On Tuesday, February 11, Pensions Minister Steve Webb came to Lewes to give a talk entitled ‘What do pension changes mean for me’.
Pensions are a hot topic because the government is changing the way pension provision is made and clearly this will affect everyone who has yet to reach pension age.
One of the main planks of the changes is the introduction of a ‘single tier pension’ which will merge all current state pension provision into one single pension. The issue is how will this affect people?
The government says the changes will be cost neutral in the short term and will cost less in the long term.
However, there will be winners and losers. The majority of people will gain in the short term but 19% ie 1 in 5, according to the respected think tank, The Institute of Fiscal Studies (IFS), will be losers.
Maybe you will be one of these. The IFS also predict that ‘in the longer term, the new system will be less generous to just about everyone than the system that it is replacing’ and that ‘most people would have to live to over 100 to be better off overall’ (Quoted from IFS Report R82). Given that by 2060 the new system will save 0.4% of national income this makes complete sense.
The National Insurance Fund was in surplus by over £38 billion at 31 March, 2012, and given the size of this pot, it begs the question whether these changes are necessary and indeed that pension provision could be improved for the worst off.
In tandem with raising the state retirement age from 60 to 68 and for men from 65 to 68 which already penalises the poorest in society and given that the vast majority of people in the long term will be worse off under the changes, this is simply another cut in people’s standard of living by this coalition government.