Rt Hon Lord Lilley

    Mr. Peter Lilley (Hitchin and Harpenden): The Secretary of State will know that I welcomed the Government‘s commitment to increase by up to 60 per cent. the share of pensions liabilities which will be met by funded private pensions. Since then, however, the crisis in private pension schemes, aggravated by the pensions tax and the disincentive effects of increasing means-testing, has moved us in the opposite direction. Although I welcome some small measures announced in the statement, nothing in it is commensurate with the scale of the challenge or the crisis facing private pensions. Is he still committed to that 60 per cent. target?

    Mr. Smith: That indeed remains our objective. It is why the Green Paper sets out all those proposals for radical simplification. There is a sweep and a stunning simplicity to what we propose, not only on tax, but on the reforms on contracting out the reference scheme test and the rest of it. Coupled with stronger protection for scheme members, that is the way to renew confidence in private pension provision. Of course, I share the right hon. Gentleman‘s goal of providing a higher proportion through the private sector. With our proposals, we can renew confidence so that we move in that direction.

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