A Pension Bill is a part of the parliamentary work for the next year and followed on from the Budget punishment of pensioners, it effectively heralds the end of the National Insurance contributory Pension scheme, besides introducing further delays for the NEST scheme.
It is proposed to replace existing State pensions and SERPS with a single inflation linked pension of £140 per week (£7,280pa); this is just £2.65 above the minimum the State says a single person needs to live on, the poverty level and the basis of the welfare Pension credit.
The whole system is reducing down to an all grey pensioner Society all receiving the same State subsistence poverty level, whether you pay NI or not; in fact you are better off on welfare as you are then entitled to quite substantial Housing and Council Tax benefit, free dental care etc..
The State answer to this problem is the introduction of a compulsory contribution NEST scheme, which is now being delayed further due to Employer objections and is unlikely to come into effect for 2 or 3 years. They are objecting, quite rightly, to the requirement to pay 3% pension contributions in addition to the quite hefty 13.8% NI, as should the 29 million people in work who pay 12% NI contributions.
Part of these contributions were intended to pay pensions to those in work to secure their retirement future, instead they are lost in Exchequer revenue and not put aside for the purpose for which they were intended, now effectively part of the taxation system, as they give no benefit.
If you earn the average wage, now £498 per week, you will pay £68 tax and £42 NI per week and your Employer pays £49, if only half of this NI contribution was put away on your behalf into a private contributory scheme, you could expect a pension at 65 of £250 per week over 40 years in real terms.
From October, or possibly later, with no other pension provision, you will be required to pay £20 per week, after tax relief and your Employer £15 for what is an uncertain pension benefit in the new high risk defined contribution scheme NEST.
It is uncertain what happens to this money, it will be collected apparently by the Treasury and could probably end up in their coffers as a repeat of the failed NI scheme. Although there will be Trustees from the existing Pension Industry, there is no guarantee of independence from State control or clear investment policy. This could be a splendid opportunity for basic Pension reform which will be missed.
Delayed retirement is still firmly on the agenda and being brought forward whilst elderly care is pushed back out of sight. There is no logic or commonsense in the approach, the savings are minimal compared with the possible costs to youth unemployment and elderly wellbeing and population claims are not proven, substantiated or even studied. There is no elixir of life to cause the over 65’s to double in number.
The concern with the urgent elderly care seems to be more with costs than needs, with proposals for a care tax at retirement and any other means of parting the elderly from their assets and savings. There appears to be little readily available information or statistics on needs, the percentages from age 75 on in care and whether this is social and recreational clubs; home care; sheltered housing; residential or intensive care. The position is made worse by illogical population projections and failure to tackle the ethics of prolonging vegetative existence.
The intention to press ahead with Public Sector pension changes was also given in complete disregard of those involved or the known facts. One has the strong impression that there is no one in Government that understands Pensions or possibly even democracy, let alone good PR.
This was on top of a poor budget for pensioners with detrimental tax changes and inflation increases given with one hand and taken away with the other, loudly proclaimed as being better off, whilst costs continue to rise.
There is a degree of cost cutting panic in the penny pinching policies, without thought or consideration, resulting in miserly austerity, unemployment and stagnation which undermines the economy. Forced redundancies; reduced services can cost more than they save unless combined with a clear forward policy.
Annuities, Public Sector, NHS, Teachers, Police, Local Government, Hutton, State Pensions, Transport, Comment
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