What is the Government doing for Pensioners?
We are working hard to get a better deal for pensioners. Under the Tories pensioner poverty soared. I am determined that pensioners should share in the prosperity of the nation and campaign for greater assistance based on need.
It is worth remembering that the Government is spending £6 billion extra a year on pensioners. This includes £2.5 billion on the poorest third of pensioners - three times more than an earnings link from 1998 would have meant, including:
- Basic state pension increased to £77.45 next year and to £79.40 a week in 2004.
- The Minimum Income Guarantee - currently benefiting 2.1 million pensioners - increased to £102.10 for single pensioners, £155.80 for couples next year.
- £200 Winter Fuel Payments
- Free television licenses for over 75s.
- Re introduction of Free Eye Tests
- Legally enforceable Travel Concessions
- An end to reducing pension to the elderly staying in hospital
- An extra £100 on the Winter Fuel Allowance for the over 80's to recognise the current 25p extra is not enough.
- Increased age-related personal allowances in 2003/04 rising in line with earnings for the rest of this Parliament so no pensioner aged 65 or over will pay income tax on income less than £127 a week.
I also want to draw your attention to the Pension Credit to begin in October 2003. This will provide up to £21.50 a week extra for couples and £11.60 extra a week for single pensioners. This is a high priority for our government and we will not stop looking for new ways to get additional help to those who need it most.
Labour wants all pensioners to have a decent and secure income in retirement. We are committed to tackling pensioner poverty and ensuring pensioners share in the country's rising prosperity.
Support for pensioners
- In 1997, our first task was to tackle the dreadful pensioner poverty we inherited. In the Tories' last year some 2.7 million pensioners were in low-income poverty. So we moved quickly to get more money to these people in a targeted way.
- Our reforms over the last six years have got extra money into all pensioners' pockets. From October we are spending £9.2 billion extra per year in real terms on pensioners. This is £5.7 billion more than if the basic state pension had been linked to earnings.
- The basic state pension is £5 higher in real terms for single pensioners and £8 higher for couples - at £77.45 for singles and £123.80 for couples.
- We have promised that the basic state pension will increase by 2.5% (or the level of inflation, whichever is higher) for the rest of this parliament.
- The Minimum Income Guarantee targets help at those that need it, with £102.10 per week for a single pensioner and £155.80 for couples.
- Free TV licences for over 75s benefit nearly 4 million pensioner households.
- We have introduced Winter Fuel Payments of £200 and in addition those over 80 will receive an extra £100.
- Free eye tests for all pensioners have been restored.
- We have extended to 52 weeks the period over which hospital inpatients receive full state pension and most of their benefits.
- We have created The Pension Service - a new organisation dedicated to the needs of pensioners.
- The State Second Pension gives 20 million people the prospect of building better pension entitlements than previously - 2.5 million carers, 2.5 million long term disabled people and 15 million low and moderate earners.
THE RESULT: Our reforms mean that pensioner households will be £1,250 a year better off in real terms than in 1997 - around £24 extra a week. The poorest third of pensioner households will have gained an extra £1,600.
Next step - Pension Credit
- Having helped the very poorest pensioners in our first term, our challenge now is to help those who have saved and reward them for their thrift.
- From October 2003 the new Pension Credit will mean more money for pensioners. Eligible pensioner households stand to gain on average an extra 400 a year.
- It will top up incomes to a guaranteed minimum level of at least 102.10 per week for single pensioners and 155.80 for couples.
- For the first time it will reward those who have saved on top of the foundation of the basic state pension- guaranteeing that it pays to have saved.
- All a pensioner needs to do is telephone The Pension Service freephone application line on 0800 991234. Our trained staff will ask only those questions relevant to their circumstances and will complete the application for them. The form just needs to be checked and signed by the pensioner.
- For people currently receiving the Minimum Income Guarantee, we will automatically change this to Pension Credit before October - they do not need to do anything.
- Meanwhile the majority of pensioners will be contacted from October when the main Pension Credit campaign begins.
- People will be able to apply at any time up to October 2004 and get it fully backdated to October 2003 (or the date of entitlement if later).
- The poorest pensioners will be around 30 a week better off with Pension Credit than if the money had just been added to the basic state pension.
THE RESULT: The average pensioner household will be 24 per week better off from Labour's reforms once Pension Credit begins. If we'd just linked the basic pension to earnings, average gains would have been only 7 per week. The Tories and Liberals would scrap the Pension Credit, and deny millions of pensioners extra money.
Framework for security in private pensions
- Occupational and personal pension provision has been a strength of the British system. We are ensuring that continues. Where pensions have been promised, we are making sure that promise is honoured - while making it easier for firms to run schemes.
- We will introduce a Pension Protection Fund to end the scandal of workers being denied pensions they have built up over many years - for the first time, guaranteeing protection if a company scheme goes bust.
- It will guarantee workers 90% of their pension (subject to a salary cap for high earners) and guarantee pensions in payment are met in full if the sponsoring employer becomes insolvent.
- We will also require solvent employers who choose to wind up their pension schemes to meet their promise in full.
- We are revising the priority order that applies to wind up so that greater weight is given to those who have been in the scheme longest.
- Pension protection for employees who are transferred to a new employer will be extended - to ensure that where pension rights have been established, the new employer must contribute or offer a good alternative.
- And we will set up a new, proactive pensions regulator to focus on tackling fraud, bad governance and poor administration.
- Protection of rights must be balanced with measures to make it easier for companies to set up and run good schemes. Costs on providers and regulation have built up into a layer cake of complexity.
- Regulation must be well-targeted, transparent, proportionate and effective. So we will drive ahead with measures to reduce burdens and regulations.
- We have set up an Employer Task Force, including both trade union and leading employer representation, to develop and promote the role of employers in pension provision and encourage employees to save.
- The Pensions Commission will monitor and keep under review the system of private pensions and long-term savings. It is chaired by Adair Turner and includes trade union representation - Jeannie Drake of the CWU.
THE RESULT: Government action to reduce costs and complexity, while making sure that pensions promised are pensions delivered.
So what about the Opposition ?
- The Tories oppose the new Pension Credit and threaten to axe it, plunging the very poorest pensioners back into poverty.
"We have suggested a reform of benefits for pensioners. Instead of the extension of means-testing through the Pension Credit, we proposed that money should instead have been put into a higher rate of pension for older pensioners."
David Willetts, BBC Online, 22 November 2002
- The Tories would take money from those pensioners who need it most.
- They would scrap the £200 Winter Fuel Allowance.
- They would scrap free TV licences for the over 75s.
- They would scrap the Christmas Bonus.
- As Shadow Social Security Secretary, Iain Duncan Smith was a bitter opponent of both the Winter Fuel Payment and the Minimum Income Guarantee.
'That (MIG) is a huge rise in spending...I can think of nothing to recommend it.'
Iain Duncan Smith, House of Commons, 15th March 1999
- The Liberal Democrats have opposed Labour's measures for pensioners. They joined forces with the Tories, voting against Pension Credit in Parliament.
- They plan to abolish Pension Credit and increase the basic state pension by £5 for everyone, plus as further £5 for 75+ and £10 for 80+.
- This is unfair on the poorest pensioners, who would get less money - something the Lib Dem's themselves admit.
- Questioned by Andrew Smith in the uprating debate Feb 27th 2003 "Does he accept the cost of his strategy is not only that some older rich pensioners get money they arguably do no need so much, but that younger poorer pensioners do not get the money they need?" Steve Webb replied "I accept that."
- Our Pension Credit directly targets money at those who need it most. The Lib Dem proposals would take money from many poor pensioners and give it to large number of affluent pensioners.
- If we spent all the Pension Credit money (both the Guarantee Credit and Saving Credit) on increasing the Basic State Pension we could increase the maximum rate of Basic State Pension from £77.45 to around £90. But this would mean losses in the region of £30 per week on average for households in receipt of Pension Credit.
Last updated 25th March 2003