State Pension Reform

Sheila Gilmore Excerpts

Monday 14th January 2013 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for mentioning the self-employed. At the moment, the self-employed build up rights under the basic pension—the £107—but not the equivalent of the £144. In our world, there are just people who pay national insurance, build up qualifying years and build up a pension. The self-employed are therefore potentially substantial beneficiaries of the new and simpler system.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Minister confirm that workers currently in the private sector who contracted out may also see, in addition to having to pay higher national insurance contributions, either higher contributions towards their private pension or a reduction in benefits?

[Steve Webb]

Yes, the hon. Lady is right. We have talked to the CBI, the National Association of Pension Funds and major pension employers. They are clear that they do not simply want to take the national insurance rise on the chin; they want the freedom to adjust their private sector pension scheme in response. However, we have calculated that, even allowing for that, the bulk of people who are within 20 to 25 years of pension age will still get more back, from the extra national insurance and any reduction in their private pension, through the enhanced state pension than they have lost.