State Pensions:  ministers plan to pay £140 a week and end means testing

From today’s Guardian http://www.guardian.co.uk/politics/2010/oct/25/state-pensions-reform-simplified-end-means-testing?&

“Ministers are planning a radical transformation of state pensions, which will see the system simplified and the amount available to pensioners increased.

Everyone will receive the same £140-a-week payment and there will be an end to means-tested top-ups….
The changes, which are due to be detailed in a green paper by the end of the year, mean a single person could receive £7,280 a year and a couple £14,560.”

Not sure how this will be funded???  I guess the Severe Disability Addition will disappear at the very least?

And another example of the consistency of this goverment in making sure, as with Child Benefit, that the rich and well-off won’t get benefits that they don’t need.

aye, firm but fair as they’re so fond of repeating

I can go with this one up to a point - if it does what it says on the tin & gets rid of the means testing (or most of it?) & provides a fair decent pension then it can benefit a lot of people.

But once again many people who don’t need it will also benefit.  OK - anyone on 40% tax will lose 40% of it, but they still have 60%. Of course, it should be possible to work something into the tax coding sytstem to claw back more - or all - above a certain income level but somehow I don’t see that coming about!

Hmm. 

They could be intending to abolish Pension Credit entirely, it would fit in with the Universal Credit.  The problem then becomes what happens to disability , housing and child costs for the elderly?  You can’t, easily, have a two tier UC on the models being discussed.

Proposals are at a very early stage, but they will need to think through what to do about people who have been paying their NI contributions for years, on the understanding that this will provide them with a reasonable pension.  The contributory principle has already been seriously eroded eg the reduction in IB for people receiving occupational pensions above a threshold, and reduction to 50% (rather than the former 100%) of the SERPS component which a widow(er) can inherit.  The contribution conditions for JSA and ESA are getting ever tighter.

There will have to be transitional provision for several years, which will make the whole scheme quite complicated.  Otherwise people who contracted out of SERPS will be placed in a more favourable position than those who stayed in the scheme.    And what about people who made voluntary contributions to fill gaps in their NI record?

It’s been reported that “the reforms would apply only to those who retire after the date when they are introduced.”  That implies transitional arrangements lasting more than forty years - which is hardly the way to simplify the administration.  Pensions now are paid out of wages and contributions now.  The effect of phasing would be to offer ourselves decent pensions at the expense of the generation coming after us, while refusing to pay for decent pensions now.