Select Committee on Work and Pensions Appendices to the Minutes of Evidence


Memorandum submitted by the Barnet Senior Citizens' Forum (PC 21)


    —  We restate our concern over the Government's failure to re-introduce the basic pension link with average earnings as an essential and basic part of any income arrangement for any older person. We also argue the need to redress the loss of income suffered over the last 18 years by millions of pensioners as a result of the ending of that link, a great many of whom are still living.

    —  We argue that the expansion of the means testing carries a high risk of increasing exclusion. Therefore maximum simplicity in methods and the system is essential. We have doubts that this will happen. The Pension Credit seems to promise more complexities.

    —  We draw attention to the growing disparity of incomes between the well off/very well off and those on low incomes-an obscenity in a rich developed country.

    —  We urge a priority be made in the short term to help the pensioners low incomes. Whilst not opposing the principle and concept of people's own responsibility in planning for their older years, we draw attention to the pitfalls of self—provision.

    —  We would be more welcoming to this addition to the Government's pensions policy if it was made an interim measure in moving towards meeting our basic concerns (contained in our first point) that argues the need for higher basic pension, linked to earnings

  1.  It is a welcome development for the Government to be addressing the incomes of the less poor. However, it is continuously necessary for millions of pensioners and their representative organisations to point out the fundamental flaws in the present system. Namely the depreciation of the value of the basic state pension since the link with average earnings was ended. This provocation should not go without mention. Welcome as the improvements were during the past year, with the above inflation increase of the MIG, the assistance towards heating bills, free TV for the over 75's, etc these have gone only a small way towards rectifying a very real and serious injustice. Unless the Government changes its approach to the link with earnings, it will remain an ongoing sore and an issue provoking continuous protest. There will also remain the ongoing insistence on a more substantial redress of the loss of income since the link was ended.

  2.  The Government has decided to restrict the 2002-03 basic pension increase to 2.5 per cent, whilst wage inflation is going up by 4.5 per cent. This surely is unacceptable, is basically unfair and undermines any gains in other ways arising from Government policies. In our opinion it gives dramatic emphasis to the points made in section (1).

  3.  Second pensions, private pensions, occupational pensions, individuals savings, etc will be add-ons for each person to strive for in order to establish decent standards in retirement without going into poverty, or just the MIG level. It cannot be right that this country can countenance the disparity between average earnings (over £400 per week) and the maximum level set for pension credit is £134.50. Even worse is the vast disparity of the "top" people's incomes against the growing number at the bottom. This surely has to be recognised as an obscenity needing to be urgently rectified. Putting basic issues right at the top of the agenda will be a major step towards a "fairness for all" system. Pension Credit does address the issue of reward for people's life-time saving and builds into the system a recognition of that element, but it does not go nearly far enough in dealing with the need for more equity.

  4.  Furthermore, it brings new complexities into the pensions minefield for many people who will fail to successfully wrestle with them. Means testing is the feature at the core of the proposals and represents an extension of this method of benefit provision. The undermining of the pride and dignity that is forced upon those suffering poverty will encompass greater number numbers of older people. Is this the direction we should be going in?

  5.  Complex systems may offer little challenges to some people, particularly those enabled to cope by virtue of their work-life training and of course the civil servants who will administer the scheme. For a great many pensioners, the complexities and the means testing approach, will present them with a big difficulty, thus making easy access to their rights a problem. This is probably a major aspect of the "failures to claim benefits" situation. Maximum simplicity should be the imperative for any new developments in incomes for our later years. We would urge that everything that can be done, is done, to streamline the pensions services delivery by the Government departments and others concerned.

  6.  If this is the road we are being taken down, then there is the value of seizing the opportunity to look at a whole range of issues and present failings. An important "tidying up" process, as well as important changes can be achieved. We hope that Government experts will engage fully with our (older people) representatives and the voluntary sector concerned in this process.

  7.  We have addressed the issue of today's pensioners, ie those who have seriously lost out as a result of the devaluing of their pensions with the ending of the "link". Resolving this problem should be prioritised and regarded as short term. Whether the longer term will see answers to the pitfalls of private provision, reduction of occupational pension schemes, misuse of pension funds for corporate gain for shareholders, is a legacy that may still be passed on, despite the many fine words of politicians and the social aspirations of reformist advocates. Whether all these complex features can be overcome with developments of, and reliance on, new technology and advanced systems, is a matter for scepticism. It is an expanding system—an industry providing wages, jobs and profits. Complexity can only add to these costs.

  8.  Finally, we re-iterate, a good basic pension remains the best and simplest support structure of incomes in our older years. The Pension Credit could be helpful and we would be more welcoming to it if it was used as an interim measure.

10 January 2002

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