Prime Minister backs down over fears of pensions backlash
A threatened backlash from older voters has forced the Prime Minister to back down on plans for a major overhaul of pensions.
David Cameron had called for another look at the key policy of a flat-rate £140 payment to all pensioners, it was reported.
But any changes will be watered down amid concerns of a hostile reaction from the nation’s 11 million senior citizens – the age group who are most likely to vote at elections.
However the Government is still studying reforms to benefits that would hit hundreds of thousands of people across the West.
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The PM was thought to be worried some higher earners would be stopped from making additional contributions to increase their pension pot, while those already claiming the payments will not be eligible for the new rate.
He was concerned about another backlash from older people, after the “granny tax” proposed in this year’s Budget that would have cut tax allowances for the over-65s.
The Pensions Minister is Steve Webb, the Thornbury & Yate Liberal Democrat MP, and he denied his flagship scheme was at risk. He said of the reports: “It was news to me, and news to No.10.”
Mr Webb said full details will be revealed in a Government policy paper this autumn, as planned.
While some people would lose out from the single-tier state pension, there was “no meaningful way” that existing senior citizens would be hit.
The PM’s official spokesman said yesterday that work was continuing on the policy, but was clear they would introduce a single-tier pension system.
However, Dot Gibson, general secretary of the National Pensioners Convention, said:
“The plan will create more losers than winners and if changes aren’t made the pension system will become even more complex than it is now.”
Meanwhile, ministers are considering axing automatic increases in benefit payments and freezing them for two years, to save billions of pounds a year. The rises would then be linked to average pay, rather than the rate of inflation as now – meaning they would usually be lower.
A spokeswoman for the Department for Work and Pensions said any changes to how benefits are calculated will be looked at the by the Government over the next few months.
North East Somerset Tory MP Jacob Rees-Mogg said: “Benefits should not rise faster than earnings. The economy remains in a mess. The Government is spending more money than it raises in taxes.”
Comments
by Pompeybelle
Thursday, September 20 2012, 10:09AM
“Will there be tax relief on these paid-for pensions - at least up to a certain level? After all, tax has already been paid on the income. It seems manifestly unfair that people should do without to ensure themselves an independent life in older age, without having to claim benefits, only to find they have to pay tax on it all over again.”
by bath1946
Thursday, September 20 2012, 6:00AM
“This is turning into another debacle similar to thr NHS. I am very interested in pensions but have absolutely no understanding of what is being proposed.”