4. How many people currently claiming a state pension will benefit from the new higher rate state pension under his proposals for a single tier scheme. (139387)
People who reach state pension age before single-tier implementation will receive a state pension in line with existing rules. Existing pensioners already receive the triple lock designed to ensure that the pension rises by at least 2.5% each year. The single-tier reforms are designed to respond to the challenges facing working people today.
To be clear, today’s pensioners have benefited hugely from our decision to reverse 30 years of falling value of the state pension for those 12 million pensioners, to whom we are now paying a pension that is a bigger share of national average earnings than at any time in the past 20 years.
It has been a busy few weeks in pensions world. The Minister will be aware that the Office of Fair Trading has recently announced that it is to undertake an inquiry into the private pensions market. This follows a Labour campaign for just such an inquiry. The Minister’s response to our campaign was to accuse the Labour party of scaremongering on pension charges. Now that the OFT has decided to undertake this inquiry, may I encourage the Minister to heed another Labour campaign call and lift the restrictions on NEST as soon as possible so that it can provide low-cost, high-quality pensions to everyone who wishes to save with it?
Thank you Mr Speaker. It will be a house- hold name soon, I hope.
We worked very closely with the OFT in the run-up to its inquiry, which will look at whether there are problems in this area. It is very welcome, and we will be working very closely with the OFT as it carries it out. As the hon. Gentleman knows, Labour introduced constraints on NEST—the National Employment Savings Trust—and we are consulting on whether to lift them.
11. When my hon. Friend presented these proposals last week, it was indicated that there would be a net cost to public sector workers in relation to the higher-rate state pension. Is he able to put a figure on that additional cost? (139394)
Yes. Those who work in the public sector will pay the full rate of national insurance, which is an extra 1.4%, but they will build up state pension at the full rate. Crudely speaking, they will pay about a tenth extra in national insurance but build up, potentially, up to a third extra in state pension, which will be a very good deal.