The following response was given by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) to the hon. Member for Leeds West (Rachel Reeves) during the First Delegated Legislation Committee debate on the Draft Social Security (Reduced Rates of Class 1 Contributions, Rebates and Minimum Contributions) Order 2011 on 21 March 2011.
The process is neutral: as the rebate falls, so too does the promise that has to be matched. Schemes could, if they wanted to—this is a substantive point—reduce their accrual rates within the scheme.
[Official Report, First Delegated Legislation Committee, 21 March 2011, c. 8.]
Letter of correction from Steve Webb:
I made the above statement in my response to the hon. Member for Leeds West (Rachel Reeves).
The correct response should have been:
When the rebate rate is reduced in 2012, the reference scheme test for contracted-out salary-related schemes—Defined Benefit—will remain the same, so it is schemes that offer benefits that are more generous than the reference scheme test that could choose to adjust their benefits in order to take account of a reduction in the rebate.