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Pensions Reform

Volume 448: debated on Tuesday 11 July 2006

To ask the Secretary of State for Work and Pensions pursuant to his oral statement on pensions reform of 25 May 2006, Official Report, columns 1648-51, what estimate he has made of the difference in the number of people who would have gained a full basic state pension under the Turner proposals based on residency and the number based on his proposed reform of the contributory principle. (75157)

[holding answer 5 June 2006]: The Government's White Paper on pension reform, “Security in retirement: towards a new pensions system”, published on 25 May, includes estimates of those achieving a full basic state pension under the Pensions Commission's residence accruals approach compared to our proposed reform of the contributory principle.

Estimates of the proportion of people reaching state pension age with full basic state pension under the current system, the Pension Commission's residence accruals approach, and our proposed reform are shown in Figure 3.vi of “Security in retirement: towards a new pensions system”, and in the following table.

Table 1: Proportion of people reaching state pension age with full basic state pension under different schemes

Percentage

Current system without reform

Residence accruals from 2010

30 qualifying years for new retirees from 2010

Men

2010

90

90

95

2015

85

85

95

2025

75

85

95

2050

75

95

95

Women

2010

55

55

70

2015

70

75

85

2025

80

85

95

2050

80

95

95

Notes:

1. Based on projections from the Government Actuary’s Department’s Retirement Model, GB.

2. Estimates are approximate and reflect the inevitable uncertainty associated with any future projection. Figures shown have therefore been rounded to the nearest 5 percentage points.

3. Under residence accruals, 44 years are required for a full basic state pension.

4. Women’s entitlement is based on their own and their husband’s contributions, i.e. includes entitlement using the inheritance and substitution rules for widows and divorced women.