Sollitt welcomes new Liberal Democrat Pension Reform Policy

4.27.00pm GMT Thu 24th Nov 2005

Liberal Democrat Pension Reform Policy will be a step forward for all Pensioners

Steve Sollitt, Parliamentary campaigner for Southampton Test, has welcomed new Liberal Democrat plans for Pensions Reform as a promise of a real step forward for Pensioners in Southampton.

Charles Kennedy, Leader of the Liberal Democrats, set out plans to transform Britain's inadequate and complex state pensions system, with the introduction of a universal Citizen's Pension.

The Citizen's Pension would be paid at £109.45 per week (2005/06 figures), instead of the £82.05p basic state pension. The pension would rise year-on-year in line with the increase in average earnings and would be paid to all those over state pension age.

The Liberal Democrats will pay for these reforms by making tough choices on the pension age and reform of public sector pensions. Specifically;

• scrapping the State Second Pension and cutting back means-tested benefits;

• increasing the state pension age to 67, with a 25 year lead in time before anyone is affected;

• reforming public sector pensions to put them on a more sustainable footing.

Charles Kennedy also called on Members of Parliament to take a lead in reforming public sector pensions, by demonstrating a willingness to reform their own scheme.

The Liberal Democrats also want to boost private savings, with all employees being automatically enrolled in non-state pensions, with a right to opt out.

Mr. Kennedy said:

"Securing a fair, sustainable pensions system that tackles pensioner poverty is one of the biggest challenges of this Parliament.

"We have one of the lowest state pensions in the developed world, and one of the most complex systems. Women, in particular, suffer real discrimination.

"I believe that there is now a broad consensus that we need a state pension that is universal - a Citizen's Pension, linked to earnings, based on residency and set at a rate which guarantees to lift all our pensioners out of poverty from the age of their retirement.

"Funding this Citizen's Pension will require additional resources. Some of these can be found by scrapping the complex State Second Pension and mass means-testing which are clearly not a viable long-term solution.

"But we also need to face up to tough choices - on the state pension age, and on reforming public sector pensions. And if Parliament is to be taken seriously, then it must start by looking at the pensions system for MPs which is among the most generous in the public sector.

"We need a pensions settlement which can last so people can plan for retirement. That means securing a political consensus first for change, then for long-term stability. After the Turner Report is released, we should seek to agree a new "Pensions Accord".

"This should be a consensus not only on the details of a new settlement, but an agreement that cross-party consultation would be a part of any future attempt to change the pensions architecture.

David Laws MP, Liberal Democrat Shadow Work and Pensions Secretary, said:

"Our proposals will result a simpler, fairer and better state pension system and will boost private saving.

"We would remove the barrier to saving created by mass means-testing. Under a Citizen's Pension there will be a real incentive to save because those able to do so will know that every pound saved will make them a pound better off in retirement.

"We would scrap the Second State Pension. This could mean a new lease of life for employer provision.

"We would introduce a BRITSAVER. It would be a low cost defined contribution scheme with a choice of funds, including a low risk option run by National Savings.

"And we would use the power of inertia to boost pensions, by requiring all employees ultimately to be opted into a pension, which they would be able to opt out of.

"The Turner Commission gives us a rare opportunity to build a consensus for long-term pensions reform. We cannot afford to lose this opportunity. Nobody knows if there is any consensus on pensions reform within the Government, but Liberal Democrats are determined to play our part in constructive dialogue, with detailed plans and a willingness to confront the tough choices needed."

Sandra Gidley, Liberal Democrat Spokesperson for Older People and Shadow Minister for Women, said:

"Of the two million pensioners in Britain living below the Government's own poverty line, two-thirds are women.

"It is vital for the millions of women and carers who will be retiring over the next 20 years that the Government establishes a Citizen's Pension. Only a Citizen's Pension where entitlement is based on long-term UK residency not National Insurance Contributions as is presently the case, will protect those who take breaks in their careers."