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A state pension for the 21st century

27 June 2011

Introduction

A state pension for the 21st century (Adobe Acrobat Document 62kb)

The complexity of the current arrangements for the financial support of pensioners is very unsatisfactory.  It leads to underclaiming of their entitlements by one third of those eligible for pension credit and probably by over half of owner occupier pensioners who are entitled to council tax benefit. Office of National Statistics, Income Related Benefits, Estimates of Take-Up 2008-09, June 2010.  Pensioners resent the intrusiveness of means testing and yet the Pension Service devotes a lot of resources to means testing, and – in the experience of many of our clients – often struggles to reach accurate and timely decisions in complicated cases.  CAB advisers spend substantial amounts of time helping pensioner clients with these complexities.

We therefore welcome the Government’s proposals to simplify the state pension system in future so that most people would get a state pension to keep them above the poverty line.  As the consultation paper shows, there would remain a fair amount of complexity even in a simplified system, but we accept that this is unavoidable.

Means testing of pensioners would not be removed by these proposals, and the Government needs to be open about this, but it would be reduced and that is welcome.

The context in which the Government announces its plans for state pension reform will be important.  As well as showing how the state pension will provide a more secure income for future pensioners, we believe the Government should commit to doing more to eliminate poverty amongst existing pensioners.  Currently, 1.8 million older people are living in poverty, and the Government must show how it plans to reduce this level of poverty.

A number of options are unresolved in the consultation paper.  We urge the Government to be open about the calculations, the winners and losers, and to consult further where decisions need to be made.