We've had the vision - now can we have our pension please?

By Brian Havard - 08/08/2008

Pensions Minister Mike O’Brien’s homily is merely cynical hypocrisy when he writes: ‘We must begin to free our minds from some of the prejudices about ageing, create new life chances for people, and in the decades to come recognise that some of the most happiest years of our life will  be spent after the age of 65’.
 
He must first free the minds of his DWP colleagues from their prejudice against half the expatriate pensioners, 500,000 people overwhelmingly in the major Commonwealth countries who are denied annual uprating, their pensions frozen for all time at the amount which applied when first they qualified or emigrated as existing pensioners. Yet they bought their pensions by the payments they and their employers made to the National Insurance Fund during a working lifetime, in exactly the same way as the somewhat larger number of expatriates, mainly in the EU and USA, who receive fully uprated pensions.

 

It is discrimination by country of residence, despite the Prime Minister trumpeting that "Discrimination anywhere is unacceptable".
 
Such a policy is obviously unfair, but when the victims are aged pensioners it becomes inhumane. These frozen pensioners find a yawning gap between the ever-rising cost of living and the frozen pension they are paid; with each passing year, the poorer they become. This is indirect age discrimination. What should be ‘some of the happiest years of their lives’ are blighted by Mr O’Brien and his predecessors having abandoned a rugged British principle of fair play: "You get what you pay for".
 
Yet it could be so easily rectified; universal pensions parity costing £400m requires an easily affordable increase of less than 1% of the pensions budget. Contributions to the NIF having been set at a level which massively exceeds outlays (the surplus was £5 billion in 05/06 alone), the ballooning NIF balance has already reached £50 billion and is forecast to treble in a few years. Just two month's interest on the invested balance would very nearly cover the annual cost of reinstating full entitlement to all UK pensioners living in frozen countries.
 
Ignoring legislation which makes clear that contributions to the NIF shall be used for social security purposes, the Government then exploits the regulation which authorises the NIF to use its surplus over outlay (originally foreseen as comprising primarily pensions plus a prudent reserve set by the Government Actuary at 16% or £8 bn) to invest in Government scrip – and the proceeds are treated by Government like general revenue, free of restraint. It is another stealth tax. Such slick financial engineering sits unhappily with Mr O’Brien’s homely fireside chat style.
 
Then the Minister has the gall to say: ‘Legislation alone is not enough. We need to tackle attitudes to ageing. Age must be recast in terms of equality, opportunity and contribution not discrimination, stagnation and decline’.
 
Can you see it happening?
 
Brian Havard, Stirling, Australia