Pensions
Every pensioner must have a decent pension and a comfortable retirement.
| The Peoples Party must: |
|---|
| establish a basic state pension of £500 per week, irrespective of previous national insurance contributions, payable at 75 and over |
| allow people to choose if they wish to retire earlier than 75, fixing their pension payment at a level on the retirement scale at the age of retirement |
| encourage people to remain economically active for as long as they wish, introducing schemes to facilitate and incentivise employment of older workers |
| exempt pensioners at 75 and over from education, health and council taxes. The abolition of taxes on savings will also end the double taxation of pensioners’ incomes |
| change the way state pensions are administered by establishing independent pension funds that will issue debt to finance pension payments and then reclaim the total value of state pensions paid from an individual’s estate. The Government would make up the shortfall |
| provide free social care or vouchers to cover the cost of care |
The current state pension system is a mess. The basic pension is insufficient for people to live on, and many rely on benefits to make up the shortfall.
The full UK state pension, which many do not receive, is among the worst in the developed world, amounting to less than a third of average earnings—compared to two-thirds or more elsewhere. While the triple lock increases pension levels, it is absurdly expanding the number of people subject to tax. It’s a crazy system where money is paid out with one hand and collected with the other, benefitting only bureaucrats.
For a minority, mainly retired public sector workers, this is supplemented by “unfunded” pensions, averaging £200 a week and rising with inflation.
The majority, who have “funded” private pensions, typically receive around £60 a week, an amount whose value is steadily eroded by inflation.
Reforming the current pensions system is highly controversial but essential to ensure its sustainability. It involves recognising that successive governments have misled people into believing they were contributing to a pension fund through national insurance payments.
Sadly, no such fund was established. The money has not been invested. Instead, like some rogue businessman, successive governments have spent it on paying current pensioners and funding general public expenditure.
As people live longer, the total cost of state pensions rises, while the number of workers to support pensions decreases. The “pay as you go” system ceases to be viable. Without reform, either taxes must rise or the real value of pensions will be further diminished.
A short-term solution is to encourage people to work longer in exchange for a higher pension upon retirement. It also involves increasing transparency in how state pensions are funded, with pension costs reclaimed, where possible, from the estate of the deceased. Not only is it a way of securing larger pensions, the policy is fundamentally different from a tax. It is a repayment of money the pensioner will have received.
We need a debate about what constitutes a pensionable age, but as life expectancy increases, there is growing acceptance that 75 has become the new ‘65’.
Ultimately, the long-term solution involves establishing proper pension arrangements, investing funds in a growing economy, and ensuring sufficient resources for decent pensions.