Welcome to the Merseyside Pensioners Association

MEETINGS

The MPA group meets every Wednesday at 1.30pm in Transport House, 143 Sefton Street, Liverpool L8  5SN.
 

They are affiliated to BPTUA, North West Pensioners and NPC.

Please come along and join in At these meetings pensioners' issues are discussed. 
 
Observers are always welcome

MPA have contributed some very useful articles that affect every pensioner - 

Pension Credits  A discourse by Bill Moore. The Consultation paper on Pension Credits is, like most documents drawn up by lawyers, designed to be as hard to understand as possible to the lay man. And thats only the notes of explanation!. However, the paper does contain changes and additions which affect many pensioners, so it is a "need to know" situation

Pension Credits

A discourse by Bill Moore of 
Merseyside Pensioners Association

The Consultation paper on Pension Credits is, like most documents drawn up by lawyers, designed to be as hard to understand as possible to the lay man. And thats only the notes of explanation!. However, the paper does contain changes and additions which affect many pensioners, so it is a "need to know" situation.

The pensions credit, it would seem, has been designed to cater for the anomaly that has arisen, particularly with the introduction of the MIG.(Minimum Income Guarantee). That is, that those pensioners who have saved, have a small second pension, or an income from other sources, but which leaves them just about. or above the MIG can now find themselves little or no better off than those who did not save.

These people the Government says, are those they are determined to help. As Alastair Darling, The minister responsible says, "To remove the penalty for saving'. The essence then, of the pensions credit is that in helping those pensioners with small incomes it will be an encouragement for future pensioners to continue saving. In addition to the credit itself, other proposals are contained in the paper.. It is intended that the MIG which has a number of rates will be overhauled and have only one top rate.

Whilst this can be beneficial to some age groups, it, will however, mean that the over 80s, who are already on the higher rate will not benefit. An age group, one would have thought who needed it most. Also proposed is that the MIG, for purposes of annual increases, will be linked to earnings. The paper claims that by 2003, the credit will give extra cash for single pensioners who have an income of up to £135 a week, and couples who have an income up to £200 per week. 

Further, it claims, no individual will, by 2003 need to live on an income of less than £100 a week, or a couple on £154. 

In more detail, the pension credit works by giving what it call a 'cash award' of 60p for every £1 of savings income up to. a maximum of £135 (single pensioner) or £200 (a couple). Savings cover a wide definition. It covers income from other pensions, from working, savings, and some benefits will count, some not. 
The following example from the consultation paper may make the operating of the 'cash award' clearer. 
A lady has a basic pension of £77 and a SERPS pension of £40, a total weekly income of £117. The credit firstly ignores 60p. for every pound of savings, which in this case is the £40 Serps. That means £24 is ignored. This means her income is reduced
to £93 per week. Because the national minimum at this stage will. be set at a £100 then
the £93 has £37 added to it. (the credit or cash award.) The £24 - the 60p for every £1 - the SERPS is 'now restored giving an income of £124 per week. So, a somewhat roundabout way, but the lady is £7 a week better off!

However, whilst complicated, the greatest complication of the. new proposals is the extent that means testing will increase. The Government estimates that half of pensioner households will be affected by and qualify under the new scheme. This, put another way means that 5.5 million pensioners will be subject to means testing. The government do say that they will move away from the discredited weekly means-test to a system where awards are fixed for a longer period.But a means test, is a means test, is a means test, and nothing this Government can do will ever remove this stigma. One wonders at a Government that has condemned outright in it's green paper, means testing, on pensioners. 

It needs to be remembered also that there are still over half a million pensioners eligible who have NOT claimed MIG. Age Concern, - in fact, estimates 700,000. Will a change of name make, that much difference?

Those pensioners, too, many of them women, who are not on a full rate pension, will. not gain to the same extent from the credit. They will still, as now, have every £1 of income needed to raise their income to the basic pension rate deducted from MIG entitlement. Nor is it clear how the new proposals will affect Housing Benefit or Council Tax Benefit. 
The relationship between them, will, the paper says 'need careful designing'. What follows on from 2003 is not shown either in the. consultation paper, or in what way the pension credit develops in relation to other benefits. This leaves an impression of a job done in a hurry with much to be put right later. Perhaps with an eye on a coming election?

There are then, merits and demerits in the paper. perhaps discussions to take place will bring improvements and needed amendments. However, what the paper does not do, nor have any proposals put forward by this Government done so far, is to ensure that the basic state pension is, and continues as, an improving central part of pension provision. Indeed, over the years the reverse is true. Whatever measures this Government has taken to alleviate poverty amongst pensioners, the central fact, remains that the basic pension has continued to decline.

A deliberately designed process, initiated by the Thatcher Government, is continuing under Labour. And a process, which will accelerate with the policy of linking some benefits to earnings and the basic pension to prices. The basic state pension, the Government green paper said "will keep its value over time and will remain the foundation of pension provision for rich and poor" In the face of what it is doing now, or rather what it is failing to do, such an assertion is quite remarkable!

The pension is a right for all in society, not a benefit. A universal payment for rich and poor alike. All pay. All should receive. Such a pension was designed by a previous Labour Government as the central part of pension provision. Which is what this Government by its policy denies! The government claims to be seeking to end pensioner poverty and no doubt some of what it has done and is doing seeks that end. But what it is doing, by it's very nature, does not end poverty, indeed, as it admits itself, it's policy draws more people into means testing benefits.

The government tackles only the result of the problem and seems to need reminding that poverty amongst pensioners is because of poverty within society. The problem is not rich pensioners/poor pensioners but differences in society. A major contribution to poverty amongst pensioners was the Conservative decision to end the link between pensions and average earnings in 1981. A deliberate decision taken in order to save money at pensioners' expense. The only real way to solve the problem of pensioner poverty is by restoration of the link. Means testing benefits continue poverty. Some improvement yes, but no solution to the basic problem. There is no information in the consultation paper as to the cost of the scheme.

The NPC response to the paper, suggests that 5.5 million beneficiaries getting an average of £5 a week extra would be about £1.4 billion. This, it seems to me, with the surplus in the NI fund would be a good start for a major increase to the basic pension, prior to restoring the link. Whatever the Government says, the money is available. The red herring that the Government throws in that this would give to the richer pensioners as much as it gives to the poor, can be taken care of, as it is in general life by the tax system - it also is cheaper to administer. 

Coincidentally, Age concern have recently shown that were the link still existing, in April 2001, a. single pensioner would be on £101.15 and a. couple on £161.70 per week. All without means testing, fiddling with. small incomes, MIG, credits just the basic pension. It is in this situation, where means tested benefits and a declining in value state pension, seem to be the determinants in pension provision, it is imperative that the fight for the link is maintained and stepped up. The alternative, to rely on benefits, can only lead to further weakening in the basic pension. In a situation where, at any time, a government can make changes as it wills, the only policy amongst all groups of pensioners which can create a unity of purpose is one which benefits all.

Restore the Link.  Bill Moore