Anyone opting for a Personal Pension is entitled to a rebate from their National Insurance Contributions. This is payable direct into their Personal Pension. So it can only be used to fund a pension not spent on personal consumption. Five and a half million people have taken out approved personal pensions. These are in addition to more than 8 million who are members of opted out occupational pension funds.
People are of course free to put more into their private pensions than just the rebate.
I imagine the Committee will be at least as interested in the problems we have had to tackle as in the success of this approach. This was not the result of giving people freedom to opt out of the State Scheme into personal pensions. The initial rebate was set at a level sufficient to ensure that it could fund a personal pension which was better than the State scheme. The problem arose from a separate change introduced at the same time. This was the decision to give employees the right to opt out of company pension schemes.