PENS

IONS

CURRENT PENSION PROVISION IS BOTH INADEQUATE AND INCOMPREHENSIBLE, AND THE GROWING INEQUALITY IN RETIREMENT AGE AND INCOME IS UNACCEPTABLE. THE FAIR BRITANNIA PARTY WILL CALL 'TIME' ON THE PRIVATE PENSIONS GAME.

OUR POLICIES — AT A GLANCE

PENSIONS SCHEMES

  • All Private Workplace and Personal Pensions Abolished and Their Accumulated Value Transferred Into The State Personal Pension Account.
  • All Other State Pensions Abolished and Their Accumulated Value Transferred Into The State Personal Pension Account.
  • Universal Non-Contributory Entitlement To The Full Basic State Pension.
  • Automatic Enrolment In A Contributory State Personal Pension Account.
  • Contributions Collected With The New National Property Tax.
  • Everyone Treated As Individuals For The Purposes Of Pension Rights.
  • The State Pension Increased Annually In Line With A New Pensioner Inflation Index .

RETIREMENT

  • Retirement Age Increased To 70.
  • Minimum Retirement Age Increased To 60.
  • Early Retirement On A Reduced State Pension Possible From Age 60.
  • A Maximum Initial Lump-Sum of 25%.
  • Full Pension Payable From Age 50 For Those Diagnosed With A Terminal Illness

DUE TO THE UNPRECEDENTED NATURE OF THESE PROPOSALS AND THE NEED TO BE FAIR TO EXISTING PENSIONERS — A COMMISSION WILL BE ESTABLISHED TO DETERMINE THE FAIREST WAY TO TRANSITION TO THE PENSION PROVISION OF THE FUTURE.

POLICY OBJECTIVES

Pensions That Enable Everyone To Have A Decent Pension

Under the present system, due to incomplete NI contributions, part-time working and the closure of the majority of company schemes, tens of millions of people — particularly the young and the self-employed — now have inadequate pension provision and millions have no pension at all. This is unacceptable.

Pensions That Offer A Fairer Deal To The Less Well-Off

Inequality in retirement is rising. Many retire at 55 with the mortgage paid, a well-earned sizeable nest-egg in the building society and a healthy income of between 1/2 and 2/3 their healthy final salary. And at age 65, they receive a welcome further boost to their income from the state retirement pension kicking-in. They can reasonably expect to look forward to an average of 20-25 years of comfortable retirement. For many more, retirement means working another 13 years until age

68 and retiring with little or no savings, little or no income from a company pension, and struggling along for 10 years or less on means-tested pension benefits with barely enough money to adequately heat their own home. This level of inequality is not acceptable.

Pensions That Are Affordable

The increased longevity of modern times have made pensions unaffordable. In the past, most people used to retire at 65 and enjoy approx. 10 years of retirement. Today, many pensioners retire at 55 and live to be 85, making 30+ years of retirement possible. This is not merely unaffordable, but somewhat ridiculous. If pensions are to ever be affordable, and worth having, then the time period over which they are paid needs to be

reduced.

Pensions That Remove Employers From Any Involvement With Employees' Pensions

Many company schemes from Maxwell's Mirror Group pensions onwards have gone bust and more than 60,000 employees of these companies — through absolutely no fault of their own — have lost all or some of their pensions. The government's compensation packages have not made-up the shortfall. Appalling. Also, because people regularly change jobs throughout their working lives, tying pension contributions to any form of employer-related scheme inevitably means either millions of abandoned pensions or millions of employees with several workplace mini-pensions of a few pounds each. Ridiculous.

As a matter of principle, as a personal matter connected with personal income and savings and personal leisure plans for the future, an individual's pension arrangements are absolutely no concern of employers anyway.

Pensions That Ordinary People Can Understand

The pensions system has always been complicated, with a basic state pension, a state earnings related pension (SERPS) and then the widespread availability of (often mis-sold) private pensions, as well as means-tested Income Support available to people of retirement age. In recent years the complexity has increased further with the introduction of contributory stakeholder pensions, the Minimum Income Guarantee in 1999, the State Second Pension in 2002 as a replacement for SERPs and Pension Credit in 2003. Most recently, compulsory pension savings accounts — called Personal Accounts — are to be introduced from 2012.This level of complexity is unnecessary and makes pensions unintelligible to many people. That is not acceptable.

Pensions That Don't Intrude Into People's Private Lives

The administration of pension rights today is such that a divorce settlement can mean monthly reminders of a previous

relationship and embroils pension administrators in the nature of beneficiaries' personal and sexual relationships. All such matters should remain separate from pension provision.

Pensions That Prevent People Blowing Their Hard-Earned Retirement Savings

Recent changes in pension legislation permits a significantly increased proportion of pension entitlement to be taken as a lump-sum. With post-retirement benefits still needing to be means-tested, this change opens the door to potential unnecessary hardship in later retirement years and an unnecessarily increased benefits bill for other taxpayers.

OUR POLICIES

Recent government legislation creating Pension Accounts and requiring automatic enrolment are very welcome. However the long-term problems in UK pension provision remain — tens of millions of young and self-employed workers with inadequate pension provision, incomprehensible complexity due to several overlapping schemes, companies still involved in the personal finances of their employees and increasing, and unacceptable, inequality in both retirement age and retirement income.

After many decades of mis-sold private pensions, stolen pension funds, inflated charges, small-print, voluntary codes, new initiatives and all the rest, its surely time to call 'Time' on the personal pensions game. Although far-reaching new legislation may be able to prevent the worst of continuing abuses, due to the necessarily fluid nature of long-term investment and the determined, imaginative trickery of those within the financial sector ever-keen to preserve rip-off 'business as usual', we believe the only truly robust and reliable way to safeguard pensions for the vast majority is to simply close private schemes altogether.

PENSION SCHEMES

All Private Workplace and Personal Pensions Abolished and Their Accumulated Value Transferred Into The State Personal Pension Account

After many decades of mis-sold private pensions, stolen pension funds, inflated charges, small-print, voluntary codes, new initiatives and all the rest, its surely time to call 'Time' on the personal pensions game. Although far-reaching new legislation may be able to prevent the worst of continuing abuses, due to the necessarily fluid nature of long-term investment and the determined, imaginative trickery of those within the financial sector ever-keen to preserve rip-off 'business as usual', we believe the only truly robust and reliable way to safeguard individuals' pensions is to simply close private schemes altogether.


All Other State Pensions Abolished and Their Accumulated Value Transferred Into The State Personal Pension Account

All rights accrued under SERPS and the State Second Pension will be fully preserved and the accumulated value transferred in to the new state Personal Pension Account. This move will reduce unnecessary complexity and fragmentation in state pension provision whilst preserving individual pension rights.


Universal Non-Contributory Entitlement To The Full Basic State Pension

Rather than deducting N.I.C. contributions from everyone at variable rates for convoluted entitlement to variable pension rights, and further, requiring companies and HMRC to keep voluminous records for decades on all of this complexity, we will move the state pension to a simple system of universal, non-contributory entitlement to a full basic pension. Everyone will then have basic financial dignity in retirement and the cost will be funded in a progressive way from general taxation.


Automatic Enrolment In A Contributory State Personal Pension Account

The principle of automatic pension enrolment has already been successfully introduced by recent governments with the implementation of workplace auto-enrolment in state-backed Personal Accounts. We will not merely build on this scheme but make it the cornerstone of ALL pension provision in Britain. As now, the scheme will be contibutions-based, so that the level of pension eventually received is determined by the total value of contributions paid into the scheme over an individual's entire working life.


Contributions Collected With The New National Property Tax

Rather than involving employers unnecessarily in employees pension arrangements, pension contributions will simply be collected at the same time as the new property-based national council tax. Everyone liable to pay tax will simultaneously become liable to pay pension contributions. Contributions will be set at a minimum level of 6% of the national minimum wage, with no upper limit — so that those wishing to pay significantly more will be able to do so. Everyone contributing to the scheme will receive a clear statement each year detailing contributions made, the accumulated scheme value and the projected pension available at different ages of retirement nd different levels of future contributions.


Everyone Treated As Individuals For The Purposes Of Pension Rights

Under our proposals, pension provision would treat every pensioner as an individual, and not as part of a couple, so that everyone — including married women — would have their own pension.


The State Pension Increased Annually In Line With A New Pensioner Inflation Index

Many pensioners are understandably concerned by pension increases being linked to inflation rather than earnings. Over the 15-20 years of retirement this relatively small differential significantly erodes the true value of pensions — when most pensioners are on low incomes anyway.

However, since a pensioner is no longer an active part of the workforce actually doing the earning, and it is the current generation of workers who are footing the bill for any increase, we believe the true value of pensions should not actually rise after retirement, rather, the effort and contributions made during pensioners' working lives should be recognised by maintaining the pension in real times throughout retirement.

Under our proposals, the state pension would therefore be linked to a true measure of the cost of living actually experienced by most pensioners — one that would incorporate housing costs, utility bills, food, etc — so as to ensure that the real spending power of pensioners' income is maintained.

RETIREMENT

Retirement Age Increased To 70

Although never popular, we do support the recent increase in state retirement age as a necessary means to keep the pensions bill affordable. The increasing life expectancy of recent decades means that most people are fit and active well into their 70s, and with our Universal Credit proposals for 'anything useful accepted as workfare' ensuring that older workers will always be able to find a low-stress, gently-does-it form of work, we favour a further increase in the retirement age to 70.


Minimum Retirement Age Increased To 60

The fundamental inequality that sees some retire at age 50 whilst others need to work for another 18 years until age 68 is unacceptable. The State Personal Pension will therefore be prohibited from paying-out prior to age 60.

Early Retirement On A Reduced State Pension Possible From Age 60

By opting to receive a reduced state pension, similar to present arrangements in their choice of when to take their state pension, people will also be able to retire from age 60.


A Maximum Initial Lump-Sum of 25%

Many schemes have this restriction already and we believe this strikes the right balance between allowing pensioners to take their scheme's accumulated value in a form that suits them best and preventing spending sprees resulting in unnecessary subsequent dependency on state benefits funded by other taxpayers.


Full Pension Payable From Age 50 For Those Diagnosed With A Terminal Illness

People should not be expected to pay towards their state pension all their working lives and then, if unfortunate enough to have a reduced life expectancy, have that misery compounded by also having their non-means-tested pension removed from them! Once over age 50, anyone diagnosed with a terminal illness will be entitled to receive their full state pension immediately.