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JONATHAN BEALE: The choice has never been easy
whether it's chocolate eggs for Easter or nest eggs for the future. This
week the Government hatched another new pension plan. One that it hopes
will bring us a more secure retirement as well as helping to ensure its
own political success.
There are twelve million
pensioners in Britain and they're almost twice as likely to vote as those
aged between eighteen to twenty-four. In thirty years time the over sixty's
will make up a third of the electorate. Increasingly, political parties
ignore the grey vote at their peril. So has Labour done enough for those
who've already retired - and is it doing enough for those who're now planning
their retirement?
STEVE WEBB MP: The long term strategy has
a fatal flaw. The basic state pension will wither and die. The seventy-five
p that we had in this parliament is a taste of things to come.
FRANK FIELD MP: I would describe the current
lot of initiatives as initiatives taken with the best of motives which
will not survive the course.
BEALE: In the kitchen of Rococo
they aim to leave their customers with a sweeter taste. It's a small company
making and selling hand crafted chocolate. Earnings among the ten staff
are between ten and twenty thousand pounds. Just the sort of people the
government have in mind for its new stakeholder pension:
MICHAEL LOCKYER: They are cheap effective solutions
to individual pension planning with very, very good low charges dictated
by the Government and capped at one percent.
BEALE: It may at first appear an
attractive proposition. Forty per cent of the population have no pension
plans other than what the state will provide. Even the Government admits
that its basic pension is not enough to live on. For people like Ruth though
the stakeholder scheme has still not whet her appetite.
RUTH MORGAN: In my job I'm not on the minimum,
I'm above the minimum wage but even so my money is completely taken care
of with my every day expenses: the rent, the bills, looking after my child
and I would not be in a position to take out a stakeholder pension unfortunately.
LOCKYER: People in that sort of
income bracket tend to have a lot of other commitments maybe mortgages,
children, other expenses and pensions is perhaps on the bottom of the agenda
as far as they're concerned. But I think the stakeholder net itself has
been cast quite wide and they will be quite attractive to higher earners.
They're going be great tax planning vehicles for people who perhaps want
to pay into a stakeholder for their children, for their grandchildren,
for their wives.
BEALE: The challenge for the Government
is to get its target group to pour their wages into the new stakeholder
pension. Contributions are still meant to be voluntary though it might
not turn out as planned.
LOCKYER: I think that stakeholder
pensions at the moment, it isn't compulsory for employers to contribute,
it isn't going to be compulsory for employees to contribute, and I think
that at some point in the future the Government may well have to revisit
this issue and it might be quite unpopular. I think possibly they may have
to insist on compulsion, and it could be that employers will forced to
make a contribution into a stakeholder pension on behalf of their employees.
BEALE: That's a worrying prospect
for people like Chantal who're running a small business on a limited budget.
From October companies like hers will be fined if they haven't signed up
to a stakeholder scheme. She already feels the Government's burdened her
with excessive red tape, and doubts that staff will be enticed with what's
on offer.
CHANTAL COADY: I think it's extremely unlikely
that anyone will be subscribing to the stakeholder pension and from my
point of view I hope they don't, because if they do we've got to do the
deductions, we've got to administer the whole scheme.
BEALE: Even if the Government can
win round the sceptics, in the world of pensions there's still a bewildering
range of options. The government's promising a new second state pension
for those on three to ten thousand pounds. It'll replace the existing state
earnings related pension - or SERPS. The stakeholder pension is for the
group who earn between ten and twenty thousand pounds. Everyone can already
buy a personal pension, but may now wonder whether they're better off investing
in a stakeholder. An occupational scheme may still be the best investment
- but they're not available to everyone.
DAVID WILLETS MP: I'm afraid a lot of companies
are closing down their occupational pension schemes for new members and
telling people instead you must take out a stakeholder, often with a smaller
company contribution than there was before. So the danger with stakeholders
is that paradoxically hundreds of thousands of new people take out stakeholders
but they're not new pension savers - they're people who end up having a
less valuable pension than they would have had otherwise.
ADVERTISEMENT: "Scuse me, I'm looking for
some help with my pension options."
BEALE: The Government's embarked
on an expensive advertising campaign to give people advice. Opponents say
it shouldn't have confused them in the first place.
WILLETS: Being new Labour everything
has to be new, everything has to be redesigned, everything has to be renamed
and you've got a host of new schemes but the trouble is that especially
with pensions what's very important is to have stability. and because they've
abolished SERPS and brought in the second state pension instead, because
instead of sticking with personal pensions they've had to rename them as
stakeholders, because of all this they've generated enormous confusion
and uncertainty.
BEALE: Confusion is not confined
to future pensions policy. Those who've already retired are often baffled
by the Government's current initiatives and apparent fondness for form
filling. Labour's policy of targeting help towards the poorer pensioners
may be noble. But in practice it often involves having to answering pages
of questions to prove that a pensioner is on a low or modest income. And
perhaps not surprisingly many haven't bothered.
STEVE WEBB MP: The government is fond of
saying that its strategy is to help the poorest pensioners but in truth
the really poorest pensioners in the land are the ones who are entitled
to these means testing benefits, but don't claim that entitlement because
the system is very complicated, because they don't want actually to fill
in long complex intrusive forms.
BEALE: Once again the Government's
had to turn to advertising to encourage pensioners to apply for its means
tested benefit.
THORA HURD: Did you know the Government
is identifying from its records some people who they think may be entitled
to extra money through its minimum income guarantee?
BEALE: Half a million haven't claimed.
And yet it still plans to introduce more means testing. The Government's
targeting those who've already had to break into their savings or who have
none at all. The minimum income guarantee ensures the poorest pensioners
have at least ninety-two pounds a week. From two-thousand-and-three the
Government have promised to bring in a new pensioners tax credit. This
is aimed at those with modest savings. The benefit tapers off for those
on higher incomes. But there is help too for pensioners regardless of
income. Free TV licenses for the over seventy-fives are among a series
of one-off payments. There's also a winter fuel allowance now worth two-hundred
pounds for the over sixties.
For Tina - Rococo's oldest
employee - there's a reluctance to go cap in hand to the Government.
Like her, all that most pensioners want is a decent basic state pension.
TINA LAMBI: Personally I would not ever
apply for anything like that because I think it should be given to you
without having to fill in forms or asking for it, that's how I feel.
RODNEY BICKERSTAFFE: We don't want a pension scheme
which is going down and down in value and people being told two things:
either you look after yourself in terms of private pension aid and private
pension insurance or secondly, well you can have more but you can only
have it by jumping through hoops, by filling in forty-page forms, by going
through the indignity if you want, the stigma of means testing, that I
call parading poverty.
BEALE: Ministers hope their long
list of initiatives will help eradicate pensioner poverty. But continuing
protests by the elderly show that they're not convinced. What they want
more than anything else is the guarantee of a decent state pension. And
many believe the only way they'll get that is by restoring the link with
earnings.
BICKERSTAFFE: I think that many people
thought that the Labour government was gong to say DNR - do not resuscitate
- to the basic state pension. But I think that it's resurrected now, I
think the debate is on, I think we've all to play for. And certainly I
think the Labour government in the years ahead is going to seriously have
to consider that the basic state pension isn't just the foundation, but
it's the mainstay.
BEALE: None of the main parties
at Westminster is offering to deliver the ultimate pensions gift - restoring
the link with earnings. Though just before the election Labour is offering
a significant rise in the basic pension - a sweetener after last years'
miserly offering.
WEBB: I think many pensioners do
feel let down that when there wasn't an election on all they got was seventy-five
p; they are not stupid, they know the five pounds is because there's an
election round the corner and they know that once the election is over
it will be seventy-five p again.
BEALE: Whether that turns out to
be true or not, even the Government doesn't claim that the basic state
pension will ever be adequate. Critics say nor will the alternatives people
will be buying instead.
FIELD: Before the end of the next
parliament the Government will have to return to pensions reform, and while
stakeholder will no doubt be able to be paraded around as increasing the
numbers of people with funded pensions - I think we will find, sadly, that
the group that most needs coverage from funded pensions are the least likely
to have taken out stakeholder - they either aren't interested or much more
importantly they haven't got the money to and therefore they won't and
therefore the issue of fundamental pension reform will return once again
for the next parliament to consider.
BEALE: Laying plans for the future
is never easy. But the problem for Labour is that its new pensions goodies
may have left people even more uncertain as to what the state will provide
once they finally retire from work.
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