ROS ALTMANN
DIRECTOR GENERAL
SAGA
PRESS RELEASE
October 25, 2010.
PENSIONS EXPERT ROS ALTMANN, SAGA: REFORM COULD FINALLY START TO ADDRESS OUR PENSIONS CRISIS.
Ros Altman, Director General of Saga, says the government is finally getting to grips with the inadequacies of the UK
Before the General Election, Saga conducted a nationwide poll of the over-50s and drew up a list of the top six policy changes that older citizens want. This Saga Manifesto called for “a flat-rate state pension for all citizens without means testing”.
“It could be that we are one step closer to achieving that now,” said Ros Altmann..
“After years of watching our pension system falling apart, it seems that the new Pensions Minister, Steve Webb, may finally be getting to grips with the inadequacies of the UK
“For years, Government has tinkered with our current inadequate state pension system, adding to its complexity, while failing to address the fundamental problems associated with mass means-testing of pensioners.
“As the OECD recently pointed out, the UK
“This is because anyone retiring can receive many different elements of State Pension. There is a Basic State Pension, a Second State Pension, plus some State Earnings Related Pension - or SERPS - plus the Graduated Pension. All of these have different qualification criteria and come from contributions made in different years. And if all these are not enough, nearly half of pensioners can claim a complex, means-tested Pension Credit, which consists of a Guarantee Credit and a Savings Credit. What a mess.
“Before 1997, Gordon Brown told the Labour Party Conference that he wanted to end the means test for the elderly, but he actually increased means-testing dramatically. While advising the Labour Government from 2000 - 2005, I kept highlighting the complexities of our pension system, also warning of the dangers and disincentives entailed in mass means testing. I advised introducing a universal flat-rate pension. But this was ignored. In 2005, the Turner Commission again failed to grasp the opportunity for such radical reform. So many missed opportunities.
“The fundamental problem is that our State Pension system undermines private pension saving. If around half of pensioners end up entitled to means-tested benefits, their private pensions will be penalised and some may see their whole private pension effectively taken away.
“As we are about to launch a national system of auto-enrolment, and a new national pension scheme (called NEST) specifically targeted at low to moderate earners, we would be at risk of putting these workers into a pension which would ultimately be partly or totally removed from them by the means-test. It is particularly those low to moderate earners who are most likely to lose out and they will be unable to save enough to float themselves off means-testing. Therefore, in order to alleviate some of the problems of auto-enrolment and the official NEST pension system, it is really important that the Government sorts this out.
“The increase in State Pension Age, announced in the Comprehensive Spending Review, was supposed to be 'fair' because it was in exchange for a decent state pension. However, the current proposals for slowly raising the Basic State Pension each year would not be sufficient to really pay a decent pension, whereas radically reforming the system, as suggested in today's papers, would be a far better deal, especially for women.
“If there was a flat-rate state pension, the Government would be able to end the current practice of allowing people to 'contract out' of the state second pension. This could bring in an extra £8billion in National Insurance contributions each year - £5billion of which would come from public sector workers and employers. This extra revenue would also save money in the longer term, because public sector pension schemes would not have to pay the replacement State
“This could be the best news for pensions in years.”
Ends
Further information:
Iain Macauley
07788 978800
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