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Volume 457: debated on Thursday 1 March 2007

To ask the Secretary of State for Work and Pensions how the flat rate accrual amount of £72.80 proposed for the state second pension in Schedule 2 to the Pensions Bill was calculated. (118722)

The initial figure of £72.80 for the flat rate accrual amount is the equivalent of £1.40 a week in earnings terms. This figure will be re-valued in line with average earnings during a working life and with prices in retirement.

In coming to this figure we have ‘smoothed’ the accrual amounts; this radically simplifies the current system where for around the next twenty years, state second pension accruals would have been set at different levels for younger and older workers. Over the next forty years our reforms are broadly cost neutral and people’s pensions will build up in a straightforward way that they will find easier to understand.