I spoke to the Redbridge Pensioners Forum event at Ilford Town Hall on Thursday afternoon.
Here is what I said.
We are celebrating the 100th Anniversary of the introduction of a limited retirement pension by the Liberal David Lloyd George.
Subsequent Conservative and Labour Governments had improved the system until a Conservative government under Margaret Thatcher broke the link between pension increases and average earnings. But Labour is now restoring the link in 2012.
Under the previous Conservative government pensioners got poorer. But since Labour came into power we’ve lifted 900,000 pensioners out of relative poverty and 1.9m out of absolute poverty.
In 1997 the poorest pensioners lived on £69 a week - today the single person pension is over £90 and because of pension credit no pensioner need live on less than £124 a week - £189 for couples. Had the Government done nothing other than simply uprate the tax and benefit system, there would have been 1.5 million more pensioners in poverty today.
Since 1997, average net pensioner incomes have increased by 29% – compared with earnings growth of 16% as a result pensioners are still less likely to be living in poverty than the population as a whole (after housing costs).
We now spend around £12 billion a year more on pensioners than we would have done if 1997 policies had continued. Around half is going to the poorest third of pensioners. Pensioner households are on average £1,500 a year, or £29 a week, better off in 2008/09 than they were under the Tories. The poorest pensioner households are around £2,100 a year or £40 a week better off.
Other support provided to pensioners includes:
o Free bus passes – benefits 11m pensioners
o Free TV licences (over75s) – benefits 3.5m pensioners
o Free eye tests
But pensioners are facing challenges with rising food and fuel costs. That is why we have provided Winter Fuel Payments to contribute towards winter heating bills worth £200 for households with a person aged 60 or over; £300 for households with a person aged 80 or over. This winter we are providing an additional £50 for households 60-79 and £100 for households 80 and over. Cold Weather Payments have been increased from £8.50 to £25 for winter 2008/09 for all those in receipt of pensioner credit. Those over 70 or on Pension Credit are likely to be eligible for some help insulating their home.
From October, we have made it simpler and more automatic to claim Pension Credit, Housing Benefit and Council Tax Benefit in one call. Older people can claim the three benefits together, entirely over the phone without having to sign or return any claim forms.
At this time of economic uncertainty many people are worried about their pensions. Labour has put pension reform at the top of the political agenda. The Pension Act 2007 combined with the Pensions Bill which is currently in the final stages and is likely to receive Royal Assent by the end of November implements the most historic changes in UK pensions since the creation of State pensions.
Specifically the Bill will:
o By 2015, aim to see 9 million people saving more, or saving for the first time, and £10bn more saving in pensions.
o All eligible employees will be automatically enrolled into a pension scheme and their money will be doubled – their 4% contribution will be matched by 3% from their employers and 1% tax relief from the Government. We estimate that more than 1 million workers who are already saving will have their employer contributions increased to at least 3 per cent. This will form a strong incentive to save and we expect many employers to pay more than the minimum.
o A new simple, low cost scheme – Personal Accounts – will be introduced enabling those currently without access to a good quality workplace pension scheme – in particular, low to moderate earners – the opportunity to save.
o This bill will strengthen existing workplace pension provision by simplifying the rules governing private pensions, including measures arising from the deregulatory review of pensions. It will also further simplify the State pension system to give people a better understanding of the State pension they are they are entitled to – making planning for retirement easier.
• The Pensions Bill will also allow people to buy up to an additional 6 years of voluntary National Insurance contributions, over and above those permitted under the current time limits (of 6 Years from retirement) so that they can enjoy a higher State pension. This will benefit thousands of women who traditionally have incomplete NI records and therefore often receive a lower state pension. By 2010 around 75% of women reaching State Pension Age will be entitled to a full Basic State Pension, rising to over 90% by 2025, compared to around 35% today.
As a result of changes implemented by this Government, many of today’s pensioners have benefited from vastly improved standards of living. Measures such as pension credit have helped to lift over 1 million pensioners out of relative poverty and, for the first time in a generation, a pensioner today is no more likely to be living in poverty than any other group.
The Government has also introduced robust measures to make sure people who are already members of a pension scheme can have confidence in the security of their savings. However, while many current pensioners are relatively well off the evidence suggests that the outlook for tomorrow’s pensioners is less certain.
Bold action is needed to provide security in retirement for tomorrow’s pensioners. The measures currently going through Parliament are a welcome first step but more needs to be done.
posted 7 November 2008