Email from Alison Seabeck MP
Posted by Alison Seabeck, MP for Plymouth, Devonport, at 14:05, Thu 25 May 2006:
The most important announcement his week has been the Pensions statement . This follows on from the Turner Report , an independent report into the pension needs of the nation in the decades ahead and how we can meet them.
Our priority in Government in 1997 was to tackle the serious pensioner poverty which existed. One in four pensioners were living in poverty - couldn't afford to buy basics like winter coats and heat their homes. Some people felt that we should have applied pension up grades across the board to all pensioners whether rich or poverty stricken. We took the view that we had to target the very poorest and this we did. For those just over the threshold this of course caused a sense of injustice which I think most people would understand.
Now, with life expectancy improving - a thoroughly good thing - we can expect a 50 % increase in the number of pensioners by 2050. With somewhere in the region of 160,000 living to be over 100 as opposed to around 9,000 today.
Add to this the fact that we are all under saving with a figure in the region of 12 million people not saving enough for their retirement then you can understand the scale of the problem. Many people will be pensioners for longer than the period they worked!!
The Secretary of State for Work and Pensions announced today how he feels we should meet the challenge. It is very much based on the Turner Report and includes
- a new low costs savings scheme into which all workers and employers will be enrolled - measures to make it easier to save by a higher and fairer state pension re linked to earnings - increase in credit guarantee to pensioners to assist the poorest - raising pension age in line with life expectancy from 65-66 in 2024 and to 68 in 2050 - tackle the unfairness to women by changing the contributory principle for the basic state and second state pension to assist mothers and carers
The outcomes anticipated are o Up to 10 million people will be saving in a personal account, and most of the money paid into personal accounts will be new pension saving
o By retirement, their pension funds could be worth around 25 % more because of the lower annual management charges in the new scheme
o In 2010, 70 % of women reaching SPA will be entitled to a full basic state pension, compared to 30% now.
o By 2025, over 90% of men and women reaching SPA will have a full basic state pension, compared to around 80% in the unreformed system.
o An additional 1 million (90% of which women) accruing entitlements to the state second pension.
o By around 2050 anyone who has been in employment or caring for 40 years or more will receive around £135 a week or more at retirement in state pension. This is over £20 a week above the guaranteed income level
o By 2050, the basic state pension will be worth twice as much as if it had been linked to prices;
o The projected long term spread of means-tested will be reversed, with only one third of pensioners needing to rely on Pension Credit by 2050.
Clearly this is a major change and I would welcome your views. Please email me direct to seabecka@parliament.uk and give your home address in Plymouth so that I can write to you personally.
Alison Seabeck MP
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