Gordon welcomes pensions proposals.
PRESS RELEASE
Release dated: 11th July 2004
Embargoed until: No embargo
Subject: Gordon welcomes pensions proposals.
Gordon Henderson has welcomed new Conservative proposals to provide a fairer deal for current and future pensioners.
Gordon, who has been campaigning for years to have the basic state pension improved, warned that if urgent action was not taken the living standard of pensioners in Sittingbourne and Sheppey would be seriously affected, companies could go bankrupt and council taxes could be forced up to pay for any future deficit in Kent County Council and Swale Borough Council pension schemes.
Gordon explained:
‘I am growing increasingly concerned about the pending crisis in pensions. There are many workers in this constituency, including the ASW workers, who have already experienced the trauma of seeing their pension decimated. They are not alone in being robbed of a decent pension when they retire; I am sure there are workers across Sittingbourne and Sheppey who are being shut out of final salary schemes and I know from my own experience that fewer people are saving for their retirement.
‘In addition, current pensioners are finding it more difficult to get by, with council taxes soaring year after year at a greater pace than their basic state pension. However, it is not just the elderly who will suffer if the crisis gets any worse. Latest valuations suggest not a single local government pension scheme currently has a surplus. As a result, councils could increasingly be forced to increase council taxes to fund their pensions black-hole. In turn, higher local taxes will make the plight of pensioners even worse.
‘This is not simply some hypothetical problem that has to be considered in the abstract; this a real local problem faced by real local people. I know that, because I’m not a professional politician, I’m just a working man with a family who shares the same worries as the rest of my community.
‘We are worried about the safety of our company pensions. We are worried about how much those pensions will actually be worth by the time we retire. We are worried about the basic state pension and worry if it will be enough to live on if that is all we have when we retire.
‘There is no doubt that the current government has let us down over pensions and we need some action to repair the damage. I am delighted, therefore, that the Conservatives have put forward plans to address the pensions crisis.’
…ends…
Notes to editors:
The proposals to tackle the pensions crisis, which were announced by Conservatives on July 5th, include:
Increasing the basic state pension in line with earnings and less use of means testing.
Conservatives will increase the basic state pension in line with earnings, not prices, to narrow the gap between the state pension and means-tested benefits. As pensioners no longer rely on the means test, their savings will be freed from Government scrutiny. A pound saved for retirement will mean a pound more in income in retirement.
By linking the pension to earnings, a Conservative Government would increase the single person’s pension by £7 a week and £11 for a couple, on top of price inflation over four years. As we raise the basic state pension in line with earnings, fewer pensioners will need to claim Pensions Credit. A million pensioners can be freed from the mean-tested credit during the first term of the next Conservative Government.
New incentives to save
Conservatives will create a new Lifetime Savings Account, open to everybody. People who put money into it would have their savings boosted by a government contribution. Savers would receive the full value of the fund in retirement. Unlike some other products, this would be flexible, allowing ongoing access to savings. So if money is needed, savings are not trapped in the account.
Annuity reform
At present, people are obliged to convert the money in their personal pension into an annuity at the age of 75. This is a very unpopular requirement. Conservatives are committed to removing the obligation to buy an annuity. The only condition is that pensioners have enough income to ensure they do not end up on means-tested welfare. As the value of the state pension is increased and pensioners get off means-tested benefits, so fewer and fewer will be affected by this condition.
More support for company pensions
The Government should issue bonds which are linked to average life expectancy, which would the pay more with increased longevity. This would mean that company pensions and insurance companies need not hold such large reserves to cover liabilities in case pensioners lived longer than expected.