The White Paper endorsed the Pensions Commission's view that it is vital that communication with members of the new scheme is designed to enable them, as best as possible, to make informed decisions about their saving. However, it did not specifically identify a need for independent professional financial advice.
Recognising the importance of information, the White Paper consultation asks for comments on what individuals would need in each proposed approach. The responses will inform the work we are doing in the period before implementation of the new system, when we are actively pursuing three distinct strands of work: developing the information and communications strategy to support the introduction of personal accounts; continuing our work on improving public understanding of pensions, and working with the FSA and others on the broader financial capability strategy. This work includes testing the workplace as a delivery mechanism for financial information, in particular information about pensions.
(2) how many active members there were in defined benefit schemes which have closed to new members since 1997 in (a) 1997 and (b) 2005;
(3) how many defined benefit schemes have closed to new members in each year since 1995; and how many active members there were in aggregate in these schemes at the time that they closed to new members;
(4) how many people who joined a private sector workplace pension scheme during the latest 12 month period for which figures are available will receive (a) a defined benefit pension linked to final salary, (b) any other pension with a defined benefit component, (c) a defined contribution pension with no employer contribution, (d) a defined contribution pension with an employer contribution worth less than 3 per cent. of gross salary, excluding contracted-out rebates, (e) a defined contribution pension with an employer contribution at least 3 per cent. of gross salary but no more than 6 per cent. of gross salary, excluding contracted-out rebates and (f) an employer contribution worth more than 6 per cent. of gross salary, excluding contracted-out rebates;
(5) how many individuals aged 22 years or over and earning at least £5,000 a year are employed by organisations outside the public sector, including the BBC and Post Office, which operate workplace pension schemes with employer contributions worth (a) at least 2.5 per cent. of gross salary and (b) at least 3 per cent. of gross salary.
This information is not available.
(2) how many people joined a private sector workplace pension scheme during the latest 12 month period for which figures are available.
This information is not available.
The answer is given in the following table:
Financial year Total 2007-08 714,000 2008-09 702,000 2009-10 691,000 2010-11 504,000 2011-12 557,000 2012-13 556,000 2013-14 530,000 2014-15 515,000 2015-16 505,000 2016-17 500,000 2017-18 502,000 2018-19 503,000 2019-20 500,000 2020-21 686,000 2021-22 708,000 2022-23 732,000 2023-24 745,000 2024-25 377,000 2025-26 379,000 2026-27 777,000 2027-28 801,000 2028-29 821,000 2029-30 838,000 2030-31 848,000 2031-32 846,000 2032-33 845,000 2033-34 832,000 2034-35 412,000 2035-36 409,000 2036-37 803,000 2037-38 805,000 2038-39 791,000 2039-40 757,000 2040-41 719,000 2041-42 698,000 2042-43 680,000 2043-44 664,000 2044-45 332,000 2045-46 334,000 2046-47 697,000 2047-48 736,000 2048-49 750,000 2049-50 737,000 2050-51 743,000 2051-52 763,000 2052-53 793,000 2053-54 801,000 2054-55 806,000 2055-56 823,000 2056-57 819,000 2057-58 819,000 2058-59 830,000 2059-60 827,000 2060-61 808,000 2061-62 797,000 2062-63 785,000 2063-64 780,000 2064-65 785,000 2065-66 774,000 2066-67 763,000 2067-68 748,000 Notes: 1. These estimates were calculated using data from 2004-based national population projections for the United Kingdom made by the Government Actuary’s Department (GAD). 2. Numbers for males and females may not add to total number because of rounding. 3. These estimates are of people resident in the UK at the time of reaching state pension age (SPA). They Include those migrating to the UK before SPA and who are resident in the UK on reaching SPA, some of whom may have no entitlement to UK state pension. The estimates do not include those who emigrate from the UK before SPA and reach SPA outside the UK, some of whom may have entitlement to UK state pension benefits.
The example given as follows is for illustrative purposes only. It is not intended to cover all the details of the calculation and the figures are indicative only. The results of any Guaranteed Minimum Pension (GMP) conversion will depend on the precise characteristics of the specific scheme and the members involved.
Example
A contracted-out, defined benefit scheme increases deferred pensions in line with the minimum statutory requirements (including the requirements on the GMP). They decide to convert the GMP of a deferred member who left the scheme on 1 July 1995. On leaving he had a total deferred pension of £1,000 a year, of which £150 was underpinned by the GMP.
Step 1
The pension scheme’s actuary, based on a set of assumptions about the future, calculates that the current actuarial value of all the existing benefits (including the GMP) is £20,000.
Step 2
Using the same actuarial assumptions, the actuary calculates that, for £20,000, a pension of £1,200 a year could be provided based on scheme rules.
Step 3
This member’s entitlement is increased to £1,200. He no longer has a GMP underpin and the new pension entitlement is governed by the rules of the scheme and any legislation that applies to scheme benefits.
The information is not available and could be obtained only at disproportionate cost.
We intend to outline further proposals for personal accounts later this year.
During the oral statement I said that both the stock market fall of the late 1990s and rising longevity had cost UK pension funds £250 billion. To clarify, between 1999 and 2002 the market value of occupational pension scheme assets reduced by a total of around £250 billion. We believe this reduction was largely a result of the impact of the stock market fall. Rising longevity would have increased pension fund liabilities during this period, also leading to increases in scheme costs.
Our proposals for increasing state pension age are based on the current available evidence which, as we have said in the White Paper, we plan to review periodically. Whether the timetable for increasing state pension age remains appropriate will be a decision for the Government of the day when considering the evidence available at that time.
The Pensions Commission, in its second report, recommended an annual cap on contributions to personal accounts of around £3,000, so that any scheme complemented, rather than replaced, existing pension provision. As stated in the White Paper, the Government share that objective, and the proposal for a contribution cap is being analysed very carefully and discussed in detail with external stakeholders. We will bring forward our proposals later in the year.
This research was published on 1 August 2006 in the Department's research report series (Review of research relevant to assessing the impact of the proposed National Pension Savings Scheme on household savings by John Hawksworth, PricewaterhouseCoopers, DWP research report No. 373).
The results of qualitative research into employer attitudes to personal accounts, undertaken by BMRB Ltd. on behalf of the Department, were published on 1 August 2006 in “Employer attitudes to personal accounts: report of a qualitative study by Helen Marshall and Andrew Thomas, DWP Research Report No. 371”. Preliminary findings from the quantitative research into employer attitudes to personal accounts were published in the Government’s White Paper on pension reform, “Security in retirement: towards a new pensions system, May 2006”. The full results of this research will be published later in the year.
The Secretary of State does not have any responsibilities in respect of public service pension reform.