Pensions? Why should politicians care?


Amid the acres of newsprint devoted to reactions to yesterday's pensions report, one thing that everybody – except the government - agrees on is that Gordon Brown's pensions policies have been an unmitigated disaster.

As the Organisation for Economic Co-operation and Development warned last month reducing means testing, encouraging people to save more, removing the tax disincentives against savings and encourage us all to work longer are now paramount if the UK is top avoid real economic problems in the future.

But does the current government care about the future? As Simon Jenkins writes in The Times today, pensions are boring and domestic, cabinet ministers know they are comfortably provided for - at the taxpayers expense - and the government’s policy appears to be simply to let the old get poorer.

With barely half the population in work and being taxed, the burden of meeting even present state pensions will rise fast. But Messrs Blair and Brown take the view that life is tough anyway and there is no point in making it less so. As Marie Antoinette might have said: “Let them eat tax credits.”

….The Tories, Liberal Democrats and Frank Field are surely right. There should be a basic state pension, available to all, no questions asked. The rest should be left to individuals, on their own or in collusion with their employers. There should be no age threshold on retirement. Company directors should not be allowed to steal pensions from their staff. There should be an end to the growing unfairness of public-sector workers enjoying earnings-related, index-linked, unfunded pensions-for-life.

The Daily Telegraph, meanwhile, reveals just how 'comfortable' politicians can expect to be in retirement.

You would need more than £1 million in a private sector pension fund today to buy the same maximum retirement income an MP can obtain from the new, improved, taxpayer-subsidised parliamentary scheme.

Oh, and even if private sector savers were wealthy enough to accumulate a pension pot this large, Inland Revenue rules will prevent them doing so.

The Telegraph also highlights the curious absence from the Turner report of any discussion about the 4.7 million people in the public sector who can continue to look forward to high levels of guaranteed pension income funded by the rest of us - a time-bomb that will lead to real problems in years to come.

The same theme is explored by Simon Jenkins says back in The Times:

With public employment, variously defined, approaching a fifth of the total workforce, the burden of these privileged pensioners will become crippling to other taxpayers. It is small wonder that Mr Brown has found eager takers for his 500,000 extra government jobs.

Tony Blair, meanwhile, has nothing to worry about. He has a taxpayer-funded pension scheme worth £3 million – a sum that would make many a private-sector fat-cat blush.