“The £140 Pension Illusion” 2

Back in October 2010, I first wrote very scathingly about the announcement by Steve Webb, the Pensions Minister of a huge increase in the basic State pension.   Recently an article in The Times suggests that it may not be such an illusion, and after a tough battle with the Treasury our Magical Minister my be winning the argument.   I am not apologising yet though and it may not turn out to be such a good trick after all.

Lets look back at the positives :-

The confidently spoken assurances that are designed to lull you into a false sense of security.   £140 is a whopping 40% increase for single pensioners and a massive 75% extra for married couples.   What could you possibly not like about that?   The other great virtue is that such big increases will sweep away means testing for thousands of pensioners.   It’s all such a tantalising offer that you really want to believe it.

As with all great tricks there are always a few lingering doubts – it’s the art of the conjurer to convince you to overlook them.

The doubts are all about “how is it all going to be paid for ?”   That was why the Treasury was not fully persuaded that the trick could be pulled off successfully.

The overall cost of the measure was helped by the fact that it was not going to be introduced until 2015 (this was subtly changed to 2016 by Iain Duncan Smith at the Age UK Annual Conference) and then only for new pensioners.   Politically this would seem to make the trick impossible, since all the older pensioners would vote against any Government that performed such an unfair trick.

So what else has the Magic Minister got up his sleeve.   Firstly, by taking more people out of the means test, it denies them a ‘passport’ to other benefits (Pension Credit and Minimum Income Guarantee) which is giving to the poorest pensioners with one hand and then cruelly taking it away with the other.   The second deception is even harder to detect because it probably involves taking away non-means tested benefits such as Attendance Allowance and Winter Fuel Allowance.   Surely this is a step too far, although it has been suggested before, no-one has been bold enough to try it.   YET !

At the end of every great illusion you are meant to be baffled and amazed, so I hope I am wrong about how this trick is to be performed.   Otherwise the Magic Minister will have succeeded in shifting money to the wealthiest elderly people only by taking it away from the poorest and frailest pensioners.

This entry was posted in ELDERLY UK POLICY, Pensions and tagged , , . Bookmark the permalink.

26 Responses to “The £140 Pension Illusion” 2

  1. David Evans, Cardiff says:

    If it sounds too good to be true it almost certainly is .
    I can imagine that this vote winning policy will be part of some politicians promises for the next election, but it will no doubt be a jam tomorrow proposal. Even if we get it there will be a price to pay somewhere else.
    What we want is old fashioned straightforward honesty, which is much lacking in todays society.

    • john graham says:

      You were quite right David and with the benefit of nearly two years hindsight we can now see that the price of the higher pension is likely to be paid at the expense of Additional Allowances. Not exactly straight forward honesty, is it?

  2. France's Fielding says:

    Having paid into the system all my working life, it would appear that I am being penalised for reaching retirement age. It will certainly alter the way I vote in the next election.

    • john graham says:

      A good point Frances and you certainly should look carefully at what all the political parties are saying about their plans for pensions and retirement allowances in the run up to the next general election. They will obviously want to keep pensioners on their side so don’t forget to read between the lines.

  3. Maureen says:

    I would like an honest explanation how this will work? Who will gain who will loose?

  4. Coventry thursday team says:

    I want a pension/allowance system that I can understand and/or give me a easy to use helpline

    • Christine says:

      I think this is a really important point – so often the government create systems that are too complicated for us to understand.

    • john graham says:

      All State Welfare benefits are difficult to fathom. The best option for the Coventry CAFE Group is probably to forge a good link with organisations like AGE UK and ExtraCare Charitable Trust who have welfare benefits specialists who can advise us. A good initial move would be to see if we can get one of them to do a short YouTube video for us outlining the main benefits you can obtain.

  5. Elsie says:

    By waiting to bring in the new pension to only “new pensioners” they are creating a 2 tier class of pensioners – ‘us’ and ‘them’.

    • john graham says:

      Absolutely right Elsie. I can’t believe they really understood the implications of only offering new pensioners the higher level of £140 pension. All they understood was that it would save money not to give it to anyone. I doubt they will get re-elected if they stick to this proposal when it’s properly understood by everyone.

  6. Michael says:

    sounds to good to be true so not true

  7. JaneT says:

    What happens to prepaid SERPS contributions?

    • john graham says:

      That’s a particularly good point which I think is likely to affect women more than men. You can probably get an immediate answer to this by directing your question to the AGE UK website or by visiting the Coventry AGE UK office. Longer term we may be able to cover this in an information video.

  8. Chris broughan says:

    We would like more
    Pensions

    • john graham says:

      Nobody of the older generation would disagree with that but I think it’s wishful thinking given the current squeeze on state spending. I think it’s more likely that universal benefits for pensioners will be frozen or reduced.

  9. Terry says:

    A typical piece of this government’s obsfustion. Say one thing that addresses a problem but when in reality the true results of their legislation are hidden and give different results.

    • john graham says:

      I completely agree. You always need to look closely at the small print and being economical with the truth seems to be part of the politicians art these days.

  10. Honest Citizen. says:

    I was angry about the result of the married woman’s stamp which was not explained to me, this sounds like more of the same. Whispy information. Big Brother wins again!
    Honest Citizen!

  11. Anne bissell says:

    Retention of current benefits . Top priority being travel passes which bring with them so many social advantages.

    • john graham says:

      This is an extremely good point you made Anne. Your comment about the importance of travel passes will certainly underline in our survey on WEALTH where the majority of our CAFE Group regularly used bus passes. The spin off of people being able to get out and about goes way beyond the cost of free bus passes. People can remain independent much longer and are much more socially connected. That probably means they live more healthy lives.

      In an Age Friendly Coventry retaining a good free or at least subsidised public transport system for older people will be critical.

  12. Bert says:

    It ids important that investment is government led to enable employment to be provided and employees to be taxpayers.

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