Nick Herbert: Reward and trust smart pensioners

There was tremendous excitement when Mrs Ely’s local postman arrived to hand-deliver a signed birthday card from the The Queen.

Coincidentally this week, Royal Mail issued a set of stamps to commemorate famous people who would be 100 this year. Among them are the late Kenneth More, Dylan Thomas and Sir Alec Guinness. Mrs Ely has outlived them all and is still sprightly: an inspiration to us all!

With the advance of medicine and better lifestyles, ever more people will reach this landmark birthday. The Office for National Statistics estimates that a staggering two-thirds of babies born today will live to be 100. Even those retiring now can look forward to another 24 years of life, on average – nearly twice as long as for their parents’ generation.

Living longer is a wonderful thing and a cause for celebration. But it does, of course, affect economic and social policy. Either state pensions will be devalued, as they have to be paid over a longer period, or the retirement age has to be raised.

So the Government has announced the equalisation of the retirement age, at 66, and plans to increase it to 68 by the 2030s. Naturally, this isn’t very popular with those affected, but it goes hand-in-hand with the ‘triple-lock’ to ensure that the value of the state pension keeps pace with prices and incomes.

In the Budget, the Chancellor turned his attention to private pensions. For some time, those who have saved wisely for their retirement have been forced to buy annuities at unattractive rates. Now, people will be able to draw-down up to 25 per cent of their pension pot on retirement, tax-free, and any additional funds at the marginal rate, not 55 per cent as previously.

Putting people in control of their own finances, a move called for by Saga, among others, recognises that each us faces different circumstances in our retirement.

I reject the patronising suggestion that people can’t be trusted to use their savings wisely. Those who have paid into a private pension and saved for their retirement are, by definition prudent.

We should reward and trust those who plan responsibly for their future, not punish them.

If you would like to get in touch with me, please write to me at the House of Commons, London, SW1A 0AA, or e-mail me at [email protected]