There is none so deaf as those who will not hear, according to a 16th-century proverb.
There is so much to praise in the Coalition Government’s Green Paper on state pension reform, that it is a shame it still contains one major flaw. Conservative and Liberal Democrat ministers have got away with junking their own manifesto pledges on the basis that coalition means compromise. However, the same should not apply to the coalition agreement, which warrants quotation: “We will ... hold a review to set the date at which the state retirement age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.”
The reason for the difference is simple. Women in their 50s have already had the pension goalposts moved once. They have accepted without complaint the equalisation of the pension age at 65. Now the coalition has broken its promise and told women who were due to retire in 2018 that they must work until 2020. Some women will lose up to £14,000 and 500,000 are affected. The Government is still refusing to honour its promise, arguing that to do so would contravene EU gender equality legislation. This is highly debatable.
Some of these women have already had to give up work to care for elderly relatives or grandchildren or have been made redundant and will now be forced to rely on unemployment benefits. They have not been given enough time to plan for this financial double whammy.
In other respects, the Green Paper is fair. Set at £155 a week and properly inflation-proofed, the single flat rate is more generous than the current notional minimum of £132.60. “Notional” because that includes means-tested pension credit, which out of pride, ignorance or some other reason, an estimated 1.6 million pensioners do not claim. This top-up is also very expensive to administer and scrapping it frees up money for higher basic pensions. It helps those – predominantly women – with caring responsibilities who struggle to accumulate enough National Insurance credits to claim a full state pension. It replaces the current convoluted mess of Serps, second state pension, pension credits and savings credit with a simple payment that enables people to plan for retirement. And unlike the current system, it does not penalise thrift.
There are some caveats. It must not be used as cover to remove concessionary travel or further cut winter fuel payments. Also, by accident or design, this reform will hasten the demise of private sector final salary pensions because it ends contracting out of a portion of the employee’s NI contribution. And doubtless the new scheme will provoke complaints about pensioner millionaires getting £155 a week from the state, though it can be recouped through tax.
Nevertheless, the main blot on the coalition’s copy book remains the way it pillories women in their mid to late-50s. It is not too late to repair this single major flaw in what is essentially a sound proposal.
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