Generations unite in their call for a better pension 

As people across the country urge their local MPs to battle for a better state pension, we have unveiled our own ‘White Paper on Pensions’ to secure a decent income for future and current pensioners.

Published today, the paper is the result of a series of mini Citizens' Juries on pensions (1) and sets out our affordable recommendations for reform. Hundreds of participants from all walks of life took part in our National Pensions Debate and were unanimous in their condemnation of the system’s failings. Younger and older people agreed that radical reform is now urgently needed to lift today’s 1.8 million pensioners out of poverty and prevent future generations from facing the same fate.

We have welcomed the Pensions Commission’s recommendations for pensions reform, but are warning that its proposals represent the very minimum that should be done. Implementing anything less than the full package of reforms would result in higher pensioner poverty, more means-testing and could undermine any new national pensions saving scheme.

We support the Commission’s approach of a more generous state system, the need to improve the system for carers and other low income groups, and improved opportunities for private savings, but we urge the Government not to forget today’s pensioners while reforming the system for tomorrow’s.

So what are our main recommendations for reform?

1. Government should provide a better Basic State Pension (BSP) by improving coverage and relinking it to earnings, paid for in part by an increase in State Pension Age (SPA).

• The real value of the BSP must not be allowed to decline further between now and the restoration of the earnings link. The level of the BSP must be increased.
• Reform must ensure near universal provision and that women are not penalised for caring.
• Any increase in SPA must take into account inequalities in life expectancy. Much more needs to be done to change workplace culture and protect the most disadvantaged.

2. Auto-enrolment of workers into a National Pensions and Savings Scheme (NPSS) which would be run at a much lower cost than existing Stakeholder Pensions.

• Compel employers to pay into the NPSS when their employees join it and contribute to it.
• Administer the scheme centrally to ensure it is low-cost, portable, inclusive and easily administrated.

3. Continued government efforts to tackle pensioner poverty.

• Action is required urgently to end the gender pensions gap for today’s pensioners.
• The link between Pension Credit and earnings should be placed on a statutory basis as a fundamental part of the overall reform package.

4. Cross-government approach to extending working lives.

• Mandatory retirement ages must be scrapped.
• Lifelong learning policies and tailored support for people who become ill after 50 must be in place.
• Older people who want a job once they have been out of work for some time must not be written off.

5. Ongoing independent Pensions Advisory Commission.

• To provide analysis and recommendations to inform pensions policy and maintain long-term stability.

Without decisive Government action, public faith in pensions will remain low, the current savings crisis will spiral out of control and the value of the Basic State Pension will continue to decline. We are warning the Government not to waste this once-in-a-generation opportunity to radically reform the pensions system.

Age Concern’s Director-General, Gordon Lishman, said:

“The national debate around Lord Turner’s proposals has made it clear that there is a solid public consensus for radical reforms, so long as changes are seen to be fair. The vast scale of the challenge is now widely agreed. Not only do we need to improve the prospects of the 10 million people who are not saving enough for their retirement, we need to tackle the poverty faced by 1.8 million of today’s pensioners.

“We believe the package of reforms put forward in our White Paper would boost voluntary saving, create a fair system for men and women and protect the poorest pensioners. But the ball is now in the Government’s court - the time has come to commit to bold reform of the pensions system.”

Age Concern May 19th 2006