

1.3

-4.1

2031

1.5

-4.0

2032

1.8

-4.0

2033

2.1

-4.0

2034

2.4

-3.9

2035

2.7

-4.0

2036

3.0

-4.0

2037

3.2

-4.0

2038

3.4

-4.1

2039

3.6

-4.2

2040

3.8

-4.3

2041

3.9

-4.4

2042

4.1

-4.5

2043

4.2

-4.6

2044

4.4

-4.7

2045

4.6

-4.7

2046

4.7

-4.8

2047

4.9

-4.9

2048

5.1

-5.0

2049

5.3

-5.1

2050

5.4

-5.1

Note:

Data in 2006-07 prices, coverage is GB.

Source:

DWP estimates.