Government is not doing enough to tackle pensioner poverty

12.43.00pm GMT Wed 17th Dec 2008

Paul Rowen speaks at second reading of National Insurance Contributions Bill

Paul Rowen speaks at second reading of National Insurance Contributions Bill

Liberal Democrat Shadow Work and Pensions Minister Paul Rowen welcomed proposals to simplify tax and national insurance systems, but expressed reservations over the second part of the Bill as it failed to address how to combat pensioner poverty, which is increasing as a result of up to 40% of pensioners not claiming benefit.

Mr Rowen said:

“We are disappointed with the proposed change because, although we are moving forward the date for the introduction of the upper accruals point, we are doing nothing to tackle pensioner poverty. The difference between the Liberal Democrats and Labour has been the Labour Government’s insistence on using pension credit as a means of tackling pensioner poverty. If we compare child tax credit with pension credit, we find that the former is claimed almost universally by those who are eligible for it. It is a flat rate payment; it is not means-tested. We have had a long-standing aim - we want it to be met earlier than the Government do - initially to restore the link between earnings and pensions and secondly to introduce a citizen’s pension. We believe that the Government are taking far too long to achieve that and that far too many existing pensioners are in poverty.”

“We would have liked the additional sums of between £290 million and £450 million to be used precisely to achieve that. In 1950, the pension was worth 18.4 per cent. of the average wage. Today, the pension is worth only 15.9 per cent., which means that today’s pensioners who rely solely on the state pension - and we should recall that up to 40 per cent. of those entitled to pension credit do not claim it - are worse off.”

“I would make two observations. First, we do not believe and have never believed that pension credit, which is a means-tested way of paying pensioners, is the best way of tackling pensioner poverty. I return to my earlier point that 40 per cent. of eligible pensioners do not claim it. It is also a fact that even if we grant all the Government’s proposals, 50 per cent. of all pensioners will still be means-tested in 2030. I have already spoken about the importance of having a pensions consensus and I believe that my party and the Government have much more in common, but the Government need to move further towards accepting the principle that people are entitled to a certain level of pension regardless of the contributions that they have paid or the amount that they have earned. We need to get all pensioners up to a level where they can live with dignity without having to undergo what they consider to be the indignity of putting their income and all their savings through tests.”

“The pension consensus should therefore be to give all pensioners, regardless of who they are, what they have earned in the past or what contributions they have made - thereby including many women who take time out to have a family - a decent citizen’s pension. Well, the pension credit does not work. It is not being claimed. The test of the success of any benefit must be whether it is understood and claimed. Whether the Government like it or not, the reality is that pension credit is not understood or claimed as it should be.”

The Bill was approved by 291 votes to 161, with the Liberal Democrats voting against.

Click here to read Paul Rowen’s speech in full