PENSIONS AND NATIONAL INSURANCE

Graduated Pension Scheme

41.

Mr. Boston asked the Minister of Pensions and National Insurance what has been the annual difference between contributions paid in and benefits paid out of the graduated pensions scheme, introduced by the last Administration, in each year since its inauguration; and for what purposes the difference is used.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Norman Pentland)

In the years 1961-62, 1962-63 and 1963-64, income from graduated National Insurance contributions exceeded the amounts paid out in graduated additions to pension by about £148 million, £182 million and £229 million, respectively. It is provisionally estimated that for 1964-65 the corresponding figure was £277 million. The contributions went into the National Insurance Fund out of which all the benefits of the scheme, including flat-rate pensions, are paid; the balance in the Fund went down over the period.

Mr. Boston

Does my hon. Friend agree that these figures reveal that this [column 1117]graduated scheme introduced by the last Administration accounts to a grotesque deception of the people? Would he try to see that these figures are given the fullest possible publicity? Does it not also suggest that the time has come for us to press on with our own Government scheme? Can he say how his own efforts are getting on?

Mr. Pentland

As my hon. Friend will be aware, we have always been critical of the present scheme and replacement of the present graduated pension arrangements is among the principal matters to which the Government's current review of social security schemes is being directed. We intend, as soon as we can, to replace these graduated pension arrangements with a new wage-related scheme of our own.

Mrs. Thatcher

If the hon. Gentleman is so critical of the graduated scheme, why is he taking £277 million out of it this year? Why did he not replace it by 2s. 8d. on the flat-rate stamp when he had the opportunity to do so?

Mr. Pentland

I remind the hon. Lady that in the recent National Insurance Act which we implemented this year we abolished the increase in graduated contributions which, under her Government's legislation, was due to come into operation this year without any corresponding increase whatever in graduated pensions. In this way we have prevented a worsening in the terms provided by the graduated pension scheme which would otherwise have occurred.