Back in December 2002, a government Green Paper first mentioned the possibility of the deferment of State Pension in return for a lump-sum bonus. At that time, the bonus was indicated to be circa £20,000, a figure that did not meet with much enthusiasm from anyone. At the Labour Party Conference in Bournemouth this week, the Work & Pensions Secretary Andrew Smith, revealed a ‘new’ pensions deferment scheme. “Deferring a pension for five years, could mean someone received a lump sum of up to £30,000” he said. Workers would now have the choice of taking the £77-45 per week State Pension at age 65, or continue to work for up to five years. Needless to say, the scheme has been touted by the party apparatchiks as a bonus of £30,000 for all at the age of 70.
Leaving aside the matters of either the desirability or possibility of working until the age of 70 for a brief moment, the scheme simply does not add up. £77-45 per week for 52 weeks times five years equals the sum of £20,137 – even allowing for Andrew Smith’s optimistic interest rate assumptions of between 6% and 7%, an applied compound rate of 7% would generate a fund of £24,781. Again, allowing for year-on-year increases in the State Pension would not account for the shortfall between these figures and the £30,000 bandied about by Andrew Smith, and then we discover that the Secretary of State for Work & Pensions has actually calculated in a “modest” personal occupation pension contribution. So unless the government is planning to make these bonuses completely tax-free, there is no financial incentive within this wretched scheme at all – and if the bonus is taxable, then the multitude of pensioners who would pay no tax on their annual pension income will become taxpayers.
Quite simply, this is the December 2002 proposal but with different wrapping paper on.
This hare-brained proposal has been launched as an alternative to increasing the retirement age of 65, and it is a matter of choice for the worker, well for the time being anyway. The LibDems must be a right bunch of stooges, for their Work & Pensions spokesman Steve Webb has welcomed this scheme on the basis that “the Government’s initial plans to pay a lump sum of up to £20,000 were simply inadequate”? The laughable thing is that the whole idea is preposterous anyway – apart from the rare soul who wishes to die in harness, the vast bulk of people look forward to a comfortable and peaceful retirement after a lifetime of work. Then there is the question of how many employers will want to employ workers who are older than 65 – anyone over the age of 50 who has tried to find work knows only too well just how difficult that can be; and contrary to the government’s advertisements, it has nothing to do with re-training, it is ageism pure and simple.
Pensioners have been hit from all sides for the last seven years. State Pensions have been linked to inflation indices instead of cost-of-living indices, pension funds have been battered along with all stocks and shares, employer schemes have disappeared with failed companies and now this insult to prospective pensioners has been wheeled out like some act of divine inspiration to end the trend towards early retirement, “rewarding millions who do not want to stop work, and provide a safety-net for those who fear poverty in old age because they have not managed to save enough”. And that of course has nothing whatsoever to do with successive governments failing to keep their promises, moving the goalposts without warning or taxing us all to the hilt, has it ??
And so Tony Blair, Ian Duncan-Smith and Charles Kennedy, in this season of party conferences whilst you are all jumping around like herrings on a griddle in vain attempt to persuade the British public that your particular agendas, policies and proposals are the ones for us, just think on this. We do not give a damn for your particular policies and proposals, for not only will they all come to nothing at the end of the day, but also there are no marked differences between your policies anyway. What we want is fairness and justice for all, an equable government and system of taxation, and most of all, we want to be told the truth. No more of your lies and deceits, no more weasel-words and spin, just tell us as it is, and let us be the arbiters of our future, not you.