Pensions Futures?

While terrorism threats still dominate the public political community, including the challenge of security at the House of Commons, the underlying political challenge without doubt is pension provision. The pension issue is basically two questions. Firstly how do we support those women over 60 and men over 65 now – ie by increasing the state pension and ensuring a basic income floor with the Pension Credit – plus other financial benefits. The need is to keep increasing them year on year so pensioners do not fall behind. The basic question here is one of a basic rate of all regardless of wealth and savings versus a means-tested tax-assessed system that ensures those most in immediate need (ie the poorest without a “works pension”) get a fair amount to survive on.

Secondly, what do we do about future pension provision? Let’s not forget the Tories broke the state pension link with earnings and increased it by less that inflation for years so it fell further and further behind in value. Their great Thatcherite idea was to push private pensions. Those at work who put money into these now often find their companies (and their pension agents) gambled their money on the stock exchange – and lost – hence the shortfall and closure of more pension schemes. But with people living longer, for the state to fully support every woman from 60 onwards and every man from 65 years old is increasingly a strain on the system. While the idea of raising the retirement age (for men) from 65 to 70 has been ruled out, and the £10 billion increase in the bill factored in by more living past 85 could be met by an increase in national insurance contributions to ensure a basic pension of more than £100 a week (rather than £79 at present) and scrapping all the means or wealth-tested benefits.

It is one of the proposals that may emerge from the Pensions Commission when it presents its proposals next month. But tackling pension provision will be the key issue for a Labour Government’s third term – to prove not only that we can run the economy efficiently but also deliver social justice to all the elderly so that they can be re-assured that they will be economically secure when they retire from work.

For more information visit the Pensions Service website.

©John Battle MP 27 October 2004